 at least that makes it a little bit better good good so you don't start reading something i'm here sorry all right okay okay oh yes we fixed it i just gotta get back to the one so there's no mouse or anything so we're just gonna do this one for page down um you'll do once you're in once you're sharing the screen you'll be able to use your right and left to click between it so once you hit presentation mode i'm not first yeah so he'll so i'm he'll have a presentation mode and you'll be able to just use the arrow keys to go between your slides okay and then the notes will be here and then your presentation will be on that screen okay all right thank you everyone we will go ahead and call the meeting to order at 204 and if we can have secretary montoya we will call yes thank you um board member walsh board member varthalo here and share waz here just a reminder of please we're only using three microphones right now and i think that if we could just meet the microphones when we're not using them i know we're not used to this setup yet so we'll probably have some technical difficulties today with us but we'll we'll try um but i'd like to open it up for public comments uh on non-agenda items so if you'd like to make a comment via zoom please raise your hand if you are dialing in via telephone please dial star nine to raise your hand secretary montoya do we have an email voicemail or public comment that we received at this time um we received no voicemails and no emails for public comment and there are no virtual attendees raising their hand at this time all right thank you very much uh we can then move to item 3.1 director berk if you could introduce the item thank you chair watz and members of the subcommittee item 3.1 is going to be our sand on reservoir fiscal year 2023-24 water wastewater and storm water increased budget overview and nick harvey our financial and budget analysis manager hate that title pardon me uh we'll be giving the presentation as well as lori urbanic our deputy director of um uh engineering resources to cover the cip portion thank you good afternoon everyone is director berk mentioned my name is nick i'm a budget manager here with santa rosa water and today we're going to be going over the fiscal year 23-24 water wastewater and storm water increase onm and cip budgets so we'll start off today by going over our proposed water local wastewater and storm water onm budgets and then take a look at our proposed cip budget we'll finish off by reviewing the rest of our fiscal year 23-24 budget schedule and requesting your formal recommendation of said budgets for consideration by the full board of public utilities so revenue assumptions for fiscal year 23 and 24 uh include an anticipated increase in water delivery volumes of approximately 5 which is based on historical information from previous years that we've had following drought years we're expecting sewer use to remain essentially flat and development to remain stable and per our currently adopted rate plan we're implementing 3 and 2 rate increases for water rates and sewer rates respectively so here's a look at the onm line items where we're seeing increases that are generally affecting the water wastewater and storm water enterprises equally i'll discuss a few of these common items here and give more specifics on certain line items later in the presentation when we take a look at fund specific impacts of the increases so first off i'd like to point out that city overhead and vehicle costs are not discretionary items for our department those costs are allocated out by the finance department for core city services and internal service funds as such we're absorbing increases here to venture it with other city departments we have a two and a half percent base salary increase across the board coming in july 2023 per our currently adopted mo use in the third item of note is given the uncertainty and speculation surrounding possible pgne rate increases our cfo and budget team have stipulated that all departments city wider to increase planned electricity budgets by 15 over fiscal year 22 23 levels with the understanding that if needed a separate item will go to city council mid-year requesting an increase to appropriations due to pgne rate impacts so here's a high level glance or anticipated onm expenditure budget increases for the three enterprises under your consideration as mentioned earlier i'll point out a bit more of the specific detail on fund to fund impacts later on but i thought this also serves as a good reminder of the funding mix involved when we discussed stormwater and creeks so unlike the other enterprises under consideration stormwater and creeks as you can see there as you all know but as a reminder is funded by the general fund as a mix with the stormwater and creeks enterprise enterprise fund revenues so here's a graphical representation of the proposed water wastewater and stormwater budgets in aggregate for the next year this is a great illustration of the relative impacts different line items in our budget have on our department as a whole so here the onm expenditures by line item for the water fund a quick glance at this chart clearly indicates our largest year of year increase to water operating costs is the water purchase line item that's 16 and a half percent increase here i'm going to set that aside for now is i'll be discussing this in more detail on the next slide and