 recording. Okay, we should be live now. Okay, Bob, I'd like to convene this special meeting for the Santorins of Island Water District for July 13, 2023. Holly, could you take the role, please? President Smalley. Here. Vice President Hill. Here. Director Fultz. Here. Director Ackman. Here. Director Mayhood. Here. District Manager, any additions or deletions to the agenda? Okay, now move to oral communications. This part of the meeting is for members of the public that want to speak on a subject that's not on the agenda this evening that's in the district's purview. Does anybody want to speak on something else? Seeing. Okay. Gentlemen, please step up. Do you mind if I don't, because I have a bad hip and it really hurts. Okay, certainly. We'll do this one. Lou Ferris-Colson. I was reviewing the annual consumer profits report for 2022 and I noticed that all of the appropriate constituents were well within spec for Puddle Water, which is good. But I did notice that there was a, what seems to be discrepancy, on the sample date for both lead and copper. For all of the cases, it was 2022. For lead and copper, it was 2020. And I find it hard to believe that we actually sampled the water two years before we tested it. So is that a typo or what's going on? Okay. Rick, could you follow up on that? I'll get back to this on that. Okay, thank you. Thanks, Bruce Holloway from Boulder Creek. There's a couple things I want to say. One was, some years ago, I don't remember when it was, maybe around 2015, someone in Felton wrote an op-ed in the press banner and they were advocating for a bond issue. That's a way to pay for district capital expenses. It was not going to be a press banner. A press banner's ownership has changed in the meantime. I'm not sure it had a deal to find that op-ed. It may have been attached to a board agenda whenever it happened, but I don't know exactly when it happened either. One of the things that is good about bonds is that people, they are assessed on an ad valorem basis. So if you have a more valuable house, you wind up paying a higher grade for the bond. And I think that's more equitable than a parcel tax that just taxes everybody equally. So I think it might be good to look into that at some point, especially with the huge capital expenses, if not now, then sometime. Another thing I wanted to say is about the fish ladder. Fish ladder was on page one of the Sentinel. I'm happy to see that that work is finally getting down. I'm glad that our environmental programs manager was able to get looking for a clock somewhere. You're at one minute, 20 seconds. There isn't the clock that you're looking for, Mr. Holloway. It's typically on the screen. I can't explain why we don't have that. Please continue. So I first joined the film fish ladder from Fred McPherson when he was on the board in 2011. He was asking the district manager at the time, when we were going to do the fish ladder, he said that it was an obligation that came with the Felton merger because Cal Am had already been told by the Department of Fish and Wildlife that they're going to have to fix the fish ladder. So that has been kind of an unfunded mandate for 15 years. And I'm glad that it's finally getting down. I'm glad that other people that the grants were obtained to pay for half of the cost, but it's still costing us a million dollars and that over a million dollars. And that is some of the hangover of the Felton merger, which I think is unique among all the annexations that this district has done since I've been paying attention. And I'll probably have more to say about that later. Thanks. Okay. Thank you. Moving to the first item of new business, the California Special Districts Board of Directors election. I'd like to start this one this evening a bit out of normal, but I reviewed the qualifications for all three of the proposed board members here with the indication that we're supposed to vote for one. I saw that Brad E. Romera is on the board for a wider district, which I was hopeful of that individual. But after reviewing the resume, I was underwhelmed by what he had submitted to us for review. The other two individuals both seem very qualified. And I think we would be okay with either of them proceeding forward. So that I'd like to hear any of the other board members have a thought on these individuals. Bob? Well, I mean, to be fair to Mr. Romera, he was only recently elected, right? And so he's sorry about that. Yeah, to be fair to Mr. Romera, he was only recently elected to his position. Perhaps maybe he should have waited a little bit before applying. Is that maybe the implication that you have, Mark? I mean, I appreciate the fact that he did apply and he wants to serve. And hopefully, we'll maybe see him again in another application. I figure for any comment based, I thought his resume was by Farley Struckers. Okay. So I'm favoring the incumbent. He's local, relatively considering the size of the state. He's local. He's got a lot of experience. Good resume. I'm going to favor Mr. Feronte. David? I mean, the truth is I'm fine with either Mr. Feronte or Mr. Stossi. I agree. I actually had a reaction to the Santa Clara Valley Water District real estate manager job description that he previously held, Mr. Romera, before he was elected. And I had some opinions about some of the real estate deals that they didn't have at that water district. So I was not a fan of him, but I will say just for consideration for Mr. Stossi, because I thought he actually had the better resume personally, that the Vandenberg Village Community Services District is a water district as well. They provide a number of different utility services. So he does actually represent water conservation and water district services as part of the portfolio of the Vandenberg Village Community Services District. So just something to think about, but it sounds like we've already decided on Mr. Feronte and I'm okay with that. I don't really have decided on this Feronte, but we've heard two of the other board members mention his name. So given lack of any other dissension on it, I'd like to recommend that the board vote for Vince Feronte for the CSTA Board of Directors. Second. Okay, before we go out. Excuse me, Mark. One point of order. Recommend or move? Move. That's right. Since that's what our recommended motion says. I'd like to hear from the public to see if anybody has a thought on this issue. Seeing none here, I see none online in the public that are meeting remotely. Holly, would you take a vote, please? Yes. President Smalley. Yes. Vice President Hill. Yes. Director Ackman. Yes. Director Pauls. Yes. Director Mayhood. Yes. Okay. Motion passes. Moving on then to the primary topic of tonight's meeting. The workshop, that's the rate study cost of service kickoff meeting. Rick? Well, Kendra, the district's finance manager came off and introduced Mark Coles. Kendra? Yes. So on April 6th, the board of directors awarded contract to Raft Ellis consultants to conduct the water and sewer rate study. District staff has been working with Raft Ellis to provide the required data that will be used to conduct the rate study. Tonight, we have Melissa Elliott, Teresa Juristich, and Lindsay Roth, who are members of the Raft Ellis team, to give a presentation about Rates 101 workshop that explains the overall process of the rate study and provides, you know, a schedule, anticipated schedule, and then they'll open up to board comment and public comment as well. So without further ado, we will, I think, Melissa is going to start off the presentation, and then we'll go from there. Yes. Thank you so much, Kendra. We'll go ahead and get our presentation pulled up here. I see that. Thank you, Teresa. So we're really pleased to be here. We suggested to your staff there at the district that it might be nice to, since you have such an engaged board and engaged community, that we provide a presentation about what a rate study is and how it works and what our scope of work is as we work through this through the end of the year to get everybody kind of on a level playing field of knowledge here. And I understand there'll be a number of different presentations with your board coming up in the coming months to ensure that you get some, lots of input from the public as you progress through your rate study. So why don't we introduce our team on the next slide? I'm Melissa Elliott. I'm an executive vice president at Raft Ellis, our western half of our, we're a national firm, and the bulk of our work is in utility finances and doing rate studies. Very attuned to doing rate studies within California, and I've done them for a number of your neighbors there. And I'm joined tonight by Teresa Jurtec, which is the, she's the project manager, and we'll be doing the leading a lot of our technical work on the rate study. And Lindsay Roth is our lead consultant. She'll be our analyst on the project, working a lot behind the scenes. She's taking notes tonight, helping us make sure we gather the input from this meeting. And the next slide, what we'd like to go over tonight is touch on just a bit about how utilities are funded because it is different than other types of local government. We want to make sure you understand the steps of a utility rate study, especially how important cost of service analysis and the actual rate design are, what the rate approval process will look like for your study. And then touch on pricing objectives. When we price water as a commodity, there's, there's a reason we do it the way we do it. So rate structures are designed to actually create, not just revenue for the district to operate, but also to achieve some pricing objectives that go with that. So with that, I'm going to turn it over to Teresa. My, how we'll roll this is we'll go ahead and do the presentation. And then at the end, we will turn that back over to the board president and see if we have some questions from your, your board of directors. Teresa. Everyone for having us here this evening. So for utility enterprise, the majority of your revenue comes from your rates. You don't get, you know, much from any, from any other sources. So it's the rate revenue that funds your enterprise. And those rates are developed to recover the, your annual costs, which include, you know, your, your reserves and, and, and debt service coverage targets, but they don't include anything like profits or dividends or anything like that. So this is a, a not for profit enterprise. And California law proposition to 18 requires that rates must be based on the cost to provide the services for the enterprise. So the rates and fees must fund your operations. They fund capital projects. They help maintain your reserves and ensure customer rate equity. And we do this through developing a