 Good afternoon. I'd like to call the meeting of the Board of Public Utilities for the City of Santa Rosa to order. If we may have a roll call, please. Yes, Chair Galvin. Here. Vice Chair Arnone. Board Member Badanford. Here. Board Member Grable. Board Member Walsh. Here. Board Member Watts. Here. Board Member Wright. Here. Good afternoon, everyone. Just a reminder to mute your phones and microphones when you're not speaking and to put away your cell phones and personal computers. Do we have any statements of abstention by Board Members? Okay, hearing none, we will move to our study session, Item 3.1, Director Burke. Thank you, Chair Galvin and Members of the Board. Our study session today is on the Water Demand Offset Policy and Fee Study. And presenting today will be Colin Klose, our Senior Water Resources Planner, and Mark Hildebrand with Hildebrand Consulting. Thank you very much, Director Burke. Yes, I would love to see the presentation. Terrific. Thank you so much for that help. So we are pleased to be before you today, Chairman Galvin, Members of the Board, to provide you information about the proposed Water Demand Offset Policy and Fee Study. And as Director Burke mentioned, I'm here joined with for presenting to you today Mark Hildebrand of Hildebrand Consulting. Mark developed the Fee Study. We also have on standby, should we need some additional information or assistance that I can't provide today. Katie Cole of Woodard & Curran. Katie led the team that was helping us in developing this policy. We had an inner departmental team and we engaged Woodard & Curran to provide some additional expertise and facilitation to help us with that. So we have her here as well if we need. Next slide, please. This is just a reminder the offset policy is an element of our shortage plan. So we wanted to just back up a little bit and remind everyone that we do comply with California's Urban Water Management Planning Act. We produce a long range water supply plan that looks out over 25 years. And we also prepare a separate water shortage plan so that if we do have water shortages at any point, we have a really detailed map to help us move through that and ensure that the demand for water doesn't exceed the supply that we have when we're in emergencies. The most recent versions of those documents, the 2020 Urban Water Management Plan and the 2020 Water Shortage Plan were adopted by Council in June of this year. We are going to propose a minor amendment and we'll talk about that because it has a direct relationship to the offset policy. So I'll bring that up a little later in this presentation. Next slide, please. So the water shortage plan, as you may recall, was adopted as a standalone document and it looks at how we would respond to water shortage emergencies of anything from a mild emergency of up to 10% to severe emergencies where we're rationing water. Then we have this detailed roadmap for us, instructions, sort of an operational manual, if you will, of how to respond at different points in time, depending on how severe a water shortage would be. It's updated every five years and again, we are going to recommend a slight amendment to that that I'll bring up again. The Water Code section 10652 exempts the Water Management Plan and the Water Shortage Plan from CEQA and therefore policies that implement those documents are also exempt. So the Water Demand Offset Policy is exempt from CEQA. It's not considered a project. And next slide, please. The Adopted 2020 Shortage Plan has eight water shortage stages. I know that looking back to when we first adopted a shortage plan in 1992, throughout the years, almost 30 years now, we have had a series of different kinds of water shortages over the years, never more than 25%. So we know that we're in good shape in responding to those. We know that over 25%, we would need to move into a water rationing or water allocations. So stages five, six, seven and eight would be those conditions where we would have to ration water among our existing customers. And that's where the offset policy would come into play. Next slide, please. We do a considerable amount of work, regardless of how severe or mild the shortage is, to make sure that we're educating the public, letting our customers know the conditions, what we need from them, how we can help them. We have a very busy Water Use Efficiency Team and Water Billing Team that respond to hundreds of calls from our customers, particularly during water shortages. We make operational changes. We do put in place restrictions and prohibitions. And as I mentioned in severe water shortages, we have water allocations or water rationing. Next slide, please. When we are at that condition where we are above 25% water shortage, our top priority is to make sure that we can assign our existing supplies, that limited supply, to each individual service. It's an individual allocated amount based on site-specific information about that particular customer. And we focus on health and safety, first and foremost. This is a really serious time if we get into rationing water, into water allocations. So violations are subject to enforcement, including excess use penalties. And as I said, there isn't then water available for new demand. So we want to make sure that we can address that when we're in severe shortages. Next slide, please. Without going through the detail of this matrix, this gives you a sense of how we calculate the water allocation for each type of customer. And then we use customer-specific data to fine-tune it even further. And you can see that as we move across from stage 6, 7, 8, it gets more and more restrictive. So these are very restrictive allocations that are provided during these severe shortages. Next slide, please. Of course, we also have an ongoing housing shortage crisis. California law does mandate that we offer a certain amount of housing and that we have policies and procedures and plans in place to remove barriers and to make adequate housing available to our community. So during severe water shortages, we have to balance the need for addressing two kinds of crises simultaneously, a water shortage crisis and a housing shortage crisis. And therefore, the water shortage plan takes us into account. Next slide. What the water shortage plan has in the adopted plan is that during severe water shortages, construction would have to offset new demands for water from new construction when water is being rationed, when we're in water allocation stages 5, 6, 7, and 8. Previous plans, including the one that was adopted in 2020, proposed that in more severe shortages, the water offset would double, triple, and quadruple in terms of the amount of offset that would be required. We have a really terrific team working with the city attorney's office, planning, economic development, the building division, water engineering resources, water resources, water planning, water use efficiency. And when we all came together and looked at this in great detail in developing a policy, we all came to the same conclusion that during severe water shortages, knowing that we also have a housing shortage crisis, really what we need to achieve is a net zero impact. And there isn't a need in stages 6, 7, and 8 to double, triple, or quadruple the amount of offset. There's no need to provide that extra burden on development. Simply having a 100% offset, regardless of what stage we're in in terms of water allocations, will be sufficient to achieve the goals that we need to achieve to ensure we have a way to address our water shortage needs. So we're going to bring before you and the city council mild amendment, a small amendment to the water shortage plan. There'll be a couple of them. This is the key one that we're bringing forward, and that is to flatten out that offset requirement to simply 100%. Next slide, please. And that'll be a separate agenda item that will come before you. So the proposed water demand offset policy implements our shortage plan. It's a mechanism to address that offset requirement. And as I mentioned, there was an interdepartmental team that were probably about 12 or 14 of us that worked on this starting about May, just making sure we thought of everything that we could to make this policy as resilient as possible, as effective as possible. And it does balance the need to make sure that we are addressing public health and safety needs during water shortages, and that we're also addressing our housing shortage crisis. Next slide, please. This would apply to projects that have not yet obtained or applied for a building permit. So it would be new projects, and it would be projects that are subject to new or increased connection fees. So a project that's never had a water meter before, or a project that has a water meter, but it's going to have an increase in water demand. Maybe it's an office building that's being converted to, for example, a restaurant, and