 painful here we are this is a pretty this was a pretty old one but roll call will show the three of us present Tom and Rochelle and myself no public hearing we have eight things on the consent agenda anyone wish I'll actually said one that's already pulled I had questions on 3.3 okay did you say 3.3 questions so I couldn't remember under this is on page 11 of the entire agenda the 129 there was something to Brooke Gregor for the so-called Creek we're project and I just wanted a reminder of what that was casual dress assuming it's for our flow measurements but yeah in the in the mid 80s the district installed a a weir and over the last winter it it got eroded and so the whole Creek bed changed and now it's it's a barrier to passage okay and so we've met with Fish and Wildlife and Brooke Gregor and we're trying to you know decide whether we should repair it modify it to make it less of a passage but it it's looking more and more like we just need to remove it there's grant funding okay available to remove it we've met with we've asked advice from the modeling tack about the the added value of that data and it seems like the downstream gauges are more okay more critical than this one it's served as purpose to get you know the calibrated model at this stage but going forward I think it's going to be a real hurdle to try to keep it so okay we're so we're making sure we're allowing for fish fish passage now that's right okay and then maybe you'll know this one too it's only other one I had was on page 17 was what's a Polaris Sportsman $1,000 thing from Environ too is that the maybe that was used for the the test on the store on the drainage it could have been the rental I'm surprised that would be coming in this late but we just didn't know what that was it might have been okay so some rent a rental for is it a vehicle of some kind what was pulling the yeah it was pulling this thing for the drainage check oh warm water in the drainage they use an ATV to pull that thing around maybe probably an ATV we do make that we should have received this this was placed on the credit card yeah okay right I just that was just another one in the same we can get back to you okay I just curious okay I'm not aware of that all right thank you for clarifying the weird project I'll move approval of the warrants then I'll second all in favor hi host we go all go on to oral communications this is the time for anyone in the audience to address us on any item not on tonight's agenda my name is Gary Rawlinson I'm here because I my parents own a property that is subject to a sunset provision on a well-served letter and I want to ask for the board to put on the agenda request I'd like to make to have a short extension on the sunset provision I found out about the sunset provision about a year ago immediately begin all the process for constructing residents on the property I've already submitted to the county I have the county's corrections but we're now getting to a point where there's such a short amount of time left that if we could have a short extension then we'd be much more sure to being able to get the project completed well we can certainly put that on the agenda would you make sure that happens and we'll let you know when that's going to be scheduled okay thank you very much thank you thank you when is your deadline by the way okay thank you anyone else any board comments okay so let's move on to the board planning calendar yeah I'm mentioning two things the MGA meeting is this Thursday 7 to 9 at Simkins it's kind of a light agenda the main thing on it is the semi-annual groundwater monitoring report and if the board likes I can agendize that for our next meeting you just hadn't come in in time I'd like to I think it'd be great yeah so we'll put that on there and let's see and then the following Wednesday so a week from tomorrow is the GSP advisory committee that's on the calendar also in an overview just to catch everybody up give them the big picture of you the MGA is done with the first round of drafting minimum thresholds for most of the sustainability indicators they still have storage to do but what we're seeing is that really there's one driver and that's the seawater intrusion so protective water levels once you get that you pretty much cover the rest it looks like except stream flows which will develop indicators for that you know kind of separately that's it and of course these will change we still need to give the ones that the target the minimum or the lowest thresholds and now we'll look for the ones they'd like to aim for so it's a continuation one thing I would like to mention the water resources management and infrastructure standing committee scheduled for October the 9th I don't know if I mentioned that but I will not be here for that so you'll need to inform the alternate so on the November Mid County groundwater agency board meeting I will be out of town so I don't know who's the altar is Carla the altar I'll let Carla know a special board assignments report and nothing new to report there just one or two items in red I think the AMI that is in red there the WDO slash AMI that'll be brought back next meeting other than that I'm glad to answer any questions just a quick one yeah the stormwater recharge thing was mentioned and I didn't know if there had been any change or it's just still the same as this like they're waiting for change in ownership we never heard how that's going with seascape or yeah I haven't heard an update from Shelly so I'm sure she'll provide us that as soon as anything else comment and move on to 53 quarterly organization wide abbreviated status update so I can report out for show our answer any questions I think they're really focused on bringing back to the board on October 2nd the continuation of the AMI WDO nexus and she's out tonight so it's Christine for that matter engineering please not too much to report other than we are starting the service area three to four intertie project this week they're they're now starting and any other questions were more than willing a little update on the ammonia that came in after this was published we're operating it and pumping it into the system it's stabilized at this point but we do want to continue to watch it to see if it'll climb the chlorine dose that's indicative of elevate continuing elevation of ammonia but at this stage we're able to operate it at it we did lose over half of the specific capacity that's gallons per minute per foot of drawdown which is unfortunate it went from like 15 to about six gallons per minute per foot but still producing roughly 380 390 gallons per minute so you know if it's sustainable at that rate we can probably accept that if it continues to climb we're just gonna have to come back to you guys with a treatment option where is the ammonia level now is it low medium high do we know we've we've blocked off the lowest level right but it was the ammonia that it stabilized at is it a low level a medium level high level yeah we haven't since this last packer installation setting we have not sampled ammonia okay we've been using the dose of hypochlorite as a right indicator but it's probably in the works over the next couple hyperchloride does it automatically adjusted or used up in that there's more ammonia right and there's a state allows a certain limit when we approach that we have to turn it off we know where we are with respect to that limit I think we're we're about a half of the limit okay that's not bad then so we still have some room remember it took six months for it to actually show up when we first started the well so we hope it'll stabilize but we certainly did block off the lower screens and that's the most productive reducing zone right yeah and if friend if in the worst-case scenario it can't we'd still producing too much ammonia and we want to then look at treatment can you open up those oh yeah over sections again okay absolutely okay thanks thank you thank you when them yeah she's not here but Taj you can can answer any if you have any questions on that I think the Chrome 6 was the biggest I mean the ammonia was kind of the big item on the main street well so the the stainless liner was successfully installed and we are waiting for DDW to give us the green light it did pass back T tests so not much more to say there except we look forward to putting it back in service both that well and O'Neill and Garnett are sort of the three wells that support that isolated zone for the surface one or transfer you know before and after the transfer so ideally those all three would be online it's not essential but but the two of them would they suffice during not during peak okay pumping okay you know not next summer you know probably have a shortfall all right okay any other questions thank you special projects I'll just hit on two the first one is the district did release the initial study mitigated neck deck for the pilot project that we're doing the pilot recharge well at Twin Lakes Church so the official comment period began September 12th and it will close October 12th on October 2nd we will be having ESA here to accept public comment and we're hoping to come back with the consideration of certification of that initial study and it mitigated neck deck at the first meeting in November subsequently we're also working a little bit on the basis of design getting that effort so that our hope and intent is to drill the pilot well at the beginning of 2019 the other thing I'll note is the city of Santa Cruz and Segal Creek Water District met last week it was based upon some discussions that we've been having with staff and several of us attended the water commission meeting to get some coordinated efforts related to outreach of the second phase of the surface water pilot so since that will be in-service testing of houses and homes and businesses in subarea one we are getting our outreach and communication planned together so that we can do that jointly that's all I have any questions thank you thank you finance any questions there just to give you a quick update we're in the process of generating refunds on the July our July and August bills and checks are going out to those customers who have closed an account but have a refund do them so that's in process we hope to have it all kind of done here we were hoping for the end of September but it looks like it may leach into the first week or so of October as well it's about 20,000 accounts I think that we have to touch individually good luck on that and for the accounts where you the customers still active then I'll be applied to the next bill is that how it's going to be applied as a refund on their account and they'll see it on there either their September or October billing statement as an adjustment any other questions HR pulling pulling triple duty I really don't have too much to report other than what's on the written but we would like to welcome some new folks that we have on board it's been a kind of a busy summer in recruitment as you can see we hired Jacob Arnold on August 27th he's now in our customer service field department we also hired a water distribution worker and he replaces someone who left us to move on and he started officially on September 10th he's a water distribution worker one we are currently recruiting for the board clerk executive assistant position and we also had another resignation and have somebody in line with that we had just completed a recruitment for the customer service field worker and had a couple of really good candidates on that list so instead of going back out we actually made an offer which was accepted to another candidate so we happy I'm starting next month and then don't forget about open enrollment you guys have been receiving information from me so if there are any changes just please let me know did we get a decent number of returns for the executive assistant board clerk position it's open now and it's got a healthy October healthy October 5th is the closing date for that and so we'll be going through our screening processes after that but things are things are coming in every day good yeah the questions general manager please great I'll report on two items not shown on my list but I do want to share I know the board a lot of times here's a negative you know people's concerns and that sort of thing but we also get a lot of positive feedback from customers and there was it there was a message sent to Shelley flock conservation customer service field manager that kind of struck me I wanted to share it with you so I'm gonna give it a try here on my phone playing it through the mic we did get permission from the customer to play it so here we go hi Shelley this is Bonn-Vanis at 928 Balboa Avenue in Capitola and I called earlier about an hour and a half ago that I needed help to turn off my main water valve that it was stuck and I just want to say Chris just left here and he fixed it for me and I was so blown away that someone came out I know he was out in the field but he just stopped by and he fixed it and I just feel really warm feelings about SoCal Creek water so I just want to say thank you you know to him and thanks a lot I'm a happy happy customer okay bye so I think it's nice to hear good good news occasionally like that the other thing I'd like to report on is you know down there in Monterey they had a court order to get off the Carmel River so they had a reducer take by half off the I think it was half off the Carmel River and you know what's an area to do so they looked at a couple options desalinization was their primary option with a backup of a pure water Monterey and since that it's flipped in pure water pure water Monterey is their number one option they're in construction on that and the supplement to that is desalinization and last week the Public Utilities Commission because Cal Am's private voted 5-0 to move forward with that project but the CPUC agreed Cal Am needs to explore the potential of even continue to expand that recycling plant too so I think that's good news for them in relation to us it I'm not sure but I would think that may put a little bit of pressure on deep water diesel a little bit but that's yet to be seen I'm you know so might be some implication there and that's that's all I have to report out any questions no public comment all right district council yes a couple of things well right now SB 998 is still on the governor's desk there's a lot of lobbying going on that's the that's the bill that would change the way you handle turnoffs for non-payment and creates all kinds of wonderful things that Leslie just really wants to do she has not enough to do right right we also resolve that the John Cole case before the last hearing it was he was scheduled to go in and start arguing again about the way fire rates are are calculated and it looked like it might be prolonging the matter even further so we reached a resolution where we just adjusted the one two-inch rate everything else tastes the same and again I unloaded another workload on Leslie but I I think it'll be a lot better than waiting through September or October or November to find out what the what the answer is and other than that oh the county had originally indicated that they would not give us an exemption from building and planning for putting in antennas as part of the AMI procedure I was able to find a county council who was willing to listen and we discussed it and she concluded that it was exempt based on some cases so we got past that one as well excellent any questions all right we moved to six to presentation by Rafa tell us so tonight we have Sanjay Gower from Raf tell us financial consultants and I've prepared a memo you you've had a chance to read it but I reiterates a lot of what he's going to go through in his presentation so I'll go ahead and let him walk us through all of the details president board members staff and public back to me do our presentation associated with the rate design study as you recall earlier on in our presentation when I've been here before we talked about different steps associated with the rate study there's the first step