by Mark Dolson
Two Critical Issues: SLVWD Financial Stability and Staff Retention
The San Lorenzo Valley Water District (SLVWD) Board has met twice (October 5th and October 19th) since my last report. Both meetings addressed topics of critical importance to our community.
The October 5th meeting was primarily devoted to finalizing the estimated revenue requirements that will guide development of the District’s updated rate structure for 2024-2028. It’s impossible to fully anticipate all the expenses that the District will encounter over the next five years, but the Board ultimately approved the following key assumptions by a vote of 4-1:
- Replacing the cross-country raw-water pipeline destroyed in the CZU Fire is assumed to require $25 million (of which 90% should eventually be reimbursed by FEMA). This assumes an above-ground solution (which is likely to be far less expensive and far more manageable than burying the pipeline), but considerable further analysis is still needed to develop a more accurate cost estimate and to make a formal decision.
- Operating expenses are assumed to increase at the most recent 3-year average inflation rate for the first two years and at the 10-year average inflation rate for the remaining three years.
- $19 million in debt (probably in the form of loans) will be needed for infrastructure projects (with at least the first major portion of this required in 2024).
These assumptions translate into projected annual increases in required revenue of 10%, 10%, 7%, 7%, and 7%. The actual increases in rates will not be known until the next portion of the rate study (looking at various options for base rates and tiered rates) is completed over the next month or so.
These increases are quite substantial, but all five Directors agreed that major rate increases are essential for the District to continue to operate reliably. Director Fultz cast the lone opposing vote because he argued that the projected annual increase in operating expenses was unrealistically low. He predicted that, unless the District adopted a greater rate increase, the District’s operating margins would suffer accordingly. (For the 56 wastewater customers in Bear Creek Estates, the Board approved a minimal revenue increase of 3% per year.)
The primary focus of the October 19th meeting was a memo from Director Mahood and retiring District Manager Rick Rogers urging the Board to formally recognize and explore possible responses to a critical emerging concern involving staff attrition. It was revealed at the October 5th Board meeting that Finance Manager Kendra Reed was resigning effective October 13th in response to what she described as the toll that disrespectful behavior from Director Fultz had taken on her mental health. It was further revealed that District Manager Rogers had advanced his own retirement date out of a similar concern for the negative impact that Director Fultz was having on his health. District Manager Rogers elaborated at the October 19th meeting, saying that other staff members were at risk, that he had tried to address this behind the scenes, and that he now believed the public should know that working relationships with Director Fultz had been adversarial for a long time and had caused many problems.
Following a lengthy Board discussion (with Director Fultz remaining silent) and numerous public comments, President Smolley asked the Board if they believed the current situation posed a serious problem. All Directors (other than Director Fultz) said it did, and they agreed that the Board needed to explore possible measures aimed both at protecting the District from further harm and at reassuring the Staff of the Board’s support for them. They also agreed that their goal was to find solutions rather than to punish Director Fultz.
The Board discussed various possible protective measures but did not come to a clear conclusion at this meeting. Director Fultz eventually read a lengthy prepared statement in which he argued that his actions were consistently appropriate. The other four Directors expressed disappointment that Director Fultz did not engage with any of the Board discussion of the objectively problematic impacts of his behavior.