it's going to have a market increase in water use. This policy would apply to that project as well, even though it already has a meter, it would be paying increased connection fees. So if a project doesn't have a building permit application filed and will have an increase in water demand that it's associated with a new or increased connection fee, this would apply. Next slide, please. How the fees work is that they would not be due until building permit final. They would only be due if, when the project is requesting a final inspection or temporary occupancy or occupancy of any kind, there is in fact a water shortage emergency declared at that time by city council, and it's a severe shortage that requires that our existing customers have water allocations and that new demand have water offsets. If at the time someone is going for their final inspection or temporary or permanent occupancy, we are not in a water shortage emergency that requires water rationing, no fees would be due, because we only need to do offsets when we're in severe water shortages. Any fees that would be collected would be tracked separately. We want to make sure that we comply with the mitigation fee act and that we're able to track the activities and the water offsets and the progress that's made and be able to report to you and to the public about how those fees are being used and how that water demand is being offset. Next slide, please. So essentially the process would be that a builder would be seeking a building permit. They want to submit their building permit application. They would need to submit a water demand offset application at that time as well. We'll provide them then with a water demand offset agreement because no fees will be due at that moment. We want to make sure they understand the fees would be due at the end of the process. We need an agreement in place, so all parties understand the agreement being made. If for any reason an applicant didn't agree with the amount of fee, the water estimate that we've associated with that based on the data they've provided us and they are not happy with our final decision about that, there isn't a pellet process. They can first come to BPU and then go to city council. But assuming all goes well and agreement is put in place, it'll be executed by both parties and a building permit would be issued and off they would go to work on their project. And then at the tail end, when they're either seeking the building permit final or temporary occupancy, occupancy of any kind, final inspection, fees would be due, again, if and only if there is a declared water shortage emergency at that time that's requiring water allocations of our existing customers. Again, otherwise there's no need to collect a fee, there's no need for offsets. Next slide, please. So I'm going to turn this over now to Mark Hildebrand of Hildebrand Consulting. He developed this water demand offset fee study. He did work with staff closely to gather data and information, but he's really our subject matter expert on this. So if I could, I'm going to go ahead and hand this over to Mark. Great. Thank you. And good afternoon, members of the board. To calculate the fee, the approach that we took was looking at the costs that we knew to be true from three known programs that the city has implemented in the past. We looked at direct installation of bathroom conversion, so installing low flow toilets and aerators and low flow shower heads. We looked at the cost of enhancing rebates for programs that rebates for clothes washers, high efficiency clothes washers. And we also looked at the cost of debate for turf removal at specific sites. So based on the cost of those programs, historical data, we developed an understanding of what it costs to offset a gallon of water every year. Then we also looked at how much water different types of accounts use. So what we did is we looked at historical billing data and we looked at different types of residential accounts and commercial or primarily residential accounts to understand how much water a typical account uses per year. And by comparing the cost of saving water with the amount of water used by different types of accounts, we were able to develop the cost per gallon for different types of residential development. Next slide. And you can see the results here. So in this table, we show different types of residential development, different types of single family residential, and we subdivided it into different size lots because obviously large lots use much more water than smaller lots, duplexes, tripaxes. And these are all categories that are consistent with your existing demand fees. And in the middle of the table there, you can see the results of the fee that we calculated based on the cost of the different types of programs, the demand offset fee that would be required for different types of residential. So for example, for a small lot, single family residential, using the bathroom conversion, it would cost about $1,936 for that program to be able to offset the water use of a small lot, single family residential. And so we did that for all three programs and the different types of development. And ultimately, we took the weighted average. So all the way over on the right column, you can see the weighted average of those three different programs to calculate the proposed fee, the demand offset fee. At the bottom of the table, you can see that we framed the commercial industrial institutional and irrigation accounts a bit differently because these types of accounts are so different between one another. Really what happens is that staff will assess as these new accounts are applying. There's an assessment of how much water is expected to be used by those new accounts, depending on the size of the account and the type of water use is expected. And ultimately, they're charged $415 per 1,000 gallons per month. Next slide. And this table really is just a repetition of what you just saw, just with fewer numbers for simplicity. And so these are the fees that are being proposed based on the methodology that was just described. Next slide. There is one relatively new development. It's Assembly Bill 602 regarding development fees. And it's not effective until January 1st, 2022. So it actually will not apply to this particular study. But nevertheless, the study does meet the requirements. The idea of this new law, it's formalizing the requirement that a fee be that a study be conducted and adopted before adopting the fees, which is exactly what we're going through right now. The study must identify the existing proposed levels of service. And then probably the more market change is that it does require studies to consider using square footage as the way of the metric for calculating fees. Or if square footage is not used, then the study needs to explain why square footage is not the appropriate method for calculating the fees. And the study that we have developed and that is being considered makes ample explanation for why the approach that we're using is the appropriate approach. And again, the study, because of the timeline, the study is not subject to AB 602, but it would comply nevertheless. And that's it for me. All right. Next slide, please. Thank you so much, Mark. We did want you to know that we have reached out to the development community. We reached out by phone and email to the directors of the North Coast Builders Exchange and the North Coast Engineering Contractors Association. We will be doing a brief presentation to the North Coast Builders Exchange's subcommittee, the Government Affairs Committee, next Thursday at noon. And we'll be joined by some folks from the planning department along with myself and Deputy Director Peter Martin will be there as well. We also sent letters to 59 interested parties, developers, contractors to let them know that this was moving forward. When there would be public meetings, when we would be asking for action to be taken by governing bodies, provide a contact information in case they wanted additional information, or if they wanted us to email them copies of the draft study or the draft policy. We've not heard from anyone that we sent letters to yet, but we're happy to respond to any of those requests for more information as needed. And so at this point, the Engineering Contractors Association has not asked for a presentation, but we would be happy to do so if they decided that was important to them and their membership. Next slide, please. So our next steps from the governing body perspective is next week on October 14th, we will be presenting the same information to the Planning Commission, asking for their review and comments. On October 26th, again, the same information will be presented to the City Council in a study session. On November 4th, we'll return here to this body, Board of Public Utilities, and ask you to consider making a recommendation to Council