SOQUEL CREEK WATER DISTRICT MEETING MINUTES … · Two are linked: “Arctic ice loss ... 5....
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Transcript of SOQUEL CREEK WATER DISTRICT MEETING MINUTES … · Two are linked: “Arctic ice loss ... 5....
SOQUEL CREEK WATER DISTRICT
MEETING MINUTES
DECEMBER 5, 2017
President LaHue called the meeting to order at 6:00 pm at the Capitola City Council Chambers.
1. ROLL CALL
Board Members Present:
Dr. Thomas LaHue, President
Dr. Bruce Daniels, Vice-President
Dr. Bruce Jaffe
Carla Christensen
Rachél Lather
Board Members Absent:
None
Staff Members Present:
Ron Duncan, General Manager
Taj Dufour, Engineering Manager
Shelley Flock, Conservation and Customer Service Field Manager
Traci Hart, Human Resources Manager
Melanie Mow Schumacher, Special Projects-Communications Manager
Bob Bosso, District Counsel
Karen Reese, Executive Assistant/Board Clerk
Others Present:
3 members of the public (included members of the Water Rates Advisory Committee
Joe Martinez, John Dickinson, Hans Schermann)
Sanjay Gaur, Raftelis Financial Consultants, Inc.
2. WORKSHOP
2.1 Rate Alternatives Workshop with Raftelis Financial Consultants
Ms. Strohm reviewed the efforts of the Water Rates Advisory Committee and
introduced Mr. Sanjay Gauer who gave a presentation (Attached as Exhibit A) and
answered questions from the Board.
The Water Rates Advisory Committee was created to determine whether a rate
structure existed, or could be developed, that could meet the following objectives
better than the District’s existing tiered rate structure:
Promote fairness and equity between customer classes
Ensure rates are not difficult to implement
Reduce revenue volatility and promote financial sustainability
Encourage conservation and efficient use of water
Comply with all applicable laws
Public comment was heard from members of the Water Rates Advisory Committee.
Meeting Minutes
December 5, 2017
Page 2 of 4
Mr. Dickinson noted that the charges are not for volume, but for capacity.
Education about that will be important. He talked about what the rates would look
like and suggested a study showing the marginal cost of the capacity.
Mr. Martinez suggested a modification to overage charges based on volume.
Mr. Gaur noted that the next step is to write a report. He summarized the Board’s
suggestions.
Rate level would be determined by the highest of 6 months use
Customers can apply to get off the program after 3 months of showing reduced
water use
Plan width = 2 units (55 gallons per person per day)
If a customer goes over their plan, they are bumped into higher plan
The staff was provided guidance to continue to investigate the CustomerSelect rate
model as well as whether the objectives can be met with a tiered rate model. Board
suggestions will be taken back to the rate committee; there may be other nuances
that come back to the Board for discussion.
The leak adjustment policy will also need to be reviewed to go along with a new rate
model.
President LaHue thanked staff and committee members who worked on this rate
structure.
3. CONSENT AGENDA
Item 3.2 was pulled from the Consent Agenda.
MOTION: Director Daniels; Second; Director Jaffe: To approve Consent Agenda Item 3.1.
Motion passed unanimously.
3.1 Approval of Minutes – November 21, 2017
Action: Approved
3.2 Annual Reporting of Excess Real Property
Action: Removed from Consent; Discussed; Information only
Mr. Dufour answered questions about the Glenwood Reservoir site. Erosion control is
maintained, but no projected future use is planned at this time. Director Daniels noted
that on-stream riparian rights are held for that property.
4. ORAL COMMUNICATIONS (items not on the Agenda)
No public comments.
Meeting Minutes
December 5, 2017
Page 3 of 4
Director Christensen shared 3 publications. Two are linked: “Arctic ice loss could spell
more drought for California” and “A test of California’s commitment to groundwater
sustainability” and the third California Water Plan Enews is attach as Exhibit B. http://www.sfchronicle.com/bayarea/article/Arctic-ice-loss-could-spell-more-drought-for-
12405285.php?t=ec2d67461a
http://www.sfchronicle.com/opinion/openforum/article/A-test-of-California-s-commitment-to-
12405228.php?t=014262453d
Director Daniels reported on his attendance at the Association of California Water
Agencies (ACWA) conference groundwater committee and water-quality committee. He
noted that, for public records and cell phones, staff can inform the Board members what is
being requested, they can search their own device, and sign an affidavit if nothing is
found.