which is what our goals and objectives what we want to achieve second step is what's the financial plan how much cash on an annual basis we need to generate to fund our capital projects that was when I was here last we talked about that I'm going to do a quick overview of that then after that's part of the study the next part is called what we call cost of service which is really about how do we divide the pie so we know how much revenue we need to collect how do we allocate the cost and what's the appropriate rate structure we do this for a couple of reasons first for transparency this is a fee for service we want to tell our customers these are our cost structures this is how we charge people second reason we do this is because of prop 218 it's required so we do that also for that reason so we go over the cost of service and then after the cost of service the last the second the last step excuse me it's the rate design it's actually the rate structure what are the rates I'm going to show you two options associated with rates whether a two-tiered or uniform this is where we are right now so we definitely want to get your inputs associated with that and then the last step of course of a rate study is the administrative record and the public hearing so today we're talking about the cost of service I'm going to touch briefly on the financial plan cost of service how we allocate costs rate design and then also I'm going to talk about customer select towards the end so right when you feel a bit tired overwhelmed I'll be doing that and go over customer select and then briefly on some emergency rates and some options associated with that so the financial plan overview just to remind ourselves we last time we came here we presented basically two scenarios about how what kind of revenues we need to collect on an annual basis as you know I use the word revenue not rates because we're talking about the amount of revenue on an annual basis and basically what our recommendation was is that if we got grants we're hoping to get 45 million dollars worth of grants we would then issue 52 million dollars and then the revenue adjustments that we would need would be a 10 percent the first fiscal year then 8 percent and then eventually to 6 percent yes I was wondering you know that scenario one the first year we bump it up to 10 percent and the next year we bump it back down I was wondering couldn't we pretty much do the same revenue thing by doing a 9 percent and then another 9 percent would it make a difference we could look into the reason why we did 10 is I'll just go right over here I believe is because of the coverage ratio but I'm looking at the slide right here so the top is the increases the green line is the coverage ratio and the red line is the requirement that we want to be at so you do have some wiggle room there so we could look at nine if the board would like so we can do two nines to smooth that out and make it a little easier on the customer yeah make a bit easier so we could definitely look at that sometimes what does happen though because I've had to throw these numbers in there in the past that 10 percent is to get us over kind of a hump because it's cumulative so when you do a 9 percent sometimes we're not always meeting our debt coverage ratio or our reserve targets and it takes that little bit of oomph to get us there and then we can drop that okay well if that could work out though that'd be nice and similarly on the scenario to we do 10 10 10 8 8 8 8 8 and so the the third 10 there and the first eight could be 9 and 9 so that'd be another nice thing is to yes we can but I don't know why all the rates here are even percentages so that if we can do there's multiple solutions here doesn't there's not one solution here I mean there's you know we could yeah there's a lot of solutions here so scenario 10 to could be 10 10 9 9 8 8 8 you know I'd be a more gradual kind of a change mm-hmm so 10 just something that I thought we should consider yeah we can look at that so scenario one as I mentioned if we receive grants scenario two is if we do not receive grants then we would be doing quite a bit of debt issue in 95 million remember in scenario two we're also postponing some repair replacement just move out the rate increases so it's not as dramatic it's still you know 10 10 10 as mentioned but we're trying to shift out projects so we don't have such a dramatic increase and then we also did a revenue adjustment gap gap revenue adjustment where if there was a delay in any projects what would the ring increase need to be so this is a presentation I showed last time our slide where the top is the adjustments that's needed in revenue the bottom is the ending fund balance the green bar the green line excuse me is your target reserves and the bars are ending balances sometimes these balances are a little bit big because of bond proceeds that you may have you're showing debt and there's some proceeds residuals there so you see that this is the one without grants as I mentioned last time I was here there is a debt issuance out in 2024 most likely if you did do this when you wouldn't need that debt issuance but again this is more of a planning purposes is not exactly how you'll implement it because as you do this you'll be implementing it and seeing how it changes each year so once we figure out how much revenue we want to collect next step is what we call cost of service we're really asking ourselves is what's the cost of service and what we like to do is is we like to break the the revenues that we want to collect into these different buckets so we have what's the supply costs so those are your wells you have a base delivery that's the infrastructure needed for winter time average use we have conservation program we have extra capacity that's the peak summer use that was the additional facilities that are needed for peak summer we have meter maintenance cost of maintaining meters replacing them and we have customer service we break the cost into those components as you notice in the bottom I've also sort of identified how we should collect that there are some policy options here about how we can collect it but typically supply base and conservation are considered variable and extra capacity meter maintenance and customer service are considered fixed so these are your actual costs based on the revenues that we need to collect with no rate increase so one thing I would definitely emphasize throughout this whole presentation I'm not talking about that 10% increase I'm just doing an apple to apple this is how much you're collecting currently with your rates and this is the new rate structure so we have an apple to apple comparison once we got direction yeah this makes sense I like this or maybe not like it but I can accept it I should say then we can say okay let's put the revenue adjustments then we married the two things together so this is collecting 19.7 million dollars residential will collect 16.4 we've identified the supply cost the base delivery the max day max hour that's that peaking component fire protection both for public and private we identify what the cost is for fire protection both for public fire private and then we allocate that based on how many hydrogens hydrogens thank you and private fire lines they are we allocated between those two meter meter maintenance costs customer building and customer service and then the water reliability why is the max day and max hour fixed that would seem like variable to me because as we get more customers and they use more than that the max day and the max hour should go up so we're being consistent with your current methodology with your rate structure okay where you have different meter cost based on customer class based on the peaking so we had a dialogue about what is the appropriate and we feel like it's best to keep the current methodology that we've developed right so is the interpretation of the max day and max hour peaking this is the cost for having users that use you know a fair amount of water so if if use was low that number would go down is that the it's relative to how much you use relative to your low so it's not a it's a relativity so it's a comparison between winter and summer that's how we're looking because we don't I mean we don't measure max hour right I mean we don't know we don't have you don't have AMI so what we're using is a proxy is the seasonality between summer and winter but with the seasonality if let's say that that all our users were to plant apple tree say you know so that then this this max day and max hour peaking cost would go up because there's more demand in the summer correct okay and so it depends on which customers are causing it so we've done some analysis what we what we our analysis determined is is that single family residential and commercial actually peak very similar we're suggesting that they should be one customer they should have the same meter charge irrigation is very different so they should have a different meter charge so so right now we're gonna look at the traditional rate options associated so what one of our recommendation is to increase the fixed charge slightly going from what your current 3565 to 4060 so we're seeing a slight increase in the fixed charge we've also examined the peaking characteristics as I mentioned between your different customer class and what our recommendation is is basically have two different meter charges one for irrigation and one for all other which is single family multifamily and commercial mm-hmm so the 48% there the is that because the peaking has changed or exactly is that that's more of a policy in the sense of how much you want to collect from your fixed and variable so there's different communities as you know Susanna cruise for instance has a lot of variable very low fixed I'm sure there's someone else right next to you that does the exact opposite that has a much higher fixed and lower variable but we don't have any data to justify that there's just a policy change yeah I mean there is there's there is my professional judgment there is some bandwidth of where you can go there of course there's outliers where it won't be necessarily acceptable but there is some you have some flexibility to stabilize just stabilize income to stabilize our revenue stream a little bit yeah with that fixed and we ran several scenarios like the higher fixed you go it can conceivably hurt the the low water users right so we ran scenarios on 50 percent fix I think the different different ones down the you know in the range and then we tried to look at what would probably be most acceptable suitable best for the customer so if it customers if it stayed at 3565 how much of a difference does that make for a customer in cost I would say a few dollars but I would have to get back to you about that I mean the the objective here is is that there's a desire to increase the fixed charge just be from the district perspective because of revenue stability because of low water sales because of drought now the challenge of as we all know as Ron's mentions that as we increase the fixed charge those individuals who use very little water will see a significant impact and then the conservation message affordability becomes challenging so be given that will be recommending it's a slight increase so that's why we're not doing something more dramatic even though there's a desire to do it but because of that balancing act yeah there's another effect here too that you know the vacation homes which for month after month after month is zero zero zero this makes them pay a bit more into the system than they do now that's true yeah and I would just add there's a fairness issue right that it gets closer going to 40% fixed it's closer not at but closer to what our true fixed cost is so we're inching that way it's around what 70% our fixed costs 90 more like 90 95 yeah you don't have a much variable your variable looks like electricity yeah so of course you wouldn't I mean that's very extreme because then you're yeah is there an interplay here with if we go to tears just in terms of increasing the fixed costs there are two tears the lower tears still would be paying less that's it's one pit one tear the increase in the fixed costs would have more of an effect on the lower user exactly okay so that's something that we have to balance out so we have to look at the whole picture but that's a great observation so this is the meter charge right over here I'm gonna look at my slide I don't have eagle eyes so first thing you'll notice is that single family multifamily and commercial the proposed rates are all the same only irrigation is different second we had a lot of discussion internally about what's the appropriate ratios to use for the meter charges what we're doing is is we're using your ratios so we're actually looking at specifically at the meters that you have installed in the ground what that does though is that it does chart the shifts the cost to the larger meter so if you notice for instance if you look at commercial and you look at a six inch which is very large right now remember this is without any revenue adjustments we're not same amount of revenue you'll notice that the six inch proposed is two thousand four hundred thirty two dollars while the current is two thousand two hundred seventy six dollars so there is an increase there about ten percent yeah for the six inch and then you can see that for the eight inch now there isn't that many six inch and eight inches I shouldn't know how many there are but I don't have that information at the top of my hand for a handful handful yeah but one thing you will notice is that one of our concerns was is the five eighth inch which we highlight to hear which is the most predominant customers if you look at single family currently is thirty two dollars and ninety five cents it goes up to thirty six dollars and sixty two cents so this is that increase as I mentioned we're increasing the fixed charge so you do see a shift from that we're looking at your specific ratios so that that does shift and we're collecting the same amount of revenue is there any question here I know there's a lot of data here and a lot of data points I think that's it that shows the answer to your question but here it's about three and a half dollars more when we go from thirty five to forty percent fixed for the five eighths there it is now one of our concerns was on the single family residential side of things in the past we have made a policy to make all single family residential customers service meter charges the same and Sanjay is recommending that we use the flow rate in order to be consistent and equitable with what we're doing with other customer classes and that will increase the charge of the fixed service charge for some of our larger meters for single family residential we have about three hundred accounts that will be impacted by that so that's specifically the one inch meter we look at the current it's thirty two dollars and ninety five cents the proposal be eighty two dollars and twelve cents that's not for apartments no we've we've got about three different type of customer profiles that are on a one inch meter that are single family residential some of them some of them are simply older homes that had a one inch meter installed at the time the home was built we have some of them that are actually duplexes because remember our duplexes are treated as a single single family residential unit they don't go to a multifamily until they get three or more dwelling units on a parcel so some of those are our duplexes and then we have some customers who had a one inch meter installed in order to accommodate fire flow now they're not charged a separate fire service charge because they only have a single one inch meter but it serves both their residential use and potential fire flow use so we're trying to come up with mechanisms to help mitigate the impact on on those customers what would it cost some one of these customer classes to replace their meter with a five eighths if they if you have a one inch or even worse a one and a half inch