to adopt the policy and fee structure. We're going to also ask you to consider whether you would be willing to make a recommendation to have the Water Shortage Plan Amendments adopted as well. And then on November 30th, we'll go to City Council, have a public hearing about this item, the Water Demand Offset Policy and Fee Structure, and actually just before that public hearing, we'll have a public hearing on the Water Shortage Plan asking for those amendments so that we can make sure to have that Water Demand Offset Fee Schedule flattened out to simply 100%. So that's the schedule going forward. I'll also mention that fees will not be able to be implemented any sooner than 60 days after adoption. So if the Council were to adopt this on November 30th, 60 days later would be by the calendar January 29th, so we would anticipate putting this into action starting in February. And also just wanted to remind you that under our current Water Shortage Condition that we're in today, if this policy were already in place, fees would not be collected under a Stage 3 Water Shortage Emergency. But of course, if we don't get sufficient rainfall this winter, there is a possibility we could move into a more severe Water Shortage Stage. So that's why this is so timely and important. Next slide, please. I am happy to take any comments or questions that you may have and I'll turn the floor back over to the Chair. Thank you, Mr. Close and Mr. Hildebrand. We'll now open it up for any comments by Board Members. Board Member Watts. Thank you. So I appreciate the presentation and understand the balance that you're in with two different crises kind of competing with each other. I think that we all know in this community that we do not have enough housing even to support the population that's currently here and we have multiple families even sharing small units because there's not enough affordable or market rate housing. So I really appreciate this coming to the BPU and Council for that reason. I had a couple of questions. One was what types of projects would these offset fees cover? I don't remember what slide it's in. It's in slide 12. It talks a little bit about city projects to achieve the water offsets. Can you just give us some examples of what those projects would be? Yeah, certainly, Board Member Watts. So of course, the three that were studied are projects that we feel we could implement very quickly. So that would be a direct install toilet program for residential multifamily and single family. That's a really terrific program. As you know, we had a grant to do that sort of work in 2015 and 16. And we were able to reach low income households and low income multifamily units that typically can't put out money up front and get a rebate. So this really reaches a much wider market than some of our older rebate programs that we had in the past for toilet programs. So that is one program that we would certainly consider launching. Another is the enhanced rebate for commercial industrial institutional ornamental turf. What we have found over the years is that most of our participants are single family residential and that's terrific. But the bigger water savings is actually these large landscapes that are managed by professional landscapers. So when they switch over to low water use landscaping, they have the expertise. So we see about three times the water savings per square foot. So that's why this is tailored to commercial sites, industrial institutional and irrigation only accounts. So providing an enhanced rebate, that is another program that could be implemented very quickly, targeted very quickly with some extra marketing efforts and outreach. And then also our clothes washing rebate, that would be an enhanced rebate. Right now the rebate is lovely for folks in the residential sector, but we don't know that it actually sends people out to buy a clothes washer sooner than they would have otherwise and upgraded to the highest efficiency model. So we feel that's another program that could be relatively quickly implemented. Beyond that, there are other kinds of programs that we could potentially implement. We need to do a little bit more work, but we have seen other programs that are successful in other agencies and in other water districts that we would like to explore and consider. But we are not ready to bring those forward at this point, but there are other kinds of programs that we could do that would help us achieve what we need to achieve. But we do have three programs right now on deck that we could launch pretty quickly if we needed to. So we feel confident we'd be able to respond next year. Thank you. And so you did say you haven't received any public comments in return from any of the letters that you have sent out at this point. And will there be an opportunity for you to inform the board about your presentations and any other public comments that have come in prior to our vote in November? I think I might toss this to Director Burke to respond, but I would assume that if we receive anything, Director Burke, is this something that you might be able to provide an update in Director's report prior to November 4th? So thank you, Board Member Watts and Mr. Close. We can definitely provide updates to the board on any comments that we receive and we will summarize and bring any comments forward when we bring this back to you on November 4th. And then there is still time because as Mr. Close mentioned, we have a number of other meetings. We'll be going to Planning Commission, we'll be going to Council. So any comments we receive from those bodies will summarize, see if there's any adjustments that we need to make and then make sure that that information is provided to you on the 4th and then definitely to the Council on the 30th of November. Thank you. That's all for now. Board Member Wright. Yeah, I would support this. The, it seemed to me that having the escalating fines or costs for water probably wouldn't hold up, have challenged. But a couple of concerns I have is one in your fee schedule for getting offset water. Do you have a cost for administration built into that fee because that's not easy to run these programs and it's expensive? Also, at one point I thought the contractor had to go find the water. Is that still an option that he can go out and do a program on his own or provide some underwater system? And lastly, in your letters it sounded like they primarily went out to contractors, engineers, planners, people like that. What about the people on the other side, the environmental groups that we read about in the paper that just say we're going to stop building houses? Are they being notified in some way? That was my question. Thanks you. Thank you so much, Board Member Wright. In terms of the administration costs, Mark can address that more thoroughly, but just in a quick thumbnail sketch. Yes, absolutely. We considered what it would cost to launch a program like the direct install because that would be going from zero to 60 as quickly as possible. So what would it take to build that program with all of the different staff members that would be involved from technicians all the way up to city attorneys and that sort of thing? So yeah, we fully burdened that with the cost and then our other programs it would be, we anticipate that about 25% additional cost would be associated with enhancing a program. So some of the costs would be borne by us because we'll keep doing these rebate programs regardless and so some of that cost has already covered, but we estimated about 25% additional cost by doing the enhanced rebate. Eventually we will need to also include some sort of an administrative fee for processing applications. We don't have that yet in place. We need to see how long it will take to process applications and develop the agreements. We don't think it's going to be a particularly costly item, but we need to go ahead and get the program started and to assess that and then we would come back with a miscellaneous fee for that front end piece of it, but the program implementation cost has been fully integrated. Let me just stop before I go on to your second and third question. Mr. Hill-Ram, is there anything you would add to what I've said? No, I think you covered it thoroughly. We considered all those costs from soups to nuts. Great, thank you so much. So then in terms of asking the contractor to go and find water, we spoke with a number of other agencies that have water demand offset policies in place. These are typically places, say in the Santa Cruz area or other places where they have a permanent water shortage. They have found it to be actually in some ways more expensive to monitor, inspect, and maintain those programs. And they also found that contractors had tremendous significant difficulty achieving those offsets in a timely way that would allow them to proceed with their projects. And they highly recommended that