President LaHue reported that Local Agency Formation Commission LAFCO will be
conducting a sphere of influence and service review for the Pajaro Valley Water
Management Agency PVWMA and the reclamation district that runs College Lake.
5. REPORTS
5.1 Board Planning Calendar
No public comments.
Mr. Duncan announced upcoming meetings.
6. ADMINISTRATIVE BUSINESS
6.1 Will Serve Letters - None
6.2 Schedule and Discuss Planning Workshop
No public comments.
Possible dates are January 23rd or January 30th. Mr. Bosso noted he cannot attend
on January 23rd. A priority survey will be sent to the Board in advance of the
workshop. Topics should include what to do about the supply options moving
forward after the Draft EIR is received, and the future of the WDO program.
MOTION: Director Daniels; Second; Director Jaffe: For staff to select a date for a
Planning Workshop. Motion passed unanimously.
6.3 Proposal to Add a Residential Toilet Direct Installation Option as an Alternate
Pathway for Developers under the Water Demand Offset (WDO) Program
No public comments.
Ms. Flock reviewed the current program and the proposal for the addition of direct
install as an option (Attached as Exhibit C). 450 toilets rebates have been done in
the past 12 months since the current program started.
Meeting Minutes
December 5, 2017
Page 4 of 4
Discussion was held. Concern was expressed that having a developer direct install
program may cause the other options to dry up. Ms. Flock felt this would not be the
case; there are still enough small projects that can tap into friends and family to the
earmark toilet rebates for their projects.
MOTION: President LaHue; Second; Director Christensen: To approve the addition
of a direct installation option to the Water Demand Offset Program and bring back
for review in 6 months. Motion passed unanimously.
7. WRITTEN COMMUNICATIONS AND CORRESPONDENCE
7.1 Email from B. Steinbruner re Millsap house
Mr. Duncan noted that information in Ms. Steinbruner’s letter is incorrect. The
Pure Water Soquel project has not been identified as the final project. Therefore,
the homes were not demolished for that project, but because they were considered
an attractive nuisance.
One additional piece of written communication was submitted after the Board
packet deadline and was available to the public (Attached as Exhibit D).
8. CLOSED SESSION – None
9. ADJOURNMENT
President LaHue adjourned the meeting at 8:25pm to the next scheduled meeting on
Tuesday, December 19, 2017.
SUBMITTED BY: APPROVED BY:
____________________________ _____________________________
Karen Reese, Board Clerk Thomas R. LaHue, President
1
SOQUEL CREEK WATER DISTRICT
CustomerSelect Rate Structure Evaluation
BOARD WORKSHOP
December 5, 2017
2
AGENDA
» Goal of the Workshop » Project Schedule » Service versus Commodity » Legal Environment » What is a CustomerSelect Model? » CustomerSelect Policy Options » Goals of the District’s Rate Structure (Ranking) » Outcome of CustomerSelect Evaluation
3
GOAL OF WORKSHOP
» Understand what is a CustomerSelect Model » Policy options associated with a
CustomerSelect Model » Discuss Board and Rate Advisory Committee
rate objectives » Develop a CustomerSelect Model that meets
the identified rate objectives
4
SCHEDULE
Task Item Completion/Target
1 Staff Kickoff 10/30/17
2 Advisory Workshop #1 10/30/17
3 Advisory Workshop #2 11/13/17
4 Board Workshop 12/5/17
5 Study Report 1/10/18
6 Board Presentation 1/16/18
5
SERVICE VERSUS COMMODITY
» Water service viewed as commodity › 67% of revenue is based on commodity sales while
only 3% of costs are variable
» Majority of water costs are associated with the ability to use water, not water use › Water is more of a service rather than commodity
» CustomerSelect attempts to capture these attributes
LEGAL ENVIRONMENT
7
KEY LEGISLATION IN CALIFORNIA AFFECTING WATER RATES
» Cost of Service Requirements › Proposition 218 (Article XIIIC and XIIID of California