financial plan, working through the cost of service analysis, and then designing the rates. So a rate study is a financial planning process that helps us set rates that consider fairness and equity that align with your community values are sufficient to fund the utilities finances and make sure you stay financially viable and are able to provide your level of service to your customers. They're sufficient to cover your operations and maintenance costs, enable critical infrastructure investment to aid in maintaining your appropriate levels of service and to comply with evermore stringent regulatory requirements and align with industry best practices and compliance with state law. There are five main steps in conducting a rate study. First, we start with a rate setting framework like tonight's discussion, where we go over goals and policies, pricing objectives, you know, discuss all possible alternative rate structures. And then we move into our financial plan, where we look out five to 10 years, modeling what your annual O&M and capital costs would be your reserve targets, look at, you know, ways to finance capital improvement projects and develop a couple of different scenarios for consideration. Once we have that financial plan developed, we move into doing the cost of service and rate design. So the cost of service is where we allocate those costs out. So we split between fixed and variable cost recovery. We split between particular customer classes, etc. So that's kind of the the meat of the rate development. And then we move into rate adoption where all the methodology is documented. And we move into the rate adoption process with the notification, the property 18 notifications to customers and the public hearing. So in a nutshell, the financial plan looks at the revenues that you have coming into the enterprise, which are mostly your rate based revenues. And those go towards paying your employees salaries and benefits, debt service and other costs, purchase water, if we're looking at a water utility, operations and maintenance, capital projects and maintaining your reserves. And so we look at a status quo case and look at what is the funding gap, what's coming in under your current existing revenue structure and rates versus what the projected needs are out in the future. And once we have developed a revenue, a revenue adjustments to to cover that funding gap, we then move on to the cost of service. So basically the cost of service takes those revenue requirements that we've developed in the financial plan and says, how do we split those up? How do we split those between fixed charges and variable charges that you see on your bill? And do we want to break those out and allocate them to customers based on the different loads and characteristics that those customers place on your system? And we do this by following best practices and industry guidelines. Those come from the American Water Works Association for the Waterside and the Water Environment Federation on the wastewater side. So I mentioned fixed costs. So when we do our cost of service, we can push costs in the fixed and we can put them into variable. So costs that are often included in the fixed charge that you'll see on your water bill are things like customer service, billing and collection, processing and mailing bills, things related to your meter. So meter reading, meter shop, maintenance repair, etc. And then we also can include system capacity because you need to size your system to meet your demands regardless of whether, you know, how much flow is actually the same going through a pipeline and or you need to have that storage take there so that you have the demand, you have the resource available when you have a peak demand. So we can move those costs and include those into fixed cost recovery. The other part of the bill is the volumetric. So anything that's not in the fixed charge gets captured under the volumetric rate and that can be in the form of a single uniform rate for every class, which is what the district currently has. You could look at uniform rates by customer class, you could have a mix of tiered rates for one class and uniform rates for another. So there's there's some very there's some options there and how you recover the volumetric charges. If you want to point out that if we do look at tiered rates, that the cost to serve those customers in the tier, that's what the basis is for those tiers rate. It's not an arbitrary setting. There is, you know, there's calculations and math and justification for what costs are going into that tier and the and the characteristics and the use that that those tiers place on your system. So when we look at tiered rates or even customer class rates, we'll often look at different components such as supply, delivery, or picking, because that's where we see the differences between the customer classes between different tiers. And then those tiers can be set on a different on a variety of basis. It could be, you know, maybe your water supply cost or the peaking that we see on the system, etc. So there's there's different methodologies available there. And then lastly, with that cost of service, between just looking at fixed and variable, you know, why would you potentially look at doing customer class rates? Well, these are recognizing that different types of customers generate different costs because of their use characteristics. And each customer group must pay their fair share and can't be required to pay the cost incurred by another group. So for example, residential can't be required to pay more so that customer commercial customers can pay less and vice versa. So now let's just step through a couple of great structures for you. So the simplest one is the flat rate. So this is like your dollar per month based on your meter size, you pay the same thing every month, doesn't matter how much you use. Super simple, super easy to understand, really great for revenue stability for the district. But it's not particularly equitable. It doesn't provide any sort of conservation signal. And it's not really affordable for essential use customers. So the next thing is to add in a uniform rate. So which is the structure that you guys currently have the flat rate plus the uniform rate. And this continues, you get continuous revenue stability on this depending on what your makes of, you know, the fixed versus variable portion of your bill. So administratively easy to administer and pretty easy to understand. And it does provide a little bit of a conservation signal because as you use more water, your bill will go up, whereas under the flat rate case, it doesn't matter how much water you use. So it does have that benefit. Another option that's out there is the seasonal rate. So that says during your off peak periods, you'll have a lower cost charge for the variable charge, but then during your peaking months, you would have a higher charge. You get a pricing signal going to your customers that say, you know, if we're going to be watering your lawn or your garden or whatever, it's going to cost you a little bit more to do that. And you do get a little bit less revenue stability here because you have the variation and, you know, you don't know how much, you know, dimming out is going to vary or change between the off peak and the peak months. And then the other structure is an inclining tiered rate. So in this one, you know, everybody steps through the first tier. So if you use say five units of water on this, on this graph, you would be paying $1 for each of those units. But if you were using 15 units of water, your first 10 units would be priced at $1 per unit. And those last, those next five units of water would be priced at, you know, that's about $1.75 or so on this graph. So everyone steps through that first tier. And then as you use more water, you move into the next tier and the next tier. So this one house promote conservation. It's still fairly easy to understand, but it can potentially target large users who just, they're just a large entity. So they're just going to, they're going to be using a lot of water, you know, or maybe they're a household with a lot of people and in a multi-generational household or something like that. So those are things to consider with the water rate structures. And then pricing and objectives. There's several pricing objectives to consider when we do a rate study and some of them kind of compete. For example, revenue stability. So if you have, you know, a higher fixed charge, you have more revenue stability, but it doesn't necessarily send as strong a conservation signal. So if you want, you know, revenue stability and conservation are both really high or strong pricing objectives, then we kind of really have to kind of be very artful in what gets put into fixed versus variable to try to, to try to balance those two out. And then there's other ones like defensibility and financial sustainability, which were pretty much given. Like obviously it needs to be defensible. And you also want make sure that the rates are designed such that you can continue staying in operation and providing the level of service that your customers have come to expect. So we've had some, you know, chats with with the district staff and folks and, you know, what we've been kind of hearing and seeing is that, you know, revenue stability and affordability and conservation kind of are sort of bubbling to the top. And that's one of the things we kind of want to hear from you guys today is kind of where we kind of fall out and, you know, your pricing objectives and, and, and what's of, you know, importance to you. Another piece of information to consider is a survey of 325 California entities were looking just at the residential water rate schedules. The majority of residential water rates structures consist of a fixed charge plus a tiered rate. The next most common is the structure that you guys have, which is a fixed charge plus a uniform rate. And then there's a smattering of those other types. And then we wanted to kind of show an anticipated schedule. Dates aren't, aren't firmly locked in, but just kind of give you an idea of where we're going with this. Well, you know, as we move through getting the financial plans done, having a presentation on those and getting input on, you know, which financial plan to move forward with the district, you know, hosting a public outreach workshop, we might, you know, be discussing why, you know, what's, what level of service is the district providing, you know, why, you know, do we need the revenue adjustments, discuss, you know, rate alternatives, etc. And then a rate authorization, a meeting, relook it and hopefully finalize the rates there. And then, you know, the Prop 2018 notice being mailed