we stick with a program where we could use programs that we can put online very quickly and implement. And in the meantime, the project can proceed so that there isn't this hitch where someone is falling behind what needs to occur. So we went with that recommendation. In terms of the letter, you're right, it did not go out to folks that I'm aware of who would be considered to be folks who would advocate for not expanding our housing stock. And so I think what I'll need to do is maybe touch base with some folks on our multidisciplinary team and get some suggestions. And also if the board or anyone else has suggestions for who I might send that letter to, I'd be happy to do so. But I think you're right, Board Member Wright, I think that's a student observation. Other Board Member questions or comments? Board Member Walsh? Yes, thank you very much. On the cost per unit, this is to the consultant. Are we just assuming that these are the conversion costs for the bathrooms and other things? When we calculated those, did we look at the number of new development units or the number of new ESDs? Or are we just saying for every new ESD, you have to provide the conversions for an existing ESD? How did you come up with the units after you got the total cost? What's the cost per unit calculation? So the way that we calculated it was that we looked at historically how many units were moved traditionally by the program, so say a thousand units per year. And so that was our denominator in terms of looking at all the costs, being the numerator. So the program cost, the direct cost, the cost of materials all went into the numerator. And that was divided by the number of units that were typically moved by the program in a given year. And that gave us the unit cost of how much it costs per installation, for example. And if I could just add to that, we figure that really if we do receive any offset fees, we need to within a year to the greatest extent possible, less time than that, if at all possible, to get those offsets online. And that's why we looked at a one year timeline rather than a longer timeline to spread that out over because if we're in an emergency, we need to create those offsets right away. Okay, so it seems like we're assuming that the demand for these conversions is going to stay steady and there'll never be a saturation. Like are there a lot, is there a lot of demand for people replacing a current toilet with a low flow toilet now compared to prior droughts? Yeah, what we've looked at is folks who have participated in our previous programs and previously, we've rebated up to a 1.28 gallon per flush toilet. These would be 0.8 gallon per flush toilets. The only program we've ever had was in 15 and 16, we had a grant and we replaced about 6,200 toilets with 0.8 flush. Primarily about 80% of those went into low income housing in the multifamily sector. So the market penetration is maybe at best around 10 to 12% in the multifamily sector and I would say not even 1% in the single family sector. So there's tremendous room there. That program ended up with a wait list of hundreds of people. So we know that there's significant demand for this program. And in terms of the commercial project with turf conversion, we think that by enhancing that rebate, that would give them what they need to be able to convince their clients, landscapers to convince their clients to go ahead with something like this because the cost benefit becomes much more effective not only with the water savings but then also just with the ongoing costs associated with it. So that we have less than a 5% market penetration on as well and then with the clothes washers, we could look at it but I would say probably we've got about a 15% market. I haven't done a formal study though but my guess is about a 15% market penetration and on the current highest efficiency model. So we think there's a lot of room in all of these programs. Thank you for the answer. I do have some other comments. One, I'm concerned that we have new development paying to reduce inefficiencies that currently exist. So we have current deficiencies and water savings as a community. New developments are going to come in. They're going to be mandated to be more efficient than we're making them pay for us to cure current deficiencies. We already have water savings programs within our operational budget and we already have a demand fee. When new development comes in to the extent that our current operational budget is fixed like we have administrative staff, they reduce the fixed cost per unit. I'm concerned that a new fee would actually reduce the new development and be contrary to the city goals. And I'd like to slow this down a little bit so we could study it more and look to is the nexus real? There's new development. What's the nexus between new development and what we already budgeted for in our water rates and the connection fees? What are we looking at? So I'd like to slow it down a little bit, look at this fee calculation, at least for another month if that would be the players of the chair and the BPU. I'm just concerned that we're already doing the work. Net zero is a little bit iffy because we're making a lot of assumptions that will actually do the conversions. We'll do them in a timely manner and then some of the conversions would not have happened, but for another $100 added to the rebate program. I think that's a pretty loose connection. Those are my only comments. If it's a pleasure of the board member, I can just address perhaps one of your comments. Oh, I'm sorry. My notes are not as good as I had hoped. I tried to take some notes here. I guess the only thing I would mention is that when we have a water shortage emergency where we're rationing water, we're at that point where the restrictions on existing customers are so severe that there just isn't water for projects to then connect to our system without cutting out water supply from existing customers further. So it's something that we've been trying to balance, but I don't know that I have much more to provide at this point. I don't know if Director Burke, if there's something you may wish to add at this point or if we should come back with some additional information. Sure. Thank you, Board Member Walsh. I think those are good questions and comments. And as Mr. Close has mentioned, that's definitely something we've been grappling with. So in terms of what we are looking to do, our water shortage contingency plan has had in it for many iterations the need for new development to offset demand when we are at a stage of water shortage emergency that is typically 30% or greater. We do not have this money in our budget necessarily to save this amount of water from existing customers. It would be their choice. We're always encouraging water use efficiency and conservation, but we don't have the ability to require it. So we offer rebates and incentives to try and encourage our customers to participate. We do require new development to be incredibly efficient and that's already factored in. What we're really proposing is a way during these water shortage emergencies when we have very, very strict allocations in place that are extremely conservative for our existing customers, the ability to allow development to continue to occur and not put a building moratorium in place. So this gives those folks, when we are short with water and don't have enough to serve our existing community, the ability to decide that they want to continue to move forward and develop and in order to do so, they have to free up the amount of water that they would need in order to connect to our system. So that's really what we're looking at and that is the nexus and where it comes from. It's very different than our demand fees and very different than our existing programs for water use efficiency. We would be tracking this funding very separately so that we can implement it quickly to ensure that we are offsetting that demand from the new development. It's a choice if development wants to pause or slow down they can and they don't have to pay the fee if the water shortage emergency is lifted. We designed that specifically to wait until the very last moment so it's charging the fee at occupancy. It's not collecting it up front to allow that choice to also occur. So it's really trying to balance the needs of very short supplies for our existing community while still recognizing the need for development and how do we balance those two. If we are not in a shortage stage where we need to allocate water there's no need for development to pay this fee. So I hope that explains some of the concerns and questions that you had but appreciate the feedback and we can definitely continue to look into you know if there's more information we can provide or other answers please just let us know what those questions are. And if I could I just wanted to add one thing about demand fees