 Chair Galvin, I believe we might have everyone on at the moment, but Secretary Atha, can you confirm? Yes, I believe we have everyone that was planning to attend. We will upgrade the new member just prior to the oath. Very good. Then I will go ahead and 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, Chairman Galvin. Here. Vice Chair Arnone. Here. Board Member Badden-Ford. Here. Board Member Grable. Here. Board Member Mullen. Board Member Watts. Here. Board Member Wright. Here. Great, thank you everyone and good afternoon. I wanted to first announce that we're going to pull item number three from the agenda. So we will not be doing any presentation at this meeting. And if we may move to item number two, which is statements of abstention by Board Members, do we have any? Seeing nobody, that'll take care of item number two. Again, item number three has been pulled. We'll now move to item number four, which is the Board Reorganization Seating of New Members and Announcement of Chair. Although we are not going to be announcing the Chair at this point, there's been no formal announcement from the Mayor at this point. So Secretary Aitha. Yes, so Mr. Walsh, if you could open your video and your audio, please. Is this going to work or am I sideways? No, you're good. So please raise your right hand and repeat after me. I, Mark Walsh, do solemnly swear. I, Mark Walsh, do solemnly swear. That I will support and defend. That I will support and defend. The Constitution of the United States. The Constitution of the United States. And the Constitution of the State of California. And the Constitution of the State of California. Against all enemies, foreign and domestic. Against all enemies, foreign and domestic. That I will bear true faith and allegiance. That I will bear true faith and allegiance. to the Constitution of the United States, to the Constitution of the United States, and the Constitution of the State of California, and the Constitution of the State of California, that I take this obligation freely, that I take this obligation freely, without any mental reservation, without any mental reservation, or purpose of evasion, or purpose of evasion, and that I will well and faithfully, And that I will well and faithfully. Discharge the duties upon which I am about to enter. Discharge the duties upon which I am about to enter. Congratulations, welcome to the Board of Public Utilities. Thank you very much. Thank you, Board Member Walsh. Welcome to our board. We'll go ahead and swear in the other two reappointed members and then we'll come back to you in hopes that you'd like to make some remarks, okay? Thank you, sir. Ms. Maddenfort. Oops, yes. Please raise your right hand and repeat after me. I, Lisa Maddenfort, do solemnly swear. I, Lisa Maddenfort, do solemnly swear. That I will support and defend. That I will support and defend. The Constitution of the United States. The Constitution of the United States. And the Constitution of the State of California. And the Constitution of the State of California. Against all enemies, foreign and domestic. Against all enemies, foreign and domestic. That I will bear true faith and allegiance. That I will bear true faith and allegiance. To the Constitution of the United States. To the Constitution of the United States. And the Constitution of the State of California. And the Constitution of the State of California. That I take this obligation freely. That I take this obligation freely. Without any mental reservation. Without any mental reservation. purpose of evasion and that I will well and faithfully discharge the duties upon which I am about to enter. Discharge the duties upon which I am about to enter. Congratulations. Thank you. Mr. Wright. I am here. If you could please raise your right hand and repeat after me. I Glen Wright do solemnly swear. I Glen Wright do solemnly swear that I will support and defend that I will support and defend the Constitution of the United States, the Constitution of the United States and the Constitution of the State of California and the Constitution of the State of California against all enemies foreign and domestic against all enemies foreign and domestic that I will bear true faith and allegiance that I will bear true faith and allegiance to the Constitution of the United States, to the Constitution of the United States, and the Constitution of the State of California, and the Constitution of the State of California, that I take this obligation freely, without any mental reservation, or purpose of evasion, and that I will well and faithfully discharge the duties upon which I am about to enter. Discharge the duties of which I'm about to enter. Congratulations. Thank you. Thank you to all three of you. If you would like, Board Member Walsh, we'd be happy to hear from you as far as your background and your desire to serve on this board, and we again, we welcome you. Certainly, and thank you, Chair Gellman. I've been in public service for approximately 30 years. I started as an accountant one at the Sheriff's Department. I was invited to apply for that job by another county employee that had an indirect financial interest. My mother was a social worker. She picked up the phone as I graduated from San Francisco State University with a degree in accounting. As she said, you better get down here and apply for this job. And then it worked out. I was at the Sheriff's Department for seven years, passed a CPA exam, got audit hours at the Auditor Controller's Office, and from there, the governor to CPA, worked at the county budget office for a couple of seasons, was promoted to Assistant Auditor Controller, was there for seven years, and left the county as the Information Systems Director after six years and joined the county Marin, where they had problems with the financial system implementation that resulted in a lawsuit with RICO charges that were eventually settled. They had inability to produce financials. I was hired there, got three years of financials out clean, got them caught up to speed and got out of there with them in good stead. The reason I bring up Marin County is that Hal Brown asked me a question, but I think the answer is important for your body. He said, how are you going to reconcile two elected officials? And I was going to be their first appointee, elected treasurer, elected auditor, and you got to reconcile with the treasurer that's still here and he's going to retire, and he was a very high qualified. And I said, I will accept the decisions that the office made in the past as if I made them myself. And that's what I want to promise to do for you and your body, to be a respectful member and to represent the Board of Utilities only as a whole, and to accept the decisions of the Board and help explain them. So I want to come in as if I made the decisions as well and be a member of your Board that's cooperative. From there, I want to thank the Board of Utilities, especially the outgoing members, but as far as the members that are still here, Chair Galvin and Vice-Chair Arnani, I've been involved in nonprofits, social advocates for youth, Robert Empire, Red Cross, Goodwill Industries to the Redwood Empire, and I've never been involved in the nonprofit or fundraising effort when they're broke, or your name and Mr. Arnani's name didn't show up. So I want to thank you. Sometimes I got pushed onto those boards because they wanted to be encountered to figure stuff out. Rod Bull would assign me to things and Tom Shoplin would assign me to things, and luckily then I was just a kid. I didn't know they were going to ask me for money, but you guys showed up. The other thing I want to do is thank Member Grebel, Baton Fort, Watts Wright, and Mullen for their good hard work. I think the members of Board of Utilities are either one or the other. They're too stupid to duck the job or too brave to not take it, and I'm going to assign bravery to all of you. And my only goal is to be a valid member, to be part of you in a unified voice, and to be helpful. And that's all I got to say. Thank you very much, Board Member Walsh. Welcome again. We're happy to have you, and we look forward to your active participation. I don't know if either Board Member Baton Fort or Board Member Wright, and having been re-sworn in, have anything they'd like to say since they're both ups? Nope. Just looking forward to serving. It's an honor. It's an important system, an important staff, and such an important function in our city to serve our users, and it's an honor to be here. And welcome, Board Member Walsh. Thank you. Board Member Wright. I'll say welcome, Board Member Walsh, and just looking forward to the next four years, and that's all I have to say. Very good. All right. Thank you, everyone. We'll now take public comments on item number 4.1. If you wish to make a comment via Zoom, please raise your hand. If you're dialing in via telephone, please dial star 9 to raise your hand. Secretary Aitha, do we have anyone? We have no public comments. Great. That will conclude item 4.1. I need to go back. I neglected to give my admonition for each meeting, which is, please, all Board Members, to mute your phones and microphones when you're not speaking, and please put away cell phones and personal computers. With that, we will move to item 5.1. Director Burke. Thank you, Chair Galvin and members of the Board, and welcome to our new member and congratulations to our new and reappointed members. Looking forward to working with you. Our first item, item 5.1, is an asset management overview study session, and making the presentation will be supervising engineer Andy Allen and Associate Civil Engineer Jason Roberts. Good afternoon, Chairman Galvin and members of the Board. Thank you for letting me make, letting us make this presentation. Jason Roberts and I are here today to make the presentation. I do want to acknowledge we have two other engineers on our staff in the asset management team, Casey Claiborne and Tonya Mokvitz, and with Tonya focused on the regional system. Last year, we included information on the entire asset management team, including our IT group, and of course, they're very important to all we do, but today's presentation will be focused on how we use asset management to develop our capital improvement program. Next slide, please. I will cover the first two items, what is an asset, and kind of a list of our water department assets, and Jason Roberts will take care of the next three items, and then we'll both be available for questions at the end of the presentation. Next slide, please. We have two definition for what is an asset. The first one is kind of the dictionary definition, a useful or valuable thing, person or quality, but in terms of asset management, a more clear definition is an item thing or entity that has potential or actual value to an organization, and we have lots of those. We have, and lots of value in our organization. Can we move on to the next slide, please? We'll start with our local water assets. You can read the list of the main bullet point items and assets that we have in our system. Certainly, we have smaller ones, water service lines, meters, meter boxes. Of course, each of those booster pump stations has multiple assets associated with it, including even our reservoirs have multiple assets at them. There's some dollar figures down below in the slide that show what our system is worth as of 2019, and we need to update that, but probably about 5% more than it was at that point, and we kind of gave you, giving you a quick look at our CIP needs over the next 20 years or so, and all that is, that number is based on pretty much aging of our infrastructure. That's not how we decide what gets replaced, and I'll talk about that with our next slide. Next slide, please. So I'll show you the water system both by age and by pipe material. So this is a good picture of the age of our system. Obviously, pipes out either in the fringe or actually in the heart are our newest pipes because we've done quite a bit of replacement in the heart of our city, and then in between we have some middle-aged pipes, and then we've got orange pipes, which are pictured as orange in this picture that are on the older side, and then we have an old one, and we're commonly affectionately referred to as old red. It's a piece of steel pipe that has been in the ground since before the turn of the previous century, and it's still functioning fine, which is great, and that's kind of a testament that we just don't replace based on age, that we evaluate the condition of the pipe and in our system before we go to replace it. Can we go on to the next slide, please? So here we have our water system by material, and you can see that the great majority of the pipe in the city is AC pipe. It's been a very good functioning pipe for us and has worked really well. It's actually when you look back at the age, some of that is the pipe of age that would or should or could have been replaced already, but it's functioning well, so we are not focused on that at the moment, but we are, we certainly look at the the pipe type as a factor in when we go to replace it, so you can see that again on the fringes of the city where we've had the newest development and some of the older parts of town where we have had pipe replacement projects, we have a lot of the blue pipe showing. It gives you a good distribution of the pipe materials throughout the city. Next slide, please. Similar to what we said about our local water assets, here's a here's a list of our local sewer assets. Here's the main ones and the number, and certainly we show you how much it would cost if we had to replace it all again in 2019 dollars and then what we would, if based on age of all these pipes, we would need over the next 20 years, and again we're fortunate that our pipes seem to be lasting a little longer than average for the industry, so we're happy to take that, but we do know that there is a need in the future for replacing of all these pipes. Next slide, please. Similar to what I showed on the sewer system by age and sewer system by material, you can see that the red pipes are our oldest pipe in the in our network. A lot of that is our sewer trunks, as you can see some definite trend lines going east-west and north-south. Our sewer trunks are getting of an age that replacement is necessary or going to be necessary, so there is certainly some money dedicated over the last few years and in future years for sewer trunk projects, and then we have some older pipes also in the system that also need to be looked at and be considered for replacement as we move forward. We have a few subdivisions, older subdivisions from town that are still with older sewer pipes, but we're trying to program those in as necessary and needed as we move forward. Let's move to the next slide, please. Again, here's our sewer system by material. There's a little less of a percentage of AC pipe, a little more PVC pipe in our system and a few others, which bodes well because our PVC pipe is number one newer and has a much longer life than the AC pipe and the others, so we're happy to have as much as we have in our system and looking forward to making replacements of those sewer mains when it becomes time to do so. You can see again it's distributed pretty much throughout the city, and again the heart of downtown area of the oldest parts of town have been replaced already with PVC and the fringes and newer developments also have PVC. Go on to the next slide, please. So we've talked about the local water and local sewer, and certainly we a big component of our assets are our regional water reuse system. The biggest single one there is the Laguna Treatment Plant. Included in the Laguna Tram, we have our laboratory. We then have our reclamation lines and geysers pipelines and the biosolids, and