and they want to not have to pay that extra charge yeah so a meters around three hundred dollars when we're talking in this range of five eighths and then installation so that's the kind of thing where I think we could do the cost analysis form okay and the fire service people where they're kind of stuck with a one meter because it's serving both and it looks like Taj has some ideas here where we're working while we're working throughout those classes to try to make it fair I guess for them so we have some ideas floating around I just had a couple put there was a whole series of housing that went out in the dual box where there are four plexus with a one inch meter and so if they're four plexus they're actually falling under multifamily residential accounts okay they do have a one inch meter then okay and then and the other question was Sanjay before I forget so are we using are you gonna use flow for fire services to yeah I'm gonna talk about fire service in a second yeah gosh Ron hit that hopefully you heard him he said some of those homes that have one-inch meters that have fire sprinklers they have to we have to leave that in they have no way to downsize that meter however there is a possibility that we would classify them as maybe a standard single-family but those homes are not paying for a fire meter that's right so they may actually be paying less by having a single one inch I don't know about that it's still higher in the proposals we're looking at those are monthly charges right but then there are those homes that are that have one-inch meters that don't have fire sprinklers that those could definitely downsize yes okay and let me reiterate and Sanjay correct me these are the proposed but without the rate increase on top okay and how many one-and-a-half-inch meters single-family residents we don't have any one-and-a-half-inch meters we've got some three-quarter inch and we've got some one inch we should just take that off the spreadsheet then because that's not a problem yeah I mean that's just it's in your every five times yeah increase yeah in order we have any eight inch single-family residents is either so it's just off yeah and what's the so the single-family residents and multi-family residents are going up for the smaller meter sizes actually for all of them but the commercial it goes up for the five-eighths restricted but goes down for the for the larger sizes and looks like the irrigation goes down as well so until you get up to the two-inch range yeah so what's so there's two things going on yeah one it well three things went on first we've increased the fixed charge by 40% second we've looked at the actual peaking that occurs between these different customer class when we applied that in the past analysis that you did this rate study it was determined that commercial actually peaked more than single-family and multi-family so that's why they were higher based on our analysis now it looks like single family multi-family and commercial are similar so they should all pay the same third thing that's changed is the meter ratios we're actually looking at the ratios that you have in the ground we're not using the AWA standards okay the last rate study we had done was just at the cusp of the drought response that we were seeing by our customers and now Sanjay has the benefit of some some data post-drought that's showing that these customers are not peaking as much as they were in the past so next is on the tiered rate structure we had a lot of dialogue about what's appropriate tiered rate structure how do we justify tiers what's the logic was to tier with one logic that we that we discovered or thought about is a two-tiered rate structure where we look at the amount of water that you have for the basin for pre-recovery levels so that's acre-feet we allocate that to every account and put that into a monthly basis that's basically six hcf so the logic here is is that if you use six or under your you know in some sense part of the solutions cliche here or you shouldn't pay for whatever it's needed for the water reliability and once you go above that then you're causing the district to find a solution to the groundwater there's a logic here that's a number we've had a lot of discussion internally about that so our recommendations as single family multifamily it are similar in sense of the indoor needs at least right for household size the number of people in the house are very similar between those two so we recommend having those as a similar tiered rate structure two-tiered now multifamily of course will be based on number of units so if someone had a 10 unit their tiers would be 60 if someone had five units and it'll be 30 you multiply the number of units and then for commercial irrigation recommending them to be uniform like your current rate structure now one thought about our multifamily is that they don't have any landscaping and so wouldn't that change their their peaking because that kind of is the difference between winter and summer you so you'd expect them to have no peaking yeah based on our analysis we saw some peaking that's similar single family I mean the thing is your single family people don't peak so that's why they're similar to because people don't use much water you have the lowest gpcd in California so I'm proud of it yeah so that's the you know so they're very similar you know in the sense that everyone doing indoor needs and while some of our very large multifamily complexes are on a separate irrigation meter we have a lot of triplexes and four plexus that that's maybe not the case they don't have separate irrigation so that's kind of contributing a little bit to a dynamic that looks very similar to single family residential so that your definition of peaking is summer use to winter use so you have a customer who uses 20 gallons a day in in winter and a hundred gallons a day in summer so that'd be high on your peaking because it's a ratio and you have another customer who's using a hundred gallons per day in the in the winter and 200 gallons per day in the summer and they're they wouldn't behind your your your ratio but your taxing the system or with the customer who starts at a hundred and goes to 200 then you are the one that starts at 20 and goes to a hundred correct we taken to count both factors one is how much you peak and how much water you use okay so you are yeah so we do this on a customer class so we don't do it on an account level sure because it's it's really ultimately how much water is needed not what the ratio is yeah that determines how you have to size the system and yeah I mean you can peak a lot but you don't use that much water so then it doesn't really I think that's where the tier structure comes in right is that what you're no that's the meter ratio the meter charge no but if you go from 100 to 200 your peaking is not as great but you'll be in the tier two structure so you'll eventually pay yeah the tier structure though it's just six units so it doesn't it's we're putting all the peaking costs on the meter ratio means it says the peaking is just on a whole class basis yeah on the individual you could do it the other way correct customer in its own class depending on literally they're peaking but correct do that yeah you could do that if you want so what I'm sorry did I talk about this slide so the next water reliability rely water reliability is estimated to be five point seven million dollars worked with staff and determining what the appropriate amount for that is based on the budget this cost is to incur to improve the long term health of the groundwater basin the argument here is is that cost should be recovered in tier two where do things like the water quality I mean your chrome six and things like that appear so water quality would be under base delivery okay or would either be based which in some sense doesn't matter because they're both a unit rate right and same thing conservation we're saying everyone should pay for it this is just the additional cost for improving the basin I would think I mean in the past we had conservation in its own tier because it was something you had to do conservation when you were over using your base right and we could do that when I show you the results then you can think about whether you want that or not and then that could be analysis that we look at so we have two basically classes the two tiered for single family multi-family uniform we have three components associated with the rate structure which is supply base delivery and water reliability which is supplemental now these are the rates so when we have this focus on residential we have zero to six and then six and above I show you how much hcf we're estimating to be sold in each of the tiers we have the supply cost which is three dollars and sixty eight cents we have the base delivery which is one dollar and twenty eight cents and then we have the reliability so the five point seven million dollars is being recovered in the six and above units as you know there's not that much water in that because again you've done an excellent job not using water but that cost needs to be recovered by those individuals so that unit rate is a bit high it is twenty three dollars and seventy four cents that was a concern so we that's what we examined in and we decided to put conservation all the tiers because if we did put conservation in the reliability charge I believe it went up to more like twenty eight dollars so increased it by five dollars hmm I'm confused if I'm using ten hcf I'm also paying the tier one all right to sex and so supply and base should already been paid for by my tier one usage and my terry tour usage from six to ten should just be the reliability shouldn't it well this is just a unit rate we just divided the total cost by all the units it's you're not covering all the cost we're saying supply and base is a unit rate cost three dollars and sixty eight cents for each hcf each okay I see so we're not it's not once you you know you go into tier two then we still need to cover it if we did that then tier one would go up right much more so as you can see the tier one is four dollars ninety seven cents tier two is twenty eight dollars and seventy one cents again this is without any increase in revenues the non-residential as you see their supply and base are the same the water reliability of course is difference four dollars and fifty five cents because we're putting that across all the units everyone's paying for in all the units there's no tiers so then it's nine dollars and fifty two cents if we put the water supply water reliability and all the tiers for non for residential excuse me it would be again it would be four dollars and fifty five cents it would also be nine dollars and fifty two cents if we did a uniform rate so just to give you a frame of reference the non residential uniform rate right now is ten dollars and forty cents a unit under stage three emergency rates the tier one is six dollars and ninety cents a unit if we eliminate tier two because with the recent for order we were told not to collect your two charges anymore so we jump from tier one to tier three tier three is twenty one oh one a unit so our customers are seeing a jump from six ninety a unit to twenty one oh one a unit under our current rates that how many hcf is that it's tier one is going because tier one is now encompassing tier one and tier two it's going from zero to zero to seven point nine nine and then eight units and above is at the tier two rate of twenty one oh one so these rates is stage three or two on top of this this is the right this is the base rate this is this is the base rate so there may be some stage charges on top of this stage charges but this this includes the supply that you have right now we don't need to add any stages on top this collects the same amount of revenue as you're currently collecting yeah so let me let me say that in a different way so because we've been in stage three I think for four years maybe five that's kind of the new norm what our customers are used to that rate because we've been doing that so we're going off that as as being the the base rate if you will and so working from that so the rate that 10% 8% that's off of revenue needs that's off the stage three rates that we're at now so we're and then the other important point to make is if the board does want to continue stage three because of the the intimate threat of further seawater intrusion what we thought is that they could continue to do that but they wouldn't have to charge additional the the incur those additional charges that are associated with the different stages but we could do all the other aspects okay that's my question yeah so that's that's the thinking that is that clear it looks so you can be in stage three without necessarily yeah we implementing right we can still do the message in saying hey it's still important to conserve here all the plethora of things we have we're not gonna do additional rates on top our charges on top of that because based on what Sanjay's presenting it already covers that but won't we still have to have in the whole rate structure listed potential stage three we will we will have it yes yeah yeah and and so 6 8cf is about 150 gallons a day just for reference but that's over a month and then divide by 30 yeah so it's 150 gallons per person per day roughly yeah so I believe six units encompasses about 93 94% of our customer base it's yeah 12 is 94 okay six I don't know on top of my head okay that's my next slide so we yeah increased the fixed charge we've changed a little bit of the tier definitions and we changed the tier price so the question of course is what does this mean so again I just want to reiterate this is the same revenues without the 10% increase in revenues what I'm showing you here is different units so we have two units 5 7 9 and 12 I'm showing you the current bill the proposed bill the dollar change and the percent change so as you can see if you use two unit and this is for a 5 8 inch meter if you use two or five units you actually will see a reduction in your bill again this is not without this is sort of a hypothetical bill because without the 10% increase so if we did do the 10% it would be across the board so you can you know so you'll see what the changes are so the person uses five would actually still see a slight decrease instead of 11 a negative 12% will be negative 2% roughly then you can see the other individuals who use 7 9 or 12 units and as you can see if you go above 12 you do see an increase now as you know in your current rate structure you do have a tier 4 that is very high so we did want to show you usage above that but before I go there when there's a little animation here that 94% of the bills use 12 units or less so this is 94% of your customers are in it live in this world is there any question about this slide before I know is a good slide so if there's a question one of your other graphs I think 70% of the people would have either a lower bill yes that's a more than a five dollar increase yeah I'm gonna show that in a second so this is the next one this is those who use above 12 now it one thing you'll notice is that once you go above 20 units you actually will see a decrease now there are very few people in these higher usage basically 6% of the bills are above 12 units you know it with these individuals who are way outside my recommendation would be given the challenges you have with your groundwater basin is that you would put penalties or something because this is just it's not appropriate to use this and this wouldn't fall under prop 218 this is not a revenue stream this is a you know change your behavior but we could do it with 218 in place these penalties you're talking about these penalties I'm talking about don't fall under prop 218 this is a true penalty this is like crossing jaywalking or well I don't think they give jaywalking tickets anymore doesn't like it but it is a penalty for what your water usage is correct yeah one could claim 218 applies since it's just how much water you use but it wouldn't be based on