out with a, you know, public hearing scheduled for, you know, January with rates effective of February 1st. And that is, you know, as, as part of that work, you know, we will be, you know, developing as a, the financial plan cost of service and rate study, we're going to develop recommended water and wastewater rates for a five-year period covering fiscal year 2024 through fiscal year 2028. And our deliverables, and we're going to be developing two options for alternative water rate structures and our deliverables will be a final report documenting the rate study and then the rate model and Excel. So thank you for your, your time and listening to that. Yeah, with that, we'll turn it back to your board president and see if there's any board discussion that you'd like from us. Thank you, Melissa. Yes, there will be some board discussion. So we will begin that this evening. Thanks. I'd like to hear from the budget finance committee, since I believe that you've had some discussions with Reptelus already. Thank you for that, Teresa. That was very helpful. As we've discussed before, I think we all feel very strongly that outreach to our rate payers is important. And in our discussions in the budget and finance committee and how to conduct the rate study, we recognize that there might be a need for more than one public workshop, including a couple that would be run by staff and wouldn't necessarily involve Reptelus being there directly. We want to get feedback from the public on various approaches that we might take before things are set in concrete. But I think it's understandable that we're only going to get public response if they have something to respond to. In other words, we don't have a lot of members of the public here tonight because we're not actually talking about the specifics. And I think that's understandable. So, so that our staff and the board can start planning these outreach efforts, when do you estimate that we'll have some kind of information that we can begin to provide alternative scenarios? For example, fixed versus volumetric charges, what the ratios would be here, what type of tiered rates, what we might be considering regarding special rates for schools, mobile home parks, etc. And whether they, to address the current huge capital expenditure student CZU fire and this last winter season storms solely through increases in rates in the next five years versus spreading these costs out over a longer period of time by debt, or as Mr. Holloway suggested, potentially going after a bond. I'm not talking about having exact numbers, but having some kind of indication or some information that we can present to the public. Can you give us a feeling for that? Well, I mean, we're looking at the August, September timeframe for having financial plans that would be ready to be disseminated to the district board and the public. Well, obviously, we have staff webinars during that time as we're developing that to go over inputs and assumptions and to refine the process. We come up with some good financial plans for your consideration. Okay, so you're saying that those financial plans, which are largely going to control what kind of rates we might end up considering will hopefully be completed about when the August, August, September timeframe. Okay. Thanks, Jeff. I think you covered most of what I was interested in. I just want to make sure that we have sufficient focus on the capital requirements that we have and the issues, special issues that are somewhat bound by time constraints related to the fire recovery and other disaster recovery that we have. We have some limitations on how long our friends at FEMA will continue to pay for those things. They put deadlines on that. And so I want to make sure that we look at those not just as ordinary expenses, but some of them have rather specific deadlines that will be coming up. And so we need to make sure that that's factored into the analysis. I didn't see a question there, so I don't know. No, I didn't have a question. Okay. So that was a statement. Okay, sorry. Okay. Jamie. Yeah. A couple of things. So I just want to follow up on Gail's question. You were saying that you think a draft proposal with financials would be available in the August, September timeframe. I noticed that you had an October public outreach workshop, which I'm assuming you were intending would be, and correct me if I'm wrong, but I was assuming that you were intending that would be the first time that we present the outline of your, you know, the various proposals that you'll be putting forward to us to the public, or will we see those in August, September as a board before they are presented at that public outreach meeting? Yes. Yes, for sure. And we have budget and finance will see those before as well. And I would hope that there might be some back and forth with budget and finance on some of these well before we go to the public. So the idea would be that the first, that we would then sign off on, you know, several approaches that we would take to the public for consideration, receive feedback from them on, and then at the, I guess I'm confused about what we're authorizing when we do the rate authorization. Is it okay if I jump in here? Sure. So I want to be really clear. The first step is that financial plan. That's how much revenue you need to accomplish what you're going to accomplish. And then maybe once the board's seen that, that might be a really interesting way to get input or to at least explain to your customer base what it is that you're setting out to do and why you need that revenue. So we need to have an okay on that financial plan before we then start going into cost of service, which as Theresa explained is, we take how much you need, and then we decide and determine and analyze where that is going to be coming from. What is it cost to serve certain parts of your customer base, for example. And so that's kind of the second big step. Once we know those costs, we can then determine actual rate structures. So the knowledge of what rate structure we have and the exact rate you're going to charge is kind of the last part of that. And my understanding and talking to your staff is you do want to bring your customers along with you on that journey as you're learning about that, and you want to get input from them as you're moving along. So the one workshop that you did see on that screen is the workshop we are under contract to be at is kind of a resource to you at that workshop. And that's why you saw that if the district chooses to do additional input sessions with it with its customers, however it works best for you all to get what you need to make your decisions as a board. Got it. Yeah, no, and I guess I don't, but what is the rate authorization decision that is on that was on your list of deliverables? We're not actually approving rates, or I mean, making a final decision until January, right? So that's correct. The rate authorization is this board telling staff this is the this is the this is what we want to put out on our proposition 218 to the public. We're informing customers, this is what we are intending to do. And then the proposition 218 notices go out so everybody receives one of those. And then you have a public hearing and then you actually vote. So that's the case. I think that that October date to even I mean, if we want to do more public outreach, that may be too soon to be doing that rate authorization between the time that we get their proposals in September, you know, and have those workshops. Point taken. Yes. Yes. I don't I don't believe that that schedule that they're putting in front of us is cast in stone that those are the dates. I think the district can be flexible about this. If we see needs down the line, it says put a put a stop or put a hold on this. Melissa, is that something that that's correct? It was an anticipated schedule. We were asked to put one together of what it would take to get you to a place where you had rates implemented at a certain date. But it's certainly whatever you want to make it, you can make it. Okay. Thank you that I will reserve my future comments for another meeting. Okay. All right. Yeah, I have a number of questions. But before I go there, I want to want to say thanks for bringing up the issue about when you can get the share of mind of your community. Because after having been through a couple of these in the past, for this district, not as a board member, but as a community member, you don't get the community share of mind until actually the prop 218 notice goes up. And at that point in time, it's way too late. If you have a 45 day process that isn't going to be stopped, isn't going to be tweaked if you get a lot of feedback from the community. The only time I've seen that happen is in 2013, when there was a five year rate increase proposed, the community went completely bananas. And the board at the meeting to approve the rates cut it back to three years. And I mean, when I say bananas, I mean bananas, it was really bad because it was all around the Taj Mahal and the community center combination and people were just nuts over that. We don't have that today. That's good news. But it really drove home the point for me that if you aren't doing these workshops, after you have something specific to provide to the community, you're not going to get anything with any value and you're not going to get their share of mind. So let's learn from those sort of more recent examples and not do that again. So because I mean, the meetings, the 2017 meeting was also interesting too, Rick. You probably remember that. When people come out at these things, there's a lot of emotion that comes out to it as well. I mean, this isn't necessarily a journey in the sense that it's a pleasant thing that we typically use the word journey about. This is a process by which people money are going to be extracted from their pocket. And so it's not always a pleasant experience when you get into these into these meetings. I did have a couple of questions about structures and models and that sort of thing. It doesn't look based on the presentation, it doesn't appear that there's any focus on unbundling the rates relative to determining specifically where the money's going to go. So for example, if you just have a big pot of money, there's no guarantee that any of it is necessarily going to go to any particular place. In both 2013 and 2017, the marketing material that was sent to the community said that these rate increases were needed for capital expenditures. There was really no mention about operating expenses. Two thirds of the increased revenue from those two rate increases went to operating expenses, not to capital. And really it wasn't until I guess the 2018-2019 time frame