Zone 7 Meeting - February 18, 2026

Director Palmer moved to approve the minutes of the regular Board meeting held on January 21, 2026. The motion was seconded by Director Gambs and approved by a voice vote of 7-0.

Item 8 -

8. Consent Calendar

Director Palmer moved to approve Consent Calendar Items 8a and 8i. The motion was seconded by Director Green and approved by a roll-call vote of 7-0.

Item 9 -

9. Approve Reduction in the Level of Participation in the Sites Reservoir Project >

Valerie Pryor, General Manager, introduced the item and explained that Zone 7 has been participating in the Sites Reservoir Project as part of its long-term water supply reliability planning efforts. Staff is recommending reducing Zone 7's level of participation. She emphasized that this recommendation is not a decision to withdraw from the project, but rather to adjust Zone 7's level of participation as the Agency evaluates a diversified portfolio of water supply projects. The Board will make a final investment decision later during the investor commitment period, after additional information becomes available, including the draft water right order and final agreements. Direction at this time would inform the 10-year Capital Improvement Program (CIP) update and upcoming two-year budget.

Lillian Xie, Associate Civil Engineer, provided an overview of the project and Zone 7's current participation level of 62,340 acre-feet of storage capacity. She explained that updated cost estimates were released in January and reflect revised construction, financing, and escalation assumptions, with costs roughly doubling since 2023. She stated that staff evaluated participation levels using Zone 7's RiverWare water supply planning model over a 20-year simulation that included four droughts and climate change factors.

Ms. Xie explained that staff analyzed maintaining the current 62,340 acre-foot allocation and reducing participation by half to 31,170 acre-feet. Portfolios combining Sites with the Delta Conveyance Project (DCP) and the Chain of Lakes Conveyance System were also evaluated. She reported that modeling showed that without additional projects, shortages occurred in 8 of 20 simulated years. Adding Sites at 31,170 acre-feet reduced shortage occurrence to one year, and increasing participation to 62,340 acre-feet further reduced the shortage amount. Portfolios combining Sites with other projects performed better overall in minimizing shortages.

Ms. Xie also reviewed system balance results, which reflect total stored water reserves across groundwater, Kern County banks, San Luis Reservoir, Lake Del Valle, and other facilities. She explained that the model accounts for conveyance limits, withdrawal constraints, evaporation, and operational factors. While increased participation in Sites improved system balance compared to no project, portfolios that reduced Sites participation and included additional projects such as DCP and Chain of Lakes showed stronger long-term sustainability and better ending system balances over the 20-year simulation.

Ms. Xie presented cost comparisons. At 62,340 acre-feet, Zone 7's share of capital costs would be approximately $417 million, with average annual debt service of approximately $27 million and total debt service over 46 years of approximately $1.1 billion. At 31,170 acre-feet, capital costs would be approximately $208 million, with average annual debt service of approximately $14 million and total debt service over 46 years of approximately $553 million. She noted that yield scales proportionally with participation.

Director Gambs asked whether water transfers were considered as an alternative. Ms. Pryor responded that transfers have historically been viewed as interim solutions until permanent projects are implemented and were therefore not included in this evaluation.

Director Gambs also raised questions regarding differences among storage types and delivery constraints, noting that groundwater banking, San Luis Reservoir, and Kern County storage do not function identically. Ms. Xie explained that the RiverWare model reflects operational and conveyance limitations and does not treat all storage types as equal.

At the request of Director Narum, Ms. Pryor described Zone 7's involvement in the Sites Joint Powers Authority (JPA), noting that she serves on the Reservoir Committee and that staff, including Ms. Xie and other Zone 7 personnel, participate in multiple work groups and are actively involved in shaping agreements and operational considerations.

Director Green asked about financing, grant funding, and whether costs truly scale proportionally. Ms. Pryor confirmed that current state and federal funding assumptions are reflected in the plan of finance. Ms. Xie stated that costs and yield scale proportionally with participation.

Director Green and Director Narum asked questions regarding the Chain of Lakes Conveyance System, including water quality, evaporation, treatment requirements, and estimated costs. Ms. Pryor stated that a cost estimate is being developed and will be presented at a future workshop. She noted that Sites provides new water supply, while Chain of Lakes provides storage, making direct comparisons difficult.

Director Gambs asked about the basis for the 20-year simulation period. Ms. Xie explained that the model uses the most recent hydrologic dataset available from the Sites JPA and the Department of Water Resources, adjusted for climate change and is intended to be representative rather than predictive.

Director Green expressed concern about making a decision at this time and indicated a preference for maintaining the 62,340 acre-foot level as the baseline assumption until additional information, including potential impacts to water rates and further analysis of Chain of Lakes, is presented.

Director Palmer and Director Benson expressed support for reflecting the 31,170 acre-foot participation level in draft planning to evaluate financial flexibility for other major projects while retaining the ability to revisit the decision prior to final commitment.