consumption correct I would turn to your attorney and you can enact a penalty that's anybody above a certain amount he's going to pay a penalty Santa Cruz has that in the existence already and it's not based it's not under 218 because it's basically punitive it's it's under the the penal code section that allows you to penalize overuse of water wasting sounds to waste wasteful water use right okay what we don't want to do is assume that that revenue comes in and built that into our financial plan then that's a problem right we want to hope that everyone behaves properly well you could even use this penalty money for something other than the general fund correct but you don't want to count on it yes so backing up a reliability how maybe it's more staff that came up with that estimate for reliability how defensible and what types of decisions were made for the the amount of the amount of money in water reliability yeah well how did you determine this is reliability cost for reliability in terms of the tier threshold or in terms of the cost that roll into the revenue the revenue 5.7 million so the items that are considered water reliability costs are those associated with with recovering our groundwater basin so I believe we did have the MGA costs in there but we pulled those out we pulled some of it out that our interior one yeah they're associated with the general cost that's like 700,000 okay because I think we felt at this point in time we were obligated to participate in the MGA regardless of water use but the repair the impairing of the basin is that's the cost that's the cost and then any any cost to develop a supplemental supply so all of our community water plan efforts would be towards water reliability but we have two supplemental supply criteria here there's with some funds without the what we're talking about right here though is simply our current budget right because right now he's still comparing just this current budget to our current rate structure he hasn't considered the costs in the future that's but the liability would be more expensive without grants or whatever I don't know what our current structure has in it our current structure has some of the preliminary studies and preliminary work we're doing on pure water soquel I think there are costs in there to evaluate the storm water recharge efforts there is I believe 10,000 in there for the draft EIR on deep water desal water transfer water transfers so all of that type of stuff that's it's is is what's hitting that water reliability I get it so this is a histogram where we actually calculate the bill for all your customers we know what your current their current bill is we know based on this rate structure what their bill would be if they use the same amount of water and then we just basically look at the change so you can see over here about fit and again this is want to echo this is without a revenue adjustment so 50% of the bills will actually see a decrease or no change so easy species are usually very modest some customers around I would say 22% we'll see a 0 to $5 increase and then you have some customers who will see a more significant increase and let me try to say it so Sanjay presented the revenue needs the 10% 8% that's earlier with and without grants and what you see is that the low end will stay in the fixed cost and correct me if I'm wrong but I want to put it in perspective with potential rate increases so it's not a surprise that if you go with anywhere in the realm of what he's suggesting up there in the previous slides is that the low end would be the very low end would be slightly more the six unit would probably be just a little bit less than what they're paying now even with the increases and then as you go up it gets they would pay more until you get to the very top in where they pay less so it's not a linear thing it's the look very low in would pay just a little bit more than the six unit type person might pay just slightly less that I call that the average user and then as you go up it pays you pay more until you get to the very top in because of that we don't have a tier three or tier four pay less and looks like the greater than 35 range is in the 12 to 15 segment correct so and so the story here it and you know we have to be comfortable with the story is is that you know the groundwater is impaired we have enough water for everyone if they use six or less you want to use more than six you know you're more welcome to but then you need to pay for the cost to repair the basin that cost is significant because we're in a challenged environment so does that hold water but that story if we if everybody was at six or less would we be alright that's based on the pre-recovery pumping goal that we've used in other literature that wouldn't recover the basin but it means that we wouldn't be making it much worse kind of the status quo the other thing about a two-tiered structure I think it kind of gets a well anyway it can be a very effective conservation structure because of there's a there's a clear delineation between tier one and tier two costs and if you do one two three four I mean you can argue those different ways but some people argue that well I'm in tier two it doesn't matter if I go to tier three it's not as clear versus what you're being clear conservation signal yeah there's a clear conservation signal except for the upper upper high the very that we'll need to do a piddly on I would like to have their money if they don't care so I don't know if I agree with the story okay I think the story is we need to recover our basin we need to recover it faster and it's gonna take more resources if we're using more water rather than the story of if we don't if we don't use water then we don't need to recover our basin oh we kind of looked at that scenario in a way you want to talk about that flat rate that's the uniform rate structure that's the next one I'm gonna show but before I go there just I want to make sure with the current tiered rate there is a one challenge with this rate structure is that first the 15% of the waters used in tier two however five point six million dollars is generated in that tier which represents 47% of the commodity sales very little water but a lot of revenue and so there's a there's a risk there because all of a sudden there's a very strong delineation between it and if someone pays attention to their bill and like wow hey honey that's we really you know we're spending a lot of money just you know this is a very expensive let's try to stay under you know six units we could have some revenue instability so given that there's two ways to deal with that risk there's a risk here financial risk and one is is that we could do a rate stabilization fund so you have that money in the bank basically and you can draw down on that and so we want to build that up another one is is that we can do some sensitivity analysis because remember there's some people who are already paying that amount of water in that higher tier it's really that that segment as you mentioned that yeah so how much sales are really occurring in there and how much of that do we expect to lose and change so we could do that analysis look at that but that's something I recommend and then have a discussion if we do the two tiered rate structure how to deal with that because I don't want to set something up and then everyone changes their behavior and all of a sudden everyone's in tier one so is it is it one consideration that you guys thought well no I guess you can't go eight you've got a good rationale for six we want to have a story here you know and we have to be comfortable with the story so that's a very important you know whatever we do here I want to make sure everyone's comfortable with the story because it has to stick so I'm not gonna be here you know be gone of course love to come back but you know you have to live with this story so and we and it has to be something we can feel comfortable explaining so if we do a uniform rate structure that's the second option it would be $9.52 so be everyone would pay that amount whether your commercial irrigation now the meter charges will be different based on the peaking ratio as I mentioned earlier and then this is the impact now the challenge with this rate structure when we go to $9.52 this is that the lower end users will see more of a dramatic increase because they won't have that low tier one rate that you currently have so as you can see the two units and the five units they do see a greater increase and then once you go above 12 units you see actually they're starting a decrease in the rates but yeah I'm not comfortable with this story either but the story I'm comfortable with so this story says it doesn't matter how much water you use the basin needs to be recovered and it doesn't matter if I use a lot of water and make it more difficult to recover the basin the and the first story was if I don't use a lot of water the basin doesn't need to be recovered and we're okay so I'm somewhere in between I do think that that somebody uses a lot of water puts more stress on the basin and requires actions to be swifter and and stronger and so so that but you still I think a part of it hat of what we are doing with supplemental water supply is just towards recovery so I guess that argues for having reliability but being careful with with not putting everything into there reserving some some actions for for recovery I mean could the story just be that you know at that 2,300 level we're just trying to not make it worse we still need to recover we still need to yeah yeah that's what I'm trying to say yeah and because if we if we don't make it worse and our water levels are too low we're gonna have we're still at risk look to the next slide because I think that that's to me says a lot about why this is not the right thing this says doesn't matter you know just use as much as you want because you're not you're not impacting the recovery that needs to happen yeah so I mean if we did do uniform this is one definitely where I would recommend having penalties in place where you would say if you use a certain above then you get a you pay a penalty to change people's behavior but these penalties would be so egregious that they're not level to sit there and just say okay yeah the the challenge here is is that you know it's a chicken or egg we're in right now in the sense of what are we gonna do with water reliability and then what's the story with the rate structure and how do we you know okay yeah that's our challenge yeah and it's none of them are good we're just trying to pick the best one well and what's reasonable and right and to me there's a story here I know it's it's that if you six or less you're not causing a problem and maybe there's some words meaning that needs to be said you're not making it worse you're not making it worse and if you're using six and above you're making it worse yeah so I agree with that so but maybe maybe it's the reliability we're then I'm not agreeing with okay because it's not a reliable supply if you don't recover the basin the water levels mm-hmm it's reliable short-term you're saying it should be called like supplemental supply for recovery or something like that rather than well I'm just what I'm saying is that if you've got I don't know how this is we're made of what's reliable makes it reliable but I'm I'm saying that part of that should be just the recovery and another part should be you know I mean I could be just called recovery yeah yeah that that's really what it's for that's why we wanted to I mean so everyone that but should should only high high you people use a lot of water pay for recovery or should everyone pay for recovery there are some water reliability costs that are being captured in tier one the we pulled everything out of tier two with the exception I believe of pure water so Cal so the cost for the MGA are being captured in tier one our conservation costs are being captured in tier one so it's just a supplemental supply project that's the water reliability costs primarily in tier two I mean another way to think about is if everyone was tier six or below we wouldn't have the problem that we would need to have recovery from wouldn't have we wouldn't have done that and so clearly the people that have been above the six range there are the people that have really caused the problem and therefore they should really be paying to get it fixed now indeed one of the issues is that they might discover that you know well we can just change our usage and escape that charge for recovery but traditionally you know our sensitivity ratio has not been very high we raise rates and usage doesn't go crashing down to the basement it kind of maybe goes down a little bit but not much so people are pretty insensitive to rate increases well in this particular rate impact is going to feel very similar to what they're paying for the next six months which is the 690 jumping to we should probably seem very little change yeah I'm not arguing with the the structure I'm just arguing with the logic and I think it's very important to have sure you know the story bulletproof yes logic yeah because if this was challenged I mean you would have to explain why these rates are exactly what it's for right it's not for this is our first meeting about this so this is a good opportunity you know to think about it we should move on yeah I've made my point more than once so this is the impact if we do uniform as you can see some looks it would be a significant impact for certain well not significant but the majority of the customers will see a five to fifteen dollar increase some will see a decrease which are the high end users you know you can tell from that chart who would the winners and losers are we also examined fire private fire lines we looked at the cost associated with just fire in itself we've allocated between public and private we're looking at the fire sizes associated with it we've also worked with Taj and engineering to determine how much of your system different facilities how much of its used for fire how much is not for size for fire we've taken that into account this is our proposed fire line charges that we're recommending again this is without the 10% increase so next I'm gonna go to customer select so I've warmed up your brain this is that was sort of the lap around the pool or the first mile now we're gonna get into the uphill run mentally with customer select so I wanted just to do some reminder slides because it's been a while since we've talked about it and we we did talk about these slides so these are repeat slides basically when we talked about it but just to remind ourselves that we did discuss about objectives there was three major objectives fairness equity defensibility I'm excuse me yeah those three so fairness and equity that means many plans tailored to individual needs defensibility that would mean for me narrow plans again because we want we don't want to have a situation where the plan was a really large and someone's complaint you know I'm in a large plan but I'm on the bottom tail of that plan and you're charging me for all this other stuff that I don't use so there's potential problems associated with that so the outcome is many narrow plans to meet both of those objectives I know that's controversial we've also talked about only focusing on single family because and multifamily excuse me so residential because they're similar non-residential there have some large meters for for our standby capacity such as Cabrillo and the seascape golf course so we're not going to non-residential we did talk about having an open enrollment plan where customers can change we talked about whether that should be three to 12 months we've done both analysis three months six months and 12 months which I'll be showing we do recommend that if you do a open enrollment that you have a roll-in period throughout your service area so that your customer service doesn't have everyone calling in it sort of rolls over we did recommend that you automatically adjust to the height or plan once you go into that plan