Director Palmer made a motion to approve the Regular Board meeting minutes of May 15, 2024, and Director Narum seconded the motion. The minutes were approved by a voice vote of 6-0.

Item 8 -

8. Consent Calendar

Director Palmer motioned to approve Items 8a through 8q, with Director Benson seconding the motion. The items on the Consent Calendar were then unanimously approved by a roll call vote of 6-0.

Item 9 -

9. Commendation for Director Angela Ramirez Holmes

Each Member of the Board of Directors read a section of the Commendation for Director Ramirez Holmes, who resigned from the Board effective May 12, 2024. Each Director then shared their tribute to her.

Director Palmer expressed that serving with Angela Ramirez Holmes was an honor, praising her intellect and the value of her well-thought-out opinions.

Director Narum appreciated Angela's pragmatism, commitment to transparency, and significant contributions to good governance, noting her lasting impact on the agency.

Director Gambs highlighted Angela's diligence, hard work, and expertise in finance and legislation, emphasizing her role in advancing women in water and her conscientious approach to spending.

Director Green thanked Angela for her service, particularly in finance and legislation, and valued her ability to foster robust debate, which improved decision-making processes.

Director Benson acknowledged Angela's support during her transition back to the serving on a water Board, her political acumen, and her contributions to transparency and good governance. She noted her skill in building relationships and articulating complex topics.

President Figuers reflected on Angela's growth from her early days on the Board, commending her detailed focus on finance and her significant contributions as a chair and leader, particularly in financial matters.

Angela Ramirez Holmes stated that it was a great honor to serve on the Zone 7 Board of Directors for three terms, thanking Tri-Valley residents, business leaders, employee groups, elected officials, and retailers for their support. She highlighted her efforts in policy making, particularly noting the funding of the 115 Trust in the current budget and urged the Board to continue to ask tough questions. She emphasized the importance of regional service through her roles in the ACWA State Legislative Committee and as chair of the Los Vaqueros JPA Board. Acknowledging the hard work of staff, she emphasized the need for high standards and performance to best serve the public. Finally, she expressed gratitude for the kind comments from her colleagues and wished the Directors, staff, and the Agency well, thanking them for the opportunity to serve.

Director Palmer made a motion to approve the Commendation and Director Green seconded the motion. The Commendation was unanimously approved.

Item 10 -

10. Appointment of Los Vaqueros Reservoir Expansion Joint Powers Authority Board Representive

Valerie Pryor, General Manager, stated that with the resignation of Director Ramirez Holmes from the Los Vaqueros JPA Board, there is currently no primary Director to sit on the Los Vaqueros JPA Board. She added that after discussions with President Figuers, it is anticipated that he will nominate Director Narum to assume the role of Director while he continues to serve as the Alternate Director.

President Figuers confirmed this plan, emphasizing the importance of the Los Vaqueros Board. He expressed confidence in Kathy's ability to effectively represent Zone 7, given her strong background.

Angela Ramirez Holmes provided public comment.

Director Gambs made a motion to approve the resolution, which was seconded by Director Benson. The resolution was passed by a roll call vote of 6-0.

Item 11 -

11. Proposed Two-Year Operating and Capital Budget for Fiscal Years 2024-25 and 2025-26

Osborn Solitei, Treasurer/Assistant General Manager - Finance, presented the Two-Year Budget for Fiscal Years 2024-25 and 2025-26. The proposed budget had been introduced to the Board during the Special Board Meeting on May 1, 2024, where no changes were recommended. Mr. Solitei provided a summary of the budget highlights.

Fund 100 - Water Enterprise Operations - Revenues are projected to be approximately $69 million in FY 2024-25 and $72 million in FY 2025-26, assuming a 5.5% rate increase and treated water sales of 34,000 AF and 35,000 AF, respectively. Fund 120- Water Renewal/Replacement and System-wide Improvements - a sub-fund of Fund 100, has a budget of approximately $13.3 million in FY 2024-25 and $25 million in FY 2025-26, earmarked for significant capital projects including PFAS treatment, Chain of Lakes conveyance system, and Patterson Pass improvements.

Fund 110 - State Water Facilities - Covers debt payments for the State Water Project and has budgets of approximately $29 million in FY 2024-25 and $31 million in FY 2025-26, with no recommended increases in the property tax override, thereby maintaining the collection of $22 million.

Fund 130 - Water Enterprise Expansion's main revenue source is connection fees. The revenue is projected to be approximately $10 million annually despite declining revenue since 2019, with expenses of approximately $21 million in FY 2024-25 and $23 million in 2025-26. An upcoming connection fee study will evaluate the future of connection fees and future project allocations.

