ZONE 7 Meeting
October 16, 2019
MINUTES OF THE BOARD OF DIRECTORS
ALAMEDA COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT
October 16, 2019
The following were present:
DIRECTORS: SANDS FIGUERS
ANGELA RAMIREZ HOLMES
MICHELLE SMITH MCDONALD
DIRECTORS ABSENT: NONE
ZONE 7 STAFF: VALERIE PRYOR, GENERAL MANAGER
OSBORN SOLITEI, TREASURER/ASSISTANT GENERAL MANAGER, FINANCE
JARNAIL CHAHAL, ENGINEERING MANAGER
CAROL MAHONEY, INTEGRATED WATER RESOURCES MANAGER
MONA OLMSTED, ASSOCIATE ENGINEER
JAVIA GREEN, FINANCIAL ANALYST
DONNA FABIAN, EXECUTIVE ASSISTANT TO THE GENERAL MANAGER
ALEXANDRA BRADLEY, COMMUNICATION SPECIALIST
COUNSEL: DAVID ALADJEM, DOWNEY BRAND
Item 1 - Call Meeting to Order
President Figuers called the meeting to order at 6:30 p.m. and the Board immediately went into Closed Session.
Item 2 - Closed Session
a. Conference with Labor Negotiators pursuant to Government Code section 54954.5:
Agency Negotiator: Valerie Pryor/Osborn Solitei
Employee Organizations: Alameda County Management Employees Association; Alameda County Building and Construction Trades Council, Local 342, AFL-CIO; International Federation of Professional and Technical Engineers, Local 21, AFL-CIO; Local 1021 of the Service Employees International Union, CTW; Unrepresented Management
b. Conference with Legal Counsel - Existing litigation pursuant to Government Code §54956.9(d) (1): 2 cases. (1) Edwin Belshe and Ginger Belshe v. Alameda County Flood Control and Water Conservation District, Zone 7, et al., Alameda County Superior Court Case No. RG17868354; (2) City and County of San Francisco v. City of Dublin et al., Contra Costa County Superior Court Case No. CIV MSN18-0928
c. Conference with Legal Counsel - Potential initiation of litigation pursuant to Gov't Code section 54956.9(d) (4): 2 cases
Conference with Legal Counsel - Anticipated litigation pursuant to Gov't Code section 54956.9(d) (2): 2 cases
Item 3 -
Open Session and Pledge of Allegiance
President Figuers called the meeting back into session at 7:00 p.m. and led the pledge of allegiance.
Item 4 -
Report Out ot Closed Session
President Figuers stated that there was nothing to report.
Item 5 -
There was no public comment.
Item 6 -
Director Quigley made a motion to approve the minutes of the Regular Board Meeting and Director Smith McDonald seconded the motion. The minutes were approved by a voice vote of 6-0, with Director Ramirez Holmes abstaining.
Item 7 -
President Figuers stated that he received a request to pull Item 7a, Request for Out-of-State Travel to Attend Upcoming Association of California Water Agencies' DC Conference, and to schedule it for the November 20th Board Meeting.
Director Gambs moved that Items 7b through 7e be approved and Director Quigley seconded the motion. Items 7b through 7e were approved by a roll call vote of 7-0.
Resolution No. 19-77 Environmental Contract with ICF in Support of Arroyo Valle Water Right (Item 7b)
Resolution No. 19-78 Quitclaim Deed to City of Dublin Line G-1, Chabot Canal (Item 7c)
Resolution No. 19-79 Grant of Easement to City of Dublin Line G-1-1 (Item 7c)
Resolution No. 19-80 Election of Four Zone 7 Board Members on March 3, 2020 (Item 7d)
Resolution No. 19-81 America's Water Infrastructure Act Compliance - Consultant Award (Item 7e)
Item 8 -
Designating Zone 7's Voting Representative for ACWA Elections and Endorsing ACWA's Nominating Committee Selections
Valerie Pryor, General Manager, stated that this item authorizes the Board President or his designee to vote in the Association of California Water Agencies (ACWA) elections and to endorse the slate. Ms. Pryor pointed out that Zone 7's Director Sarah Palmer is ACWA's Candidate for Vice President. Director Ramirez Holmes made a motion to approve the item and Director Quigley seconded it. The item was approved by a voice vote of 7-0.