we're increasing spending in the miscellaneous category due in large part to a recently adopted department policy of subsidizing certification costs for those who have such certifications as requirements of their positions and although we're seeing a sharp increase in a couple line items the net effect of those increases are being significantly mitigated by the large reduction in our budget requests for onm projects so you can see the year over your delta on onm projects is down 57 and a half or 57 percent rather and in spite of some of these larger increases we're only seeing a 7.1 percent increase in the bottom line in aggregate so back to the purchase of water item the two main factors affecting our water purchase budget are water delivery volumes and changes to the sonoma water wholesale water rate sonoma water is putting forth a 10.5 percent 10.56 percent wholesale water rate increase for 2324 and on top of that we're also assuming a rebound in the volume of water delivery is about 5 percent those two factors together contribute to the purchase of water being our highest increase on our operating budget so this graphic spells out just how significant our water purchase budget is in relation to water's onm cost as a whole this is a good representation of the impacts that uncontrollable costs have on our operating budget so to illustrate you know water purchase budget is taking up a huge chunk here and as you can see administrative in city overhead is taking up a pretty good chunk as well so moving on to our local wastewater budget the largest line item increase is miscellaneous expenditures at 17 and a half percent this is due primarily to the enterprise having 25 us us oh one employees who all need certification next year significant reductions and other line items however result in the local wastewater only realizing a 1.6 percent net budget increase here's a graphic on the proposed onm budget for the local wastewater and here's a look at our reserve levels for each of the operating funds as of June 30th 2022 we can continue to see healthy undesignated reserve balances in both water and local wastewater and as a reminder the operating reserves are adjusted each year to 15 percent of actual onm expenditures for that year the catastrophic and rate stabilization reserves have not changed in some time we hold those steady so looking at the storm water increase onm line items overhead obviously sticks out with an almost 87 percent increase or almost 88 percent increase I should say this is due to a one-time adjustment that was made last year and as such this isn't so much a budgetary increase as it is a return to normalcy with regard to that line item in the budget they're also adding some debt service costs relating to the purchase property for the lower colgan creek restoration phase three project which will be featured in the cip portion of our presentation and here's the chart summarizing storm water and creeks proposed 3.3 million dollar onm budget for basically year 23 24 so I wanted to touch on the storm water and creeks reserve balances since we spoke about it on the water side they only carry undesignated fund balances with water and wastewater being utilities with several stakeholders and outstanding debt issuances there are several required reserves set aside in those operating funds that aren't required here so this is a high level summary of what we're planning to invest in capital projects next year for the three enterprises we're discussing today we'll spend the rest of the cip presentation or the rest of this presentation rather offering a more detailed look at our proposed cip programming water is appropriating a little over 14 and a half million for projects next year here we see the category breakdown by both percentage of the total as well as the dollar amounts we're continuing to invest in our cip dollars and key water delivery infrastructure and bolstering potential future groundwater supplies on the local wastewater side we're programming 13 and a half million for next year with the bulk of the funding being invested in our sewer trunk infrastructure which has become more of a priority for us in recent years and storm water and creeks is programming a little over 1.6 million in cip projects next year a little under a quarter of their total cip investment is going towards programmatic projects which are crucial to the storm water and creeks team so that would be that first line item in the amount of $380,000 this investment is what gives them the agility to react to situations such as hazardous spills without causing major disruptions of the budget the remainder of the funding is being invested among the four lower projects that you see on the side there okay so before we get in any project specifics i want to give you a brief overview of how our cip funding information is organized on the handouts you've been given so in summary the area under the gray headers on the left hand side of the document we can think of that in terms of summarizing all funding that has been given to these projects in the past and appropriations that currently exist today so on the far left you'll see the PID or contract numbers to each project followed by the five digit jl keys which are the keys that actually hold budget in the city's ledger as you move to the right it shows you carry over from previous years revisions year to date expenditures and conferences