although the wording is very similar those connection fees are based on what the impact would be on the infrastructure not the impact on the water supply per se. So the impact fee looks at for example the peak demand month for a single family home and how does that affect the size of our pipes and our sewer treatment plant that sort of thing. So it's a little bit different. I know the word demand is used both for the water demand offset and for the demand fees and so I think it's very easy for us to conflate them but they're actually assessing two different kinds of impact and the water demand offset fee would be addressing a water supply impact not a distribution system impact. So I hope that's a little bit helpful as well. They're called similar things but they're very different in terms of the impact they're mitigating. Well I appreciate that consideration. When we did look at the connection fees did we not take a net assets approach of the existing net assets rather than how many how much new pipelines we're going to have to add? So I thought it wasn't about infrastructure expansion I thought it was about paying for proportional share net assets. We have the consultant here made me help with that. I don't think I conflated that. My apologies then. That's accurate. Your demand fees paid for infrastructure whereas this demand offset is looking at water supply. And the demand fees pay for infrastructure but did you not use a net assets approach for the come up with the connection fee amount? Yeah that was part of the calculation. So that would pay for what already happened. That would pay for prior cash flows that went to the infrastructure less of depreciation. For infrastructure correct. Okay thank you. Thanks for that distinction. I really appreciate that. Thank you very much. As far as remember Walsh your comments on timing this is only a study session it'll be coming back to us in November for potential recommendation and then we'll go to the city council so we do still have some time to address any concerns that you have. I have a question Mr. Close little strange I guess. A lot of people have home warranties that cover washing machines. So if they were to have a problem with their washing machine and wanted it replaced and they wanted to put in something that qualified for the enhancement program are you able to work with the warranty company for an upgrade or whatever might be needed because normally the warranty company is going to put in the cheapest washing machine they can. Yeah I understand what you're saying. Well actually it's based on customers submitting a receipt to us. There's a very simple application form it's really really quite basic and so it is again one of our more cost-effective rebate programs which is why we wanted to include it in this in moving forward with this because it's very cost-effective but they provide a receipt for us so we would look at the fact that they have purchased something there's a receipt showing it has been purchased and then we provide them with their rebate. Well with the receipt that the homeowner might get would just be the fee to come out and take a look at the problem and the receipt for the actual cost of the replacement unit would be paid by the warranty company but the unit itself may or may not qualify for any kind of a rebate in terms of being an enhanced washing machine so I just wondering if there's a way to accommodate that. I've got an old washing machine and I've got a warranty. Well it's a great question. We have great customer service in our water use efficiency team so I think that if a customer were to advocate with their company the warranty company our staff would certainly be happy to speak with them and help them understand which of the models were eligible but that is a nuance we haven't thought about so it's a good question. Okay thank you. Any other board member questions or comments? Board member Baden-Forton. Thank you for an always great presentation. I appreciate it. A lot of thoughtfulness also around how do we balance these two frankly catastrophic competing demands. I have a couple of process questions and then a couple around next steps. If our management plan was approved in June 2021 and it's an every five year requirement the question around why now it's not that it's required as a supplement to that 2021 management plan approval if in preparation and please be at the stage five or stage six and it wouldn't be essentially triggered unless we hit the next stage. Okay. Yeah it's to make sure that we have the fee set as a flat fee so in case we have another catastrophically dry winter everything's in place and we're not burdening development with 200, 300, 400 percent offset requirements so it's to have that in place. If we get plenty of rain this winter then terrific. That's what we would all love but this minor amendment the state has asked us across California to adopt these as separate plans just for these kinds of reasons where if a water supplier finds that a minor adjustment needs to be made in between five years it's very easy to do that. So that's one of the reasons why they in fact required that we adopted as a separate plan because they've seen over the years sometimes small things need to change in between in order to really be effective on the local water supply emergency situation. And if with the fee being due at final construction or a certification of occupancy or whatever trigger of that point is if a water emergency isn't in place then the fee essentially wouldn't be charged to that project. Yes that is correct. We only need offsets if we are in such a severe shortage that we're doing water allocations with existing customers. So for example we're in stage three right now we do not require water rationing. Fees would not be collected if this policy had gone into place say five years ago no fees would be collected today because the water shortage doesn't require it. It's only when we get into severe shortages. Okay has any kind of ballpark data collection happened in the sense of what the kind of benefit or the impact could or couldn't be essentially you know how many building permits have been issued in the last you know over the last five years. Do we do we have any kind of context what this might look like how many units it might apply to and in kind of what buckets? We don't have a really detailed breakdown. We do know that there are I want to say that there were I'm trying to remember now I think it was somewhere in the neighborhood of 40 building permits per month on average. Now some months they're really clustered together maybe it's a subdivision. Another month maybe they're very spread apart and there's very few but sort of on average I think we looked at about something in the neighborhood of 40 per month just looking at what's happened so far this year. So but again if we're you know at the building permit stage everything staggers quite a bit after that. So even if you know seven or eight projects got a building permit today when they would actually go to construction build and get to the point where they're ready for occupancy is very staggered. So some projects might move quickly a year or two from now be ready. Some may take five years. We have some building permits that have been in place for over 10 years. So there's really no way for us to know exactly although we could look at how many accounts have come online. I think there were something like 300 per year on average in the last few years when we exclude fire rebuild. So that gives us kind of a sense of the number of new connections but most of those were well I'm not going to say for sure I'd have to look at what class of customer they were I don't want to get too far ahead of myself. That's all thanks. And on the public engagement piece I appreciate you always do a fantastic job reaching out. I was certain that there was some focus. I assume that it had happened and appreciate it that especially reaching out to the development design community. I understand work member Walsh's hope to slow down the process in some ways in that one the practical implications of policy are oftentimes unseeable especially if a non expert for example is on the decision making body. So there's certain things that I can look out into the future and make some guesses about and there's some things that I can't. And so I think what I'll be really interested in seeing is what kind of feedback came back especially from the expert community those really directly involved in housing development but also how that input was integrated into what our next steps are. Unfortunately what happens a lot of times is something will come back. Certainly this is a study session so the next time we see this or really any policy change the next time it comes back all of this input and public engagement will have happened and then something comes back and there's really only 10 minutes at