you can see just this one we actually totaled up the number of assets that are right there or within our sub-regional system, and if you look at the number there below, that is our needs over the next 20 years for just the LTP, Just the Treatment Plant, and of course that's where the much of the focus will have to be currently, and I'll explain that more in just a second. If we move over to the next slide, please. We do have a regional system overview next, which includes both our geysers pipeline and our reclamation line. The geysers was installed in 2003, so we are a long way from needing any kind of replacement of that pipe, but we do have maintenance issues and things of that nature that focus some of our projects, our capital projects, but again that's a much newer pipe. Our reclamation system, it was built starting in the early 70s and into the 80s and even into the 90s, so it will be a pipe network that we'll be starting to look at shortly, but at the moment it seems to be functioning well and we haven't had significant issues with the pipe network that is there. So this is the main body of the regional system, and if we go on to the next slide, you can see the north end, which includes going past Windsor and up to our terminal reservoir at the geysers. So we have all that pipe that we're responsible for, plus our pump stations as we head up the hill. So that's the kind of a summary of our regional system, and we don't want to forget the next slide because we really feel like our water department's greatest assets are our people, and here's a picture of a few of them. We're living in a different world, we wear masks, we work from home, some of us, but it is the people that make this system function, make our asset management system work and make our whole department work well, so we don't want to forget about them, and we're happy not to have to replace too many of those people very often. So I'm going to turn the next part of the presentation over to Jason Roberts, and if you can go on to the next slide, Roberta, please. Thank you, Andy. So I'm going to talk a little bit about what asset management is, how we do it here at the city, and how we develop our capital improvement program. So what is asset management? A couple of definitions. Jason, I apologize for the interruption. Can you turn up your volume in any way or get closer to your microphone? You're coming across as quiet, I think. Does that sound better? That does. Okay, great. Thank you, Jennifer. Okay, so I'll start over here. I am going to talk a little bit about asset management, what is asset management, and how we perform it here at the water department in the city, and also how we use it to develop our CIP. So what is asset management? There's a couple definitions here. Asset management is a practice of managing infrastructure assets to minimize the total cost of owning and operating those assets while delivering desired service levels. And the second one is kind of a continuation of Andy's definition of an asset, which was something that has potential value to an organization. And so asset management is the coordinated activity of an organization to realize value from those assets. Next slide, please. A comprehensive asset management program, you know, asset management programs can have a lot of different aspects to them, but mainly, you know, in order to perform asset management, we're going to need the detailed asset inventories. And here at the city, we're currently have a computer maintenance management system that catalogs all of the city's assets. We're currently moving that system over into city works, which I mean, you know, already, it's been a multi-year effort, and this hopefully going to be implemented here in the next few years. We need operation and maintenance of those assets. We need to perform condition and risk assessment, develop our capital improvement program, and look at long-range financial planning, and I'll go through a little bit, some of these in a little bit more detail. Next slide, please. So why do we perform asset management? We really want to develop a programmatic approach to replacing our assets so that our system doesn't give us any surprises, and we're able to make the right decision at the right time and really look to spend money wisely and make the most of our customers' fees. Next slide, please. And so in performing asset management, we really look to answer some common questions, kind of everyday questions. Which assets need the most maintenance? When should we replace these assets? Are they troubled assets? And you know, when will we need more CIP budget in the near future or for our future? And really, you know, this helps us answer which projects we should undertake and how soon. Next slide, please. You can also use asset management to answer some of the bigger questions. You know, what level of service do we want to provide to our customers, and how can we do that sustainably? It helps us identify which assets are critical to sustained performance. Which of those assets in our systems are absolutely necessary to keep providing service? And also to answer, what are our long-term costs and are we investing enough in our capital improvement program? Next slide, please. So how do we develop our CIP? A number of different things go into CIP development, including a general plan, direction from the general plan, internal master plans and engineering studies. You know, there's regulatory requirements, levels of service, condition assessment, risk assessment, stakeholder input, and of course input from Board of Public Utilities and City Council. And I'll touch on each of these points in the next slides. Next slide, please. So looking at the general plan and master plans as really relate to our CIP, we really look and make sure that our system is going to be able to support changes proposed in the general plan with rezoning or specific area studies that are undertaken at the planning level. We want to make sure that our water and sewer system can support growth or changes of industry, whatever the direction the general plan outlines. We also look at level of service scoring for our assets. A level of service, for instance, could be water pressure delivery to residential or commercial customers, or it could be water level in the sewer and making sure that our assets are meeting those levels of service. These studies can also include condition assessment, risk assessment, and also some targeted CIP project development. Next slide, please. Some of the regulatory requirements that we might look to meet using our asset management program and developing our capital improvement program are building codes and specifically related to seismic requirements for our reservoirs, for our pump stations, and our facilities. Looking at fire code upgrades to our system, making sure we're providing minimum fire flows to our customers. There is a department or division of drinking water requirements that we need to meet to make sure we're providing clean, potable water and that we're not exceeding any MCLs or that there's any kind of contaminants in our drinking water. There's also national pollution discharge elimination system permits, both for LTP and for stormwater. We need to make sure that our capital improvement program is helping us meet these regulatory requirements. Next slide, please. So looking at level of service, each asset provides value to the city. And evaluating those assets, we can look at both condition of those assets and what it's providing. What level of service is it providing? So we look at things like percent downtime per year, perhaps on water mains or pump stations, how many incidents are happening per year, whether those are overflows or shutdowns. We look at hydraulic capacity, regulatory compliance, and costs to maintain. So we have levels of service for all these things and those are really driven by goals and priorities from the top down and really have to do with what level of service do we want to provide to our customers and how can we do that in a sustainable manner. Next slide, please. So a little bit about condition assessment and why it's important for our capital improvement program. I like to use the car analogy. So go with me for a minute here. You'll notice the blue line starting on the left and where that meets the green line at the top, that would be your new car. And as you start driving it, the car runs great, but over time the performance declines. And so you take it into the shop for inspection where we'll do a condition assessment and then you'll perform maintenance and repairs as needed as shown by the red lines there. But every time you repair that car, perform maintenance on it, it's never going to get back to that new condition. It's never going to get back to that original performance. And so you do the cycle over time and the top performance of that asset of your car will decline along the black line, black dotted line. And at a certain point maintenance and repairs aren't going to be enough for that car to provide a minimum level of service that you desire and you're going to need to replace it. And so you'll implement a replacement strategy, you'll buy a new car, and the cycle will start all over again. Next slide, please. So risk assessment is made up of two factors, rather. It's made up of the likelihood of failure of the asset and the consequence of failure. The likelihood of failure is based on the asset itself. It's really everything that we know about the asset. We look at the maintenance history, we look at condition assessment and observations, and then we look at assets or attributes of the asset, the age and material, and we come up with a likelihood score based on all of these things. The consequence of failure is really everything not directly about the asset. So all of the financial, social, and environmental factors surrounding that asset, where is the asset installed? Is it installed next to a creek? What does the asset serve? Does this water main provide water to a hospital? If this asset fails, how much of a financial burden is that going to be on the city to replace it? Is it under the highway? Is it under a railroad? All these sorts of things that can affect or increase risk to the city, but aren't about the pipe itself. So when you take these two factors and multiply them together, you develop a risk score. On the bottom right, you can see kind of a generic matrix where likelihood and consequence come together to tell a story about risk. So if you look at in the upper right, in those red squares there, where we have major to severe consequence and almost certain are likely to failure, those are really going to be the large diameter trunk sewers. And then as we look at the lower right in the orange area, those are maybe new trunks where the consequence is very high if that asset were to fail, but the likelihood is a little bit low. So these are the types of areas where we'd want to do more frequent inspection or maybe risk mitigation or resiliency project or redundancy project to kind of reduce that risk. In the upper middle, in the orange squares, those are more of the smaller pipes that have maybe have some holes or some cracks, neighborhood type projects where they may be likely to fail, but they're not as consequential as the trunks. We want to take care of these projects as soon as we can because these are the ones that turn into higher risk projects. And I bring these two areas of red and orange up because this is really where kind of our CIP is targeted. And we do need to keep looking at the low and medium risks as well because over time, they'll turn into high and extreme risks. Next slide please. So also in developing our CIP, we take input from stakeholders and the public. We work directly with local water and sewer operations and water reuse operations as well as water administration. We'll take public input from customer calls and public meetings as well. Next slide please. And of course, our capital improvement program will take into account direction from board of public utilities as well as city council through budget subcommittee meetings and full board meetings or city council meetings. Next slide please. So in summary and development of our CIP, we do a data review, we identify assets that need CIP work, looking at maintenance records, inspection data and pipe information. We'll perform a risk assessment and prioritize which assets need work now. Once the priority projects are identified, we'll refine the scope and confirm funding. We'll work with local operations, TPW, stormwater and right away as stakeholders in the project and we'll receive feedback from them. We'll develop the project scope and then we will queue the project for design with capital projects. Next slide please. Take any questions. Thank you, Mr. Allen and Mr. Roberts. We'll now open it up for any board member questions or comments. Seeing none at this point, thank you for the presentation. It's always good for us to be reminded of all the assets we have out there and all the pipe that's in the ground that we have to oversee and make sure that it's functioning. So thanks for that. I'll now 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 9 to raise your hand. Secretary, do we have anyone? We have no public comments. Thank you. That will conclude item 5.1. We'll move now to item 5.2. Director Burke. Thank you, Chair Galvin and members of the board. Item 5.2 is a study session on our 2021 water and wastewater cost of service study. Our proposed fiscal year 21-22 through fiscal year 24-25 rate schedule and our proposed update to the water shortage charges. I would like to just take a minute to recognize our budget subcommittee of the board, chaired by board member Watts, as well as participants, board members Grebel and board members Wright. We do ask a lot of the budget subcommittee every year. And in particular this year, with rate setting, we asked even more. And we greatly appreciate their thorough feedback and leadership and helping us craft rates that are going to be proposed before you today. So with that, I am going to turn it over to our deputy director of administration, Kimberly Zanino. Kimberly will be leading this off as well as introducing the consultants and others that are going to be presenting at today's study session. Good afternoon, Chairman Galvin and members of the board. Today, as director Burke said, we are bringing forward the study session on the proposed rate schedule. But before I turn this over to our consultants, I had a few things that I wanted to say. First, I would like to tell you how much director Burke and I appreciated the time that you spent with us to give us guidance when we met with each of the BPU members and their respective council member. We listened to your input and we kept all of that input in mind as we went through this process. We made sure that while we were going through this process, we were consciously considering the effects of the pandemic on our customers and our community. And those are reflected in our rate recommendation coming forward to you today. I also wanted to just take a couple moments to talk about, since it is related to rates and revenue from rates, that we are and continue to proactively work to support our customers through the pandemic. We are paying attention to and watching the various relief packages that have been coming out. While they don't yet have well defined processes or qualifications in them yet, we are actively reaching out to those developing those programs to see what assistance we can provide. As it currently appears that customers will have to participate in receiving some of those funds. And so we want to make sure that we are in a place where we can assist our customers with that. We also continue to