one of the discussions we had earlier on was about penalties so if you went outside your plan what would what would happen to you because of and the challenge with prop 218 is is that if both people use the same amount of water why would one be charged a penalty and another one not just because they chose the wrong plan so what our suggestions is is that we jump into the higher plans and they basically stay in that plan potentially three to six months yes but talking about 218 you could also charge that you know here I am I did use you know 12 units one month but now you're still charging me at the 12 month even though I'm using three yes so yeah it'll go on for a whole almost a whole year correct and so I'm be I'm I'm not getting the same service that she's getting and I'm charging you know so I think that's a charge that also so with capacity I'm comfortable because the concept of capacity is is that hey I peaked off the system and then you have that system that idle capacity for me again when I show up so I think it's fair to charge people for capacity where I think it does get problematic is what we call the water reliability and I have a slide on that in here where if somebody did because right now we're basically following a similar tier logic that if you're in plan zero to six you don't pay the water reliability charge if you go above that then you do pay the water reliability charge if someone bumps into the water reliability charge but then all of a sudden drops back down and they're doing the good thing should they be charged the water reliability in those other months and that's I can see that being challenging so I that's something to consider I'm definitely looking into getting an input from the advisory committee from them about what they think is appropriate there are some thoughts I have but it is a luck to get their input on that and we are meeting with them in October another issue that just came to me is that you know we're bumping people who go over up and keeping them there but we're not doing the same thing going down if I matter you know a 10 to 12 plan and I only use six you're not automatically bumping me down and keeping me there for so that's also you know well so then we're getting into a tiered rate structure I mean that's what it yeah yeah that's what a tiered rate structure is is where those you you if you peak or if you use a lot more water in the summer whatever you only pay it for once this one basically if you peak or use a lot more water you you're paying for that for a longer period the capacity the capacity is let me make sure I covered sorry I covered this one so the next one is credit we talked about that should there be a credit available and we said yes there should be a credit available at the end of the year one of the things we're thinking about cost of groundwater production at the time now with this information and doing the analysis there might be some other things we may want to consider as credit as we look at this various and consideration so of course we want to have appeal process and variants in place if we do this you know customers who do not select would be based on the actual usage that occur and then we already automatically adjust based on use and based on input from the board we were recommending that we use based on input we will use 50 gallons to units of two I'm worried about the first section there the variances appeal like medical devices and scat that's it gets us into a 218 again that you know someone is may have a real problem but they may not even have much income and there's all kinds of rationales for why one person might not want to pay as much as some other person you know they're using the amount of water and that gets you into 218 problems you don't have to have it okay this was based on input that we heard so okay well yeah it's up to you either policies so now the valuation so what we've done is is we've looked at three months six months and 12 months so we actually looked at consumption that occurred and we looked at and if somebody peaked a lot they are stuck with that peak for 12 months if they peaked a little if they peak a lot they're stuck with us six months and then three months now the interesting things about this rate structures is the number of units so as you have larger if you have 12 units 12 units have more let me see what the slides is three units have fewer units than six units and six units have fewer units than 12 units because you don't get stuck in the higher plan so as Leslie says the flexibility so the 12 units has less flexibility 12 months excuse me sorry 12 months has less flexibility sorry about that 12 months has less flexibility and has more units in the higher tiers in the higher plans one of the challenges with this rate structure though is if we did do this is how do we roll it out and is it appropriate to look at past behavior and charge based on that or do we start brand new and just look at this month and then roll it out from this month or do we look at the prior three months six months or 12 months and it matters because if we use the last three months six months 12 months then the plan rates will be similar each year if we roll it out the first month depending on the month that we choose it could have different quantities and the rates could actually jump up the rates would would be higher in the first year and then could potentially drop in the second year so there's some phasing issues associated with this and how we phase this out that we need to think through if we do this so that's another wrinkle to think about so this is as we talked about director Daniels you mentioned this about the higher plans and if you got into higher plans is it appropriate for that person to pay for those additional costs and for me the one of the challenges the water reliability so if somebody uses stays they want to use the four-unit plan but then one month they jump into the seven-unit month plan and they get stuck but they went back to four units in the actual use is it appropriate for them to pay water availability because they just jump one month and be stuck with that the safe was a 12 month period so that's something to think about and then oh what about water supply and delivery so these are concepts that we need to you know work through and figure out if we did this so what are the rates we actually modeled it we developed similar to the tiered rate structure we follow the same logic as the cost of service now what we have is we have customer service which we do have in the tiered rate structure we have peaking but now the peaking is not on the meter charge it's on the plans so we've allocated on the plans instead of the meter charge we have supply cost we have delivery cost and we have the water reliability which is similar to the tiered except in this one it's a it's in the six-unit plan or higher so we actually calculated the peaking by plans so we actually looked at how much people peaked within the plans between summer and winter and that's what this shows you here we didn't we're not showing you all the plans but we actually did calculate that and so those people who for instance if you think about if you use three to four units that person's most likely use there's not much peaking there they're staying in three or four units but if you use above like 11 to 12 units those people peak they use 12 units and then they go back down and so there's some capacity there that they use in the summer that they don't pay for the winter so we want to charge them for that so there's a lot of information here but this is sort of the story behind it so the first column is the customer service this is just the cost to meter read have someone available to answer the phone so every plan pays $4 and 40 cents and this is similar to the the tiered rate structure we've also calculated something similar like that the second component is the peaking charge so if we call then the tiered rates the peaking components on the meter charge here it's on the plans so bigger your plan is more you use in the tiered rate structure is on the meter size so someone could have a 5 8 inch meter but they don't use that much water but they still are paying for all that capacity all that peak in this one now they're paying it based on how much actual water they use so we shift that cost over to plans next is the water supply cost which is similar to the tiered rate structure again in units of two we have the base again that's linear and then we have the water reliability in the water reliability as you notice only shows up once you go above six units and that's again it's a unit charge so you add all those up together you get the plan now one thing you'll notice is that if you don't use any water throughout the whole year you only pay $4 and 40 cents not that many people use no water throughout the whole year I mean maybe we do have a couple but if you use very little water then you see that the charge is much less then if you use a lot of water you get charged more and then of course remember this is a 12 month plan so in one month if I jump into a higher use I get stuck with that higher charge for the whole year I just want to mention that when this was presented to the rate committee the public members on there I kind of sat there and listened but the public members went totally berserk about this but the level zero usage in the other plan the tiered inclination was what forty one dollars what's the base zero charge thirty six thirty six thirty six thirty six whereas this is four dollars and forty cents and it was mentioned and that may be true that at four dollars and forty cents you probably would barely pay for going out reading the meter preparing the bill sending the bill taking care of getting back four dollars and forty cents and putting the bank so it's not to mention having fire service available the liability and even just the depreciation on our system I mean you know types eventually break and they had to get replaced wells eventually four dollars and forty cents me if everyone is at that level the system would just not work at all or even meter maintenance I'm not sure we're capturing the cost even maintain a meter at that residence and that would happen whether they used water or not yeah so we could look at different scenarios here one is put meter maintenance as a cost component but the idea here is we're trying to get away from the meter into plans well you could take the previous numbers you had and use them here instead of these these are different numbers than the previous yeah the the previous ones assume basically plan switching monthly this is assumed do the same thing you could still lock people into plans yeah but then I have to count the number of units because the unit there's more people in the higher tiers right the in the tiered rate structure right you you fluctuate right you move up and down and this one you don't this one you're stuck or some amount of time you some amount of time yes so this one now shows basically the three options of a 12 months six months and three months we also show that the proposed tiered rates as a reference point I'm also showing you the bill counts associated with it's because the bill counts are gonna be different because in the 12 month plan if you notice there's a lot more people in the higher tiers or in the higher plans excuse me like for instance if you look at the 10 units right let's just look at 10 so in the tiered rate there's only 7.4% of the bills use 10 while when the 12 month plan there's 10.8 people get stuck there so all of a sudden I use it once I'm stuck there now I'm paying for that for a longer period of time if you go to the six month plan then it goes to 9.8 and then the three month plan is similar it's getting similar to the one month plan or the tiered rate structure so the next slide is basically showing that compared to a uniform rate structure I don't think there's a much interest in the uniform rate structure based on the input I got earlier on from the board so I'm not going to cover that is there any questions or comments about customer select associated with it one of the things that I find is it's very complicated all this getting stuck in things the issue about how you have the things start off the anyway I don't see how we explain the system to our customers it's a lot more complicated than you know our current declining system that's fairly simple to know and this isn't you know maybe it's worth sharing at least what I think it was the sentiment of the Water Rates Advisory Committee at the last meeting which was like about a week or two ago and Leslie Sanjay board members who are on that correct me if you're wrong but what I heard and these are people these are public members that dedicated you know a year over a year of their service you know about on a monthly basis and coming in and really liking this method so they they were invested in it but at the last meeting what I thought I heard and correct me if I'm wrong was they think it's worth continuing to evolve it maybe Sanjay presents it at a Aqua meeting or two and let people you know put their input to it maybe when we get if in when and if we get AMI because then people will know their usage and would know if they're creeping up you know they could get a message sent to them on a hourly basis I guess whatever but that it's time may not quite be there and I thought that was telling for me for people who put so much effort into this and and were really beholden to it at the beginning but going through this process I think I think that's where they kind of ended up is that is that a fair assessment would you say that the last meeting I wasn't there you weren't there that's right but Leslie and I think director Daniels was I was yeah it was that is that a fair characterization of what we thought we heard they would like to see an effective customer select scheme they just don't think this is it maybe it's not red needs more work well also there's the issue that our system will be prepared to implement this right probably for another year so adopting this now means that we couldn't actually do it because we don't have our system ready for it so we have to hold off at least a year and I think we all we really should spend more time thinking about how we can simplify it so that we can actually get customers to understand what they're being charged and and understand it is required if you're going to understand how it's fair because if it's just random bills coming with all kinds of numbers and charges and it means that people just assume it's not fair so I'm gonna move on unless yes we need to talk okay so we're moving on so the next topic is emergency rates there are different approaches of collecting emergency rates so this is not just we talked about drought penalty rates penalties don't fall on prop 218 we're trying to change behavior it's not a revenue stream this is a revenue stream this would need to fall in a prop 218 would be in our administrative record would be in your prop 218 notice you would adopt it you would have triggers associated with it you don't have to implement it it's sort of your back pocket policy you could always implement something less than what's adopted across the board so if it just creates flexibility and as you know droughts occur and when they do occur unfortunately in 2014 for you it happened very quickly so these things can happen very fast so you want to have that in your back pocket there are three approaches one is a fixed meter charge where basically as the meters get bigger you pay more that's what Santa Cruz has and they have different stages you can have a uniform where it's a hcf or you can have a tiered which is what you had in the past based on our discussion with staff our recommendation is to update the emergency rates using your tiered or commodity approach similar to what you've done in the past this is a good opportunity if the board has other things they would like to evaluate we could do that as you know we have a lot on our plate already so but we could evaluate is there if there's