and ends up on the far right hand side with the total available balance as of today the colored headers on the right hand side of the sheet are what are the summarized funding for the next five years of the cip program it's also important to note that for any given year we're only really looking at year one in terms of your recommendation and approval as we only appropriate cip one year at a time but we like to include five years for planning purposes one final note is the funding type column there's four funding types and those can be defined as new projects those are projects that have never had funding before and they're receiving projects for the first time within the five year cip plan there's carryover projects which represent projects that have existing appropriations that are not receiving further appropriations in the five year plan there's continuing projects that are projects that already have appropriations and are receiving further appropriations in the five year funding plan and then there's cancelled projects and those projects represent those that we expect to be complete for the end of this fiscal year or have otherwise been reprioritized or deprioritized and without i'm happy to hand it over to laury urbannick deputy director of engineering resources of sander as a water who's going to walk you through some specifics and highlights of our cip program thank you nick i'm laury urbannick deputy director of water resources and i'm here to give you just a couple of highlights of the cip program this year so the first project is a it's a of water and sewer project and we've broken it up by the different funds so this is the water component it's just a neighborhood street with um like low excuse me with um small diameter water mains and sewer mains and so this one is just up sizing from a six inch water main to an eight inch and the estimate for this project for just the water side the water fund is eight hundred fifty thousand dollars and we expect to start design and have construction year two we're also putting money into the groundwater program um this is the leet well rehabilitation and um it's to provide emergency water as outlined in the groundwater master plan we've recently done some testing and with our consultant who's looking at um really what level of detail that we need to replace if we need to replace the well casing or the screen and so that work is still ongoing and then another one of our critical two of our critical pump stations are also being given upgrades to increase fire flow up in the wooey area pump station 10 excuse me we'll install um an additional third pump and expand the the house the they call it a pump house um i'd call it the structure but that's how we have it and the next one is uh station 14 and it is uh installing a new capacity pumps out in the oakmont area and then station four uh out there on farmers um right now we're we're going we're evaluating a lot of elements that need to be fixed out at the station excuse me um this project is going to evaluate the operational needs and perform some of the facility and then look at what kind of rehabilitation we need to do and identify the work um excuse me whoops um anyway the the decisions will be made at a later date after we receive the full analysis on the report and here is uh sewer main this is the counterpart to the first project i talked about on Salem Avenue and Clement and the sewer estimate is slightly larger and it'll come in at almost a million dollars again design will occur simultaneously with the water and construction hopefully will start in year two the trunk lines are one of our biggest components in this year's uh program and ongoing they are in desperate need of rehabilitation and as some of you probably know their reinforced concrete pipe is the majority of them and they're seeing a lot of internal corrosion so this there's an error on this slide i have to point out um this says the project total estimate is four million actually that that is the year one funding and the total project is estimated at a little over 14 million dollars so that's just year one funding but this um this sewer trunk will be um rely lined with a liner and it will certainly improve um oh i'm sorry i'm on the wrong wrong wrong trunk my apologies um this is the Los Alamos trunk and yes the error is still correct but this is a replacement project for an additional capacity and um we're hoping that this uh is getting close to being put out to bid or it might be out to bid already and uh start construction this spring late fall um along with the trunks that are getting rehabbed and replaced um we're also looking at the sewer siphons um those of you who aren't familiar with the siphons they're in our chunk lines typically where they go under creeks and so on the upstream side we have a usually it dives under the creek and so this project is going to line some of those and then we're also going to install grit traps on the upstream side um those grit traps will have sediments and rocks and debris fall out so it makes it much easier for operation staff to clean this is another large sewer project and it's estimated at 7.5 million dollars again we're hoping to start the design in year one and construction as you can see it's all over town so we anticipate it'll take two seasons to complete the construction and here's another lining out on the robeless trunk this is a continuing project