Ms. Pryor outlined the upcoming schedule, including the March 4 CIP workshop and a future Chain of Lakes workshop. She explained that presenting the 31,170 acre-foot participation level in the draft CIP reflects preliminary financial analysis and what staff currently views as a prudent financial path, while emphasizing that the Board retains authority to modify that assumption prior to the final decision later in the investor escrow period.

Director Figuers asked about projected long-term demand. Ms. Xie stated that current demand is approximately 33,000 acre-feet annually, compared to projected build-out demand of approximately 55,000 acre-feet.

Director Narum moved that staff proceed with the CIP and budget workshops using the 31,170 acre-foot participation level for planning purposes, while also providing comparative information reflecting the 62,340 acre-foot level. Director Palmer seconded the motion.

Following additional discussion regarding budget implications and long-term financial impacts, the motion carried by a vote of 6-1, with Director Green opposed.

Item 10 -

10. Proposed Changes to General Manager Evaluation Procedures >

Director Benson reported that she attended the January 29 Administrative Committee meeting during which the Committee discussed updates to the General Manager's performance evaluation procedures. She explained that the proposed changes are intended to streamline and simplify the process, make it more concise, and align the timing of the evaluation with the General Manager's contract cycle rather than a fixed annual schedule. The revisions provide greater flexibility in how the evaluation is conducted and clarify components of the review process.

Director Benson noted that the updated procedures provide for a self-evaluation by the General Manager and allow the Board the option to include additional input mechanisms, such as employee or stakeholder surveys. The proposed revisions also clarify that performance evaluation and compensation discussions may occur at Board meetings. She emphasized the importance of identifying performance objectives tied to the Strategic Plan and the General Manager's work with member agencies, the public, and other partners. She also stated that the evaluation should recognize strengths, leadership, accomplishments, and successes, in addition to identifying areas for improvement.

Director Palmer expressed support for highlighting positive performance in the evaluation record, particularly as it relates to consideration of compensation or merit increases.

Director Gambs commented that the proposed procedures did not appear substantially different from the current process and asked for clarification regarding the changes. Director Narum stated that, when reviewed side by side, the revised procedures provide additional flexibility in what is included, at the direction of the Board, the Board President, and General Counsel.

Rebecca Smith, General Counsel, explained that the proposed revisions align with recent updates to the Board Policy on Conducting Business. She noted that the changes are primarily cleanups and streamlining efforts to ensure consistency and clarity, rather than substantive modifications to the evaluation process.

Director Benson moved to adopt the Proposed Changes to the General Manager Evaluation Procedures as presented in the Board packet. Director Palmer seconded the motion. The motion carried unanimously, 7-0.

Item 11 -

11. Declaration of Fix a Leak Week March 16, 2026 >

Ms. Pryor presented the item and explained that the U.S. EPA WaterSense Program promotes Fix a Leak Week annually in March to raise public awareness about water waste caused by household leaks. She noted that the EPA reports the average household can waste nearly 10,000 gallons of water per year due to leaks, and that approximately 10 percent of homes have leaks that waste 90 gallons or more per day. She stated that Zone 7 supports the initiative through a public awareness campaign in coordination with retail water agencies, including social media outreach and educational information on identifying and repairing leaks.

Director Palmer moved to approve the declaration of Fix a Leak Week. Director Benson seconded the motion. The motion carried unanimously, 7-0.

Item 12 -

12. Committees

There were no Board comments on the Legislative Committee, Water Resources Committee, or Administrative Committee meeting notes.

Item 13 -

13. Reports - Directors

President Narum reported that she will attend Science Odyssey to present an award.

Director Palmer reported that she attended the Water Resources Committee meeting on January 27 and the ACWA Region 5 Board Meeting on January 28, with follow-up discussion at the February 9 meeting. She noted that Region 5 is planning an event in the southern portion of the region and is preparing a presentation for ACWA's Spring Conference in May, potentially focused on new water treatment technologies. She also reported attending the ACWA Board workshop and meeting in late January, the Alameda County Special Districts Association Executive Board meeting, and indicated that the upcoming Delta Conveyance Authority Board meeting will include updates on project timeline and related matters.

Item 14 -

14. Items for Future Agenda

There were no requests for items for a future Agenda.

Item 15 -

15. Staff Reports

Ms. Pryor highlighted items included in the written staff reports. She noted that the State Water Project allocation increased from 10 percent to 30 percent and expressed hope for additional increases. She also reported that the Stoneridge PFAS Treatment Plant received the Honor Award from the American Council of Engineering Companies of California as part of its Engineering Excellence Awards program.

President Narum suggested submitting the award information to local publications. Ms. Pryor agreed.

Director Palmer inquired about recent flooding conditions. Ms. Pryor stated that she had emailed the Board the previous day to report that, despite steady rainfall, the system was operating without issues.

Item 16 -

16. Adjournment

President Narum adjourned the meeting at 8:40 p.m.

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Zone 7 Meeting - February 18, 2026

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