Constitution) › Proposition 26 › California Government Code 54999
» Water Conservation
› Article X of California Constitution › SB X7-7 – 20% reduction by 2020 › New SWRCB regulations call for each agency to self certify
that they have adequate supplies for three years assuming drought of 2012-2015 and set conservation standards equal to their projected supply shortage
8
CASE STUDY: SAN JUAN CAPISTRANO
» Recent Litigation: CTA vs. City of SJC › Rate payers (Capistrano Taxpayer Association, CTA) sued
the City of San Juan Capistrano over its tiered rate structure
» The Orange County Superior court ruled that the rates did not meet the nexus requirement in August 2013
» Key factors: › Lack of administrative record › City used multipliers to justify the tiered rates without
any administrative record of an underlying rationale
9
SAN JUAN CAPISTRANO RULING
» There needs to be a nexus between cost of providing services and rates
» This nexus needs to be clearly shown in the administrative record (report)
» Show your work
CUSTOMER SELECT RATE STRUCTURE
11
WHAT IS CUSTOMER SELECT?
› Water system is designed for the hottest day plus fire protection Capacity of the system is a major cost driver
› CustomerSelect allocates capacity to a customer
based on highest use The objective is to lock in customers bills based on
highest capacity use › Plan tier width can stabilize revenue › Flat charge for service (no commodity charges) but
includes conservation signal
12
CUSTOMER SELECT MODEL
› What does the model achieve? “The CustomerSelect Rate model has the potential to
stabilize utility rates by “locking” customers into plans.” –Defining a Resilient Business Model for Water Utilities, Page 154
“Customers would have an incentive to keep their consumption below the break-point of their plan and even to move down to a lower plan the next year.”
Defining a Resilient Business Model for Water Utilities, Page 154
13
CUSTOMER SELECT POLICIES
» Which customer classes is CustomerSelect appropriate for? Only Single Family Residential?
» Number of plans: the number of unique plans offered, each with a specific range of water allowable
» Plan size: the number of billing units available in a given plan; the range of units; how wide should the plan be?
Example: Plan B: 2-4 hcf » Overages: the charge and/or consequence of exceeding a plan
allocation Example: $/hcf penalty?
» Credit: the dividend or rebate associated with billed use below a plan’s maximum; the variable costs associated with groundwater production
» Plan switching: the ability and frequency of a customer to change from one plan to another
Example: Once per year; seasonally; monthly
14
CONVEYING INFORMATION
» How will a customer know that they are approaching or above their plan allocation? › Lack of information on usage › “If a utility has not invested in smart meter
technology it may have to – as customers are likely to demand real-time water use information so that they can track their consumption against their block.” Page 187 Will SqCWD develop and deploy a web or mobile application?
CUSTOMER SELECT POLICY OPTIONS
16
CUSTOMER CLASSES
» Which customer classes is CustomerSelect appropriate for? › Recommendation is to evaluate Single Family and
Multi-Family Similar demand and meter sizes Non-Residential may have larger meter for potential
capacity • Cabrillo College • Seascape Golf Course
Non-Residential would increase complexity of plans
17
PROPOSED CUSTOMER SELECT RATE STRUCTURE
› Recommend only CustomerSelect No meter charge
› Rebate to customers that stay within their allocation How do we determine this? From a cost of service perspective why does this occur?
• Power and chemicals?
18
PLAN OVERAGES
» What occurs when a customer goes over their plan? › Moved to higher plan corresponding to that
month’s use? Locked for specified time period?
› Tied to supplemental water supply projects and/or conservation program costs? Initial plan allocation needs to equal sustainable yield
› Penalty? What are they for?