that there was any focus on getting capital going. And by that time, the increases in operating expenses had pretty much chewed up the anticipated 65% rate increase from that time because the expenses were skyrocketed just before the rate increase took effect. So in order to kind of get around that situation, is there any way to be able to say, okay, out of this money that we're going to charge, this amount of money is specifically for and cannot be used for anything other than capital expenditures? Melissa? I was going to actually ask if Kendra would like to take that one first. I'm not sure how you intend to handle that exactly. So you're saying designate, kind of like the fire, not to use the fire recovery surcharge, but kind of like the fire recovery surcharges designated for fire recovery efforts. You're saying like if we had a rate that was for capital expenses to designate it to like a capital expenditure fund, kind of like that? Yeah, I mean if you have a let's say $100 bill, which is kind of where we're at right now for our average bill, you know, let's say I'm just picking a number out of my hat. This isn't the real number. $30 goes specifically to capital cannot be used in operating expenses at all, period. One of the things I'm concerned about, particularly over the last two rate increases, is that we've told the community we're going to do X and we've done mostly Y with the money. And in order to really be completely transparent and upfront with the community in addition to needing that budget to match the term of the rate increase that's committed, that may be another way to do it. But if we don't want to do that, we could always say yeah, X amount of money out of your bill, percentage wise, fixed, whatever we come up with, goes specifically to capital, or specifically to capital and maintenance. Because again, we still have all these steel tanks that aren't maintained and well past their maintenance life. Something other than just saying, here's a pot of money, trust us. So can I just follow on from that? Because for example, you did the rate study for Santa Cruz, and Santa Cruz actually does have a part of its bill where it is specified that there's a certain fraction of it that is for capital expenditures. And looking at, for example, Marin County, where I grew up, they also have something like that. They also have one for watershed maintenance, because like us, they have a huge forest that they have to deal with. So the question is, is do you know whether, you know, that that's a way of communicating with the public where you think the money should go, which I think is a great idea. So I think what Bob's trying to get at is, do you know whether in those cases, they also are tied to requirements or things that the board did that said, we actually have to spend the money this way. And, you know, maybe this is a unique, maybe you don't have to follow up on this, that's not your job. But if you happen to know, given that there are places that do make these kinds of splitting out of the bills, you know, go ahead. It is, it is done. That is, that is a, that is a way that so folks do that, and they do that for exactly the reason you're talking about to make it very transparent. Some utilities will do that for a certain period of time, maybe they have a specific project and they actually name the fee so that it goes to that project and you see it on your bill and it's for transparency purposes. It does set up on the staff side of things, the administration side of things. You want to be really careful with that, right? Because as you're, as you're going through your regular audits and making sure that funding is going to the right place, there's just less flexibility with that type of thing. But that's, that's possible. It would be a restricted fund. We'd want to make sure you're, you've got advice from your legal counsel on that and what you can and can't do with that. So staff is really clear on that and probably would be included in the recording as well. But that's a possibility. I mean, I think there's this notion out there that there are people in the community that don't want any rate increases at all. I'm sure there's a handful of people like that. I think really what people are communicating is the level of trust that they have in the district to take a pot of money and actually use it in the way that it needs to be used is what's lacking. And, you know, unfortunately, over the last two rate increases, we haven't as a community, as a board, as a as a district haven't done a great job of that. The next thing I wanted to ask about was this the financial plan that you're putting together. Is that financial plan or could that financial plan be the basis of a committed five year budget for the district that would also again communicate to the to our community exactly where the money's going and why? Teresa, do you want to weigh in on that? I mean, I mean, ideally, that's the two work together, right? That, you know, we're working from the initial budget and we're doing our best along with the district staff to estimate what we think those costs will be over the next five years or so. You know, and then, you know, then then it's kind of on the district side to, you know, say, you know, how, how, you know, is there, you know, kind of a, you know, a plan to bring budgets in similar to what was in the finance, what gets developed through the financial plan and rate study process, you know, or where does, you know, just something have to change because circumstances change from what was, you know, presumed in the model. I mean, I've had other, you know, one other community like really sort of focus, focus on that and say we need to drive our budgeting process to, you know, be more in line with the financial plan because we went through the process to do that. But yeah, I mean, I, I mean, we're, yeah, I don't know what I, I actually don't know what else to say about that. That's fine. I mean, it at least provides a basis for things. I mean, in the last five year rate increase, the operating expenses were projected to grow, I think under 4%. They actually came in closer to five and a half to 6%. It doesn't sound like a lot, but when you deal with compounding over a long period of time, it's actually a fair amount of money. And so that's, that's something else I'm trying to get at. One more question. Excuse me before I yield the floor has to do with estimating costs. So in the 2017 time period, we had a more or less a fixed cost of or fixed increase for staffing costs, which is a majority of the operating expenses that was, was, was pretty much the same year to year. Where this board appears to be going with respect to new contract, it could potentially fluctuate quite a bit every year, depending on the inflation rate underlying, you know, CPI. And, you know, depending on where you think that's going to go, it's anywhere from two to 10%, probably unless we get into a serious inflationary mode. But what have you seen districts do from a rate point of view to be able to adjust to that? Because at the end of the day, you still need to have X amount of margin, that is revenue less expenses, operating expenses or non operating expenses in order to apply that money to the capital expenditures, whether you're doing that through cash, current cash or a debt like a loan, setting aside what Mr. Holloway was talking about with respect to a bond, which I think is worthy of a discussion, but not part of my question. Let me start and I'll ask Theresa if she has anything to add. I think a lot of your questions are if we had better crystal balls, this would, this would be much easier. And it is, it is difficult for staff to kind of look out five years and imagine what's going to happen with their staffing, imagine what type of things might happen in the district. You've had a number of terrible weather events that have, that have impacted you and impacted operations. And so that, that's just a challenge. And so we do rely on staff to give us their best estimate based upon kind of what they've seen in the past, but then also looking forward. That's actually not what I'm asking. I recognize that you cannot forecast with any accuracy around particularly inflation. That's a macroeconomic thing that we have no control over. What I'm asking is whether or not there are any examples of districts that have come up with rate structures to explicitly address that in order so that on a year to year basis, they aren't losing margin necessary to be able to continue their capital improvement program. That specifically is not something I have seen. Theresa, have you seen that? I'm not sure if I've seen in California where there's kind of a minimum cost of living adjustment that's built. And I might need to canvas our folks to see if they've seen that and what the, what the particular language read. Great. Thank you. I do have some other questions, but I want to let other folks go. Thanks. You talked on one of the slides about the examples of pricing objectives. And we saw eight different ones there. One that I didn't see starred was financial stability. Did that come up in your discussions with either the staff or budget finance committee? Or did you only have three stars to be able to put on there because you can't pick everything that was on that chart? Sustainability. I think it's the one that you wrote. I'm sorry. Okay. Yes. I had mentioned that like defensibility and financial sustainability are two sort of givens, right? We have to make sure that the rates are defensible and we need to make sure that we develop something that allows you to continue doing your business and providing the level of service that your customers have come to expect. So those ones are just automatic givens. So the stars were like, what did we hear? What have we been hearing that says that what do we need to think about in addition to those two? Oh, okay. I didn't know that that was a given. Me too. That made me feel better to hear that. Yes. That's not the impression that I know. To be fair, they actually did mention. Okay. Sorry. I missed it. Okay. You mentioned the different rate structures. And can you bring to us some different, take, you know, three different customers, give us some examples of tiered billing structure for that individual across either a three or six month period. And the same under our current structure so that for the more basic presentation, we could see how that might change, not in the bigger picture that you are presenting to us on. But on my bill, how is that going to? You're talking about billing, what we call bill impacts. And so when we develop the rate structure alternatives, that's exactly what we'll do. We'll show how that impacts specific customers with their