the desk to really look at how the interplay of the input that came back and what is decided moving forward can be a little condensed in a way that doesn't really accommodate smart policy design so it's something that I'm sensitive to especially for something as important as housing and water. So I'm not sure I leave it to you and staff to kind of think through what's the best way to be able to bring that development community feedback back to us but I hope to be able to see it in a way that's pretty understandable and to see how that went and I think that's what I have for yep that's it thank you very much I appreciate it. Thank you. Hopefully board member Gatenfort will have a comprehensive staff report before that item comes before us on November 4th that can address the feedback that they've received. Thank you. Any other board member questions or comments? Very good. Thank you for your presentation and I will tell you that I will see you and your team next Thursday since I happen to be on the board at the North Coast Builders Exchange and I chair their governmental affairs committee meetings. So we'll see you next Thursday. All right terrific thank you. At this time we're taking public comments on item 3.1. If you wish to make a comment via zoom please raise your hand. If you're dialing in via telephone please dial star nine. Secretary Aitha do we have anyone? We have no public comments. Very good that will conclude item 3.1. Item 4 is the approval of the minutes. All of us were present so those minutes will be approved and entered. At this point we are taking comments however public comments on the approval of the minutes if you wish to make a comment via zoom please raise your hand. If you're dialing in via telephone please dial star nine. Secretary Aitha we have no public comments. Very good we will move to item 5.1 our water and recycled water supply update. Director Burke. Thank you Chair Galvin and members of the board. Item 5.1 is our water and recycle water supply update and our deputy director water resources Peter Martin and our deputy director water reuse Emma Walton will be making the presentation. Great thank you. Good afternoon chair Galvin members of the board. Very pleased to be before you today with the water recycle water supply update with deputy director Walton. Next slide please. So we'll just kick off with working our way down the watershed. You're familiar with these graphs graphics at this point but as of October 4th Lake Minasino is at about 23% of their target water supply for this time of year. Some water continues to message that this is a critical situation as supplies continue to dwindle in these late months of the year. And then just a note according to some water staff they anticipate that storage levels will fall within the next three weeks to 12,000 acre feet. The last time that occurred was on November 3rd 1977 which is a year that is many people are very aware was the driest single year on record so far. We may have exceeded that last year. So next slide. So this graphic goes into a little more granular detail of Lake Minasino storage and their projections for the remainder of the year. Some water expected the storage in Lake Minasino at this point to be on that orange line that's where it's denoted there and they anticipated that by October 1 the storage would be at about 20,000 acre feet obviously over time due to a variety of factors water conditions have continued decline in their supplies in Lake Minasino beyond that rate. Obviously at this point we learned on Monday that they are losing at about 130 acre feet per day that will increase to about 150 to 160 acre feet per day. This is specifically because beginning this week transfers from the PG&E Potter Valley project will be reduced from 30 CFS to 8 CFS under that FERC variance. Just a reminder, I believe maybe even late 2020 the Potter Valley project and PG&E asked for a variance from their mandated flows from FERC and that allowed them to better manage their water supplies in Lake Pillsbury but obviously that resulted in reduced flows coming out of that project. This particular change is the fact that the Potter Valley Irrigation District will be closing out the irrigation as they have now received their full allocation meaning that PG&E is allowed to continue to reduce their releases to the mandatory minimums under that variance. Next slide. So as I say, Lake Sonoma is at about 44% of the water supply capacity for that reservoir are at about 180,500 acre feet. So no one wanted to tell us they continue to anticipate these storage levels will continue to fall by about 200 acre feet per day absent any early returns on rainfall or changes to the outlook as far as precipitation goes. That means that by mid-November storage will fall below the 100,000 acre foot threshold. So just a couple of reminders too as well that the existing temperature change order expires on December 10th. So that temperature change order is what Sonoma water is operating under. This allows them to use the water year critical flows and reduce their releases from the reservoirs to their minimums under decision 1610. On Monday, Sonoma water staff told all the contractors that they are already starting to starting to develop a petition that would be submitted at the end of October and that would be given the opportunity to continue the existing releases beyond that December 10th date. Obviously the goal is to prevent reverting back to higher in-stream flows that are required under decision 1610 as of today because decision 1610 is based on the cumulative inflow to Lake Billsbury and not necessarily the existing doesn't line as well with the existing conditions in the Russian River watershed. The water year type would revert to dry conditions instead of those critical conditions that are stipulated by the existing temporary urgency change order. So that would mean of course that Sonoma water would need to increase their releases from the reservoirs and that would result in reduced opportunities for storage carry over this winter. Next slide. In terms of meeting the requirements of that temporary emergency change order Sonoma water was required to reduce their diversions by over 20% compared to 2020 levels. At this point they are achieving a 22% cumulative sort of reduction from July until this point of year. So definitely on target to meet that requirement. As you can imagine this is directly attributable to all the contractors reducing their water use like we have at Santa Rosa. And also ramping up any local supplies that they may have in certain instances. Next slide. So you know you've seen this graphic kind of progress as we go along unfortunately. Last month Santa Rosa only achieved a 15% overall reduction in water use this month compared to last year falling short of our target of 20% under stage three of our water shortage contingency plan. So obviously we set a up to 20% target by instituting safety of the water shortage contingency plan. But it's important to note that despite falling under short last month we do remain in compliance with our specific allocations from Sonoma water so far this year. And then just obviously in green you can see the good news too is that from July through September the city has achieved a 21% overall reduction in water use compared to that time frame last year. So just to kind of recap we did kind of take a look at some of the reasons that we may have fallen short in September. There's some potential items that may be important to the we brought to the board's attention. You know obviously the billing cycle from Sonoma water this month was a short one. It actually ended on September 23rd. So you know sometimes we're not always able to align all of our other data that includes things like our groundwater supplies internal customer data as cleanly as we would have for the past few months. Some of that may actually be smoothed out in October's usage numbers too as well. So something to consider there. And then we've just seen a measurable increase in customer usage in our commercial and institutional usage compared to 2020. As you can imagine this is likely explained with during the COVID emergency last year schools were not resuming in-person learning and of course not as many people had returned to the workplace last year were in much different situation now. So given that things have certainly sort of loosened up since 2020. And then just evapotranspiration rates were a bit higher last year compared to this year in 2021 in September. Still they sort of both remain pretty close to the normal range of historical evaporation transpiration rates for the for the month of September not necessarily the prior months but just maybe perhaps those might be some explainers too as well. So but nonetheless we're definitely redoubling our efforts on outreach messaging and other conservation efforts trying to get back on track for