19
WATER RATES ADVISORY COMMITTEE DECISIONS
» Residential evaluation only » Historical use for customer plan selection
District will suggest a plan Initial open enrollment for all customers
» Collapse rate structure into CustomerSelect rate » Plan Switching
Rotating open enrollment schedule (once per year) » Plan Credit/Rebate
Can be provided at the end of the year » Plan Overages
RFC suggests customers are moved into plan corresponding to metered use
Can re-select plan at open enrollment
GOALS OF THE RATE STRUCTURE
21
WATER RATES ADVISORY COMMITTEE GOALS
» Fairness and equity » Simplicity and administrative ease » Financial sustainability » Strong conservation » Defensibility
22
PRICING OBJECTIVES RESULTS WATER RATES ADVISORY COMMITTEE
Ranking Classifications Objectives Score
1 Most Important Fairness and Equity 18 2 Very Important Defensibility 19 3 Important Financial Sustainability 22 4 Somewhat Important Strong Conservation 25 5 Least Important Simplicity and Administrative Ease 28
Received eight responses to the pricing objectives exercise
23
DISTRICT BOARD OBJECTIVES
» Fairness and equity » Simplicity and administrative ease » Financial sustainability » Strong conservation » Defensibility » Water resources management » Affordability for essential use » Customer Understanding
24
PRICING OBJECTIVES RESULTS DISTRICT BOARD
Ranking Classifications Objectives Score
1 Most Important Fairness and Equity 14
2 Very Important Defensibility 17
3 More Important Water Resources Management 19
4 Important Financial Sustainability 26
5 Important Strong Conservation 28
6 Somewhat Important Customer Understanding 30
7 Less Important Affordability for Essential Use 36
8 Least Important Simplicity and Administrative Ease 39
Received five Director responses and General Manager
25
PRICING OBJECTIVES RESULTS COMPARISON
Ranking Classifications Objectives Board Score
WRAC Score
1 Most Important Fairness and Equity 14 18
2 Very Important Defensibility 17 19
3 More Important Water Resources Management 19 N/A
4 Important Financial Sustainability 26 22
5 Important Strong Conservation 28 25
6 Somewhat Important Customer Understanding 30 N/A
7 Less Important Affordability for Essential Use 36 N/A
8 Least Important Simplicity and Administrative Ease 39 28
26
DECISION ANALYSIS
Score Objective Number of Plans Plan Size Overages Credit
Plan Switching (Rolling Open Enrollment)
14 Fairness and Equity Many Narrow Auto Adjust Strong Strong
17 Defensibility Many Narrow - Strong -
19 Water Resources Management Many Narrow Auto Adjust Strong – Addtl. Credit? -
26 Financial Sustainability Fewer Wide Auto Adjust - Weak
28 Strong Conservation ? ? Auto Adjust Weak Weak
30 Customer Understanding Fewer Wide Incremental Cost Weak Strong
36 Affordability for Essential Use Many Narrow Incremental Cost - Strong
39 Simplicity and Administrative Ease Many Narrow Auto Adjust Strong Weak
27
KEY OBJECTIVES
» Fairness and Equity Many plans
• Tailored to individual needs
» Defensibility Narrow plan width
• Disconnect between potential capacity and capacity used with large widths
• Potentially problematic in cost of service analysis • Example: User selects plan 10 to 15 hcf, and consistently uses 11 hcf
• Is it defensible to charge them for 15 hcf of capacity when they actually only use 11?
» Outcome: Many and narrow plans meet both objectives
28
PLAN LOGIC
» Plan Logic: › How many plans should we have?
Individually tailored would be fairest and most defensible
› How wide should they be? Individually tailored would be fairest and most defensible
› How do you define them? Most fair and defensible approach is to either have
customer provide information or base upon actual use
29
OUTCOMES
» How many plans should we have? › Many discrete individualized plans › Based on actual use › Kicked in to higher plan (cannot go down)
Cannot go down unless based on appeals process Example include health issues / leaks
Rollout in summer based on actual use – each plan is an increment of 1 hcf and customers are locked in until open enrollment or appeal approval
30
Nov. 29, 2017
Save the date for an Alliance for Water Efficiency (AWE) webinar on the economic benefits of water conservation programs. It will be Thursday, Dec. 14. The agenda includes a report that examines the jobs, income, and savings generated by water efficiency investments. Webinar details will be posted on the AWE website.