follow the moratorium on disconnection for non-payment. We are not turning off water meters. And we are also still waiving delinquent fees for our customers and offering any form of payment plan that customers would like to use in order to try to keep up with bills as the pandemic continues. And then finally, I would also like to thank the budget subcommittee for their work. We have spent six months working with them on this rate recommendation. We have worked with our consultants for the last two years, developing the financial model, which is the basis for the work we've done. And so I'd like to thank them as well. We asked them to change direction so many times because of the current situation, looking at different scenarios and different ways to look at things and different things that we can do. And they did that without complaints. So I very much appreciate that. So with that, I'm now going to turn it over to our consultants, Mark Hildebrand and Bob Reed. Great. Thank you. Hi, this is Mark Hildebrand and I'll be giving a presentation on the first half of today's material. And then Bob Reed, whom many of you know from years of work that he's done with the city, will be giving the second half of the presentation. Next slide, please. So the portion that I'll be covering will be the water and wastewater rate study recommendations. And Bob will be covering your water shortage contingency plan and financial strategies related to that. Next slide. Next slide. So I understand that some of you are new on the board, some of you have been around a bit longer. I did want to cover a couple of things briefly just in terms of the steps that we go through when we do a rate study. And this slide shows the three general steps that almost all rate studies, comprehensive rate studies go through. The first step is the revenue requirements. You could also call this a financial plan. And this is really just looking at all the money going into the enterprise and all the money going out. So the money coming in is predominantly rate revenue, the money that your ratepayers pay every month on their bill. And the money going, you also have some miscellaneous revenues coming from interest earnings and miscellaneous services that you provide. The money going out will be your operating budget, including some transfers to the general fund and your capital spending, which comes in the form of cash finance project as well as debt finance projects. So you have debt service in there. So with the financial plan, once we understand all your revenues and expenses and forecast that for a 10-year period, we make recommendations on the best way to meet your revenue requirements, whether that includes a debt service or a debt strategy or not. And then inevitably, we have to keep up with inflation at a minimum until we talk about how much rate revenue needs to increase in order to meet your revenue requirements. The next step, once we understand how much rate revenue we're going to need over the planning period, the next step is called cost of service. And the cost of service is a cornerstone to what's called Proposition 218, which is the law in California that governs how utilities can charge rates or what they need to do in order to charge rates legally. And really the premise here is that you can't charge more than the cost of providing service. And so when we do the cost of service analysis, we're looking at your customers to see how they behave, how they use their system, and how they drive your cost. So this involves understanding how many customers there are, how large their meters are, the strength of their sewage, how much water they use, etc. And so we use those metrics to assign costs to your different customer types. Once we understand how much revenue we're collecting from your different customer groups, then we go to the last step, which is rate design. And the rate design is making decisions about how you want to recover revenue. So if you know you need to collect, say, a million dollars from your single-family homes, how much of that's going to be on the fixed portion of their bill that doesn't change regardless of their water usage, how much of that's going to be on there, what we call the variable portion of their bill, the portion that changes depending on how much water they use, and how is that going to be structured in terms of, is it going to be tiered rates or uniform rates? So we didn't make any changes to your either the cost of service methodology or the rate design principles from the last study, but we did make some updates. So there will be some small changes in that regard that only because we've updated the metrics that go into the methodology and not because we changed how we, the decisions and how those things were structured. Next slide. So here's a general picture of both utilities, water and wastewater, and how the funds are structured. And you can see on the left side, those are the revenues that come in. So it's predominantly the user rate revenue as I mentioned, but you also have some miscellaneous revenue from different services that are provided by the utilities. And occasionally you do receive grants or debt proceeds from debt issuance. Those monies go into various funds. Mostly goes into the operating funds, but some specifically go into what you call your CIP or Capital Improvement Project Appropriations. And then the money is spent on either Operation Maintenance, Debt Service, or Capital Projects. There's a series of reserves there and we'll be talking a bit about your reserves on some following slides. Next slide. This presentation isn't designed to go into a great amount of detail about all the financial analysis that we did, but we did want to highlight some of the key points to the project, some of the milestones that were passed over the last couple of years. The first one here is a recent issue of debt that the city did called the 2020 Series A and 2020 Series B. 2020 Series A was what we call new money. It was money that's being used to pay for a 70 million dollar UV project, ultraviolet treatment project at the wastewater treatment plant. And then the 2020 B is a refunding to your refunding 2012 bonds. And both of these were really good news for the district, for the city as a whole and for your ratepayers. First, the rates today, if you read the news, you're well aware that interest rates are now an all-time low and the interest rates that the city was able to get for this new money and for the refunding was really historic and a great win for the city. And you can see that in that third sub bullet there that the, because of the refunding of the 2012 revenue bond, you're actually going to be saving your ratepayers over $16 million over the next 14 years. So that was a great win. The next thing that we want to mention is that the catastrophic reserve, so the reserve targets that we put in what's called the catastrophic reserves is going to increase significantly based on recommendations that you receive from your consulting engineers, GHD. And so they have been spending quite a bit of time looking at your different systems and at their vulnerabilities in the event of natural disasters, various natural disasters, earthquake, et cetera, fires, floods, et cetera, and making recommendations on how much you should have in cash, you know, in the event that you need to be able to replace critical infrastructure. And so you'll, we'll show you in the next slide some specifics on the numbers that they're being recommended. I mentioned already that we did update the cost of service analysis, so we didn't change the methodology, but we did update the numbers that go into there. So the the way that people use water has changed a bit over the last five years, the number of customers, et cetera. So those that will affect the final rate outcome. And then I mentioned that we are keeping the same rest structures that you've had historically. Next slide. So some specifics about the catastrophic reserves on the water utility side, your current catastrophic reserve policy was to keep about almost 6 million, 5.75 million, and GHG is recommending that you increase that to 17.5 million. The good news on this is that from a rate increase standpoint, none of the rate increases that we'll be recommending are being driven by this increase in reserves, because the cash balances that the district has on the books right now is actually sufficient to be able to fund that increase in the reserve target. So none of the rate increases that you'll be looking for, looking at will be driven by this. And so that's that's good news for the utility that you can immediately fund this new reserve target. On the wastewater side, it's been proposed to increase from 6.8 up to 21.5. And again, your reserves are able to fund that. That's actually largely due to the favorable volume issue that I mentioned on the previous slide. For regional wastewater, formerly known as subregional, they're recommending, we're putting in a placeholder that GHG actually has not finished recommendation on what that reserve target should be. So right now it's 1.7. We've put in 10 million as a placeholder. We expect it to be in that range, but we will update that when we get a formal recommendation from GHG. And the Geyser catastrophic reserve has increased from 1.25 to 3.3. Other updates on that general policy is that we're proposing that you specify a broader range of potential issues right now. It really just focuses on earthquake and we're proposing that they include language dealing with other natural disasters such as fires, floods, pandemics, etc. We're also asking or proposing that you modify the reserve policies over time to keep up with inflation as the last bullet shows. Next slide. So this is sort of fast forwarding to the big picture for the water utility. So I'll walk through, let me see if I can get my pointer out. Can you see my cursor or is that, no, okay, let me get the pointer out here. I'm not sure if I can get my, oh, I'm not sharing my screen. That's fine. Of course. Okay, I'll just talk through it. So in the top graph there, it's kind of hard to tell sometimes because the colors are so close, but the foreground is the blue. There are blue columns in the foreground and that's your, those are your expenses. So the light blue are your operating expenses, the hashed blue is your debt service, and the dark blue at the top is your capital, your cash finance capital. In the background, you see green, which represents your revenue. So the dark green at the bottom is your non-rate revenue. It's your miscellaneous revenue that we mentioned. The kind of the middle green, the largest green section in the middle there represents your existing revenue that you get from your current rates. And the light blue only at the top represents the revenue that you'll be getting if you were to implement the rate increases that are shown down at the bottom, the percentage is there. So at the bottom, you can see that for the next four years, we're recommending a 2% rate increase on July 1st or near to July 1st in the summer, followed by 3%, 3%, 4%. The years after that, the 4% and 3% after fiscal 26 are really just projected numbers. We're not asking for action on that, but it's just based on our projections, mostly driven by inflation. We expect your rate increases to be about on that order out there. You will notice that there's a 2% rate increase immediately followed by some slightly higher rate increases that was done expressly to recognize the current economic conditions that your city's facing, that, you know, the entire country's facing. But the U.S. payers are, you know, a lot of them are facing economic hardships right now. And so we wanted to make sure that we were cognizant of that and that we proposed rates that really minimize the impact to folks in the near term. In the middle, to help you interpret that middle graph, what you see the dark black dashed line are your target reserve levels. And you can see that increase at the very beginning. That's the increase in the catastrophic reserve levels that we mentioned up to just above $20 million total. That's the sum of all your reserve targets that catastrophic reserve is amongst your reserves. And then you can see how the light blue line is your actual ending fund balance. And you can see how it's already up near $20 million. So we're not really proposing much of an increase to your total reserves. And you can see how that over time stays really close to your reserve targets all the way out through the end of the planning period. The last things on this graph to point out are your debt coverage ratio. So these numbers are very healthy. They're basically non-factors, really the minimum that you are allowed to keep because of your debt obligations is 1.25 or in that region. We like to keep it above 1.5 just for credit rating reasons. And you can see that you really don't have much debt as compared to your revenue. And so the numbers are very healthy. And then you can see the total capital spending summarized numerically at the bottom as well. So that's the water utility financial plan. On the next slide, we'll talk about wastewater. And so you can see it's the same graph. So I won't go through all of the nuances of it, you know, the details. But you can see that again, the top graph is well balanced. I forgot to mention that in case it's not clear that any time that the sum of the columns is equal to the sum of the green background, that's basically a year where the budget's in balance. So if the greens ever higher, then you're building your reserves in that year. And if the columns are ever higher, then that's a year where you're in a deficit and that you're drawing down on your reserves. You can see that you're building your reserves a bit in year one there. And then it's staying very steady over the course of the planning period. The rate increases that are being proposed here are 2% per year for the next four years, followed by slightly higher rate increases thereafter, largely being driven by what we expect inflation to be. Again, the debt coverage ratio, very healthy on the wastewater for the way to our enterprise. And then there's two different source or capital spending. There's your, what we call your local wastewater capital spending, shown in second to bottom row, and then your regional CIP on the bottom row there. Next slide. So here's a summary of the rate increases that we're proposing. And we're almost at the end here. So rather than take questions, now I'm just going to get through the slides and then we can come back to these slides to cover any questions that you might have. Next slide. When you, actually did you, Jennifer or Kimberly, did you want me to pause at this point to take questions on the financial plan or should I get through the whole presentation? I think it's okay to continue through these last slides so they don't think they'll take a long time. Okay. Come back to any slide that you want to look at if you have some questions. Okay. Yeah, if anybody wants to jump in. So the rate setting objectives, so these are the things that we take into consideration when we're setting your rates. And again, a lot of these are a reflection of what was done during your last rate study about five years ago. And we kept the same objectives for the current study. And again, we made very little changes. But you know, first and foremost, we want to make sure that you're meeting your financial obligations and that you're legally compliant with your rates. The legal compliance obviously is critical. And the rates that you currently have in place are meeting all those requirements. And so that's good that we're keeping the same rates. We do to the extent that we can from a legal perspective encourage, we want to encourage water