an interest tiered commodity sounds like the way to go okay it's also real simple you just say here whatever your bill is it's increased by 3% exactly so next step is to receive direction from the board on which rich structure to proceed for further refinements then to show the proposed five-year rate with the increase and the proposed rates and to develop the five-year emergency rates to because once we know what the proposed rate structure is then I can develop the emergency rates I mean I'm we need here from the public but I just I'm I'm pretty strongly leaning towards just the two-tier approach and I think I like dr. Daniels idea of maybe seeing about an alternative to jumping it up high at first and maybe smoothing that out whether it was 999 versus let's get public comment first before we start discussing it okay which we've already been doing so anyone wish to address us on this item thank you Becky Steinbrenner I came in late and I apologize but I was at the rate committee hearing meeting and I heard the great outcry from the public members on that when they saw this presentation so I'm glad you're moving slowly on it I had I just want to point out that it looks to me like this is sort of fueling the funds to help pay for pure water so Cal please confirm is is this taking into account the cost because I see contingencies with grants without grants is this building the cushion to pay for pure water so Cal yes and no I'd say pure water so Cal is in the five-year finance plan okay so that's part of why these rates are being built in the way that they are now and I want to point out that still your board claims at least I think that you haven't made up your mind you're going to choose the budget for water transfers but there's also water in there for water transfers program we're doing now and for looking at deepwater diesel which we're doing now so all of that is built into this if you had to buy water from deepwater diesel that's also built into this I'd suggest taking comment and then yeah all right I understand no back and forth all right thank you for that bit of clarification I just want to point out regarding pure water so Cal that your own documents show in that have adding that project to your system would increase the supplemental supply operating costs beginning fiscal year 2023 2024 to an estimated by an estimated almost two and a half million dollars two and a half million dollars and already the groundwater management for 2018 2019 is it five million dollars additional so I think there are some readily available things and I'm really looking forward to the day this November hopefully when the water comes from Santa Cruz City the north coast streams and that's going to help a lot I want to also ask a question and I've only got a bit of time here what what is exactly meant by emergency rates what is what do you define as emergency rates is that when you have to buy water or sell water to other agencies or if you could please define emergency rates and what the criteria for declaring emergency rate status would be I'd appreciate that thank you very much I would say that explanations pretty explained in our urban water management plan and then if you have questions from staff beyond that they I just want to remind the board that there was the gap rate if no supplies pursued that that was another evaluation that was presented last time and the rates are also being looked at the revenue whether the fifty million dollar grant or some portion that's provided or not so this one make sure that's clear anyone else wish to address us so you know I just have one comment when you start throwing around the numbers they sound really big if you look at the effect on individual bills it's not as big as you think the other the other two comments the other comment is what is the cost of having seawater come into our aquifer that's something that that we have to to weigh the costs of any supply of water transfers or pure water so Cal or deep deep water desal or any supplemental supply it's it's not a it's not something you can just say we don't want to pay this you have to also say at the same time we're willing to risk the aquifer and the the amount of money it cost if it were to be intruded by seawater so okay let's bring it back to the board and discuss these next steps so we have to pick a right structure anyone else want to I was thinking about director Harnsmeyer and how he said we should have a rate structure that's a continuous curve and the actually the cuss customer select is kind of like that because it's got so many different possibilities you know it's broken down so finally I don't know whether we can pull off customer select I like that it it instead of saying you have a meter of a certain size so that determines how much your impact is on the system and on the resource that it's it's tied to how much water you use but I do think it would before I would support it I'd want to at very least have groups of our customers really you know get together and say we're willing to do this we're not willing to do this and have to look at what the education part of it all is you know I'd be doing something so different than what everybody else is doing there's a cost involved there with with education so I'd like to see it happen at some point and maybe it's when or if a am I occurs where there's that feedback but I don't think that we should pursue it any farther than what we have but I would like to see it keep coming back to the board as an option relative to that I think one of things that was discussed is that at some point when we get this home so we're reasonably comfortable with it we could even put this on people's bills and say if these rates were applied this is what you'd be charged so give people an experience of it it could be a subset of the customers or something and so you could see if this new thing were to be implemented this is what the effect would be on me because yeah it's kind of arbitrary now you can see all these charts and graphs and tables and things and knowing how it affects individual customers not quite clear I actually thought it was kind of interesting I was looking at the that slide that shows what the cost would be for the tiered right and then for those different usage what it would be for customer select and actually if you're a low water user you're going to get a benefit out of it even if you do get pushed up to the next tier for three months or 12 months it's just it's it's hard to understand how it affects you I mean when you talk about me going up to the next tier and being stuck there for six months but when the tears you know instead of four dollars a month it's 13 or instead of 62 it's 89 and then you look at the before the uniform rates but that's the tiered rates okay oh sorry okay the tiered rates you can see that still you'd be paying less if you're a lower water user like six units at customer select and if you got bumped up to the next tier you'd be paying about what you would have been paying with the tiered rates it's it may not be as scary as we all think I mean I was a little scared by it but you know it would be better if we had AMI and then it could be connected with that and people can see what they're doing and they'll feel like they have some control being one that likes to feel like I have control I would like that so I mean I I think for now the tiered rates would be what I would be interested in but I'm not completely against the customer select it's it's not really as scary as I thought it was I had a question so you know I know it was a lot of thought went into going to the 40% fixed charges versus 35 and but then it as you mentioned it also creates while that creates some financial stability it also creates some potential instability in the fact that if there's that much of a jump you might have a decrease in usage at that level which is great for the aquifer so that may be the way to go but just you know I'm still not sure about that percent change didn't change it that much we looked at I think it was about two dollars a month difference okay yeah remember if you increase the or decrease the fixed charge the the jump between tier one and two will stay the same you're just increasing both because it's just the supply and delivery charge will go up so if okay so the difference would still remain for the most part might be slightly not yeah and when you're looking at 35 65 I have to do my math I mean really it should be 60 40 if you look at what the actual costs are the fixed costs are 90% of our costs but 90 10 yeah it should be 90 10 but I mean there's a point where you you do want to still have conservation but yeah I don't have a problem with that x increasing it how many things are we deciding on just giving guys right so I think which right structure I think nobody likes the uniform which I'm one of but it just sends the wrong message right and and the two tiers what we can do and we obviously liked more tiers but that wasn't doable so we're kind of not quite ready for customer select even though it's a cool idea so to me it seems like we just not much choice one remember one feature about the customer select is you have to be involved with your rates because if you get pumped up and you never bother to go look at it again you will stay up there forever so you may normally be using four units but you've been bumped up to eight and you'll stay at eight until you figure it out and figure out how to go to the the staff and ask them to put it back down so it makes people have to be involved with their rates whereas now all they do is just I don't think it's gonna happen you to make some I think what's gonna happen is people will get involved and go get very angry oh yeah yeah and you have to if I think you have to have it'd be a tremendous education program that would have to be rolled out to get people to think differently in fact I was thinking that rather than having this I have to go and ask the staff to put me back down after the 12 months is over instead it would automatically go back down to the average of your last 12 months so if you go if you went up one month in the summer and you got stuck there for 12 months you'd take the average of all those months and you automatically get put down to that and that would be less the effort on the staff's part because for most folks that would pay okay if they wanted to they could put themselves down at the zero rate if they wanted but that immediately pop back up but you'd you'd have to explain to people what's gonna happen and there'd have to be some some way of them knowing that it's happening because they're not used to it now yeah because they get paid on just what they do that month and the next month I start all over again sure and I think we'd have to have some higher rate for the lower users to cover more of the cost especially yeah it just didn't seem fair doesn't seem fair almost seems like your subsidized the other normal users are subsidizing and larger families are subsidizing the low users to an extreme degree so I think we've decided then we would like to tear inclining structure to be brought back with us with the details the details okay the actual revenue we need and we'll continue to study the customer select program with some changes and when I like the idea of taking it to meetings and throwing it out there and kind of wild and people shoot bullets at it and then see what we need to know any more okay now we go to item 6.3 revisions to the district's lake adjustment policy $330,000 we're giving staff directions so after the August 21st board meeting the directors requested that we take a look at our leak adjustment policy we had a variance request at that board meeting from an individual who had experienced some high usage while she was not in residence and so the board had requested that we bring our leak adjustment policy back so we were able to go out and we did a little analysis and back in 2015 when we last looked at our leak adjustment policy we actually made it more generous at that time and we revised our tier adjustment policy rolled it into the leak adjustment policy so people were getting adjustments for almost any leak once every three years there was a meeting where we actually the board granted a variance where a customer had two two different leaks and within a fairly within that three-year period they had two different leaks and the board went ahead and allowed a variance for giving them the more generous of the two leaks and so over the years these changes to our leak adjustments policy have impacted us financially it has been a significant increase in the number of leak adjustments that we're processing and the amount of the leak adjustments that we're writing off so we wanted to be able to give you that analysis we also went out and looked at other area water districts here in the county to see what they were doing in terms of leak adjustments and I've provided you that analysis other than scott's valley water district I don't know of any other that's giving an adjustment for simply unexplained water use there were two agencies that I could find in the state that did allow an adjustment for unexplained water use but they put some fairly restrictive limitations on it in order to kind of mitigate the the right off that would incur if they were to grant those policies it's awfully difficult for us in our position to identify whether unexplained high use is simply an unintended consequence of somebody being out of town and a toilet lift running or something like that or if it's an instance of actual neglect or abuse we have we have no idea so I mean is there is a reason why couldn't just be like a uniform charge instead of the tiered thing on the amount of an adjustment went up because that's one thing that made it somewhat seemed like a little bit out of punitive well but the case we're talking about wasn't the leak the different idea I'm just saying in general using that the tier rate sometimes makes it instead of just charging for the cost of the water I agree it should be the cost of the water because the amount issued for leak adjustments doesn't mean that that's the cost of the water that we didn't get paid for that's what we could have gotten if we didn't adjust it right so depending on how generous we go I was able to identify that if we just expanded the scope to instances of unexplained water use and granted them the same type of leak adjustment that we currently offer that the impact I believe would be about sixty six thousand dollars if we go a more generous adjustment than that then there's a good chance that that could be much more of a fiscal impact for every two hundred and fifty thousand dollars in write-offs we'll have to increase rates for all of our customers one percent how does that work if it's money that's due to the tiers going well because when we calculate our rates we do it based on revenue need so we take that anticipated usage we identify the revenue need associated with it so you can calculate people using more water than they meant well it's based on historical usage so that does include some leaks when we when we adjust a leak we don't adjust the consumption we just adjust the bill because if we adjust the consumption then we don't get accurate water use numbers for our state reporting so when we pull that information for a rate study it includes water used across the board and that includes water attributed to leaks so that is the basis for calculating our rates after that analysis did you have suggestion or recommendation I I didn't but I do have our list of questions yeah that I would need the board to provide me input on in order for me to go back and devise a revised leak adjustment policy are we trying to address them for me we'll try to address them okay I'm still not convinced that it's a real loss of revenue that it's a loss of revenue based on the tears and some of them seem kind of punitive for accidental use but remember like Sanjay has pulled the last three years of consumption in order to calculate what what those rates need to be going forward and