year one is design and we're looking at 5.3 as a total project estimate again these sewer trunk lines have a lot of internal corrosion and this will line it and rehabilitate the project and here we have a highlight of one of our creek projects this happens to be phase three of a really awesome project that we've done a lot of creek restoration thanks to our storm water folks this project's been around for a long time and not only is it a restoration but it's also increasing flood capacity from 25 to the 100 year flood event and constructs a lot of natural paid bikeways and pedestrian pathways and a bridge and also a thing that we love is it's got 5.8 million dollars worth of grant funding and with that that completes my presentation on the cip and i'll turn it back over to nick okay and here's here's a quick overview what the remainder of our annual budget schedule looks like we're going to be before the full board this thursday the 16th with Sonoma water's proposed rate increase we'll be back before the full board twice in april the budget study session as well as requests for the board to recommend the water department budgets and regional partner allocations to city council and we'll be requesting council's approval the preliminary regional budget on april 25th and we'll finish out the budget cycle study sessions on may 8th and 9th and formal budget adoption scheduled to take place on june 20th and with that we can open it up to any questions you might have great thank you very much for the presentation i will now open up for board member questions or comments i appreciate the presentation thank you i just had a couple questions um go back to my notes one thing kind of towards the beginning of the presentation you mentioned just the cost of PG&E increases but then when i looked at some of the line items it looked like the utility cost had was budgeted as a decrease from the previous year i just wanted to know if you could explain that a little bit yeah so so what happened was a while back the budget team we were speaking to the budget team about our PG&E uh cost estimates and they had said hey let's go with uh 15 above the 22 23 adopted budget but what happened was when kimberley and i dove into the local budgets um they actually had some pretty sharp increases uh for 22 23 uh in reaction to the actual cost from 21 22 and so for those especially in the local enterprises that being water and local wastewater um we looked at what they were trending on for this year and made sure that they had enough budget to absorb the actual costs uh so what happened was 22 23 was budgeted pretty heavy and so we did some more analysis to peel that back a bit and as you might imagine the bulk of our electricity usage is actually consumed out at the plant and you will see the effects of that in our next presentation thank you that that makes complete sense um i just wanted to say i really appreciate the overview of the cip it's always nice to get a visualization of where these projects are happening and and also i'm happy to see the continuation of more funding towards groundwater and i know that former board member dad would be would be uh asking for that repeatedly so feel like we have to have to continue to his legacy and make sure that's addressed so thank you very much for all of that board member thank you um when you were talking about storm water you said that um the the increase in the budget of 87.6 percent that came under internal and external overhead was reflected a return to normal yes i'm not sure what that means is that like before covid like what's the return to normal so basically what happened was we we discovered interviewing last year's activity that they were mistakenly undercharged uh their fair share of the allocation and so what's showing as and we did some work to true that up in the financials for 21 22 actuals and so what you're seeing is actually a massive increase is actually just a return to normal so it looks like a huge spike but that's just uh based on the budgetary changes um so last year it was under budgeted and undercharged this year we're budgeting back to normal all right well then we will open it up for public comment on item 3.1 so if you are in the room uh please go to the microphone or if you wish to make comment via zoom please raise your hand and if you are dialing in via telephone please dial star 9 to raise your hand secretary montoya do we have any email voicemail or public comments that were received we have no email or voicemail public comments received and um no hands are raised on zoom for public comment great thank you there's a lot of ways to make public comment now so i apologize for if i missed any all right so um show us if i may i just want to make sure anyone in the room can comment as well so if you do want to comment just raise your hand if you'd like so we have the in person also all right so if i don't think we need to take um a motion or seconds already on the table so just do we have to take a motion so if the subcommittee is comfortable we are more than happy to ask you all to recommend so you'd need a motion and a second if there's additional information the subcommittee would like we can always come back and schedule another budget subcommittee meeting but um this we now have all the details and we've provided them to you today and so our um our recommendation from staff is that the budget the subcommittee