actual bill. And how that works throughout the year. And we would also show for different amounts of water usage. Okay. So people can kind of identify what that might mean to their household budget. Right. So but not only the rest of the rate fairs, but the board can also see how does that influence. Okay. Do you do any amount of comparative aspects to other districts, other areas as part of what you're bringing back to us? Yes. That's part of our scope of work is to do a comparison to other districts. In fact, a couple of your tables have had us do their rate studies and you all were one of the comparative districts. Okay. All right. And how far out do you go or what kind of bounds do you put on that? Because I'm thinking that although we might not be comparative from a district size to some of the larger ones in the Silicon Valley area, we're competing with them for staff. And does that influence then rates? What kind of districts do you go out to compare? I guess. We generally will ask your staff what they see as their peer utilities in the area. Most utilities will choose those that are close by that their customers might be aware of. You know, most folks do not select where they're going to live or place a business based upon water rates. I won't say all people, but that's usually unusual. Right. So that's typically how we do it. So we would just ask your staff if there's something, you know, the board that's interested in specifically would just let your staff know and we can do that. Hey, Mark, it's round up the usual suspects. I know it doesn't have to be. That's normally what happens. Okay. All right. Those are the questions that I have. Sure. I actually have another question. I think Bob did too. Just a couple more. Just a couple more and then we can go out. Okay. All right. Well, then let's go back around the table again. I just like to get some more information on tiered rates and your slide sort of depicted the customer classes being quite distinct, for example, residential versus small businesses versus industrial. But I think I know that tiered rates are used in other districts that are much more like us where most of the customers are residential. And so how do you cost out the various tiers in that circumstance? And, you know, I mean, just from first principles, you could say, well, there's different among residential, maybe some are at different elevations. And so, you know, that costs a different amount to provide, or maybe some get their water from wells. And that costs us more money to deliver because we have to pump it out of the ground. I kind of suspect that at least my feeling is there's not going to be a lot of enthusiasm for that kind of picking on individuals. I think we're all kind of like D'Artagnan and, you know, three Musketeers, you know, one for all, all for one kind of thing. And we're all together on this. And so I, so, but on the other hand, I can see that when you're looking at the incremental cost of that last bit of water, when you have a large consumer, that person is imposing costs on the whole district by requiring that we have more capacity, more storage, and also usually ends up meaning that we have to pump more groundwater, especially in the summer to supply that demand, which is more expensive because of the power, and also runs us a fell eventually with groundwater rules and our requirements for meeting Santa Margarita sort of guidelines, which could potentially put us in a situation where we have to undertake expensive projects to raise groundwater levels. So it's not so much that the water actually costs more to take it to those big users, but their effect on the incremental, that last little bit of water is significant. So how do you cost that out? Well, you've done a great job of explaining a lot of that. So, well done. Part of this demand analysis, right? So, so what you just said is a demand analysis and also your pricing objectives. So if for the district, conservation is vitally important and you're really trying to drive usage down, you might have a different tier heights than a district that is less concerned with that. And so when we look at demand, what we typically find in districts is there's some natural breaks in usage patterns among residential users. And that's where we start. And then we start thinking about, well, what do we want to accomplish with the rate structure? And we want to make sure that we kind of refine that based upon that. Teresa, do you have anything to add to that? Yeah. And that's, that's where, you know, like the peaking factors, we start looking at peaking factors by class and by tier, if we're doing tiers for say residential. And so that helps us allocate class. We allocate costs to peaking. They get allocated to supply base. There's a couple different categories they get allocated to. And then we can subdivide those costs to the different tiers and customer classes based on how much peaking demand they put on the system. So we, we can dive down into these, you know, different buckets, if you will, of cost and then allocate them based on, you know, user characteristics. Thank you. That's all I have. Jeff. Okay. So going back to a subject that we talked about earlier a bit on the outreach to customer groups and when we go out and talk to them about what we're doing, it occurs to me that first of all, we should identify a number of specific subgroups of customers within our communities and hold special outreach sessions for those particular subgroups, rather than just hold a series of wide open public meetings at the library type of thing. For example, the school. Exactly. We would want to talk to the schools, bring in the mobile home parks for one. So basically segment our customer base somewhat and also use that as a means of communicating messages that are specific to those groups. In order to facilitate this, I would like to suggest, I don't think this needs to be a motion, but I would like to suggest that the budget and finance committee work with staff and maybe with our public relations agency to break up or to come up with a schedule of groups and start the process of organizing a series of meetings. Can I suggest maybe that that would go to the committee that's actually specifically formed to communicate? Well, that's fine. Yes. So maybe we do the message and they do the how are we should work together. But there's an admin committee who's at outreach committee. Okay. So that was my thought there. All right. Jamie, anything else? Well, I mean, I would just add to that that I agree it's the admin committee and in the contracts that we have with Miller Maxfield, we included funding for a potential workshop with the understanding that we would probably need some support with this kind of thing when we got to doing public outreach around the rate study. So what I would ask staff to do is bring in Miller Maxfield at some point when appropriate to help support the planning of these workshops and outreach activities and get them involved in organizing these customer segmented meetings as an example. They can do those phone calls to try and get people into those meetings. They can find facilities, places to have them if we need to, you know, find some places in the community to have these meetings. And they can do the outreach, you know, they can publicize them as necessary as well. One or two workshops are probably possible. You're looking to have staff go out to 20 groups, different groups. I didn't hear 20 groups. Well, we have a lot of different groups. I didn't I didn't I didn't hear 20 that staff is not going to have that kind of time to spend going out. I mean, I think that we should coordinate that some of these people come to us and have workshops. We're not going to be able to have multiple workshops for all these groups. Just staff doesn't have that time. No, but we can prioritize some of that. We can we can have a I would say a couple yes, but not all these different groups. I mean, the board can direct I can take it right now. Why don't why don't we let the admin committee discuss that in the subsequent committee meeting with you and see if you can come up with it. Okay, here's the X number that we could reasonably target. And that's a large enough group that you're not going to spend staff resources to go out and talk to two people and end up talking to two people out there. If that's the case, you should be you should be here. Mark, so could we agendize this for the August? You hear that not staff. Those people should come before meetings or committee meetings and not come to staff because you're the ones that are going to make the decisions on how to raise rates not staff. We can recommend. I think board members board members should be in attendance to members should be in attendance or should participate. I mean, I think it's a great idea. Great idea to agendize. Let's do that. For the admin committee meeting in August. That makes sense. You must have been in marketing. You do market segmentation. Yes, I do. Okay. Another question. I have several actually questions and comments on the conservation side. I'm mindful that we're about 20% under the state goal for indoor water usage. Indoor water usage, not not total water usage, indoor water usage. I doubt that it varies substantially in the summertime. My point though is that I am deeply concerned about continuing to beat on the customers regarding conservation. Doesn't mean I want us to lose ground in where we are. But I think we can pretty much say we got a status quo here on continuing to beat people over the head unless we're going to start providing specific targets which we've never done. And this also gets into question about where are we with the drought declaration and that sort of thing because the drought declaration process we went through the last time wasn't completely transparent to the community. I'm skeptical of comparisons to other districts simply because there's a ratcheting effect that goes on when you do that. And I think ultimately if we can bring some people in that are really like us, maybe not necessarily the usual suspects, maybe that will give us some better information. Otherwise I think we kind of know what that is all about. For me it's not so much financial sustainability, it's district sustainability. And the financial part of it is the way that the district achieves sustainability. As a district we are not sustainable at this point in time. We are not sustainable in maintenance, we're not sustainable on capital. Our current operating margin is about three million. We need somewhere between five and six if we are really going to be doing and executing on the capital improvement program. So if we're going to be really upfront about sustainability we need to do