conservation. The rates are designed to make sure that your revenue is stable and predictable, especially in the event of drought. And we think we found a good balance for protecting you from those events. Obviously we're looking to minimize rate increases and specifically we looked to really minimize immediate rate increases given the current pandemic. We thought we are always trying to promote affordability and keep your rates simple so that the public can understand what they're paying when they look at their bill. Next slide. Some of the cost allocation principles to be aware of that ended up driving who pays what. We identified different buckets of costs. So some of your costs are what we call customer costs. That would be customer service, billing, those sorts of things. And we assign those customers to everyone, regardless of whether they're a big customer or small customer. So if you're a customer, you get your fair share of customer costs. Capacity costs are associated with the size of your system. So this is looking at the costs associated with the size of your pump stations and your pipes and your treatment systems, all the general size of your utility. And those costs are fixed, predominantly fixed, and they're assigned to customers based on the size of their meter. Because the size of someone's meter is also fixed, doesn't change, and it's a reflection of how much capacity is needed to serve that customer, whether or not they use it. The commodity costs are costs associated with purchasing and treating water and distributing it, pumping it. So all those electricity costs and water purchase costs. And those are assigned to customers based on how much water they use. And then we looked at that water supply and your water conservation costs to justify the tiered rates. And I'll explain that in a little bit more detail on a coming slide here. And then on the wastewater side, there's different rates that are charged based to customers, based not just on how much sewage they produce, but also on the strength of that sewage. So some of your commercial customers produce higher strength sewage, and it takes more energy and chemicals to treat that sewage. And so we make sure that we pay them a premium for that higher strength sewage. Next slide. So if you look at how costs were allocated into those three big buckets, I just mentioned, the customer cost, the capacity, commodity cost, you can see here in this graph that it's predominantly the commodity cost. And that you have some costs that are for just serving accounts and the remaining costs for capacity in the form of your infrastructure. Next slide. So justifying tiered rates is very important from the thing of Proposition 218. Again, that's the law that governs how you can charge your rates. And there's been a flurry of lawsuits that have transpired in the last 10 years or so on the heels of a landmark court case that happened down in San Juan Capistrano. And so it's really important, more important now than ever to make sure that if you're going to charge tiered rates that you have a very clear rationale for why some customers should pay more than others. So in this case, what you see here in the first two columns are the tiered rates that we charge for. And the first thing you'll notice is that there isn't really that big of a difference between the two. Single family tier one is just under $6 and single family tier two is not even $7. So the difference between them is pretty modest. The difference that does exist is because of the water supply. So you'll see that the blue section for single family tier one is a little bit smaller than for tier two. And that's because you do receive a small amount of your supply from groundwater, which is significantly cheaper than the water that you purchased from Sonoma County. And that water, even though it's a small part of your portfolio, is really a fraction of the cost of your purchase. So we're giving the benefit of that cheap water to folks who use water in tier one. And so that effectively lowers the average cost of water supply for that tier one water. And people in tier two pay only for Sonoma for the purchase water cost and don't get the benefit of the cheaper groundwater. The other portion at the top there is your water conservation cost. So you do have a water conservation program. And the logic here is that for your higher water users, you wouldn't need a conservation program. And so we go ahead and charge those costs to tier two users. You can see multi-family commercial, they pay a uniform rate, which means they only pay one rate regardless of the water usage. And they also share in those water conservation costs because they also benefit from that program. And then for irrigation, they have the same justification. They carry more of the burden of the water conservation costs simply because of the amount of water they use. It's a function of how those costs get allocated. But it's all done very equitably based on known metrics. Next slide. So here are the rates that are being proposed for the water. This is for year one. You can see in the first column your current rates. Then the second column shows the proposed rates for July 2021. And then the change in the form of dollars and percent. And you can see that the change is quite modest. And it does vary a little bit from different categories. And again, the fact that it's different in different categories is simply a function of the fact that we've updated the cost of service metrics. And so that ultimately ends up being routed. Those different metrics end up affecting the usage rates versus the monthly service rates slightly differently depending on the change of the inputs. And so all these different components change a little bit differently from one another. It's important to note that in year two and three and four, these differences won't exist. They all go up by the same percentages as noted in those earlier slides. But in year one, results do vary depending on what cost category we're talking about. Next slide. So same slide. But for wastewater, again, it shows the current rates compared to the year one rates and the change that's being proposed by the different categories. And again, those different results vary just because of the inputs to the cost of service analysis. And I think last slide. Last slide for me, I believe. So this is, you know, there's a lot of numbers on those previous slides. And I didn't spend too much time with them with them because frankly, they don't, they're kind of hard to make sense of just looking at the numbers in isolation. What makes a lot more sense and what's easier to digest are these numbers, which is what we call a bill impact analysis. So what we did is that we identified some typical customers that exist out there and how they use water. And we wanted to show you the total change in their monthly bill. So you can see at the top there, we've got four different examples of single family homes from low water user to a high water user. And there are bills for the water, both the current bills with the current bill that they would pay with current rates. Then the next column, the bills that they would pay with the proposed rates, and then the total monthly change in the last column. So you can see those percentages in the last column were all quite similar amongst your different rate payers, meaning that none of the changes that are being proposed are being disproportionately ending up in one lap versus another. It's really being spread out pretty evenly, which is, which is good news. I think that it's, it's not, it's not going to be disproportionate for anyone. Next slide. So I was, I got ahead of myself. There is one more bill just to put things in perspective, again, for that typical average residential monthly bill for a resident that uses about 7,000 gallons of water per month and a sewer cap. So the sewer cap describes how much water is expected to be returned to the sewer. You can see that their current bill is almost $150. And you can see the monthly increases that will happen in year one through year four. And the pie chart showing what parts of their bill, these different, how their monthly bills split up in terms of the different components that we talked about. Next slide. Here's a survey that we did of the region showing some of the most expensive cities and utilities in the area and the least expensive. And you can see that Santa Rosa is really in the middle of the pack there. And these rate increases that we're proposing really doesn't change your rank. I expect for the next, even after years two, three, and four, you probably still won't jump ahead of the next city up. And keep in mind that they're all going to be raising their rates over the next coming years as well. So this snapshot of what the rates look like now will probably, those rankings tend to stay pretty even with one another. If anything, your city of Santa Rosa's rate increases are quite modest compared to some of the rate increases that Bob and I are looking at for other clients. So you're probably going to get passed by a couple of cities in the coming years. Next slide. So I'd like to hand this slide over to Kimberly to say a few words. So we want to, right before we get to questions, just talk about communication with our customers in the current virtual world that we're in, we've had to work to create an outreach plan that can reach our community with the constraints of not being together or being with them in public. And so you can see that we are using all of the digital and written tools that we have available to us. There are many options that are listed here for you. You were also previously shown a video on our campaign, the value of water. I was going to try and show the second video, but I will let you know I decided not to just because we had so much trouble last time getting it to run smoothly through the public Zoom meetings. So instead, we are more than happy to provide you with the link so that you can watch both the first video again if you choose to. And then also so that you can see the second video that has been released. And we are working towards a third video. And then our next step will be to move more towards not just the value of water campaign, but also information about the actual rates themselves and the proposed rate schedule. And so that will be coming out and forward also. And at this point, we'll have a stopping point here. If you go to the next slide and take questions from this portion before we move on to the water shortage charges section of the presentation. Thank you, Mr. Hildebrand and Deputy Director Zanino. Open it up for questions from the board with regards to this initial presentation. Member Ray. Yes, not really a question, just a general comment that I have to applaud all of staff and everybody for the rate that we're actually charging our customers right now that it is only 2% in the first year, which is extremely low. And the thing that is most concerning to me is that three quarters of our rate of our costs, at least for water, or two thirds or something like that, is the commodity cost, the actual purchase of the water from Sonoma Water. And so that's an unknown for us. And so we're, anyways, I guess my hope is that Sonoma County or Sonoma Water will do their due diligent as well to keep the rates reasonable for our customers during these times of pandemic trouble, financial problems and so forth. And that's my comment. Just a quick clarification, fair point, and you're right, the vast majority of those commodity costs are for purchasing the water, but we do include other costs like electricity and chemicals and other costs that change with the increase or decrease of water. Thank you, Board Member Wright, and thank you for the clarification. Other Board Member questions or comments? Yes, Board Member Walsh. Yes, thank you, Chair Galvin. Is this the appropriate place to ask any specific questions on the rate study itself, or are we just having questions on the presentation? Is this your- I'm here. Deputy Director Burke, do we want to wait until Mr. Reed has finished before we get to rate questions or- I think Chair Galvin and Board Member Walsh, yes, you can ask questions on the rate study itself at this point or the presentation. The next portion of the presentation will focus on the water shortage charges specifically. Okay, thank you. Thank you very much. And so I have comments and a couple of questions. First on the comments, I think the quality of the consultant's work in the city staff's communication expertise and their ability to communicate allows the public to ask questions and understand what they're doing. And I think it's just fantastic high quality conversation. And the questions that I have are whether or not we can add a little bit to that conversation. And then I have one specific question about the calculation, and that's on the capital improvement plan for the water page ES4. In the actual study itself, we were saying that the fiscal year 2022 to fiscal year 2023, we're saying there's going to be a 3% inflation on CIP, but it looks like it's a ES4 that we went from 13.8 million to 14.6 million, and that's more like 6.7. So is that a clerical problem or is it- can you help me out with that? Let me- It's also in the presentation itself, sir. Okay, what side was that on? It's on ES4. Mark, it's on the slide that shows the graphs projecting going forward on our expenses and revenues, including our CIP. That's slide A. At the beginning of the conversation, it's- I'm sorry. In the study itself, the executive summary, page four of the executive summary. Okay, let me pop that up. In the prior page, we said the benchmark for the capital improvement was 3%. And then on the graph on ES4, fiscal 2022 is 13.8 million for capital, fiscal 2023 is 14.6 million. That's 800,000 out 13.8. The others from there, when you go from 23 to 24 to 25 are about 400 to 500,000 per year, and that looks about right, just eyeballing. I see. Okay. Yeah, thank you. There is something going on in there that's not just inflation, and I'll have to pop the model open to refresh my memory on exactly what's going on in that particular year. Go ahead and ask your next question, and I'll start looking that up. Great, and thanks. And these are just- I just want to make sure you're okay with these. I don't know if it's a mistake or not. I just want to be able to communicate that to the public if they were to read the study. Sure. Then the other thing is on the benchmark itself, we're starting out with, let's just say, 13.4 million. Is that based on an industry benchmark that we can describe, or is it just based on what we've been doing so far? So let's keep doing that at 3% a year. And then where are these funds sitting if we're not spending that rate? So if we don't spend 13.4, let's say we spend 12.4, but we've taken that 1 million in rates, are you assigning reserves within the enterprise fund, or are those going to a city's capital projects fund that's restricted for enterprise uses? What's going on with those- with that component of the rates? If our budget- if our budget's different from the actual there? I can answer that question for you. Okay. So we have and we continue to have a dollar amount that was determined years ago for the amount that we should be investing. We have re-evaluated that and we'll be looking to increase based on recommendations, how much we put into the CIP over the last many years. However, we as all are aware have had many emergencies, delays and getting projects out. So we did not feel that it was appropriate to put the recommended or the additional cash into the CIP at this point and put that on our ratepayers until we start spending down some of the amount that is in reserve or has been appropriated to the CIP