considered this budget and make a recommendation to the board great thank you so i will entertain a motion if you want to do it i will move uh to pardon me pardon me that uh we approve the fiscal year 2023 24 water fund local wastewater fund and storm water increase enterprise operations and maintenance and capital expenditure appropriation requests i second that motion thank you we have a motion in a second can we take a separate time on today i can get a roll call though um board member walsh i uh board member borkelo I and chair wants I and that passes unanimously thank you so much for your presentation and now we can move to item 3.2 director Burke if you would like to introduce that item thank you uh chair what's the members of the subcommittee item 3.2 is going to be our same number as a water fiscal year 2023 24 regional budget overview and we will have these same presenters as before um uh chair chair what's um I am before we discuss this budget I are this agenda item I'm going to recuse myself from participating um because I want to avoid any actual or perceived conflicts um I work for the farm bureau as I think all of you know and um you know we we advocate on behalf of our members and there is you know that some of our members actually um contract with santa rosa water for delivery of recycled water so um out of an abundance of caution I'm going to recuse myself from this conversation thank you very much great thank you very much for letting us know and we still have quorum so we can continue moving forward with this item thank you have to rest of your day okay and with that we will take a look at the fiscal year 23 24 regional onm and cip budgets so today we'll be taking a look at the proposed regional budget for fiscal year 23 24 and I'll start with a look at the onm budget then I'll go over the proposed partner agency allocations and cip specific to our regional system and finish up with a request for your formal recommendation of the budget for consideration by the full board of public utilities so the same general onm increases discussed for our other enterprise funds are impacting the regional operating budget however the effects of these the increases for chemicals and electricity are more pronounced for the regional operations at the treatment plant sorry as the treatment plan is our department's largest consumer of both chemicals and electricity we'll discuss these items in more detail during our look at the line item budget so the treatment plan is our largest consumer of electricity we've budgeted for an over 36 increase in electrical costs there are two main factors driving that increase one is the afore mentioned 15 percent budgeting over 15 percent over 22 23 electrical budgets for PG&E rate increases as directed by our cfo and in addition to the 15 percent we're also expecting an increase in the volume of electricity actually consumed at the plant so that's why you're seeing a number that's so much larger than 15 we're seeing an increase in projected miscellaneous costs due to our recently implemented policy of subsidizing training and certifications for those who have job specific requirements for such and the increase in operational supplies is primarily driven by increased chemical costs at the plant sodium hypochlorite and alum prices in particular are expected to increase in costs next year due to increased demand as well as anticipated market and supply chain volatility and as reminder it insurance overhead and vehicle costs are assigned by finance and our regional operation is absorbing similar increases in these costs as all other departments citywide in spite of those increases however the reduction in our proposed on m project budget is keeping the aggregate increase to the fund at just 8 percent here's a chart reflecting the entirety of regional's proposed budget for next year including cip and debt service appropriations we also like to include the miscellaneous revenue figure in red at the top that 5.3 million dollar figure which serves as a reminder that we always budget our partner out agency allocations net of that figure so we take every cost subtract out what we're budgeting for miscellaneous revenues and we build that net amount and allocate it accordingly to our regional partners so here's a look at our regional reserve levels as of June 30th 2022 we're continuing to hold the operating reserve at 15 percent of actual operating costs you'll notice that we don't have an undesignated reserve balance as we have in other operating funds in the water department as a reminder any excess reserves in regional are held in a refund reserve on behalf of our partner agencies and are applied to partner allocations as requested for rate smoothing purposes so here's the summary of that refund reserve balances of June 30th 2022 as allocated to each partner agency so we have a total of just over 2.6 million dollars in the regional refund reserve held and it's broken out by agency in the different columns here so now we'll take a look at our proposed partner alloc partner agency allocations for 23 24 each agency has allocated their pro-rata share of budgeted on m cip and debt service costs those totals are then aggregated into the total allocation for next year and then compared to the previous year's allocation for the purposes of expressing the percentage increase for the year so i spoke briefly about the purpose of our agency refund