that. With respect to that the conversation we had at the last board, maybe not the last board meeting the one before, about reserves, the basis for the calculation on the reserves for capital was based on a 75 million dollar number. I think it was. If you read the policy it's not what's in the plan for the next few years, it's the total capital cost. And I have asked for an agenda item on this if we need to discuss that further to make sure that we're all on the same page. Because using a 75 million dollar number when they start doing the analysis is going to give a completely skewed view of what our actual capital requirements are. So if we need to have an agenda item on that I would like to request that we do so. I think you saw that. Yes. Last question on your model. I believe one of the things that was in your proposal was the fact that you all have a, I think it's a really slick model for doing these financial plans. And that ultimately I think one of the outcomes of this is that that model would be available to Kendra and the finance team for their use to help in budgeting so we can make that process faster, better, provide more analytics metrics, that sort of thing about what our plans are. Is that accessibility only for this period of time that you're doing the study or is that a long term forever we get access to it whenever we want? It's yours. We'll deliver it to you. It's Excel based. There's a little bit of training that we can do with Kendra and her team and it's all yours. You own it. Excellent. And then, sorry, one more thing on the bond. I do think we need to have a conversation about that at some point during this process. We are undergoing a very dramatic demographic transition in our Valley and the people that are buying their houses now are not buying them at, you know, a quarter million dollars or 200,000, 300 like we did when we bought in 30 years ago. So the upside there, if that's a path we want to go down in conjunction with this might be something to take a look at, particularly if we get really transparent and firm in our operating budgets that we can present to the community. Melissa, is bonding something that you could cover further for us at another meeting? I'm going to pass that to Teresa and see. I don't think that's... Like, I mean in our rate models, if, you know, we kind of look at we look at kind of where the revenue adjustments are saying without doing any sort of bonds or SRF loans or whatever. And then if we're seeing something that, you know, it looks like there's, you know, maybe issuing a bond or something, you know, we'll put that, we'll put that in, but it's kind of, you know, we're not acting as your financial advisors, but we put in, we can, we certainly can build that into the model and have a placeholder and presumed, you know, terms and conditions for that and that and then that becomes part of like the financial plan, but, you know, and, you know, but, you know, as time gets closer to that, then you would, you know, work with your financial advisor to... I think that's perfect. Yeah, we don't recommend specifics, but we can test it for you and you can kind of get a sense of what it does. No, that's great. We want to get the recommendations from our bankers. Yeah, of course, of course. Yeah. Okay. I think, I think the board is done with questions. Rick, you wanted to interject before I got to the public. Right, just established time limits. Can I ask a favor though? This is a very meaty conversation. I would like to see us not just cut folks off if they have, if they're making good points and it's really on point. They're not repeating themselves. I'd like to see us get as much input in this as possible at every meeting we have on rates. Okay. Thank you for that. Rick, it's your call. Okay. I would like to hear from the public. I would like to keep it at three minutes. As we have in the policy, if there is substantial discussion or substantial input from a public member that the board feels necessary to follow up on with discussion, we can certainly ask questions. Come back to somebody. So with that, I'd like to open it up to the public to see what comments we have. And excuse me, Mr. Holloway. Do we have the timer up on screen, Mr. Holloway? We will have the timer asking about before. I have spoken to Eric about the timer and he should have that. I think I'm correct. You were looking for it to know, well, how much time? I shouldn't need the time you're on my phone to say, hey, it's better if the person can see what's going on. Yes, I heard. And not just to cut off. Yes. I was aware that Raff tell us to the city of San Cruz, one apartment raised in a couple of years ago. So I took a look at that. And it looks pretty good to me, actually. San Cruz has these elevation charges. We've never done that here. In fact, I've been a customer for more than 40 years. And this district, to my recollection, has never treated one neighborhood different than another neighborhood. There was never anything that said, if you get in the water from wells, we're going to charge you a different rate than if you get your water from streams. Or if your house is full disclosure, my house is about 500 feet of elevation higher than where we are right now. So this kind of sticks in my craw a little bit, the idea that we might do an elevation surcharge like the city of San Cruz. But when I looked at their rate study, all of the elevation charges were less than one dollar. It looked like the top one was going to go over a dollar by the end of the five years. But they were all currently they're all less than one dollar. If something's less than one dollar, I'd say forget about it. If that's all it is. Because I think it really sticks in my craw that there's a lot of history here. And if you're going to single out, I mean, when I hear the idea that you might charge more for somebody at a certain elevation, I started thinking about wells and how deep are the wells? Because I think all of our wells are probably deeper than 500. So anybody that's getting their water from wells is also the water is being elevated to get up to ground level. I couldn't. One of the things about the city of San Cruz is they don't get any property taxes, but we do. And I couldn't tell from the discussion that the consultant is aware that we do get property tax. And that means to me that means that we don't need as much fixed revenue from water rates as San Cruz does, because we already have some fixed revenue from property taxes. Another thing is I looked at the request for proposals and it says that you want to get you want the consultant to do something. You want them to study the low income program. And my understanding of the low income program is that it is completely funded by the property taxes that we've got because that's not cost base. We've got some discretionary income that we can apply to a good purpose without having to justify it based on cost. So it's important that the consultant is aware of how much property taxes we've paid. I'm out of time, but I have more to say. Okay, this is exactly why I asked. Anybody else from the public? Hello, I'm Jim Mosier. I've been here for a couple of decades. And I've been very encouraged by the discussion tonight. A lot of my comments are just to be affirming much of what's already been said. I think we should be moving to tiered rates. I absolutely agree with Director Maywood and Mr. Holloway that we should be treating neighborhoods the same. I think the tiered rates should be based on use. We're heavy users. I pay more per gallon. I think it's completely justified. Those were the kinds of rates we had here and in most of California. And so there was a public court decision, I believe it was in 2016 and 2017 that basically threw them all out. And I was very encouraged that Ref Tell us is aware of the kinds of strategies to be used to be in compliance with that appellate case. And many districts, including Santa Cruz and many around us, now have those tiered rates based on volume of use. And I agree. We really need to take a look at the schools as special use. And I'm glad that the board appears to be ready to look at those factors. I think for me, a second thing that's very, very important is that we address the needs of low income and fixed income taxpayers the extent we can. The low income rate assistance program is one strategy. I had seen when I examined Ref Tell us's presentations or the, I guess it was the staff presentations in Santa Cruz that they had stated that Ref Tell us was also assisting them in looking at how to help those folks who are low income or fixed income. Because we want to treat out water as a fundamental human right. Most importantly for me, and I won't have time to say everything I was hoping to say, but it's the rate payer engagement. I just think this is absolutely critical. I totally agree with Director Fultz on this. We need to get options out to folks so they understand what the board is looking at so you can have input we need to have buy-in. And that wasn't done the last time. And I think it was a big mistake and it created a lot of distrust in the community. So I'm hoping that the board and staff can do what they can for this. And I certainly would like to be involved in any way I can to help. And finally, since my time's almost up, I'll just say that with this issue of operating budget versus capital budget, I would hope that when we talk about this, that we realize that these two buckets actually interact substantially. I actually learned this thinking about the engineering department and the environmental department, knowing that they spend the substantial amount of time on capital projects and construction projects. Yeah, that's all treated as operating. Yet it's going to capital. When you have a bunch of capital projects, you're going to raise operating and it's not going to show up. Thank you for your comments, Mr. President. I also have more to say. I really think we need to revisit this. I would encourage members of the public that have significant additional to say or you want to express, please send something in writing to us with your thoughts in it. I look at all of the public comments that we get. At future meetings, it's on the agenda. We'll see it then. And if board members see that there's points there, we'll deal with that. This is exactly the transparency issue here. We really need to move away from that. People speaking in public actually generates more interest on the part of the community rather than just putting in a writing where they may or may not see it if it's buried in the agenda somewhere. We keep relying on the notion that, well, if we just put it in the agenda, they'll see it. We need to let the community speak on this and speak as long as