that three years of consumption includes water loss to leaks so anyone who wishes to address us on this complicated issue this would be the time thank you Becky Stein Brunner I have a question how do you verify that a high meter reading is due indeed to an actual leak do you find the wet soil or the problem with the appliance or whatever because I have also heard your board discuss that you've had a very high failure rate on your meters is this a function of the problem with the meters and maybe the absentee property owners just don't know and so they get a high meter reading and assume that it's a leak how do you verify that it is indeed a leak in the system thank you but I don't think we have a high no that's that's incorrect incorrect statement what is our failure rate for the meters it's it's within the standards it's it's very low because we have almost all new meters if if a customer were to question whether or not there was a meter problem they could get the meter tested right right I think what's being referred to is the battery charge going down but the meter itself in the way it records is not inaccurate and if it were a meter malfunction we wouldn't see that water use increase and then decrease after after a repair has been affected anyone else wish to address us say no one back to the board should we try and yeah I just had a few questions about the the policies of other agencies so that's on page 100 129 so city of Santa Cruz type of leak underground leak or extraordinary non-recurring public plumbing issue I don't know what that means so what's an extraordinary non-recurring plumbing issue so their underground leak is just for a service land leak but if you had an extraordinary like a toilet leak or an irrigation system leak or that type of scenario they do it upon proof of repair so once once you can prove that whatever that non-recurring extraordinary incident was has been repaired and is not likely to recur then they will grant you a leak adjustment okay and then the amount adjusted by Sanctuary's is all consumption in excess of prior year so what they do is for instance if you have your leak in August they take last August's consumption and we they compare that and they take if you use two ten units last August and this year you use 20 units they take it back and bill you for 10 units whereas we do a 50% reduction 50% reduction plus we drop them to the lowest tier that they achieved the prior year so if it was a 20 unit leak and last year they use 10 units we would write off five units right off the bat and then we take those other five units and drop it down to tier two tier three where they hit at 10 units last year and so City of Watsonville's unintended water use in the table for type of leak that's that's any unintended water use upon proof that the incident has been repaired so again you have to show its repair that's all I had so we go back to the questions how often should a customer receive an adjustment for unexplained water use that's not a leak that's just right right now we offer a leak adjustment once in a three-year period so I don't know if you want unintended or unexplained water use to be that once every three years or if you want to apply a different metric to it well there's even the question do we even want the unexplained water used to be adjusted we've never done that in the past so I think that's the first question right we just want documented leaks well then you know when we when a person gets blindsided by a lot of water use it's not unreasonable for them to come to us and go you know what happened and do we just say tough or do we give them and you know the meters working it happened in the story or do we listen to them or have a policy that says sometimes something happens and that it doesn't have you know this is not something that's recurring all the time with you and give some type of allowance for that I favor giving some type of allowance I mean that you know the person that was here last time was one of those people you definitely feel for them you know yeah I mean it sounds like unless something drastically changes that could increase you know leak adjustments 20% and the cost go up 66,000 but maybe that's worth it if we think that's fair I have quite a bit of empathy for somebody that gets blindsided by especially if they haven't even been home a huge yeah okay so when I think I mean whatever years interval we pick should be the same for that as anything else you know I think they range from one per year to one every five years and we're kind of in the middle range so we pick the same range we have now okay I think that's reasonable yeah how many building period should be adjusted per incident I didn't even understand that question so if it goes over from one building to an X like somebody has so right now right now if it crosses two billing periods we adjust two different billing periods so if if they have a leak in toward the end of July and it rolls into their August bill then we adjust both their July and their August bill some agencies will only do one billing period I say we do to yeah I don't know of anyone who does more than two with one or two I'm okay with the way we do it now oh yeah I think you know if it starts the day before the end of a billing period and that's excellent yeah yeah so too I mean hopefully I will catch these a lot sooner sometimes with unexplained high use you can see it go on for a number of months well we should be even if we allow alert them to that if they can't identify what's causing it I think we do it at the two month maybe it goes three four five months then the others won't get covered limited to two the first two months that covers somebody is just on the coast just unlucky as far as their meter reading date as long as we're informing them if we're not sure we are are we informing them we if if we're out when we read the meter and we see that meter spinning at a rate that is indicative of a leak we will notify them with a door hanger otherwise they are notified when they get their bill and their bill is higher than normal what if they don't look at their bill we don't we don't know when we're we don't know whether that use is attributed just just having more people in the house or if they put in a lawn or a garden or a pool a pool we have we we don't know you're right we don't know there's even the question of a definition of unexplained water use to the customer they might think this isn't unexplained how do we know when we're just seeing the levels go up and down every day well I thought we're talking about a leak now not unexplained unexplained means there's no explanation for the use so all these questions are unexplained right right we have a leak adjustment policy in place they don't know if we want to change our current leak adjustment policy or not we will be reevaluating it again with a new rate structure right so so what are we doing here it's two max right okay how should they just be calculated so what kind of formula do we use right right do we want to stay with our current formula do we want to change that formula do we want a different formula for unexplained high use it's 50 percent less the low reduce it to the low to the tier that they achieve last year so if they're normally a tier 2 user we take the other 50 percent and drop it down to tier 2 instead of tier 4 versus the I still was wondering about the uniform rate for the excess over their normal usage so right and what would that be well whatever the commercial rate of the commercial or in this case yeah whatever the commercial rate would be I don't know how would that compare so so if they so you're talking about anything over their normal usage would be billed at the commercial rate which is higher than both tier 1 and tier 2 it's just the cost of excess water use I don't know so if if they're normally a tier 1 user and they had a leak that put them into tier 2 or tier 3 we would charge all of that excess use it may it what I'm saying is it may not be a cost effective they may be charged more than than they otherwise would have okay I was thinking the other ended up usually being more because it was at their marginal rate difference means small leaks and big and we try and encourage people because it is an adjustment that's only offered once every three years to kind of hold on to it and in the event they have a large leak but some customers will take it on a very small increase in their bill so only if at most we'll have we'll potentially have two tiers so that would be I mean if it's if they just marginally go over that so I don't know if you want to leave it the way it is until we adopt a new rate structure I agree that whatever we do for a leak we should do the same thing for unexplained exact so till we revisit the leak what we're doing with the leak we should I think just adopt the same yeah I guess I'd have to see the difference in examples for cost to make that decision I agree it's probably should be the whole leak policy once we have new rates we're just dealing with unexplained water use right now it should be the same as what we're doing because I don't understand the full ramifications of the uniform rate versus tiered rate with the new system well one one theory here is we want to recover our costs right right that's why I was thinking but you know what costs are part of this clearly the pumping cost and the chlorine cost the treatment costs are part of our costs but a lot of the stuff you know is not part of the usage so that's true but yet you don't want to just be I mean I think it's like 50 cents or something is there right right then a 10% yeah for 5% so that wouldn't be not much at all so once again you want it to be high enough to discourage you know people from just ignoring leaks well yeah I don't think people are that sinister I yeah and I would just say right now we just have to do it the way we're currently doing it and then maybe bring it back I'd be comfortable with that is just for clarification are you saying that for unintended use use the same system as you're using now yes which is different because you're not doing anything for unintended use right now right well no no we're saying the same the same the same method we're talking about calculations so they're the same calculation for leaks that we're doing for leaks yes are there any limitations on the amount of the adjustment yeah so somebody had a max of 500 we don't have a max on the our current no so I'd stay with the same yeah so Ron raises a good point most of the time there is an explanation it takes a little sleuthing to find out what that might be if they have an explanation for that high use like they left a hose on and it burst or they were out of town and their house sitter had a pool party does that still qualify for an adjustment the scenario yeah the scenario I was thinking of so somebody's doing the garden hose and they leave it on and doesn't have a hose be able to fill in a hot tub and they walk away and you know it's so it's accidental it's not intentional but it's not unexplained either I think we're dealing with unexplained in most instances people will refrain from giving an explanation in order to get the adjustment because we'll be hit with these that's why I'm trying to flush them out actually these scenarios are exactly scenarios that we've encountered in the past what do you what are you right I you know it's a balance between trying you know you don't want to push people to not disclose information because they could be I don't know penalizes the right word but not recoup that that that leak adjustment break our lease adjustment leak adjustment funding so either it's just one of those gray zones I just want I would like I think it's worth clarification because as soon as we get out of here and set the policy I can almost guarantee we're gonna see it we're gonna go up be an amnesty program for yeah I mean overuse yeah I don't think any of those scenarios are intentional and so it goes to the root of what you're doing you're deciding on so it's unintentional but explained yeah I mean you have we have those I'm afraid to go on vacation we do encourage people to turn off their house valve but when they go on there's people that still leave in the house while I'm gone well that's explained then so any limitations I would say if we have a max of the ceiling you know if we want goes up this high then we don't deal with it differently we should have a floor as well because we don't want to have someone coming in saying you know I have this I have you know 12 gallons I leaked and so I won't yeah or I had company for a month yes right I don't seem to need to have a limitation okay I mean if we're getting our costs back see what you're saying one time I agree I don't understand that when how far back should the adjustments from anybody's become effective like how quickly are we going back are we going back to July 1st are we going back to the beginning of the fiscal year the individual who brought the incident in August do we want to go back far enough to accommodate her her situation we gave my recommendation would not to be go to go back prior to July 1st because then I've got fiscal year in disclosure let's go to the recommendation yes so July 1st sounds good or any changes recommended to the adjustments for service line irrigation or toilet links those are the types of leaks we currently cover under the program we just want to leave it we just won't leave it until the new rates till yeah but at that point maybe the fact that I like the idea of recouping the cost of the water at a commercial rate but we don't I think you know we'd have to see what that looked like okay but that's after the rates are in come back sometime after that yeah so that we could say okay well if we left it the way it is and you lost this many gallons from a leak this is what it would cost if you use the uniform rate or a commercial rate this is what it would cost so we kind of see the scale that I'm fine with waiting till you see the of the rates yeah roughly 301 but yeah I like to see the numbers so we're directing staff to defer revisions to the leak adjustment policy until new rates are adopted and but we are we are doing the unexplained explains we're adding we're calling it unexplained and I guess this will come back to us this will come back to you as a revised adjustment policy that will include the unexplained high use okay that sounds good this was very easy to follow thank you for laying it out so can I ask one question I just Leslie going back in time I just want to be sure we're going you're going back to July 1st based on what the board direction is I just want to know is that going to cause a lot of staff time to go back because I another alternative and I'm not sure if it's fair to entertain but is just anybody who has asked for a break that's come to the board you adjust so is otherwise you just go forward with the policy I thought that's what you meant we have we have about five customers that have approached us okay with a request for unexplained high use in the last few weeks so they haven't applied for a variance right but they but we have documented that their situation is similar to the variance requests we had this would apply to them so does this apply to those customers as well yeah yeah and what I'm wondering is if you go back all the way to July 1st which I guess isn't that far but is that going to cause your staff a large amount of time to figure out who leaked and do the adjustments no okay we've we've already we started a spreadsheet right after the August 1st meeting and you're not going to go into water uses and say oh this is unexplained you need to be brought to your attention by a customer correct yes okay thank you so I think we're done with that we go to six four resolution for amendment to CalPERS we're gonna switch if you don't mind Tracy I can work the screen for you if you like okay okay I have to switch gears a little bit thank you I'm presenting to the board tonight a resolution that we are requesting the board approved to take to CalPERS in regards to our