fund, which is where it lives. There are three separate funds. One is a CIP fund that is for the water fund only and can only be spent on water projects. There is also a fund for the wastewater CIP. Same thing can only be spent on wastewater. And then we also have an additional CIP fund for the subregional system and those are spent on subregional projects only. Thank you, Kimberly. Kimberly, I'm so happy you're there. And do those funds roll up into the net position of the water funds or are they in a city's governmental capital projects fund? They're in a fully separate fund of their own. That is literally for water CIP, wastewater CIP, and subregional CIP. That's what funds work for or do. Great. Because I'm seeing that when I look at the water utility fund and wastewater utility fund on the Audit of Financial Statements June 30, 2019, it gives me 45 million unrestricted in water, 68 million unrestricted in wastewater utility. And so some of those what we call unrestricted funds on the Audited Gap Financial Statements for budgetary purposes, some of those are considered capital projects funds CIP for those respective enterprises. Correct. And those actually as they come forward, you will see it with budget this year. Those are actually all sitting in projects that are in progress to move forward. So those funds go into the CIP are actually appropriated through the yearly budget process for specific projects. I absolutely love that. And then are we taking those funds into account? This is for the consultant or can we are we taking those into account when we model the CIP needs into the rates from 2021 forward? Yes. Okay, great. So we're only doing that 3% increase now, but as we move forward and get some projects out, then we will likely be looking to increase the CIP amounts in later years as we have debt service that also kind of releases funding back to us. We also will have the ability to make decisions and as Mark mentioned as well, we're only talking about that first four years. And so we'll be going through this entire process again before we come back for that next rate schedule and re-evaluating all of that. So it's okay if you could increase the conversation by including what the current gap with the current budgeted or audited financial position is and then we have some CIP reserves that we're going to use that might be helpful. On the capital again on the capital component, so if we're basing it on the need going forward and we have the presentation on the water CIP on the asset management, so we need 518 million for the next 20 years. I don't want to start doing the math but it looks like it's less than 13 million a year. Could we describe what that benchmark is in the study itself so that with the public ask questions we can maybe answer that? Because there's some mention of an association benchmark in the study, but it just referenced that there was a benchmark. And then I'm sorry if I'm asking too many questions but there's another point in the conversation of wastewater CIP where if we get to, and this is at ES8, the ES8, the bottom paragraph was saying the capital appropriation budget is going to increase in conjunction with the decrease in the debt service. And that's sore by so when debt service goes down by 5 million we would increase the capital improvement budget by 5 million and that kind of seems like we're backing into an answer or that we're back you know we're holding the current rate consistent instead of lowering it. And so that kind of begs the question which do we need to have some projects out there to say this is what we think we're going to do with the money or explain what that benchmark is and that we're not hitting the benchmark until we decrease that debt service and now we can increase capital improvement to catch up with that benchmark. So I'm kind of looking for some sort of anchor for how we come up with the capital improvement project part of the race. So thank you Board Member Walsh. I can speak to that a little bit and then Deputy Director Zanino might have something to add. So as was mentioned an initial study was done by Engineering to get some recommendations for our water and wastewater CIP. That amount has been carried over time. We did an analysis of our infrastructure and just like the rest of the industry pretty much you know state and nationwide we're behind in our investment. And so over time we should actually be doubling the amount that we're investing currently in our CIP. We've presented that information to the BPU before. So at this point in time though and looking at the resources as well as the emergencies that we've been going through and the amount of projects that our engineering teams can take on at this point in time. We think it's prudent right now based on what they can achieve to keep these amounts consistent with what the initial recommendation was although inflating year over years was discussed. As was mentioned by Deputy Director Zanino going forward in our next rate increase will definitely be re-looking at that and we are hopeful to be bringing additional investment in our capital going forward. Okay that's perfect plus we'll have another rate review before we get to 26 anyway. Correct. Okay great I just wanted to kind of highlight that if we had some sort of benchmark or anchor or project list to show the public and include that as an exhibitor of Dendham to the report that would that might be helpful. I will add to that we do a we have a five-year planning for CIP. Okay. Only as it comes through budget we only approve year one but we display five years worth of projects. We also have studies for each of our utilities water, wastewater, and subregional that identify long-range projects that we need to be considering as well out to 20 years. So there's a there's a very robust process that goes on in those reports as well that determines what those projects are and as we go through the budgeting process you will see documents that come to you that show you five years worth of CIP planning for projects even though you're only looking to recommend the first year to City Council who would approve the first year of the CIP budget. And that's fantastic and I agree with that the City has the probably the best in-class reconciliation of CIP to budget and I've looked at audit reports for economic analysis and the tie into the budget is fantastic so I appreciate that. Thank you. That's all the questions I have. Mr. Hildebrand did you have the response to the initial question from Board Member Walsh? Yeah yeah I think taking a look at that that was a good catch I think a more apt description in that paragraph would be to say that and starting in fiscal 23 would be when that inflationary adjustment starts and I'll get with staff to make that change. Thank you. Yes Vice-Chair Arnone. A comment and question first of all I just want to comment on how timely and good it is to see the new expertise on our board from new Board Member Walsh's questions it's good to see that level of expertise on the board and appreciate the fact that you read all this. I've got COVID problems. Thank you very much Mr. Arnone. I have COVID issues here. My question is that on slide 16 with the recommended wastewater rate schedule it appears to be there's one classification of charges that are actually going down with this set of recommendations having to do with the different size meters of multifamily commercial industrial institutional users and I'm just curious as to why that one classification of rates went down. Bob do you want to let me know we can we could both answer that but this is your original model. Yeah in the wastewater rate schedule as Mark had indicated the what we did was we updated the cost of service analysis to reflect the current budget and financial information for the utilities you know which changes a little bit over time as well as the customer base changing a little bit. We were also cognizant of you know the revenue mix between the fixed service charges and the wastewater usage rates which are tied to water usage and wastewater flows and as a result of going through that cost of service update we did find it appropriate to have pretty modest reductions in the amount of the service charges for most of the meter sizes across the range of meter sizes. The for single family customers the fixed monthly service charge is not tied to the size of the meter because generally in general for single family the different meter sizes is associated with irrigation needs and not so much what the requirements are for wastewater so it's the same amount regardless of meter size for a single family but across the other customer classes it is a function of the meter size and so really what we're seeing here is the result of the updated cost of service analysis and the new financial information that we were working with as we were going through the study. So it's justified by the actual historical usage is the the reason why these went down. Usage customer base characteristics and the financial information the financial makeup of of the utilities costs and how those are allocated out to the different components. Okay thank you. You're welcome. Other board member questions or comments with regards to the cost of service study and the proposed rate schedule? Okay hearing none I guess we can proceed on then with the water shortage contingency plan. We'll take board comments and questions after that and then open it up for about any public comments. Great and this is this is Bob Reed and Chair Galvin and other members of the BPU thank you for the opportunity to present this information to you. Mark's presentation on the water wastewater rates was really focused on normal water supply and demand conditions and usage characteristics looking out over a 10-year planning period. The water shortage contingency plan is something that is done to look at what happens when we don't have a normal water supply and demand situation. If we go to the next slide the water shortage contingency plan is a component of the urban water management plan and I think most or all of you are aware the urban water management plan is something that is required by the state to be prepared every five years. The last one was completed in 2016 and so the new update is in process and basically the urban water management plan provides pretty detailed information about the utilities water supplies, customer base and demand characteristics as well as water conservation program elements to it. So it's a pretty comprehensive report that's prepared every five years. One of the pieces of that is the water shortage contingency plan and this is a plan intended to help guide the city and the utility through a what happens during an extended drought situation where water supply is curtailed and so it becomes necessary to curtail demand and water usage. The state has recently and I think really on the heels of the last drought that we had a few years ago the state has prescribed various water shortage stages with use reduction goals for each stage. Basically it's you know up to 10 percent then 20 percent 30 40 50 percent and more of water use reductions in these various stages and so as the city has been preparing its water shortage contingency plan it's looking at those state guidelines but has decided to be a little bit more refined than the state guidelines and has identified eight water shortage stages and in conjunction with that those are different levels of water use reduction that would be required depending on the water supply situation and then in conjunction with that we looked at from the financial perspective of what happens to the utility when water supplies are curtailed so water demand is reduced what happens to revenues and expenses and how do we meet the financial needs of the utilities in those constrained non-normal situations and here we are looking at water shortage charges which are part of the rate structure and then also excess use penalties which kick in at the more significant stages of shortage and I'll go into more detail on both of those I would like to say that the city already has adopted policies and these shortage charges and excess use penalties are already in place based on the last water shortage contingency plan and what we're doing at this point is updating those that policy and those rates and charges consistent with the new water shortage contingency plan and the new state's guidelines for shortage stages so if we go to the next slide this sort of summarizes the different stages of shortage that can exist and in the city's water shortage contingency plan we're looking at eight different stages of shortage the initial stage which goes beyond a normal supply condition would be when there's a very modest use reduction goal of just up to 10% it includes voluntary conservation measures intended to help the city achieve that water use reduction goal of up to 10% and with that we would not have any water shortage charge or excess use penalties associated with that as we move into the next stages of shortage stages two three and four we're now into mandatory conditions where mandatory use restrictions would be imposed and they ratchet up as you would expect through the different stages of shortage and then you can see the use reduction goals associated with each of those but in this next increment for stages two three and four would be included a water shortage charge which would generate some additional revenue for the water utility and then when we get into stages five six seven and eight as things continue to ratchet up we would also bring into play the excess use penalty and I'll describe both of those in a little bit more detail but again the intent here is as conditions become more severe the actions taken in response to that ratchet up both in terms of the restrictions that are placed on water use imposed on customers in terms of limiting days that they can irrigate or whether they can irrigate at all and other other uses of water which come into play through those stages so we go on to the next slide in looking at the financial condition for each of the different stages what we do is we start with that normal water supply and demand condition and then we look at what happens with different levels of water use reduction both revenues and expenses are affected and it creates a financial deficit we've got we'll show that graphically in a moment but we've developed a three prong strategy to bridge that financial gap to help the utility remain whole during these shortage conditions regardless of the different stages is one of the prongs of this three prong strategy is to basically reach into our our pockets and to use some of the available reserves that may be available within the utility these might be undesignated reserves or potentially could be catastrophic reserves and as mark indicated previously there there's been some discussion about updating the catastrophic reserve policy and one of our recommendations is to potentially broaden the ability to use those catastrophic reserves including for a water shortage situation so so one prong would be able we would look at available financial reserves that we have to help bridge that financial gap a second is to impose the water shortage charge this would be an incremental increase to the water usage rates that would apply to all water usage and we generate a modest amount of additional revenue to help bridge that gap and then the third prong of this strategy would be to defer a portion of the capital improvement program and thereby preserve cash so it may be possible to delay or defer some capital spending and preserve some cash depending on the severity and also the the duration of a water shortage condition I did mention there there will be also access use penalties