they're making good points. Thank you, Bob. I'm looking at the procedures that we've set forth. The procedure allows you to make exceptions on your discretion. That's what I'd like to follow this evening. So I'd like to continue the meeting. I want to make it really clear that he has the discretion to make those changes. You are not doing so. That's correct. Okay. Okay. Additional comments? Yes. Thank you. Three parts. First of all, the up and down vote on property team for this issue of the rating increase. I didn't hear any specific date when that might happen. Could we have a date? I mean, is there a date that just wasn't mentioned? It was December 1st when it would go out. I'm concerned that voting would then be between the holiday period, and that's just a concern of mine, but I'll leave it at that. The second thing, benchmark, I believe strongly in benchmark, and I think it's been a lot of discussion about that. I'm just not sure we're concentrating on the right hand. We're talking a lot about the type of rates here, whatever. And I think I would like to see data if they have it from other districts, comparing what we do with the money. In other words, operating expense breakdown, capital outlay breakdown, outside consultant breakdown. In other words, how do we compare to other districts on how we're spending our money? I think that's where you're going to either win or lose rate payers, is how you're spending your money, not how you decide to collect. And the last comment is just on, has anybody on the board thought about the fact that we are in the process of hiring their district manager, and they're going to be saddled with this five-year rate increase after they come on board? I mean, is that a concern? I'm not saying it is a concern. I'm just saying, should that be something that should be discussed and at least addressed because, you know, I for one, always hated having to come into a position where it was a bit of a complete, you know, you've got to do this and your budget for the next three years. I yield the rest of the time. Okay. Thank you. I'd like to hear from anybody else participating remotely. See if there's any comments there. Do you see who's the attendees are? Yes, I can see. Okay. I see no other comments. Would you say you want a written comment? Would you like us to take our comments and write them down and send them to you? Not necessarily what you've said this evening. If there's more that you want to expand on, please. Yes. Rick, I have no questions. You want to continue with public comment? Okay. And you have a CEDM, so I'm going to raise your hand. Okay. Is she unmuted? She appears so. Okay. Cynthia? I just said that I would like to hear more from Jim Mosher and Bruce Holloway because I think they're making excellent comments. And we should hear from each of them again. Thank you. Okay. Thank you, Cynthia. I'd like to come back to the board as individuals and see if the board has any comments or thoughts based on what we've heard from the public here, based on specifics that they may have thrown out. Gail, anything? Bob? Yeah, I'll let them have my time for speaking because I think they're making great points and I'd like to hear more of them. I would only make one comment and that is that when you look at a study design or a list of things that we're looking at, you should not necessarily assume that that means that we're going to do that. It means that in something that we're looking at, I'm going to compare with other potential strategies also. So the fact that we may ask for some information on some does not necessarily mean that's the plan. Okay. I was just going to say in response to the comment about the, you know, recruitment for the general manager, I mean, there's a lot of things to think about as we go through the recruitment of the general manager, but I will say having worked in public agencies that do public rate increases for 20 years and incoming general manager will be so happy that they don't have to deal with this process because it's behind them. And the board said it's all super important. So I would like to hear further from Mr. Holloway and Mr. Mosher. So Bruce. All right. Thank you very much. Just a suggestion for graph tell us you had a slide about seasonal rates and there was a bullet point that said revenue instability. One of the things that what I would say is that we have seasonal usage patterns and that means that there's revenue instability to begin with and then the trouble with seasonal rates is that it exacerbates the revenue instability. So that's what I would say is the problem. It's not that it's exacerbating revenue instability. So it never seemed to me that seasonal rates would work very well. One thing that the consultant said a number of times that we're talking about sizing the system based on demand. And maybe that's true in San Jose or someplace like that. But my observation here, like in my neighborhood, I think the system is sized based on fighting a fire, based on fire protection. I'm one of the lucky people that has a six inch water main on my street. But we only have maybe 20 houses. So I'm not really a water professional, but in terms of delivering water to houses, people can wash their clothes and make dinner and take shower and so on. It might be that two inch water main would work on my street. And the only reason we have a six inch water main is to fight a fire. Same thing with the tank at the top of the hill. There's a standard, which Rick knows very well. I don't know what it is exactly, but it's more than 200,000 gallons to fight a structured fire. And so I'm pretty sure that the tank at the top of my hill is bigger than that. And we have 47 tanks. And most of them are probably sized to fight a fire. So the way I think of it is that many parts of the system are sized, not based on demand at all, but based on fire protection. Now, since I've looked at the Santa Cruz rate study, it looked like a typical residential customer might get a bill with five line items. One of them is called infrastructure recovery. One's called rate stabilization and a whole bunch of different things. I found that kind of confusing. If I got a bill, I pretty much want to know the mechanics and how it's calculated to have only different line items. There ought to be a way to get that information somehow. I don't know if it really needs to be on every single bill. And using the example that director made of a watershed management fee, if I saw a watershed management fee on my water bill, I'd be thinking, where did this come from? Is this from Cal Fire? Is this some new mandate by the state? Why is this broken out separately? What is that mean? Please finish. Go ahead. Okay. Thank you. Jim Mosier again from Felton. Just very briefly, I wanted to say that in talking about the operating capital budgets, just how I think it's important that if we're going to use those buckets, that there be some estimate of how capital improvements are repaired and replacing broken things and responding to these disasters. What impact they have on the operating budget? Because otherwise it's going to be confusion. In terms of comparative race, I agree. I can't remember. I think director Volk said this. I think it would be good to be comparing with other districts that are more like us than Saisana Cruz, Scotts Valley, where they're compact and they don't have, they don't deal with watershed issues that we have or the extensive pumping may have to do because the housing infrastructure is so scattered. And I also just wanted to say that it is I think really important when we go out to the public that you give them an opportunity to respond to what you're considering. What are the options you're considering so that the people know what to respond to specifically? And I saw that they were, I watched a lot of the video that was done in Marin County when they were doing race study and they did exactly that. And I thought it was very effective because it brings people in and makes them feel like they're part of the discussion. Number one, the number two, you can hear what people are having to say so that you can respond in your decision making to try to meet what the community is at its best trying to communicate to you. And again, I would like to be involved in trying to help that communication happen. I just think it's really, really critical. Thank you. Okay. Thank you. We don't have a motion or anything else. I could have a couple of follow-ups if we may. Okay. Looking at the low income rate assistance program, so currently coming out of the lease, the cellular lease revenue, it could come out of the property tax, but pretty much 100% of the property tax money is being used to help fund our loan repayments and for capital. So let's keep in mind that if we were to, the bucket is so big, if you take money away for this purpose, you have to put it back or say you're not going to do as much capital improvement if the rest of your operating margin remains fixed. So let's be mindful of that. Ultimately, the state really needs to fund this at scale. We are not at the scale of Scotts Valley and we don't have the wealth of, excuse me, a scale of Santa Cruz. We don't have the wealth of Scotts Valley. This needs to be funded by the state and we need to be working towards that aspect of it in order to get that fully funded. The other part of that on the property taxes, Bruce, I think you were saying we don't need as much fixed revenue. I'm not sure I would go that far because of the fact that we do have a fairly large amount of capital that has not yet been addressed relative to what we need to be spending every year on a capital base that's somewhere around $450 million and if you just take all the components of that, divide by their life and add up the number, it comes out to somewhere around five to six million. So I guess I would be concerned if we were to say the property tax money can be used in lots of different ways rather than what we're trying to use for right now, which is capital improvement. Thanks. I'd also like to follow up on a comment from Jim Mosier on the comparative to other districts and to kind of Bob's point of, well, it's the usual suspects, you know, going to Scotts Valley, going to Santa Cruz, you know, our immediate neighbors. Is there a way to look at other districts that are in a mountainous area, spatially spread out with driving six miles to get to eight customers in some cases? But they would also have to be the most expensive community to buy a house in, in the state of California, which is where we live. And they would have to have the unique aspect of the fact that we have probably higher incomes for our mountainous rural community than most other similar mountainous rural communities