the remainder of the year and I'll cover a bit of that in my next slides. Next slide please. So this is sort of a refresh on the campaign and logo. Obviously in concert with the Snowmourin Save and Water partnership we began launching a new look and feel to our drought is here save water campaign. The campaign slogan of course will remain the same but you know things like the logos and the types of outreach efforts are going to get a real refresh as we head it and look towards like fall and winter and another consecutive year of drought here. So next slide. So as part of that transition we're going to be really moving customers to move towards turning off the irrigation to save as much water as possible over these next few months in hopes that we'll be able to create more carryover storage to get us through the next year. You know obviously as days get shorter and the nights are colder plants lead net sort of need less and start to go dormant at this time of year. So we'll be connecting our community with that message we're already starting to do so. In this month we'll be pushing out bill inserts. We've utilized the posted advertisements in the press democrat from time to time. It's like a literal posted note sticky note. People can grab and kind of stick it somewhere so that they can have that necessary reminder for a variety of things and it'll be branded with our you know drought is USA water and provide information related to Santa Rosa water as well. Next slide. I did a neglect to mention to a wine country radio station advertising we'll continue to go out to at that time as well. So we you'll see that we'll kind of be focusing our efforts back towards indoor usage. You know and you'll see specific tips that connect you with people and the things that they're doing in their home. We continue to move our super water saver campaign along. It's kind of a fun effort that we're doing right now and then we'll just continue to push out drought tips. We continue to use this the connections newsletter as a very good tool to get the information out to folks in our community as well as these Google ads you may you may see those when you're perhaps on YouTube or you know just bruising Google or something like that. An advertisement will pop up and you know direct you to some of the resources for Santa Rosa water. Next slide. Just one last plug of our drought drop by a van occurring this weekend we'll be at youth community park and cold and creek park this weekend providing drought kits. Again we're just definitely this is kind of the actually the fourth sort of event this year trying to hit all parts of the city making sure that the effort to get out in the community during this time is kind of spread out. We'll be providing many of the same items in our kit. Something fun this time though is that there will be free led light bulbs courtesy of Sonoma clean power will be teamed up with them and they'll be handing out light bulbs at that event as well. So I'm looking forward to that this weekend and next slide. And then just something I'm very excited about. We sort of made a critical milestone with the Santa Rosa plain groundwater sustainability agency the public draft of the Santa Rosa plain groundwater sustainability plan was released on October 1st. It will be available for comment from the public for 30 days. Press release went out to coincide with that and definitely working on outreach to community. So there'll be a virtual community meeting via zoom next week on October 13th and we'll be receiving feedback from the public educating public about what the plan is and letting them know how they can comment and participate in this process. Again, we still remain on our timeline that adoption of the final groundwater sustainability plan in December of 2021. And the hope is that by law the plan must be submitted to the state by January 1st of sorry January 31st of 2022. Next slide. So this sort of concludes my portion of the presentation. I will have handed over to Deputy Director Walton. Thank you Deputy Martin. Good afternoon, Chair Balvin, members of the board. Thank you for having me today. I will just provide a brief update on our recycle water supply. Next slide please. So our production given this is the end of the water years September 30th was the end of the water year. Our protection curve is now complete and you can see that our production over this last year is well below our average. Something I put on the graphic this time is I took the minimum of the water that we produced over the since 1986 and for every month and I charted that against our current production. And so that minimum line you're seeing along the bottom is the minimum amount that we produced in any given month since 1986. So you can see the amount we're producing is really quite low and overall the lowest amount we've ever produced. Next slide please. So in reference to an average year we produce about seven billion gallons on average for comparison in the 2013 and 2014 water years we produced about 6.1 billion gallons. Last year we produced 5.8 billion and this year we produced 5.3 billion gallons. So on average 1.7 billion gallons less which is about what we supply to our ag users on an average year. So it's quite a substantial amount of water that we produce less that we produced this year. Next slide please. Despite our low production we have been able to meet all of our obligations and have delivered quite a all of the water that we have produced obviously to the geysers year to date we've delivered about 2.7 billion gallons. Our allocation for the geysers this year we're anticipating delivering about four billion gallons. So we have a little more to go on that. We allocated 600 million gallons to our ag users. We've delivered nearly all of those allocations. We do have a few users that are still using small amounts of water. So there is a small amount left in allocations there. And our urban users we allocated 480 million gallons year to date we've delivered 335 million gallons. So there is still a little left in our allocations there as well. In all we have about 1.4 billion gallons or 1400 million gallons remaining in allocations that we will need to meet by the end of the year. Next slide please. Given that we have about 1400 million gallons left to deliver we between what we have in storage which is about 400 million gallons and what we expect our plant to produce which is about 1200 million gallons we will be able to meet all of our allocations. So despite our really low production our team has just done an amazing job managing the little water that we do have in ensuring that we're able to meet all of our user needs. Next slide please. So just kind of a summary of how the year went. We really collaborated closely with both our users we held a lot of user meetings to make sure that we were getting the message out early that we were going to have a tough year that we wouldn't supply frost that we were going to have allocations. We worked closely with our users to manage those allocations by reading meters biweekly and providing timely updates to our users of when they were going to be close to running out of their allocation. We also worked very closely with our regional partners this year. Windsor really helped us manage our system by oversupplying what their obligations were early on so that we could retain storage to make as much water available as we possibly could for our ag users. So that collaboration really helped us get through this season. As I mentioned Windsor has already delivered 190 million gallons to date. They are back online. They shut down for a little while because they were also having trouble maintaining their supplies so they were offline for a little bit but they have already over delivered on their contract to us and are back up and running. So with their support and the collaboration it really helped to make this water year go smoothly. As I said we have met and are planning all of our agricultural obligations and we plan to meet the small remainder that we do have. We're also on track to meet our urban and geysers obligations and we're confident that that's going to happen. And then finally as we're all hoping for rain we are obviously planning for another dry water year so again we will be reaching out to our users early and often to make sure that they're aware that we're planning for another dry water year and we anticipate kind of similar conditions to occur. Next slide please. That's really all I had to share but I'm happy to answer any questions. Thank you to both of the deputy directors. I'll open it up for any board member questions or comments. Seeing none thank you for the update. At this time we will open it up for public comments on item 5.1 If you wish to make a comment via zoom please raise your hand. If you're dialing in via telephone please dial star nine to raise your hand. Secretary Aitha. We have