but we are not expecting any revenue from those because those penalties could be entirely avoided by all customers if if they reduce water use the way that they're supposed to so we're not anticipating any revenue specifically from that whereas the water shortage charge would generate some additional revenue go to the next slide this shows what happens financially for the water utility at the various stages of water shortage and as we the blue bars in this graph are the expenses and the green bars are the revenues and you can see and it's of course as you would anticipate if if we're selling less water we're going to be generating less water rate revenue so the rates fall or the rate revenue falls through the different stages of water shortage because we're selling less water but expenses also decline in in particular you're buying less water from from Sonoma water so that expense declines there may be some reduced pumping and some reduced chemical costs some other costs most of your costs are fixed but but some of those costs will will decline and then there will be some areas where you will actually see some cost increases the effort that you expend towards water conservation program and outreach and education programs to help your customers are likely to increase somewhat as you go through these stages of shortage so we've tried to model what happens to both revenues and expenses at these different stages of water shortage and the analysis and you can see the financial gap the difference between revenues and expenses widens as we get into the more severe stages of shortage so our three prong strategy is to help us bridge that gap between the revenues and expenses and if we go to the next slide this graphically shows how those different prongs those three prongs would come into play or could come into play depending on how they're implemented in stage one because it's a voluntary condition where water use action goals would just be achieved through voluntary means imposed on customers we would not impose the water shortage charge or defer capital spending but instead rely on available reserves either undesignated or catastrophic reserves that could be used to bridge that financial gap because if we move into the into the mandatory stages of shortage we would start to impose the water shortage surcharge and that would increase with each stage of shortage and then there would also be some reduction in the amount of capital spending so you see the green portion in these bars and starting at stage three represent reduced CIP appropriation so reducing the amount of money being set aside for capital projects and there would be some discretion between each of these but the main one and the one that we're focused on is some additional revenue coming from that water shortage charge revenue if we move on to the next slide this shows I'll stop you through this but this shows the water shortage charges and imposes them on the water usage rates and I'll describe this but up at the top you can see that first row the water shortage charge starts at five percent in stage two and then goes to half percent then ten percent and on up through the different stages this represents the increase that would be imposed on top of the then existing water usage rates the shortest charge is not imposed on the monthly service charges that part of the bill and that part of the rate structure would remain unchanged but by increasing the water usage rates across the board by these percentages you're creating a financial incentive for customers to do the right thing and to reduce some of their water usage correspondingly so you can see in stage two that five percent adjustment to each of the rates the rates that are shown here for the normal uses what's been proposed for july of 2021 so our the first year of our four-year rate plan and you can see they've each been increased by five percent and that occurs through stages two three and four when we get to stage five and this is consistent with the existing water shortage structure we shift to a different rate structure where customers will be limited to a specific water allocation and that for residential it would be tied to the number of people per household and then some allocation for irrigation which you know ultimately at the high end actually gets cut off completely as well and then also for commercial customers based on usage history and characteristics and their water needs there would also be an allocation there and and what happens starting in stage five is water use up to that allocation all water use would be at a uniform rate which would be based on the normal rate plus a at that point of 15 water shortage charge but then if they go over that allocation over 100 of that allocation they would from 100 to 150 percent of the water allocation they'd get into tier two so there's a higher rate there would be a 10 percent higher rate in in stage five and then if you're over 150 percent of your allocation you get into a second or a third tier a 20 percent increase in the rate and pay a higher rate for that these excess use penalties are things that can be completely avoided by customers as I mentioned before if if they stay within their water allocations they can avoid that excess use penalty entirely and they would be just in that tier one and so we're not anticipating any revenue coming from the excess use penalties however if they do materialize that money would be directed to help cover the water shortage costs conservation program activities at the time or to replenish reserves that are being depleted because you're you're bridging your financial gap in part by using your your reserves again this basic structure is in your existing water shortage contingency plan and policy and rates and it's just being updated to reflect the new shortage contingency plan and the cost of service analysis if we go on to the next slide this really illustrates what happens with this rate structure water shortage rates and the excess use penalties this is showing what happens with a typical single family residential customer in their water bills the top half of this table shows what happens if that customer is compliant with the water use reduction targets and reducing their water use consistent with the the needs depending on the various stages one through eight what happens to their bill and then the bottom half of this table shows what happens to a customer that doesn't reduce their water use over these stages and what happens to their bills you can see in that in the top half of this that as we once we get into stage two a water shortage charge appears on the bill so they're starting to pay a little bit of water shortage charge on all of their water usage but they never pay an excess use penalty even in the higher tiers because they're meeting the use reduction goals and you can see in the last column here the total water bill for this customer meeting that water use reduction goal their total bill is lower than what their normal bill would be with normal usage so even though they are paying this water shortage charge because their water use is going down they are seeing a lower bill associated with a smaller water use the converse you know the customer that doesn't cut back at all they are going to continue to pay all the rates the water shortage charge applies to water shortage charge applies to all of the usage that ramps up is through the different stages and then the excess use penalty also kicks in starting in stage five where you have the the water allocations and you can see there that customer is going to have pretty significant increases in their bill and hopefully encourage them to to reduce their their water usage so so this is really summarizes the the benefits of this water shortage charge structure with the excess use penalties and and is really an update reflects an update to the prior policy and is consistent with state guidelines as well as the the city's new updated water shortage contingency plan I wanted to conclude this presentation we go to the next slide and and bring things back in to the next steps in the rate setting process here and and Kimberly I don't know if you want to take this over but but the water shortage rates water shortage charges will need to go through the prop 218 process and be approved with the normal water and waste water rate structure so that'll be a part of the the process even though that water shortage contingency plan and the urban water management plan are separate documents and are are moving on a parallel track to the rate study but the the rate approval process in the public hearing process will need to incorporate the shortage charges with a normal water and wastewater rates for the next four years and I'll turn it back over to Kimberly if you want to conclude I can go through I can go through next steps as you'll see here and you've probably already seen on your future calendar that we will be back to see you again this month on the 18th we will come back at that time to request a recommendation to city council once that is done then we will have our city council study session in March we are also in the midst of preparing our prop 218 notification for mailing the prop 218 process and the notification process is a quite lengthy one and so we need to have that completed by the end of March and sent out before we have the public hearing because there is a 45 day period for our customers and our community to make comment or protest on the proposal in that prop 218 notification as Bob indicated we will also be adding the shortage rates so that they are going through that same regulated process to make sure that they also are meeting all those requirements if we were to have to implement them at some point and then finally we will have the public hearing in May it will be near the end of May and then there will be a 30 day waiting period for rates to go into effect and so they will hopefully be effective by July 1st that's the plan and then our first billings in July 1st that is a full entire cycle of reading and billing would be those that would see the rate increase if approved show up on the bill and that is I believe the last slide more questions yes if anyone has any questions comments anything you would like us to follow up on please let us know we are here to answer and we have other staff available as well if there's any questions related to the urban water management plan are those shortage charges if necessary thank you mr reid and also thank you deputy director Zanino I'll open it up now for any board member questions on mr reid's presentation board member battenford thank you for making that accessible to the to the non-engineer members here and the non-cpa members here appreciate it very much just a few clarifying questions on my apologies if I if I missed it each year we do we approve right the pass-through rate rate from from Sonoma water has that been integrated into this into into this new rate structure because my understanding is right we're not going we're going to discontinue that practice correct correct so we will because we have developed a good relationship board member right pointed out earlier talking a little bit about the pass-through rate year over year Sonoma water brings their budget to us the water contractors and we work with them every single year to make sure that we are staying within a range of increases which is usually between four and six percent they have worked with us to stay there we haven't seen big fluctuations and so because of that we feel comfortable not doing a pass-through rate and instead doing a specific amount each year for that that coverage a part of that really comes about because we just want to make sure that our customers know what's coming their way when we do the pass-through rate what happens is that they don't know we don't even bring that to city council or bpu until spring and so don't really know and the approval doesn't happen until literally right before their first billing in July when when the rate actually increases and so it really does provide more stability for our customers to plan as well for the future we are trusting that Sonoma water is going to work with us and continue to work with us to keep the rates within that four to six percent and we will continue to follow that process of working with them at the beginning of their budget setting process to make sure that that we are staying within that range great and also along the way the asset management and how do we anticipate future cip i i i remember a former board member down always bucketing it as we would anticipate is it one percent for the it's the one percent or two percent for you jennifer jennifer knows what i'm talking about has that also been worked in and has there big big changes in that that we wanted to you know we estimate a repair to to part of the system at two percent a year and and another part at one percent of the year so you want to handle that one dr. Burke yes thank you thank you and yes that definitely was goals that we had in prior years in working with the board over the years we have really implemented a much more robust asset management program so the factors that were discussed in the previous study session is now what we take into account to really look at what our needs are going forward so it's not just driven by age of pipe and pipe replacement because those are what those numbers were based on but it's based on all the factors that we talked about in the previous study session and that's what we're looking at building in overtime and as we discussed earlier you know we we recognize we're going to have to build that up and we will be looking to do that the next time we do the rate rate setting for this one because of our limitations on resources we think it's consistent to keep it at the level it's at but increasing by inflation great it sounds like a a more useful calculation in that right not every not every mile of pipe is the same value is the same anything so I appreciate that on the the water shortage charges you know of course our staff and our team you guys do such a fantastic job of forecasting and really keeping our customers at the center um as we come into potential shortages you know just abundant clear notification of allocations of what the crisis is of how they can conserve incentives that we might be able to provide I know we have a a fantastic system of conservation incentives that we work with our customers with um and and also to to be clear on on enforcement um have we already started to do pretty heavy outreach um kind of forecasting for the community how have we started to do that are there any particular um high leverage collaborations that we've thought through whether whether it's kind of our larger users whether it's larger swaths of our residential customers via I don't know reaching out to property management firms um it just strikes me that as we walk into a shortage situation allocations clarity and high leverage conservation opportunities become much more important um something tells me you already have a long list and I'm just interested really for the public's sake and for the board's sake um how we're walking forward with it sure and I can talk to that a little bit I will recognize um that this is a little disjointed um for the board and I do recognize that because we're only providing you the rate schedule and not the rest of the plan the rest of the plan will be coming to the board I believe in April along with the urban water management plan and it outlines everything that you've just discussed including customer information conservation programs enforcement all of those pieces so we we will have a very robust um discussion and information on that when we bring the entire plan forward