contract with their public employees medical and hospital care act known as PEMCA so I presented in the memo just some history on the district's agreement in with CalPERS retirement plan to contract services with them for their medical plans as we know CalPERS is a state retirement system and one of their little adjunct duties that they do on the side is they also offer health benefits for agencies to contract with if they choose to not all CalPERS agencies who participate in the retirement plans contract with them for benefits I think there are a number that that do not but those that do fall under the rules of PEMCA which is governed by statute so it makes doing business with CalPERS in contracting for their health benefits a little bit different than if we were to go out on the market and contract our health benefits through a broker let's say so with that I wanted to go ahead and and prepare our present to the board the history in regards to the district's agreement with CalPERS to be part of PEMCA we originally signed the board originally approved and adopted a resolution back in 1986 and resolution 8648 is attached to the memo and under that resolution CalPERS agreed that the district would participate in enrollment and premium contributions and as that particular resolution reads for both active members and annuitants which I'll refer to as retirees it's just easier for me to say and the resolution provides that the employer's contribution it reads as such as the employer's contribution shall be the amount necessary to pay the full cost of enrollment in a health benefits plan for employees and eligible eligible dependents and an annually graduated contribution amount for retirees until those retiree contributions are equal to those of employees it gets a little complicated and I'll do my best to try and keep it clear so we have that contract in place and it has been in place since 1986 and basically what that resolution says is that we'll pay the full cost of the benefit what happened though is over time we had negotiated beginning in 2005 we had negotiated with our employee groups to start cost sharing the cost of the benefit which we can do under our MOU we negotiated in 2005 with our mid-management and our management group to do a minor cost sharing and then in 2009 our SEIU group our larger group also agreed to that similar cost sharing that we had with that that minimal cost sharing and then as we all recall who might have been here at that time we actually agreed in 2013 with all of our groups to do more of a cost sharing and we went to the 90% coverage by the district and 10% out of pocket by employees and our employees and our retired retirees actually are under the same guidelines the language in our retiree MOU is that the retirees receive the same as active employees and so the 9010 cost sharing actually applies to retirees as well except when a retiree becomes eligible for Medicare and then the district pays for 100% of the Medicare plan. I can't speak to what took place during the negotiations process and discussions with CalPERS in 2005 but I certainly can speak to what discussions took place in 2013 when we went to the 90 cost sharing plan we actually consulted with our prior finance manager and Leslie and I have been working on this that we consulted very I think very robustly knowing Michelle with CalPERS during during the change and and she confirmed that there were a lot of discussions that she had during the negotiations process about this new 9010 plan that we're working on and at no time CalPERS let us know that we had any kind of issue with our current resolution. So that's that's the history and we have a current issue that we're trying to correct at this point because of some conversations that we were having with CalPERS that began back in January of 2018 Leslie and I were trying to reconcile some billing for our retirees and we had some questions just in regards to to the billing process for retirees and we needed to get some consultation from CalPERS about that question and during that in February of 2018 when we contacted CalPERS we asked them the question and we never got we never heard back and Leslie made it a point to keep following up and keep following up with CalPERS and finally in August after another follow-up call CalPERS actually responded to us and said oh you're fine the way that you are everything's fine you can go ahead and do what you wanted to do until that was the first call that we got and then I think it was the same day or the next day we received a call from CalPERS saying oh wait a minute this was handed up to me with the CalPERS representative we were talking to staff level and it had been handed over to a compliance unit member and she said I think we have a problem with your current contract the 1986 contract because under that contract it indicates that there will be full full payment for the cost of benefits and the cost sharing isn't included in that so it caused us a little concern about what we were doing with our how we needed to fix that we were assured by CalPERS that don't worry about it this stuff happens we've seen it happen before and what you need to do is you just need to correct it now CalPERS is our regulating agency and in order for us to be and we bargain these these cost sharing plans in good faith there was no issue in regards to how we bargained and how we came to agreement way back in 2005 2009 and in 2014 it's just that there was an inadvertence that no one when Michelle was talking with CalPERS no one paid attention to that contract and she was asking the questions but they told us we were fine what they told us this summer was we need to go ahead and make an amendment to your contract to your CalPERS resolution so that we can actually do what you guys have in good faith bargained for over the last number of years so they provided us a copy of a resolution that they said we need to go ahead and bring to the board and that resolution is presented here tonight it's the resolution that was written by CalPERS and CalPERS doesn't allow us to to change that resolution to the wording of the resolution and through this process we've been working with legal counsel to make sure that we're walking along and doing things the way that we need to do and to understand our exposure if there was any exposure on this what CalPERS advised us to do when when they when we brought it to their attention they brought it to our attention was they said you know stop your active deductions your active employee deductions for the cost-sharing until you can get this resolution into us and then you can resume that it also they also said that we needed to not have any deductions for our retirees as well so that's the fix that we're bringing tonight that CalPERS is recommending that we need to have in place in order to make our bargaining agreements that we bargain in good faith okay as far as they're concerned we asked them because we were worried as a regulator you know as are we are you concerned about any are there any fines attached to this or that or do we have any audit exceptions and they really assured us you know this stuff has happened before these are old contracts that sometimes they just put away and don't necessarily look at but certainly need to change it now that you're bringing it to our attention and now that we know about it they're not going backwards and looking at what we've done if CalPERS doesn't audit they actually just do it from that snapshot so they have it on record with us that we're correcting it we're fixing it and if we were being audited today then they would just recognize that we are working to fix that that oversight or inadvertence any questions I know this is it's a little complicated I do want to just mention that there is an impact that that our retirees will fill we have right now the district pays CalPERS the cost of the benefit directly to CalPERS and some some retirees are making contributions I did talk about those folks who are Medicare supplement they're paid 100% and it just depends on where they're falling in that in that kind of category right now the retirees are actually not having anything deducted out of their retirement warrant that's issued by CalPERS for their medical benefit because we've been paying CalPERS that under this new resolution this will be I think the most important impact to share under the new resolution we will no longer be doing that we will only be paying the PEMCA minimum which by statute we have to pay and deductions will be taken out of the retiree paycheck and the district will now pay the retiree directly the cost of the benefit instead of paying CalPERS so that's why these two they have two options the option that we have full pay or the cost sharing contribution and so this will create a change with the retirees I know that we're gonna have a lot of discussion with our retirees about this change because they will see a change in their retirement paycheck and so we we're putting a plan together right now to make sure that we have a really good outreach and opportunity to talk and explain this as much as possible to retirees as we're as we're implementing this these changes won't take place until November based upon approval tonight of this resolution. Any questions? Anyone in the public? You want to make the motions? I will make the motion to approve resolution 18-24. I'll second it. Okay we have a motion second roll call please. I'm director LaHere. Yes. Director, director Jaffe. I know I'm out of order. You're confusing us. We've forgotten our own nature. As you've explained it sounds like we do not have any options so yes. Director Lather. Yes. And director Daniels. Yes. Passes unanimously. Thanks Tracy. Thank you. We go on to item 6.5 consider request for six month extension. While Taj is approaching this was a this was litigation we were involved in a couple years ago we settled that they originally contended they had an absolute right to a connection to a main that no longer existed they backed off completely and said they would hook up to us and pay the appropriate fees. Now Taj can give them the current information that's going on up there. Yeah I mean that as you might know there is a county by right project at the lower part of this property that is we've been they've approached staff to talk about but really this is not for that development this is for two existing structures that you know I suppose if there were two you know one is on a well right now and one is a something that's been in construction for for decades not not served by anything and so they're they're still trying to work out what the future of the property holds and I don't even know if six months is gonna you know that's what they've asked for and you know there's the conditions I think stay the same in the agreement the settlement agreement and you know I think it's up to you guys how you want to handle that. I recommend you do it there's no downside to it and they I think what they're trying to do is they've got this development on the lower piece and if they can work that out then they're going to do something on the upper which would bring in the water that would also serve this house. Okay so there's no connect there's no main going up to it now. No in fact they were looking at if this other thing hadn't come along they were looking at going over to victory lane putting a meter over there coming across the canyon and across their property to get service just to get the right pressure. Yeah there are mains on kind of either side of this property and it's caught kind of in the middle of a pressure zone so we've talked at length with the developer that's proposing to do the development at the bottom of the hill and what would be required for that it's it's no easy it's not an easy property to serve and even these two are going to be a challenge with easements and booster stations and well well destruction so they've got that ahead of them. So that's why the six months probably is not going to actually do it. Yeah I would I wouldn't necessarily recommend you know going beyond that because it is a settlement agreement. Okay so if you're recommending not going beyond that do the property owners know this? That's six months and then that's all they've asked for. They only have a right right now till until November. Okay they've asked for six months and they didn't discuss anything beyond that and so we're just our recommendation is grant them the six month I think what Taj is saying is they may come back and need more I don't know what their plant what their negotiations are with City Ventures who is the lower unit or you know how long the upper one would take. What is the settlement agreement issue if we ever were to turn it down and extension that is? I don't think we have any obligation. We don't have anything beyond that. Alright I'll move approval of the first motion then to approve their plan. I'll second. I have a motion to second. All in favor? Aye. Opposed? unanimous. We go on to six. Six. Accept an award. Oh well. Hard work. We have to. Why do we always have this at the end? Something we would have this at the beginning. No it's good to end a meeting with with a high note. I know but but I waited a long time. This is going to rejuvenate you. So we just get one drop is that all? So last week Taj and I went out to the water reuse symposium where a lot of regulators and other agency reps and consultants and everybody related to the water reuse industry came together and one of the highlights of that symposium is their award ceremony. So they gave out quite a few awards the 2018 what they call national awards for excellence and Soquel Creek Water District was awarded in a category where there was only one winner every other category had multiple winners this category only had one winner which was us for education and outreach for our mobile education trailer. So we were presented with this glass water drop that we proudly brought back and have been displaying and really sharing with our communications and outreach team. Rebecca Rubin who was instrumental in the creation of it and then by day he Campbell who has taken this baby and really made it her own and is driving it around all over the county and it is going out to so many events and we are very pleased with how we're able to carry out the mission which I think came from the board to not just hold events and ask people to come to us but to go out to the people. So we'd love to share this with you as well. Thank you. I'll just I want to add one thing what's not shown in these pictures here that I've seen in other pictures is Melanie at her house with a circular saw Taj's shop quite a shop I might add at your house working after hours on their own just putting in building the you know aspects of this and so thank you both for that dedication. We've we've gotten quite a few people reaching out to us this week going how did you guys build that for $8,000. They have the staff we have. You should tell them give us $8,000 we'll tell you how we did it for $8,000. We would not do it again for somebody else for $8,000. You can rent it for a month for $8,000. I'll give this to you. Can we get a picture maybe of Taj and Melanie and the board up there if you don't mind? Leslie's side job is a photographer of course This is the one-minute video that you showed at the National Water Reuse Conference as part of the award presentation. Yes. I was doing it for clarification just I watched lots of Perry Mason so we'll send it out send it out to all the board members. Should there be two Rs there? It's water with an R and then there's not a second R for reuse. That's okay if you email it to me I can brag on you at San Francisco. We adjourned. I think there is a motion for accept the award is that what it is? I'll make the motion. I'll second it. The motion is second. All in favor? Aye. Opposed? unanimous. And let that passed after you already had the picture. Good thing, huh? And there is one letter item 7.1 Mr. Stallings. Are we waiting for this or not? No, we're okay. Well then we're adjourned.