Zone 7 Meeting - October 19, 2022
3. Open Session and Report Out of Closed Session 9. Untreated Water Rate Study and Proposed Untreated Rates for Calendar Year 2023 10. Award of Design-Build Contract for Stoneridge Well PFAS Treatment Facility Project 12. Proposed Calendar Year 2023 Municipal and Industrial Water Connection Fees 15. Items for Future Agenda - Directors MINUTES OF THE BOARD OF DIRECTORS ZONE 7 ALAMEDA COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT REGULAR MEETING October 19, 2022 The following were present: DIRECTORS PRESENT: DAWN BENSON SANDY FIGUERS DIRECTOR GAMBS LAURENE GREEN SARAH PALMER ANGELA RAMIREZ HOLMES OLIVIA SANWONG DIRECTORS ABSENT: NONE STAFF PRESENT: VALERIE PRYOR, GENERAL MANAGER HEATH MCMAHON, ASSISTANT GENERAL MANAGER - ENGINEERING OSBORN SOLITEI, TREASURER/ASSISTANT GENERAL MANAGER - FINANCE JARNAIL CHAHAL, ENGINEERING MANAGER KEN MINN, GROUNDWATER RESOURCES MANAGER MONA OLMSTED, ACTING PRINCIPAL ENGINEER BRANDON WOODS, ASSOCIATE ENGINEER JAVIA GREEN, FINANCIAL ANALYST DONNA FABIAN, EXECUTIVE ASSISTANT GENERAL COUNSEL: REBECCA SMITH, DOWNEY BRAND Item 1 - Call Zone 7 Water Agency Meeting to Order President Palmer called the Regular Meeting of the Board of Directors to order at 7:30 p.m. Item 2 - Closed Session The Board went into Closed Session at 6:36 p.m. and came out of Closed Session at 7:15 p.m. Item 3 - 3. Open Session and Report Out of Closed Session There was nothing to report out of Closed Session. Item 4 - President Palmer led the Pledge of Allegiance. Item 5 - All Directors were present. Item 6 - David Lunn, a Livermore resident, provided public comment. Item 7 - Director Ramirez Holmes moved to approve Items 7a, 7b, 7c, and 7d and Director Benson seconded the motion. The items were approved by a roll call vote of 7-0. Item 8 - Director Green moved to approve the Special Board Meeting Minutes of September 7, 2022, and the Regular Board Meeting Minutes of September 21, 2022, and Director Gambs seconded the motion. The minutes were approved by a voice vote of 7-0. Item 9 - 9. Untreated Water Rate Study and Proposed Untreated Rates for Calendar Year 2023 JaVia Green, Financial Analyst, recapped the rates process stating that in August staff met with the Finance Committee to discuss the calendar year 2021 reconciliation which came up with a charge of about $164 per acre foot. Staff met with the Finance Committee in September and presented them with some options to smooth the reconciliation charge. The Finance Committee recommended the adoption of option three. Ms. Green stated that staff recommends the Board adopt the rates to be effective January 1, 2023. The preliminary rate based on option three that the Finance Committee recommended is $274 per acre foot. Staff arrived at that rate by averaging water supply costs which are estimated to be at least $11.5 million next year. For rate setting purposes, staff analyzed the three-year average of water supply cost and using this average instead of the projected cost, it would reduce the cost from $11.5 million to $8 million, so for rate setting purposes staff used average water supply costs of $8 million. Another option staff looked at in order to help smooth the rate is phasing-in the reconciliation charge over a three-year period. So, that would mean a charge to $55 in 2023, $55 in 2024 and $55 in 2025. The benefit being a less initial rate shock and financial impacts to the untreated water customers because they would have time to plan. Ms. Green added that option three results in a rate of $219 per acre foot by using the water supply cost of $8 million and adding the reconciliation charge of $55, which results in a rate of $274 per acre foot. Ms. Green stated that the recommended action is for the Board to adopt the resolution approving the calendar year 2023 untreated water rates. Public comment was received from Darcie Kent, David Epstein, Mark Triska, David Kent, Brandi Lombardi, Michael Wood, Karl Wente, and Matt Ford. Director Ramirez Holmes stated that the Finance Committee struggled with this because they tried to figure out how to be fair to both treated and untreated customers because the untreated has no reserve. Director Gambs stated that the issue is the high cost of water, which is a result of decreasing water supply from the State, and the challenge is replacing it. He doesn't see that there is a quick solution to this. Director