and part of what you'll hear in your next item has some discussion of already what we're doing in terms of the dry year conditions and um the water supply implement or water conservation implementation we're doing both um individually the outreach we're doing here and regionally uh with our partners so we are we are we we've been through dry years and drought before we're using all those past lessons learned that information is also implemented into the plan we'll be bringing forward and we do address all the pieces that you've mentioned um board member baton fort those are all the pieces that we use when we're dealing with dry conditions and potential shortage fantastic thank you today was uh today was great a lot of um very uh a lot of fantastic staff reports appreciate all of your work today thank you board member baton fort other board member questions uh mr reed I had one question with regards to the excess use penalties uh you mentioned that uh you're not planning on seeing much revenue because they'll avoid those penalties do they have to avoid it by by reducing in the following month and then they avoid the penalty or is it longer period of time how does that work um the uh the water allocations that would come into play in those higher stages of shortage I think for residential customers it's really will be a um uh a quantity of water per you know per member of the household so it's based on the number of people and and each household and then an allocation of of water for irrigation uh is as well and once those come into play um the customer would need to stick within that water allocation to stay within tier one and avoid the excess use penalty and if they go over that amount then that excess use penalty would would kick in um I'm I'm sure there would be some outreach and and education and forming the customers as to when you know that water allocation and that rate structure would come into play you know in advance of it actually kicking in so so that following month they would have a if they exceeded they would have a penalty in the in that billing which they would have to pay and then they would avoid the penalty in the following month if they dropped their usage below the correct levels that is that it correct that's my understanding is is how it would work okay okay so but if they're consistently using more water then they would potentially have excess use penalties every month month after month okay that's that's correct and and share gal sorry pop no go ahead Jennifer share galvin um we we would when we put out our um prop 218 notice last time and we're in the process of putting that information together we were very clear and we'll be very clear with our customers what those allocations are and sending lots of information so our intent is to be very forthcoming well and we will be not only our intent we will be very forthcoming with information to our customers letting them know this is what your allocation is is this information still correct in terms of number of people in the household and um if you are able to reduce your bill per the allocate or reduce your use per the allocation this is what the impact will be if you're not this is what the impact will be so we will be doing a lot of outreach related to these pieces if we if we get into those higher level of shortage um because it is it is something that we we want to ensure that our customers are well informed and understand exactly what the impacts will be so that information will if we're looking at the best way we can incorporate it into our prop 218 notice but there'll be a lot of outreach um so that customers are well informed great thank you uh vice chair Arnone kind of following up on the same issue I heard clearly that the shortage charge is subject to 218 prop 218 uh requirements but I wasn't clear on whether the excess use penalties are also subject to prop 218 considerations or whether they can incorporate for like punitive um considerations uh in in calculating the amount yeah um I'm I'm not an attorney and I get my hands slapped whenever I practice law but it's but it's my understanding that the excess use penalties are are because they are penalties they're not part of the regular rate structure um and I was I was thinking today whether five years ago with the prop 218 notice whether they were included in the notice just so that people were aware of them um I think that was probably the case but maybe Kimberly or Jennifer would would know and what the plans are going going forward with the with the notice this time around so they were not included last time so we were going to have to do an additional prop 218 notification if we were going to enact any of those at the time before that there was a prop 218 notification that included them and so that was part of the reason why we wanted to make sure that we included it with this rate cycle so that we could get it into the prop 218 process and make sure that it was properly noticed because noticing is not inexpensive and we didn't want to have to do a separate notification for uh the shortage rates so that implied that implied three that it is subject the penalty is subject to prop 218 requirements so that means you can't include a punitive element to it is that right if you have to do a prop 8218 analysis to show that the associated costs are for justifying the penalty then then you can't you can't be punishing people for using too much water so so the water shortage surcharges um do have a cost analysis because they're intended to help bridge that financial gap that that we are able to to quantify and and estimate so it is on that basis the excess use penalties are not intended to generate additional revenue so but i'm i'm going to you know we have we have discussed this and raised the issue with with the city's legal council um as to whether the excess use penalties are subjects and it's been my understanding in the past that they're not subject to prop 218 that doesn't mean that you can't include the information in a prop 218 notice as as an education outreach sort of endeavor it seems to me a wise thing to do in terms of transparency um providing information to your customers even if it's not legally required to do so got that makes sense that makes sense mr matt how did you want to chime in i just want to echo what uh mr reid said in his last uh few uh comments i've seen this issue arise with a number of different jurisdictions and i share the view that he just expressed even though technically an something in the nature of a penalty an excess use charge is not a technically subject to the prop 218 uh requirements i believe that the prudent thing to do is to be fully transparent with every aspect of the district's rates and charges schedules including something that is in the nature of an excess use charge so that there can't be any doubt as to what it is that the city is doing and to the extent that the arguments ever arise you will have created an administrative record that will stand you in good stead should there be litigation challenging all or any aspect of the rate structure thank you thank you other board member questions or comments if not then we will open it up for public comments we're now taking public comments on item 5.2 if you wish to make a comment via zoom please raise your hand if you're dialing in via telephone please dial star 9 to raise your hand secretary aether do we have anyone we have no public comments thank you very much thank you to all the presenters on this uh study session we'll look forward to seeing it in the upcoming weeks with regards to uh our rate setting and that'll take care of item 5.2 item 6.1 our regular minutes from january 21st uh everyone was present so those will be received and filed item 7.1 is a staff briefing director berke thank you chair galvin members of the board uh our staff briefing today is a water and recycle water supply update and a deputy director peter martin deputy director water resources peter martin and deputy director water reuse operations amma walton will be making the presentation uh good afternoon uh chair galvin and members of the board uh peter martin here i'm here with a uh water supply update as well as providing you with some additional updates on some of the outreach efforts we've been doing in the dry weather period and also providing some updates on some programmatic elements that we're implementing as well it's like the presentation's being pulled up here so um you can go ahead and advance to the second slide uh i don't know if you're getting tired of seeing this uh same graphic over and over again but um you know obviously uh we got a nice little slug of rain over the last week um unfortunately it's not enough to reverse our fortunes obviously um but uh we're still following far behind percentage of normal for this time of year uh in the region uh which is is a little bit concerning so um if we can advance to the next slide please uh so lake minnesino as of monday i guess in this slide uh was about 29 000 acre feet or approximately 41 percent of their target water supply for Sonoma water releases they're currently set at about 25 cubic feet per second um the difference between the last time i gave this presentation is that obviously there is a seems to be that the reservoir has hit bottom so um if you see that black line um water supplies are starting to go up a little bit which is was uh as you can see too also it's it's tracking very much like what we saw in the 2014 water year by that purple line which was in the midst of the last historic drought so um next slide please so similarly uh lake Sonoma storage where we uh the city of santa rosa derive our water supply um is about 64 percent of storage for this time of year or 157 000 acre feet and their releases are currently set at about 94 cfs um should mention since we have new board member that lake Sonoma is uh does hold approximately a two to three year water supply for the region as well as the contractors including the city of santa rosa um i guess next slide please so uh we were provided with an update at the water advisory committee on monday um on the filing that Sonoma water uh filed their temperature change petition or tcp um they filed this request to allow them to modify their in stream flow requirements in the upper watershed and better manage their storage in lake menesino uh this request was received uh by the state water resource control board and noticed publicly on january 19th uh the state water resource control board has not responded in the form of a formal order but Sonoma water did say that they anticipate that will occur soon um so the proposed changes are mainly to their water right permit terms uh allowing them to move the hydrologic index or i guess perhaps the indicator of what water supply conditions are on the watershed uh from a determination based on inflow into um lake pillsbury which is in the eel river watershed and align it more with storage levels in lake menesino so lake menesino storage uh would determine uh the conditions in the watershed uh Sonoma's water proposal is such that as of february 1st because lake menesinos below the 36 proposed 36 000 acre foot threshold um the conditions would be changed from what is normal today to critical uh so that would allow them to reduce their mandated in stream flows in the upper river russian river uh by 75 from 75 cfs to 25 cfs qbp per second um it's important to note that at this point no chart changes are proposed for in stream flows in dry creek or the lower russian river uh where santa rosa does receive our water supply but it's important to note that as we heard on monday snow water is monitoring storage in lake sonoma and um they will continue to reevaluate that um to see if additional changes are needed uh in the spring and that would have impacts um obviously for in stream flows uh from dry creek and below at the confluence of the russian river out to the pacific ocean uh next slide please so this request is pretty much exactly the same as what we saw in the 2013 2014 water year uh as i mentioned in my previous slide uh water supply is trending very closely with what we saw in that year um and sonoma water's water supply forecast modeling shows that there is a risk of lake menesino uh reaching critical levels of less than 20,000 acre feet without some intervention now um so at the water advisory committee on monday we did learn that um sonoma water sort of reviewed their long-term historical rainfall stream flow and storage records and found that in similar water years below normal conditions will persist in the majority of the scenarios that they model so basically the chance of a rebound to normal conditions at this point is becoming more and more unlikely so this is concerning obviously in the upper watershed because sonoma water relies on lake menesino to meet late season fish flows and the demands of their water contractors in the upper watershed it's important to note too that um i just want to remind everyone that pgne for the plotter valley project which does terminate into the east fork of the russian river did ask for a variance for their flows per their hydroelectric project permit through the federal energy regulatory commission uh to reduce their minimum flows from 45 cubic feet per second to 15 cubic feet per second so there's also an anticipation that the reduced amounts of water coming out of that project into the upper russian river watershed so um lastly sonoma water staff did note that reduced flow regimes would need to be monitored and um sort of consulted on with the north coast regional water quality control board the national marine fishery service and the california department of fish and wildlife they do know that salmonids are present in the watershed right now and they're being monitored um and then just nearly uh those flow regimes that they need to make sure that they're considering the impacts to water quality and uh protecting all the other salmonid life stages uh through their flow regimes next slide so um just in response to this ongoing dry weather um i just want to highlight a few things um you've heard a lot about this over the last couple months but um we're continuing to coordinate with our regional partners uh it's important as uh director berke mentioned before we've been here before um or we've sort of got a game plan um and so we're working to make sure that um we're working with them collaboratively all the sonoma water and and the contractors as well as the sonoma marine um water saving partnership to understand if proactive or progressive measures are going to be necessary in light of this lingering dry weather um for this month we are going to be conducting additional outreach in the form of a new radio spot which encourages customers to maintain water smart habits will be continued to put out digital media in the form of facebook instagram and twitter posts and then additionally the continued customer bill messaging and folks customer bills and then we use the city connections newsletter newsletter which has quite a wide range of folks that actually receive that as well and then just i did want to note that there is a significant overhaul going on with our water smart yard page which a web page which directs customers to rebates and other sort of things that they can do to be more water smart in their yard and that's intense anticipation of outdoor irrigation season happening so uh so for the next slide please um i just wanted to take time here to give a brief overview of the benefits of advanced metering up infrastructure or am i to our customers and sort of showing how it's ensuring our routine management of the city's water waste ordinance this has been an important tool am i that's paying dividends through the city's investment and