Webinar will look at the benefits generated by water
conservation programs
The Union of Concerned Scientists has put together a guide and online toolkit to help with the development of a local groundwater sustainability plans. The plans are a requirement under California’s Sustainable Groundwater Management Act. The guide is also available in Spanish.
Guide and toolkit released to help develop groundwater
sustainability plans
With Microsoft serving as the host, Sustainable Silicon Valley has organized a water strategies event titled No Drop Left Behind. It will feature speakers from water districts, public utilities, tech companies, and more. The topics will cover water projects that range from small-scale installations to large municipal systems. The event will be Tuesday, Dec. 5, in Mountain View.
Silicon Valley event to promote the benefits of
No Drop Left Behind
A symposium exploring the relationship between homelessness and water management will be held Thursday, Dec. 7, in Fullerton. The event will focus on the Santa Ana Watershed. The agenda includes a panel discussion on creating partnerships between water managers and homelessness agencies.
Exploring the point where homelessness and water
management intersect
A geologic mapping project in the Great Lakes region will be presented during a webinar on Wednesday, Dec. 6. The project has developed 3D maps that can provide information for environmental decision and infrastructure projects. Less than one-third of the U.S. has been mapped at that level of detail.
How a geological mapping project can help
with planning decisions
The California Water and Environmental Modeling Forum is presenting a four-day workshop to present the new features of the U.S. Geological Survey’s One-Water Hydrologic Flow Model. It can be used to analyze the conjunctive use and sustainability of water resources. The workshop will be Dec. 5-8, in McClellan.
Four-day workshop will cover new features of hydrologic flow model
The Public Policy Institute of California has released two reports related to California’s freshwater species. Managing California’s Freshwater Ecosystems and A New Approach to Accounting for Environmental Water present reforms to improve freshwater ecosystems.
Two reports offer reforms for California’s freshwater ecosystems
Long-Term Offset Generating Projects
Total Offset
½ ½
Enhanced Toilet Rebate Can get up to 0.5 AF per turn on waiting list
Applicant gets back in line.
Applicant pays for & directly installs required toilets (Proposed)
Applicant finds their own offset generating project.
Alternate Pathways
Applicant finds rebate participants and earmarks applications.
How to fulfill your offset:
1) Toilet rebate half
DEFAULT pathway:
Sit on the wait list un l you are number 1 on the wait list and enough rebates have come in for
your project . Purchase offsets within 21 days of no fica on by District.
ALTERNATE pathways:
Find residen al customers in the District who want a new toilet and directly pay for and install
the qualifying toilet in the residence un l you have enough to fulfill the requirement (proposed
pathway). Offset credits earned are counted toward offset requirement and do not need to be
purchased.
Find customers in the District who want to get the rebate and have them earmark their
applica on for your project un l you have enough to fulfill the requirement. Purchase offsets
within 21 days of no fica on by District.
Find a project in the District to save as much water as your offset requires. Upon Board
approval, pay for and implement project. Offset credits earned are counted toward offset
requirement and do not need to be purchased.
2) Long term half (no wait list)
Once the toilet rebate half is met, applicant can purchase the remaining half of the offset
requirement.