Sanwong suggested looking the possibility of developing a reserve policy for untreated water rates and keeping the rate increase at a maximum of 20%. Director Ramirez Holmes suggested staff look at water storage and how it is charged to the untreated customers in terms of cost allocations. Public Comment was received from David Lunn, a Livermore resident. President Palmer asked if the reconciliation charge could be reduced and if the overhead charge is necessary. Director Sanwong stated that the overhead component should be included. It was approved as an untreated water rate component by the Board last year. The Board Members discussed the CY 2021 reconciliation charge to the untreated water rates. Director Ramirez Holmes made a motion for a 25% increase to bring the unit rate to $255 per acre foot for calendar year 2023, and Director Gambs seconded the motion. The motion passed by a roll call vote of 4-3 with Directors Benson, Green and Sanwong dissenting. Director Figuers left the meeting due to a travel obligation. The Board took a 5-minute recess. Item 10 - 10. Award of Design-Build Contract for Stoneridge Well PFAS Treatment Facility Project Brandon Woods, Associate Engineer, gave a presentation on the potential award of a design-build contract for the construction of the Stoneridge Well PFAS facility. Mr. Woods went over the regulatory and water quality background, the project background and scope, and the public outreach that has been done for the project. Mr. Woods' presentation will be uploaded to the Agency's website. Mr. Woods stated that staff recommend Conco West as the contractor, as they have built numerous projects for Zone 7 including the Chain of Lakes 1 and 2 wells, the chemical systems replacement at Hopyard 6 and Stoneridge Wells, and the stabilization project at Chain of Lakes. They also recently finished constructing the valley pump station under a design-build contract. All of those projects were completed to Zone 7's satisfaction without any disputes or claims. Mr. Woods added that funding options for the project were presented to the Finance Committee on October 4. Funding this project would defer three capital projects including work to be completed at the Del Valle and Patterson Pass Water Treatment Plants. Mr. Woods stated that staff's recommendation is to adopt the resolution which includes designating the Stoneridge PFAS Treatment Facility project as a drought emergency project, and that the Board authorize the General Manager to negotiate a contract with Conco West for the design and construction of the project in an amount not to exceed $12,800,000. Staff also recommends the Board appropriate and additional $13,400,000 in the fiscal year 2022-23 budget from fund 120. Jill Buck, a resident of Pleasanton, provided public comment. President Palmer read parts of a letter received from the Pleasanton Chamber of Commerce fully supporting the Stoneridge Well PFAS Treatment Plant. Director Ramirez Holmes suggested staff pursue funding of projects through Congressman Eric Swalwell's office, as he asked her about that when she was in Washington DC trying to get funding for the Los Vaqueros project. Director Gambs moved to approve awarding the design-build contract and Director Green seconded the motion. The item passed with a roll call vote of 5-1 with Director Ramirez Holmes dissenting and Director Figuers absent. Item 11 - JaVia Green presented the wholesale water rate study and proposed treated water rates for 2023 through 2026. Ms. Green gave a recap of the rates process, the schedule of meetings and workshops that were held, and the public outreach including the mailing of postcards to over 102,000 residents and businesses. Ms. Green stated that water costs for fiscal year 20-21 were $5.1 million and in the fiscal year ending 2022, the cost of water was $14.8 million. The full presentation will be posted on the Agency's website. President Palmer pointed out that initiative number 24 in the Strategic Plan states to continue to effectively manage financial resources in a prudent matter that maintains Zone 7 Water Agency systems providing reasonable rates to the community and demonstrating good stewardship of public funds. She added that it is within the Strategic Plan to maintain target levels of reserves. Director Gambs stated that the deferral of the projects isn't something he is comfortable with and