Resolution No. 19-82 Designating Zone 7's Voting Representative for ACWA's Elections and Endorsing ACWA's Nominating Committee Selections (Item 8)
Item 9 -
PPWTP Upgrades and Ozonation Project Quarterly Progress Presentation
Mona Olmsted, Associate Engineer, presented the second quarterly progress report on the construction of the Patterson Pass Water Treatment Plant (PPWTP) Upgrades and Ozonation Project.
Item 10 -
Lake Del Valle Property Agriculture Grazing Lease Status
Jarnail Chahal, Engineering Manager, gave a presentation on the status of the grazing lease on the Lake Del Valle property. Mr. Chahal stated that Paul Banke, the current lessee, was in the audience and wishes to extend the term of the lease agreement for 10 years. Mr. Chahal said that staff recommends the Board authorize the General Manager to negotiate and execute an amendment to the current lease with Mr. Banke to extend the term of the lease agreement for 10 years. Director Gambs suggested staff work with an appraiser and/or a consultant to assist with the comparables and negotiations. Director Palmer commented that the Banke family has been very good stewards of the land and have provided valuable education to various school groups. Director Ramirez Holmes asked if the initial lease was at market rate and based on comparable properties. Mr. Chahal responded that the lease was based on the Chicago Mercantile Exchange Daily Feeder Price at the time of executing the lease. Director Ramirez Holmes asked if the terms of the agreement have been met in terms of the number of grazing cattle, horse boarding and other subleasing requirements. Ms. Pryor responded yes. Director Sanwong asked that if Option 1 was chosen, would the terms of the lease come back to the Board or would it be signed outside of a Board meeting. Ms. Pryor said that the terms of the lease do state the amendment can be negotiated and executed by the General Manager; however, due to the significant commitment of the agency, it would be brought back to the Board. Mr. Banke shared a few photos and gave details on some of the improvements he has made on the property. Director Palmer moved that the Board approve Option 1 and Director Gambs seconded the motion. The item was approved with a roll call vote of 7-0.
Resolution No. 19-83 Lake Del Valle Property Agricultural Grazing Lease Status (Item 10)
Item 11 -
Cost Allocation Study for Future Water Supply & Reliability Projects Preliminary Findings and Recommendations
Ms. Pryor introduced Item 11, Cost Allocation Study for Future Water Supply and Reliability Projects. Ms. Pryor stated that as the Board is aware, Zone 7 is considering a number of projects that are in the conceptual or planning stages, including but not limited to, Sites Reservoir, potable reuse, Delta Conveyance, regional Desal, and the Los Vaqueros Reservoir Expansion. Ms. Pryor felt it would be good for the Board to discuss cost allocation methodology for those projects independently from looking at the projects themselves. Ms. Pryor introduced Elizabeth Drayer, Vice President of West Yost and Associates, who Zone 7 commissioned to do a study.
Ms. Drayer presented the report and stated that the purpose of the study was to evaluate how the capital costs for water supply projects should be allocated to existing and/or future users. Ms. Drayer stated that the methodology they used for the study was to evaluate existing and future demand conditions, review the planned water supply projects and their benefits to existing and/or future users, and recommend cost allocations based on allocation principles and proportionate benefits of the projects. Ms. Drayer added they coordinated and solicited input from retailers, developers, and untreated water customers through a series of outreach meetings, including a presentation to the Zone 7 Finance Committee on October 1st.
Dan McIntyre, General Manager, Dublin-San Ramon Services District (DSRSD), expressed his appreciation to Zone 7 for inviting the retailers to participate in the study. Mr. McIntyre stated that the Board of Directors of DSRSD is in support of staff's recommendations, and encourages the Zone 7 Board to adopt some of the projects in the Capital Budget at its earliest convenience, and make its fee and rate studies reflect some of the projects.
Item 12 -
Proposed Untreated Water Rate for Calendar Year 2020
JaVia Green, Financial Analyst, presented the proposed Untreated Water Rate for 2020. Ms. Green stated that staff met with untreated water customers on August 20, 2019, and with the Finance Committee on October 1, 2019, where staff received feedback from the Committee, and comments from the public. Ms. Green mentioned that Zone 7 contracted with Raftelis for the second year in a row to conduct a cost of service study for untreated water rates. Raftelis recommended three-year rates of $217 per acre-foot (a.f.) for 2020, $243/a.f. for 2021 and $257/a.f. for 2022. Ms. Green stated that the Finance Committee recommended adopting only one year of rates, and also to provide a reconciliation of the CY 2018 untreated water revenue, deliveries and 2018 actual expenses, include the water supply management and water supply cost component in the rate calculation, and delay the two new components (the Agency overhead and water supply and capital cost Components) to allow for more discussions with stakeholders on the impacts on the rates increases and lastly, review the current Rules and Regulations of Governing Untreated Water Service and to develop an Untreated Water Reliability Policy. After the staff presentation, the public provided comments.