Funds 200 - Flood Protection Operations and 210 - Flood Protection Development Impact Fee are for flood protection. Fund 200 will benefit from approximately $29 million in federal funding from the Army Corps of Engineers for storm damage repairs and an additional $3.7 million for high-priority site repairs, with further FEMA grants expected. Fund 210 will continue flood management planning with a steady budget of approximately $1.8 million for both years.

Mr. Solitei concluded by recommending the Board adopt the Resolution approving the two-year operating and capital budget for fiscal years 2024-25 and 2025-26, effective July 1, 2024.

Director Narum inquired about the sensitivity analysis conducted by Mr. Solitei regarding the potential impact of lower water sales on the budget. Mr. Solitei explained that a sensitivity analysis assuming a 5% decrease in water sales would result in a 2.6% reduction in water sales by acre-foot, translating to a loss of 3,450 acre-feet over the two-year period. This would reduce revenue by approximately $3.6 million over two years and deplete reserves by $2.5 million. While the budget would not be fully funded under these conditions, adjustments could be made, if necessary.

Director Narum appreciated the sensitivity analysis, highlighting its importance in the context of variable weather, conservation efforts, and rate hikes in the Valley. She emphasized that even with a 5% reduction in water sales, there are sufficient reserves and time to adjust spending. Director Narum noted that the budget includes a 5.5% rate increase, funding for the Section 115 Pension Trust as per policy, significant investment in capital projects, and reserves on target. She acknowledged the Finance Committee's concern about declining connection fees and Mr. Solitei's plan to address it.

With these considerations, Director Narum moved to adopt the Resolution approving the Two-Year Operating and Capital Budget for Fiscal Years 2024-25 and 2025-26. Director Palmer seconded the motion. The Resolution passed unanimously by a roll call vote of 6-0.

Item 12 -

12. Adoption of Energy Policy

James Carney, Senior Planner, presented the draft Energy Policy developed as part of the ongoing Energy Master Plan study. The presentation included three sections: background information, a summary of the Board's direction that informed the policy drafting, and an overview of the draft policy itself.

The study includes four components: a baseline assessment, the energy policy, upcoming project discussions, and a final compiled report by the end of the year.

Mr. Carney explained that the Energy Policy's purpose is to outline Zone 7's energy management goals and priorities, providing guidance for staff in evaluating potential energy investments. The policy development process incorporated input from a Board workshop in April, where the Board emphasized aligning the policy with Zone 7's mission and values, ensuring compatibility with existing procedures, promoting fiscal responsibility, and maintaining flexibility.

The draft policy, organized around five focus areas: compliance and governance, resource optimization, fiscal responsibility, reliability and resilience, and environmental responsibility, addresses various aspects of energy management. Each focus area includes specific policy statements to guide staff in achieving energy management objectives.

Mr. Carney summarized how the draft policy incorporates the Board's direction and supports Zone 7's mission. He recommended that the Board approve the Resolution to adopt the draft Energy Policy, noting that the next phase of the Energy Master Plan study would involve project identification and prioritization, to be discussed later in the summer.

Director Gambs moved to approve the Energy Policy and Director Benson seconded the motion. The Resolution passed unanimously by a roll call vote of 6-0.

Item 13 -

13. Committees

There were no comments on the Committee notes.

Item 14 -

14. Reports - Directors

Director Palmer submitted a written report but added that she attended an ACWA Board meeting this past week. Director Benson attended a Central Valley tour and she went to the ACWA 2024 SGMA Implementation Summit.

Item 15 -

15. Items for Future Agenda - Directors

No items were requested for consideration at an upcoming Board meeting.

Item 16 -

16. Staff Reports

Ms. Pryor presented highlights from her General Manager's report. She discussed the State Water Project Delivery Capability Report released in May by the Department of Water Resources (DWR), which updates estimates of water delivery capabilities and includes analyses of three climate change scenarios. The report underscores the need for investments in storage, modernization, and repair of State Water Project facilities, as well as the construction of the Delta Conveyance Project and repairs to the California Aqueduct.

She also highlighted recent developments regarding the Delta Conveyance Project, noting that an updated cost estimate and benefit-cost analysis were released in May. Representatives from DWR and the Delta Conveyance Design and Construction Authority (DCA) will attend the August Zone 7 Board meeting to provide detailed discussions on these documents. The project's cost estimate has risen to $20 billion, reflecting inflation.

Item 17 -

17. Adjournment

President Figuers adjourned the meeting at 8:11 p.m.

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Zone 7 Meeting - June 11, 2024

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