he doesn't know how that would impact the ability to serve customers or what that does to water supply reliability. Director Green asked what the proposed water costs are based on. Mr. Solitei replied that the cost of water in FY 2022 was $14.8 million and next year will be around $11.4 million due to the State's allocation. Other years' average costs were around $8 million. The Board recommended scenario five at the September 21, 2022, Regular Board Meeting, but also wanted to look at scenario six. Director Ramirez Holmes stated that the Finance Committee recommended scenario four. President Palmer stated that the main difference between scenario four and five is that scenario four does not include reserve replenishment and if the reserves aren't replenished, the Strategic Plan isn't being followed, which would cause problems if any other emergencies may come up. Ms. Green concurred and stated if the Board went with scenario five where reserved would be replenished, critical projects could be completed by 2025 or 2026. If the Board didn't go with scenario five, the earliest the projects could be completed is 2026 or 2027. Public Comment was received by Vin Pohray, a resident of Pleasanton. President Palmer reiterated the importance of replenishing the reserves and following the Mission Statement which is to provide safe and reliable drinking water for the community. Director Ramirez Holmes stated that relief was given to untreated water customers based on their concerns and treated water customers should get the same relief. She doesn't believe a 43.7% increase over four years is sustainable for anyone in the Tri-Valley. President Palmer moved to approve scenario five and Director Green seconded the motion. The motion failed by a 3-3 roll call vote with Directors Gambs, Green and Palmer supporting, Directors Benson, Ramirez Holmes and Sanwong dissenting, and Director Figuers absent. Rebecca Smith, General Counsel, stated that Board can offer an alternative or take the rates up at a future meeting. President Palmer made a motion for a rate revenue increase of 6.5%, which wouldn't defer projects as much as scenario four, nor would it replenish reserves as quickly as she would like. Director Green seconded the motion. The motion failed by a 3-3 roll call vote with Directors Gambs, Green and Palmer supporting, Directors Benson, Ramirez Holmes and Sanwong dissenting, and Director Figuers absent. Okay, well we are at an impasse. Director Ramirez Holmes made a motion to approve scenario four and Director Sanwong seconded the motion. The motion failed by a 3-3 roll call vote with Directors Benson, Ramirez Holmes and Sanwong supporting, Directors Gambs, Green and Palmer dissenting, and Director Figuers absent. President Palmer directed staff to bring back a compromise scenario, somewhere between scenarios four and five, to the next Board meeting. Item 12 - 12. Proposed Calendar Year 2023 Municipal and Industrial Water Connection Fees JaVia Green presented the proposed 2023 water connection fees stating that per Board policy, the fees are set to keep pace with inflation. Ms. Green added that the proposed fees were brought to the Finance Committee and the Committee unanimously agreed to bring them forward to the full Board for adoption. Staff based the adjustment on the change in the Construction Cost Index from September 2021 to 2022, which is 5.7% for standard 5/8-inch meter increasing the fee from $31,910 to $33,730 for the Alameda County Service area and from $30,620 to $32,360 for the Dougherty Valley service area. Director Benson moved to approve the proposed fees and Director Ramirez Holmes seconded the motion. The item passed by a voice vote of 6-0 with Director Figuers absent. Item 13 - There were no comments from the Board on the meeting notes. Item 14 - Director Palmer submitted a written report. There were no verbal reports. Item 15 - 15. Items for Future Agenda - Directors Director Sanwong asked that there be a Liaison Committee meeting with the East Bay Regional Park District to discuss the Chain of Lakes pipeline proposal. Director Ramirez Holmes asked that a staff report come before the Board regarding the COVID state of emergency slated to expire in February, and how that will affect Board meetings. Item 16 - There were no comments from the Board on the Staff Reports. Item 17 - President Palmer adjourned the meeting at 10:46 p.m. |