Alfred Exner, a resident of the City of Pleasanton, stated that developing rates should be reasonable and equitable and it looks like Zone 7 is trending that way. He asked what Zone 7 was going to do with the overhead costs that were taken out. He also stated that the report implies the water coming out of Lake Del Valle is basically free and he would like that free water to go to Pleasanton or Dublin. He also feels the logic on the fixed charges for the treated water should also apply to the untreated water customers.
Laura Mercier spoke on behalf of the Tri-Valley Conservancy and requested that the Board not approve an increase in untreated water rates, but postpone its decision for one year. Tamara Reus spoke on behalf of the Friends of Open Space and Vineyards. Ms. Reus stated that she feels there needs to be a better understanding of what the rate increases are going to be. She also suggested that not only the untreated users be part of the process in determining the rates, but also organizations such as the Tri-Valley Conservancy, the Friends of Open Space and Vineyards, and winegrowers, to bring another perspective on how the rates will bring long-term impacts on the valley. She would also like to see the rate discussions be delayed for a year. Mark Triska, owner of Triska Crane Ridge Vineyards and member of the Tri-Valley Conservancy, stated that he and other winegrowers who get their water from the Wente turnouts, are charged energy and administrative fees on top of the untreated water rates. Mr. Triska said that the proposed rates are 9% higher than last year and he feels that is too high. He also suggested postponing the decision to increase water rates for one year and to get a committee together to look at what the costs should be. Linda Kelly, a resident of Pleasanton, spoke because Vin POh'Ray, another resident of Pleasanton, raised questions regarding the differential between untreated costs and treated costs. Ms. Kelly said that Mr. POh'Ray calculated the untreated water users were paying $167/acre foot and the treated water users were paying $1500/acre foot. Mr. POh'Ray asked if the treated water users would also receive a reduced rate.
After considerable discussion amongst the Directors about which component to use in order to come up with an untreated water rate, Director Palmer made a motion to adopt the untreated water rates at $173/acre-foot and Director Smith McDonald seconded it. The rate of $173/ acre-foot was determined by taking the recommended rate of $182/acre-foot and applying a credit of $9/acre-foot, based on the 2018 Untreated Water Rate Reconciliation Example (Attachment C) of the staff report. The motion was approved by a roll call vote of 5-2 with Directors Quigley and Sanwong opposed.
Resolution No. 19-84 Adoption of the Untreated Water Rates for 2020 (Item 12)
Item 13 -
Proposed Municipal & Industrial Water Connection Fees for Calendar Year 2020
Osborn Solitei, Treasurer/Assistant General Manager - Finance, presented the proposed Municipal & Industrial Water Connection Fees for Calendar Year 2020. Mr. Solitei stated that the last connection fee study was in 2017 and the next study is scheduled to be in 2022. Mr. Solitei stated that with direction from the Board, staff presented the proposed connection fee update to the Finance Committee on September 12, 2019, where the Committee supported the staff recommendation and approved the staff report to be forwarded to the full Board. The Committee also recommended staff survey other agencies, and the results of that survey are included in the staff report. For the 2020 connection fees, staff recommends adjusting the current fees based on the Engineering News Record Construction Cost Index (ENR CCI) from September 2018 to September 2019, or 1.3%. The proposed fees would be effective January 1, 2020, and would be $29,440 per dwelling unit (5/8" meter size) equivalent for the Alameda County service area, and $28,250 per dwelling unit (5/8" meter size) for the Dougherty Valley.
Director Ramirez Holmes stated she realizes that the policy says we charge a connection fee plus an increase based on the ENR CCI; however, we have also had a delay in projects. Director Ramirez Holmes said she was concerned that we have a housing shortage crisis and just because we can raise the rates, does not mean we should, and with the rates being so high she is concerned about the study being based on a certain number of projects that are not completed, yet we are still charging the same amount. She said she is not opposed to the policy that says we increase the rates, but she is uncomfortable with the amount increasing when we are not keeping our end of the deal.