WAIT LIST 12/5/2017
Spot on List Date put on list Project Address Development Type APN
Remaining total offset
(AF)
Total WDO cost
remaining
Rebate requirement
(Toilets) Remaining (AF) Notes
1 11/15/2016 9041 Soquel Drive Commercial 041-141-56 0.811 44,605$ 68.0 0.811
2 1/19/2017 313 Moosehead Tier I SFR 042-066-18 0.413 22,715$ 35.0 0.413
3 1/23/2017 7152 Mesa Drive Tier II SFR 039-072-90 0.826 45,430$ 69.0 0.826
4 1/23/2017 206 Shoreview Tier I SFR 042-202-36 0.413 22,715$ 35.0 0.413
5 3/3/2017 Vista Mar Ct. Tier I SFR+ADU 040-214-16 0.58 31,900$ 49.0 0.58
6 3/22/2017 "0" Putter Tier I SFR 037-033-15 0.302 16,610$ 26.0 0.302
7 4/3/2017 North Polo, Lot 1 Tier II SFR & ADU 041-191-44, -45 0.988 54,340$ 83.0 0.988
8 4/10/2017 3600 Via Flores Tier II SFR/ MLD 030-271-26 0.823 45,265$ 69.0 0.823
9 4/12/2017 North Polo, Lot 2 Tier I SFR 041-191-46 0.413 22,715$ 35.0 0.413
10 4/12/2017 North Polo, Lot 3 Tier II SFR 041-191-47,-48 0.826 45,430$ 69.0 0.826
11 4/12/2017 North Polo, Lot 4 Tier I SFR 041-191-49 0.413 22,715$ 35.0 0.413
12 5/24/2017 805 Rosedale ADU 036-055-12 0.248 13,640$ 21.0 0.248
13 6/1/2017 4201 Capitola Rd. MLD and 3 Tier I SFR 034-121-36 0.596 32,780$ 50.0 0.596
14 6/2/2017 "0" Main Street Tier II SFR 030-221-34 1.424 78,320$ 119.0 1.424
15 7/6/2017 2590 South Main Mixed Use 030-221-46 0.735 40,425$ 20.0 0.237
Total Offset = 1.233 AF. 0.5 AF of toilet
offsets purchased.
16 7/11/2017 309 Rio Del Mar Blvd. ADU <640 ft2 042-222-48 0.165 9,075$ 14.0 0.165
17 7/17/2017 312 Park Ave ADU <640 ft2 036-094-16 0.165 9,075$ 14.0 0.165
18 8/7/2017 Vista Del Mar Tier II SFR 053-131-30 0.516 28,380$ 43.0 0.516
19 8/8/2017 605 Capitola 2 condos 035-301-16 0.57 31,350$ 48.0 0.57
20 8/10/2017 2590 South Main
MLD with 4 Tier II SFR with
ADU 030-221-46 2.312 127,160$ 193.0 2.312
21 8/11/2017 3296 West Ledyard Way ADU <640 ft2 039-101-22 0.165 9,075$ 14.0 0.165
22 8/25/2017 4111 Nova Drive ADU <640 ft2 033-111-03 0.165 9,075$ 14.0 0.165
23 9/8/2017 2820 Rosedale Ave ADU <640 ft2 030-253-38 0.165 9,075$ 14.0 0.165
24 9/12/2017 201 Playa Blvd. ADU <640 ft2 045-183-07 0.165 9,075$ 14.0 0.165
25 9/26/2017 308 Arthur Ave ADU <640 ft2 044-192-38 0.165 9,075$ 14.0 0.165
26 10/2/2017 503 Capitola Ave SFR to Duplex 035-093-12 0.285 15,675$ 24.0 0.285
27 11/3/2017 195 Quail Run Rd ADU <640 ft2 040-232-40 0.165 9,075$ 14.0 0.165
28 11/9/2017
Rancho Del Mar Shopping
Center Commercial Change in Use
039-221-12,039-221-
11 0 -$ 0.0 0
Plans fluctuating. Proposed plans do
not require additional offset.
29 11/15/2017 3300 Maplethorpe Subdivision/Townhomes 032-121-60 2.72 149,600$ 227.0 2.72
30 11/17/2017 836 Bay Ave, Capitola Commercial carwash 036-011-17 0.848 46,640$ 71.0 0.848
31 12/4/2017 3355 Merrill Rd. ADU <640 ft2 037-141-17 0.165 9,075$ 14.0 0.165
3233
Total 18.547 1515 18.049
Legend
SFR = Single-family residential
MFR = Multi-family residential
MLD = Minor Land Division
ADU = Accessory Dwelling Unit
Tier I = SFR or ADU on lot <10,000 ft2
Tier II = SFR on lot >10,000 ft2 or commercial
Written communication rec'd via email after board packet deadline