reserve and here's a perfect example of how it benefits our partner agencies so as you can see here sabastopol has chosen to apply 200 000 dollars with their reserve balance in the applied fund balance column and that's keeping our effective year-over-year increase to just under two and a half percent so about 2.3 percent absent that refund application it would have been much higher so that is a great illustration of how that reserve works and how our partner agencies benefit from it so here's the breakdown by category of our proposed 10 million dollar cip budget for the regional enterprise the majority of our funding is being invested directly into the improvement of our plant and geysers infrastructure with the remaining with the remainder supporting ongoing planning efforts with that i'm now going to hand it over to laury urbanic deputy director engineering services to speak about some of the specifics of our regional proposed regional cip budget thank you nick and everybody so the first project that we're going to highlight out at the plant is the replacement of the ltp filter valve replacement this is phase two it's highlighted here on the slide in red and it replaces the cells nine through 14 a bank of those and the total project is estimated at about 1.4 million dollars and we expect design and construction in year one since the project is ready to go to bed now that's always exciting and the second project out at the plant is the is that not advanced let's see what's going on here oops clearly i'm having issues with the slide deck today my apologies so the second highlighted project is the aeration based on improvements and this will replace the low pressure pipes fittings and valves and refurbish the channels we're expecting the design to take year one and year two and the total estimate on that project is 2.3 million dollars a significant portion of work on this project will be just keeping the bypass pumping going as we move through the project area and the burning flow we expect to be in construction in year three and we have a project out at geysers infrastructure seems like we just built it to some but it's now approaching 20 years old and we need to keep this critical infrastructure going so this project is going to upgrade some pumps and bfds out there and those should be replaced about every 10 years so we want to keep up with that maintenance and replacement the project this this first phase the initial will be a design assessment and condition assessment and design and that will be year one and with that i'll turn it back over to nick to talk about the remaining schedule okay so here's the remainder of our budget schedule for the year we'll be bringing the budget before the full board on april 6 in our study session we'll follow that up on the 20th with the request of the full board to recommend the preliminary regional budget and allocations to city council we'll then be asking city council to approve the preliminary regional budget and allocations for the purposes of notifying our partner agencies that their allocations which we like to do by may 1st of each fiscal year for each calendar i should say and council study sessions or may 8th and 9th was formal adoption plan for 20th june 20th rather and with that we are available to field any questions you may have on the regional budget great thank you very much do we have any board member question we we do see a reduction in the onm budget for repair maintenance is there a impact expected from that reduction in the operating budget now i think the the biggest impact is that because we have so many funds built up in those projects which don't release their budget at the end of the year we're seeing that benefit us greatly this year because we're not having to budget for those projects as a function of their carryover budget so you know absent that we'd have to increase our investment but since we put so much money there last year and it's carrying over it's giving us a reprieve this year with the carryover budget okay thank you thank you very much i i have no questions at this time very clear presentation thank you so now we will open for public comments on onm 3.2 if you are in person you can go to the microphone if you wish to make a comment via zoom please raise your hand and if you're dialing in via telephone please dial star nine raise your hand secretary matoya do we have any person email or voicemail public comment um we have no in person comments um no hands raised on soon at this time and we also received no voicemail or phone voicemail or email public comments sorry great thank you you with that i will um entertain a motion for the recommendation i'd like to make a motion yes i move that the uh budget subcommittee recommend to the full board of public utilities approval of the fiscal year 2023 2004 regional operations and maintenance and capital expenditure appropriation requests i will second that uh secretary one today can you get a roll call vote yes um board member walsh aye and a chair wants aye okay and that passes with two affirmative votes with board member barkalow recusing well thank you very much this was quite an efficient budget season for the budget subcommittee so that's greatly appreciated i know staff's work is what really led that to be as efficient as it was um and so with that i guess we will adjourn the meeting and see some of you the rest on thursday thank you