Mr. Solitei replied that in the Cost Allocation Study, Item No. 11, there are many upcoming projects and we need to continue with the increase in connection fees. The Board asked that the policy be reviewed, updated annually, and that the ENRCCI did go down last time, around 3%, and this time it is 1.3% so we are just trying to keep up with inflation. When the projects begin, we need to match the revenue we are receiving, so that is why we are recommending keeping up with the cost of inflation. Ms. Solitei also added the next study is schedule for 2022.
Director Gambs stated that there are a lot of new projects he feels were not incorporated in the study such as Sites Reservoir, Los Vaqueros or regional Desal, so if we are increasing based on an old study there may be a gap between now and when you do the new study and the longer you wait the bigger that gap, the more heartburn you will feel from the developers. Director Gambs stated if it makes sense to do it sooner, he thinks we should consider it.
Director Quigley said that he agrees wholeheartedly with Director Gambs, and thinking back historically over the last 15 years where development stopped for a few years, he recalls Zone 7 gave one large contractor some money back because they pulled their project.
Director Quigley made a motion to approve the item and Director Palmer seconded it. The motion passed by a roll call vote of 7-0.
Resolution No. 19-85 2020 Municipal and Industrial (M&I) Connection Fees (Item 13)
Item 14 -
a. Zone 7/City of Pleasanton Liaison Committee Meeting - August 13, 2019 - draft minutes
b. Water Resources Committee Meeting - September 10, 2019 - notes
c. Finance Committee Meeting - September 12, 2019 - notes
d. Finance Committee Meeting - October 1, 2019 - notes
Item 15 -
a. Verbal comments by President
b. Written reports
c. Verbal reports
Director Palmer stated that she attended the DCA Board of Directors Meeting on September 19th where they established a stakeholder engagement committee and they chose some potential members who represent a broad spectrum of interests in the Delta, as well as geographically. On September 23rd, she attended an Agriculture Water Management Plan Guidebook Workgroup where they discussed how agriculture water is managed through the drought and the water budget. On September 26th and 27th, she was in Irvine at an ACWA Board Meeting and toured some of the Irvine facilities. On October 1st, she attended an ACWA Working Group on Direct Potable Reuse Framework. On October 3rd, she had a conference call on the Delta conveyance. On October 4th, she attended a Region 3 event at Nevada Irrigation District where they discussed forest resilience. On October 9th, she attended an ACWA steering committee meeting. On October 11th, she attended an ACWA Regions 6 & 7 San Joaquin Valley Water Forum. On October 12th, she attended the Zone 7 Open House.
Director Ramirez Holmes wanted to thank staff for the Open House event and for the work that was put into it. She received great feedback from people she knew at the event. Director Quigley also thanked staff for the wonderful and educational event. Director Quigley also mentioned he went to the California Special Districts Association Annual Conference in Anaheim.
Item 16 -
Items for Future Agenda-Directors
Director Ramirez Holmes stated that she would like to see an Outreach Presentation with information on Zone 7's Facebook page and other outreach activities. Director Ramirez Holmes also mentioned the waitlist for the schools program and if it is possible to allocate additional money so that there is no longer a waitlist. Ms. Pryor responded that we can look at that for the next school year and will make a note of it for the upcoming 2-year budget process. Director Ramirez Holmes asked that it come back to the Board for additional funding before the budget process. Director Ramirez Holmes also asked that staff look into providing the Board an iPad or similar device so that the Board can have access to the agenda package without having to wait for it to be delivered, and to reduce the amount of paper that is used to create the agenda packages.
Item 17 -
a. General Manager's Report
b. Legislative Update
c. September Outreach Activities
d. September Water Inventory and Water Budget Update
e. FY 2018-19 Unaudited Fourth Quarter Revenue and Expenditure Report
f. Verbal reports
Valerie Pryor highlighted a few items from her staff report. Ms. Pryor stated that staff developed a Public Safety Power Shutoff (PSPS) information sheet and it is posted on the website, along with a Per- and Polyfluoroalkyl Substances (PFAS) section.
Alexandra Bradley, Communication Specialist, gave a brief recap on Zone 7's Open House that was held on October 12th. Ms. Bradley stated that the tour was 96% pre-booked prior to the event with a total attendance estimated at 250 people.
Item 18 -
The meeting was adjourned at 10:00 p.m.