do because of the nature of the people who live here and work over the hill in the Bay Area as opposed to if I'm living in Jackson or Placerville, and my job market is more limited to, you know, the opportunities there. So, so that's my concern about this comparative issue is that it's not just about the water operations comparison. It's also about the community costs to live in that community and work in that community. So that's to the point that I was asking about the comparison of competing salary-wise or competing staffing-wise with somebody from one of these other larger districts. Can I? Can I offer? Can I offer? Senator Clairvally. Senator Clairvally. And I don't know how to get to, get to that. So, yes. Struggling. Struggling. But before we go there, I want to throw one more thing in which is I want to be very cautious about doing that. If you look at the the census information in our area, there is still an enormous percentage of our community that lives on well under the median household income. This is this is a community that is not composed of all the folks driving over the hill or working over the hill by any means. And so to and unfortunately one of our previous gentle managers tried to use the average income as the justification for why rates should skyrocket the way they did and he got raked because of the fact that this community is not composed just of people making 100 to 150,000 a year. The people who live in this community currently live in this community at the costs that this community has. They may be struggling. I'm not saying that there are not people who are struggling. But my point is if you go to Jackson or Placerville or Camino, there are people struggling there too, right? And there are people who are making more money there too. We need to look at comparisons that both look at what are you know what are similar operating conditions because I think it's a really valid point. The city of Santa Cruz does not have the same operating conditions that we do. But we need to be careful that they have the same cost of living conditions that we are experiencing in this community whether you are the poorest person or the wealthiest person living in this community. And I think the cost of living affects everybody. Well, it affects everybody. But how does it affect our costs? It affects staffing and what we need to do staffing wise to be able to hire. So, Melissa, thoughts on how to This is hard as you're noticing because utilities are really unique and all of the different pieces of this that you talked about make them very unique. This is why we sometimes, in fact, we often recommend you don't do a comparative because what you're telling, I mean, if you just look, if you're a rate payer or a customer and you're looking at that list of 10 utilities and you see your district is number seven, but somebody else is number one as far as they're lower than you. That just looks probably lower because they're not investing in the system. They're not investing. I mean, they could be taking a total break on capital. They haven't raised rates in 10 years. That may sound really nice if you're a rate payer, but in the long term sustainability of your system, that's really not the wisest choice. But it looks good at the moment. It's also a very much a moment in time. And we know utilities are constantly influx on their rates. I mean, they're most of the utilities we work with do do a rate study about every five years. Sometimes they get three years into the race study and they stop. Sometimes there hasn't been a rate study for a long time, and they're kind of holding it. It's hard. You're hitting on all the reasons why. So let me ask you a question. If you're going to go out there and get information that we're going to say put so many qualifiers on that you really can't do anything with that, should we be doing it at all? Do I want to get that information at all on this comparative analysis? Is the question that I want to put out through that? Before you answer that, Melissa, let me sound the rest of the board to see do we want to do a comparative analysis? To Bob's point, all we're going to do is go get the usual suspects and come in. So our situation is in here. Right. But if you're going to discount no matter what they come back with for the following reasons, that's not applicable. So I wanted to ask the rest of the board because we're the ones that set the charter for Ref Tell Us and what we're asking them to do in the form of the RFP. We approved it. We didn't actually ask them to do a benchmarking study, the sort that Luke would like us to do. That's not their job and that's not part of the RFP. But it's so comparative to other districts going out and seeing what other districts. You could sit down and an hour get the rates of what the people around. I can do this and send it to you tonight. I can do it myself. So to me, this is a non-essential question because we can figure it out right now. To Gail's point, this is all public information. So if we propose a rate increase of X percent or whatever, I can guarantee you that Valley Press or Banner or one of these newspapers is going to send their reporter out to go out and say, what's it cost to buy water and all these different communities? It'll get published. And we don't have to put it in the study particularly because if it turns out that we're way out of line, some reporter is going to write this up in the story in the local paper or put it on the web. It's too easy to get the information. I think from the point of view, the question you're asking is do we need to do an in-depth analysis on that? I'm not sure that we do. I guess it would depend on if there's something they're doing cost-wise or infrastructure-wise to justify tiered rates. That might be interesting to know. I think it would be worthwhile to have a comparison to Scott's Valley and Santa Cruz. I mean, if it takes an hour or two to do that calculation, these are our rates, is what you pay in Santa Cruz and Scott's Valley for equivalent water. I think there's some value in that. We don't have to ask a reporter to do that. I think that's in the interest of transparency to our community. I'm just saying they will if we don't. I am maybe. It's worthwhile for us because somebody will bring it up. And we should, if nothing else for defensive purposes, we should know that so that if somebody comes in and says, oh my god, you're three times as expensive as so-and-so, we should all know that. I completely agree on that. Nothing more detailed than that because it's not a benchmark. Exactly. And again, the thing I'm most curious about is what these workarounds are on tiered rates. I mean, one of the things I'm sensitive to is being too clever by half to try to do a workaround and find some obscure loophole by which you drive the truck through. I mean, that's not the spirit of what we're trying to do here. I mean, if tiered rates make sense for us, there should be a pretty obvious reason for why that should be. It shouldn't be that we're looking for some vague loophole. So I'm curious to learn a little bit more about what those justifications are that you've encountered in the other studies that you've done. Okay. So with all of this input, Alyssa, you can come back to us in a month. Let me ask something, though. Okay. We have all said things. Right. Not all of it has been the same. In fact, we haven't necessarily agreed on everything. So when you say they take the input, what is it specifically that we're telling them to do? To sort of say, thank you very much for the input we've had. If there's three people that said one thing and two that said another, we'll ignore the two. We're relying on staff. What is it that we as a board are communicating formally to them as their charge and remit for what we want to see? I don't have an answer to that question. But I'd like to ask, Melissa, what's your takeaway from this discussion this evening? Yes, sure. One large takeaway is that public outreach is very important. And I would like to get with staff early next week and see if we can decide on a schedule that makes sense, that accomplishes what the goals are for public outreach and gives you time to get the input that you need for the board to feel comfortable making their decisions. And that staff can communicate that back to the board so everybody's on the same page of what that looks like. I think that would be really helpful. Pre-unit, sounds like you're going to have some discussions about what that public outreach might look like with one of your subcommittees that you have. As far as the comparative, that we can, as one of your directors mentioned, it's a very easy comparison for us. We will just look to your staff to give us the utilities and the specifics on that. And we can accomplish that. If you decide you don't want it, it's not a big deal. We're going to do that toward the end. We're not going to do that first thing because we don't know what your rates are yet. So that's something you have some time to decide on. We certainly heard a lot from both the public and the board about different things that you want to make sure we're considering. We have someone taking notes on that. Frankly, most of what you're talking about are things that we do consider in the rate study. And it's, my takeaway is this is a really highly engaged board. You're going to ask us a lot of questions and we better be prepared to answer them when we come to you with our recommendations after vetting it with staff. Is there anything I'm missing that you'd like to make sure that we're taking care of? I don't think so. Melissa, we'll be able to come back to discuss our chapter or our admin community. That's great. And just so everyone knows, we're continuing to work. So it's not like we just sit and wait. So we've got some things that we're doing. And that's completely fine for you all to take the time to do that. And we always say it's best not to rush these things. It's best to have all the input, all the information, and for folks to feel comfortable with the process was very transparent as they go along. Okay. Could I make a request? You can. For the admin committee meeting, can we invite Miller Maxfield to be in attendance? Because I would like them to hear some of the direction that we may want to start pointing them towards in that meeting, or at least get their feedback on what we're asking them. Okay. All right. Well, the public that was here and online, thank you for your attendance. And we look forward to further discussions down the line on this rest of the year. With that, we've got nothing else on the agenda. I'd like to adjourn the meeting. Thank you, Melissa. And thank you for the presentation. Thank you, Eric. That's 756 adjournment.