improved customer meter infrastructure and the data that comes out of that improved infrastructure so this graph sort of looks at some of the cases that we've seen over the last few years and in this graph you can see obviously we not only saw an uptake in complaints last year but we've been able to have greater impacts in our follow-ups and response to customers through the review of billing data and that's only would only be available through the santa rosa waters new sort of am i program that's been put in place in the last few years so as you can see the water use efficiency team actively responded to more than 340 cases in 2020 but also had significant follow-up with customers on flag usage data and also issued several warnings next slide please so this is just a graphic that shows you sort of a further breakdown of those water waste reports by month as you can see we're last year we were sort of averaging about one complaint per day that required follow-up by staff and so while these public complaints and other complaints sort of are an important tool in understanding the boots on the ground issues i just wanted to provide in my next few slides next slide sort of how we're utilizing visualize customer data to better follow-up and investigate water waste or customer losses so many customers may not know they have a leak and the billing department sort of flags what they consider continuous use cases where we see just water continually running in a meter we can we have data that's you know up to about an hour hourly sort of time frame so those those kind of flag counts are sent over to water use efficiency team and then they follow up with the customers so i'll go ahead and just say yeah just advance the next next part of the slide in this first case we have a large institutional customer which was actually a school the water use efficiency team contacted them and provided them with an on-site socially distanced visit outdoors to look at their infrastructure and then they also provided quite a bit of AMI history to help them understand their water use including continuous use so obviously found four large leaks including in the irrigation system some process water leaks and a service line fracture so average savings there just in this one customer is 27,000 gallons per day i should note that in many of these large customers these folks don't know that they have a leak until the time that the water use efficiency team follows up with them so they just assume that that's the cost and that's how much water they're using so so advance the slide a little bit in this second case a commercial customer which is it happened to be a strip mall the customer didn't realize they had a leak as well so while use efficiency staff quickly followed up with them and they were able to pinpoint a wide open leak running in a vacant building for a toilet on that in that strip mall so those kinds of things are interesting too as well and that you know we're in a time where it's it's obviously buildings are not necessarily always being utilized and they're sitting vacant we can help customers save money and obviously water during this time as well so advance the slide this third case would be an irrigation only customer which has happened to be a golf course we sort of surmise that one of the leaks have been occurring since 2017 that leak sort of increased over time from 116 160 gallons per minute to over 600 gallons per minute so they work closely with this customer and we're able to find additional leaks and have an average saving of 14 000 gallons a day i do want to just kind of highlight i don't have any more on this slide but i do want to point out too i did learn about another customer that was a dialysis clinic that continuous use just recently we followed up and we did find out from just from talking with them that continuous use is mostly to be expected based on their processes but then we also found that they had a small leak and so water use efficiency staff worked hand in hand with them to determine the nature of their leak and then you know obviously this opens a door for them to continue to build a relationship and help them to reduce their continuous use and maybe even some process improvements so that this contact is very good because we can't have a lot of our face-to-face customer interaction that we've been used to in the past so i did want to just close with that the water use efficiency team is sort of working with the vendor that smartworks that that processes and displays the AMI data to help us to develop a routine report that shows water savings for single-family customers when we do follow up on these so this will help us obviously to track our calculated savings through this program and also you know help us to work through these continuous use issues as well so i guess next go to my last slide here just want to remind everyone that we're here to help and why use efficiency team can be contacted at srcity.org slash water smart or the phone number there below so with that i will hand over the presentation to deputy director walton thank you deputy for martin good afternoon chair galvin and members of the board and i'm a walton i'm the deputy director of water reuse operations i'm here to provide a very brief update on our recycled water supply as our conditions of an availability of our recycled water haven't changed much so next slide please so first i'll just show you our recycled water production curve the gray line there shows the average for about the last 35 years the blue line is our water production from last year which i've mentioned previously was our historic low up until this year in which is represented by the black line that runs along the bottom there up until this month we had been averaging around 14 million gallons of production per day which is about what we see during the summertime so really a reflection of little to no rain this month we had we did see an uptick in our production we have reached almost 16 million gallons a day on average we got up to as high as about 24 million gallons per day but not for a very sustained period so our average is still pretty low and really much lower than last year which was a pretty hard year for us with respect to recycled water so if you go to the next slide please here's what we have in storage again the gray line they're shown in showing an average year and then the black line along the bottom showing our current situation we did receive because of the small amount of rain that we the region received we did get a small uptick in our storage about 50 million gallons of additional storage this was actually for two reasons one because of the the rain we got as well as the storm knocked out power to the geysers pump stations up on Pine Flat Hill so we were offline and not pumping water to the geysers for about a day so we gained a little bit more in storage than we would have otherwise just a reminder we would like to see this the black line on a much steeper upward trend in order for us to be gaining in storage to use for the coming summer months however it is not on an upward trend it's on a slight upward trend only because we are sending less to the geysers than we typically would be this time of year and Windsor is sending more to the geysers than they typically would which helps offset what we send as well so much lower than we would like to see and not gaining as much as we would like to see so next slide please so just again a reminder that we are preparing for little to no recycle water being available for our interruptable customers as director Burke mentioned last meeting we will be establishing an ad hoc to discuss how we want to utilize the very little recycle water that we will have we are continuing to have meetings with our ad community letting them know of the situation that we're in and providing regular updates they've asked to see our storage curve on a regular basis so we are providing that regularly so they can track it along with us and then again ongoing cooperation with our regional partners I mentioned Windsor is pumping more to the geysers than they are actually contracted to pump which is helping us maintain more in storage than we otherwise would we're also in conversations with Sonoma water and potentially you know be looking at whether or not they will have water to provide to supplement the water that that we have just as a reminder while we do have regional partners who also produce recycle water we produce substantially more than our regional partners so while we ask for their help and we appreciate their help it is minimal what they are able to provide with assistance but every little bit does help so we continue to have conversations with them and with that I'll take it to the next slide and open it up for any questions thank you deputy director Walton and deputy director Martin board member questions or comments okay I don't see anybody so thank you both for your presentation let's hope that I know we don't have any rain on the horizon the next week or so but let's hope that things change between now and our next board meeting and maybe we'll have a more positive report okay so at this point we'll take public comments with regards to item number 7.1 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 atha we have no public comments on this item thank you that'll take care of the staff briefings we have two items on the consent calendar if anybody's willing to make a motion to approve those I'll move to approve the items on the consent calendar second oh there we go I didn't see who got the second we have a motion by vice chair Arnone was it director walsh board member grable second I'm sorry okay second by board member grable we'll now open it up for public comments on item number eight if you wish to make a comment via zoom please raise your hand if you're dialing in via telephone please dial star nine anyone no public comments may we have a roll call vote please yes chair galvin hi vice chair Arnone hi board member baden fort hi board member grable hi board member walsh hi board member waltz hi board member right hi thank you passes unanimously we have no report items item number 10 is public comment on non-agenda items so we'll take public comments now on item 10 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 aether do we have anyone we have no no public comments that will conclude item number 10 we have no referrals we have no written communication subcommittee reports you heard or in one of our items that the contract review subcommittee did meet and approved what was item 8.1 of our meeting today so i believe we have a report from the water conservation subcommittee yes chair galvin the water subcommittee we met on january 25th and staff provided updates on two items one of which was the water shortage contingency plan which we did hear a little bit about tonight or today and we will hear more about that as far as the full plan of the 2020 urban water management plan that'll come to the subcommittee first and then back to the bpu for consideration before the city council in may or june and staff also provided updates on the existing santa rosa water dry year campaign activities and various updates on the water use efficiency program and we provided some feedback on existing and planned efforts that will be sustained as long as dry weather conditions persist and we did just hear the supply update so hopefully we will get some more rain but the staff is working very hard to make sure that we have all of the activities in place preparing for the dry weather and that is it thank you any board member questions regarding the subcommittee reports hearing none will now take 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 please dial star nine to raise your hand secretary atha we have no public comments on this item okay item number 14 is board member reports do we have any i will report out as was previously mentioned in the staff report or staff briefing that we are establishing a recycled water ad hoc committee and at this point board member battenford and myself will be serving on that committee and will be reporting to the full board as we get going okay any other uh board member reports all right we're now taking public comments on item number 14 if there are any members of the public that wish to comment via zoom please raise your hand if you're dialing in via telephone please dial star nine secretary atha we have no public comments item number 15 is director's report director berck thank you chair galvin in the interest of time i do not have a report for today thank you we're now taking public comments on item number 15 if you wish to make comment via zoom please raise your hand if you're dialing in via telephone please dial star nine to raise your hand secretary atha we have no hands raised thank you uh we'll now move to our closed session matter uh interim legal counsel mr maddo would you please announce the closed sessions yes chair galvin there the board will be meeting in closed session on three items tonight as listed on the agenda two of them are existing litigation matters the first is uh batten grove two open space maintenance association versus city of santa rosa the second is in the matter of the city of santa rosa's petition for review action and failure to act on the part of the california regional water quality control board concerning the city's uh discharge permit the details of the resolution number etc are listed on the agenda both of those are where existing litigation matters and the board can meet in closed session under government code 54956.9 the third closed session item is for the board to meet and give instructions to its real property negotiator and that is permitted under government code section 54956.8 the property involved is 25301 ramal road and skag's island road the assessor's parcel number is provided on the agenda the um the negotiator on behalf of the city the water department is jill scott the negotiating parties on the other side are the victor leveroni corporation joseph leveroni patricia starnetta the elizabeth ann leveroni trust in the louis leveroni trust and the negotiations concern price in terms of payment and with that i believe it would be appropriate to go into closed session mr chairman thank you before we go into closed session i'll open it up for any public comments regarding item 16.1 16.2 and 16.3 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 aether do we have anyone we have no public comments okay at this time i would ask the board to please disconnect from zoom and reconnect via the closed session zoom information that was provided to you and we'll see you in closed session thank you looks like we just need board member walsh okay i think everybody is back if we could ask secretary aether to do a roll call please yes chairman galvin here vice chair ononi here board member baden fort here board member grable here board member walsh here board member watz board member right here right so everybody that was in the closed session is now back and we'll ask interim legal counsel mr madow to report out on the closed session thank you mr chairman the board has returned from closed session there were no reportable actions taken during that closed session thank you thank you very much okay everyone thank you for being here and we will adjourn the meeting and see you in a couple weeks and have a happy valentine's day in the meantime thank you thanks everyone thank you very much okay board members can you hear me this is the reporting secretary i can hear you loud and clear patty chair concave here okay perfect i check concave we have uh everybody's here and looks like we're ready to start okay i'll ask uh all fellow board members to turn on their video and keep your audio on mute