no public comments. Very good that will conclude item number 5.1 We have no consent items we have no report items. Next item is public comments on non-agenda matters we're now taking comments on item 8 if you wish to make a comment via zoom please raise your hand. If you're dialing in via telephone please dial star nine to raise your hand. Secretary Aitha do we have anyone? We have no hands raised. I'll take care of that item. We have no referrals we have no written communications subcommittee reports I will report that we just had this week the city council BPU liaison committee meeting was met we met on Tuesday at the 5th of October we reviewed two items the first was the proposed water demand offset policy and fee which you heard about in our study session today the committee asked some questions and provided feedback to staff the second item was an update regarding the use of the property adjacent to the treatment plant to support a proposed regional organics processing facility on May 20th 2021 after two and a half years of negotiations renewable Sonoma decided to end negotiations with a zero waste Sonoma on the potential development of a regional organics processing facility and also with the city for citing of the project on city-owned property next to the treatment plant since renewable Sonoma ended negotiations staff have identified both immediate and potential future operational needs to utilize the site with support from the liaison subcommittee staff will be working with the BPU to issue a request for proposal to evaluate potential opportunities for Santa Rosa water to utilize the site for operational purposes and forego offering the site as a potential regional organics processing facility staff will provide the city council with written updates regarding this process that's my report on the liaison subcommittee are there any other subcommittee reports any questions or comments from the board all right we will now open it up for public comments on item number 11 if you wish to make a comment via zoom please raise your hand if you're dialing and via telephone please dial star 9 to raise your hand secretary aether we have no public comments next is board member reports do we have any board member reports seeing none we'll move to the director's report director Burke thank you chair galvin and members of the board I do have a number of items to report on to you this afternoon first I wanted to provide an update on the ability for public boards to continue to meet in a virtual or hybrid setting as the board and everyone may recall in march of 2020 due to the spread of COVID the governor issued a series of executive orders that modified the requirements of the brown act these orders waived a number of brown act requirements including requirements to require the physical presence of members at a meeting location as well as the requirement that agencies provide notice of each teleconference location from which a member of the body would be participating from the governor's orders sunsetted on september 30th and shortly before that date the legislature did pass assembly bill 361 which allows local agencies to continue to meet remotely during proclaimed emergencies under modified brown act requirements the modified requirements are similar to the provisions in the prior governor's orders and they can be used during a proclaimed state of emergency when the local agency legislative body has found that meeting in person would present an imminent safety risk agencies that use the modified procedures do not have to make the remote meeting sites accessible to the public or include the remote location details on the agenda in order to use the provisions of ab 361 the local bodies must make certain findings regarding the continued existence of a state of emergency within 30 days of the initial teleconferencing meeting and every 30 days thereafter so what that means for the board of public utilities is that the city council is going to make these findings at their meeting on Tuesday October 12th and they will sorry they will consider making these findings at their meeting on Tuesday October 12th and if they make these findings that will cover the any boards commissions and subcommittees of both the city council and the board of public utilities would be included in that as well and as long as the council continues to make these findings then we will be able to meet in this format under the modified Brown Act requirements at some point if these findings are not made then we would need to go back to complying with the Brown Act as written which means you would either need to meet in person or if you are choosing to meet from an alternate location that location would have to be listed on the agenda and that meeting location would have to be open to the public to participate so that was the first thing I wanted to update the board on second I wanted to let the board know of an urgent project that is going out that is occurring out at the Laguna treatment plant a 42 inch underground pipe that supplies air to our oh sorry aeration tanks is severely leaking okay so the 42 inch underground piping that supplies air to our aeration tanks is severely leaking the buried pipe is 260 feet long and is over 15 feet deep and cannot be repaired providing air to our aeration tanks is critically important to our ability to treat wastewater we became aware of minor leaks in the piping earlier this year quickly engaged a consulting engineer and are about 75 percent through design construction for the permit replacement has been scheduled for early next year however unfortunately last week we discovered that the leaking has increased dramatically and we will be using our on-call contractor to install temporary bypass piping to ensure that we are able to continue to supply air until the replacement is completed the temporary piping will also be used to facilitate the construction of the permanent replacement and we are confident that this temporary piping will provide us the assurance we need and we anticipate that the construction of the temporary solution will go smoothly and we will keep the board updated as we continue to undertake this critically important work next I wanted to let the board know some good news I'm pleased to announce that Santa Rosa water has been selected to receive a U.S. Bureau of Reclamation fiscal year 2021 small-scale water efficiency project grant the maximum award amount of $75,000 will be utilized to further increase our cash for grass rebate funding for commercial customers and we are continuing to track and pursue multiple federal and state funding opportunities for potential local supply reliability improvements and expanding water use efficiency program rebates to assist with reducing water waste and improving water use efficiency so just a great job by the water use efficiency team to pull together a very quick application and very pleased to say that we were successfully awarded the maximum amount and then last I did want to acknowledge that this is California's fifth annual water professionals appreciation week and I am pleased to highlight the important role of water professionals throughout the state as well as here at Santa Rosa water I think we all know that water is essential to the health and success of our community and so are the water professionals that work around the clock to ensure a safe and reliable drinking water supply wastewater collection and treatment beneficial reuse of recycled water and biosolids and stormwater and creeks management water professionals appreciation week is the perfect opportunity to thank our dedicated and highly trained team of operators technicians administrative professionals analysts engineers specialists and more who are responsible for and carefully manage our community's water resources infrastructure and the environment especially during a time of dual emergencies of drought and pandemic I am extremely grateful to work with such a great team of professionals and I want to thank everyone for their service to Santa Rosa water not only the water professionals but the great leadership we have from our Board of Public Utilities and that is my report and I'm happy to answer any questions the board may have thank you very much I think the full board certainly supports all the work that the staff is doing and congratulations on not only the receipt of the grant but also all the hard work that the staff is doing any other board member questions or comments for the director very good we are now taking public comments on item 13 if you wish to make a comment via zoom please raise your hand if you're dialing in via telephone be please dial star 9 to raise your hand secretary aether we have no public comments very good that concludes our agenda and our meeting we will be adjourned wish you all the best the rest of the day and the week and let's pray for some rain this weekend