Muziek

Chair, staff is ready when you are.

The meeting is now called to order.

Will the clerk please call the roll to establish a quorum?

Thank you, Chair.

Commissioners, please unmute.

Thank you.

Commissioner Tanakella?

Absent.

Commissioner Gaspard?

Commissioner Burdock?

Present.

Commissioner Steinbaum?

Absent.

Commissioner Shombe?

Present.

Commissioner Nelson?

Absent.

Commissioner Olson?

Here.

Commissioner, I'm sorry, Vice Chair Iberle?

Present.

Commissioner Johnson?

Here.

Commissioner Tran?

Absent.

Chair Zito?

Present.

Thank you.

You have a quorum.

Okay.

All right.

I'd like to remind members of the public in chambers that if you would like to speak on

an agenda item, please turn in a speaker slip when the item begins.

You will have two minutes to speak once you are called on.

After the first speaker, we will no longer accept speaker slips.

We will now proceed with today's agenda.

Okay.

Okay.

So, please rise for the opening acknowledgments and honor of Sacramento's indigenous people

and tribal lands.

To the original people of this land, the Nisan, the Southern Maidu, Valley and Plains,

Newark, Puttwin, Winton Peoples and the people of the Wilton Rancheria, Sacramento's only

federally recognized tribe, may we acknowledge and Options and honor the native people who

came before us and still walk beside us today on these ancestral lands by choosing to gather

together today in the active practice of acknowledgement and appreciation for Sacramento's

indigenous peoples history, contributions and lives.

Thank you.

Please remain standing for the Pledge of Allegiance.

I pledge allegiance to the flag of the United States of America and to the republic for which it stands,

one nation under God, indivisible, with liberty and justice for all.

Okay.

I think we have, do you do the welcome or do I?

We have a new commissioner joining us, Paul Gaspard.

Thank you.

Good to have you.

We're all kind of the blind leading the blind, but if you have any questions, just ask.

Thank you.

Okay.

So moving on.

Let's see.

Our first order of business today is the approval of the consent calendar.

Clerk, are there any members of the public who wish to speak on the consent calendar?

Chair, I have no speaker slips for this item.

Thank you.

Okay.

Well, let's see.

Is there a motion?

Let's go ahead.

Are there any commissioners who wish to speak on this item?

All right.

Is there a motion and a second for the consent calendar?

I move to approve the consent calendar.

Do what?

Second.

Do we have a second?

Who seconded?

Okay.

Commissioner Johnson second.

I have a motion by Commissioner.

I'm sorry.

Olson.

I'm sorry?

Olson.

Okay.

Olson.

And a second by Commissioner Johnson.

Will the clerk please call the roll for the vote?

Thank you, Chair.

Commissioners, please unmute.

Commissioner Tanacala.

Absent.

Gaspard.

Aye.

Aye.

Okay.

Thank you.

Burdock.

Aye.

Steinbaum.

Absent.

Shambay.

Aye.

Nelson.

Absent.

Olson.

Aye.

Vice Chair Iberle.

Aye.

Commissioner Johnson.

Aye.

Commissioner Tran.

Absent.

Chair Zito.

Aye.

Thank you.

The motion passes.

Okay.

Thank you.

We'll now proceed to the discussion calendar.

And I think first up we have the Department of Utilities overview presentation.

There we go.

There's my presentation.

Hello.

I'm Cheryl Hewn.

I am the current interim director of utilities.

So as some of you may have known, our previous director was Pravani Vandegar.

And she recently left us at the beginning of June to join the El Dorado Irrigation District

as their general manager.

And so I have been appointed as the interim director while the city moves forward with a

recruitment.

And we hope to have a new permanent director on board by this fall.

So a little bit about me.

I was DOU's engineering division manager over our engineering and water resources division.

I've been with the department for 30 years and I was in our engineering manager position

for three years.

So with that, I'm going to jump in to tonight's presentation.

So tonight I'd like to share what we do in our department as well as some high-level statistics.

Our services are critical to a functioning city.

Without them, our lives would simply not be possible in the ways we know them.

Utility services are critical to public health and safety for several reasons, including providing

safe drinking water, preventing flooding, and preventing sewage overflows.

So a few of the statistics from our department.

Our annual revenue is around $249 million.

We have a five-year CIP that is around $226 million.

Our service area for our drainage and water systems are 100 square miles.

Our wastewater system is a little bit smaller because Sac Sewer, which is an independent sewer district,

it used to be a part of Sacramento County, they provide wastewater services for the northwest

and southeast of the city.

And our department has around 599 employees.

So we are one of the larger departments in the city of Sacramento, and we have several revenue streams.

One of our most important and largest is our user fees, which are our rates that are paid by our customers within the city.

And we have a rate for each one of our systems for water, wastewater, and drainage.

We also have revenue from impact fees.

These are from developments that pay to buy into existing capacity or fund infrastructure expansion.

Next, we have some funds from federal appropriations and grants.

These funds are used toward infrastructure needs, and these help to offset future rate needs.

The department also uses loans and bonds to help fund large infrastructure projects.

And then our department is governed by Prop 218.

Prop 218 dictates that rates must be used to provide utility services to all residents.

We cannot fund programs that benefit specific communities,

or we cannot engage in non-utility programs when staff time is funded by rates.

Also, we cannot mix these funds up.

We cannot cross funds between the water, wastewater, and drainage system.

So basically, water funds have to be spent on the water system.

It is important to note that the services we provide are highly permitted and regulated by federal, state,

and local agencies to protect public health.

This slide is a depiction of some of the major agencies that we must comply with.

There are fiduciary regulations related to rates, fees, and accounting practices.

We have public health requirements that are related to drinking water, wastewater, and drainage

that are overseen by federal, state, and county regulators.

There are many other oversight areas that are too numerous to mention.

So we wanted to give you kind of a visual comparison of these increasing regulations.

You can kind of see back in 1990, we had three different permits that were linked to our drinking water,

our storm water, and our combined system.

But if you fast forward to 2024, you can see that these regulations and requirements have mushroomed.

For our drinking water system, it includes regulations related to PFAS or the new lead and copper requirements.

For our drainage system, we have trash capture and floodplain management regulations.

And our overall department has to meet the electrical vehicle mandates by the state and the city.

So these regulations drop regularly during the year and often must be implemented immediately.

Living in California means that regulations increase continuously,

which adds to the labor and costs that are challenging to plan for with no advanced warning.

So DOU also coordinates with many agencies.

This slide gives you kind of an example of all the different agencies that we coordinate with.

We coordinate with water, wastewater, and drainage agencies locally, regionally, statewide, and even nationwide.

This helps with planning, teaming up to work on common challenges and upcoming regulations

to ensure we are decreasing our costs as we coordinate and pool resources.

We're now going to dive into our four different divisions that make up our department.

Hopefully, this will give you a picture of the size and variety of our groups.

The first is our Office of the Director, which provides strategic and operational direction

and management support to our divisions related to media communications,

legislative and regulatory advocacy, safety, security, and emergency preparedness,

sustainability, employee administration services, and IT support.

The Office of the Director, we also coordinate with City Manager's Office and other city management

with our elected officials and different regional agencies and regional and national organizations.

Moving on to our Water Division, this division provides treatment

and distributes drinking water throughout the city.

They help monitor through testing our source water, such as rivers and groundwater wells,

as well as our finished water.

They perform research on process optimization and changing regulations to ensure we can comply.

To give you kind of a snapshot on our water system,

we have two major surface water treatment plants shown by the Blue Squares.

We have our Fairburn water treatment plant that is on the American River near Sac State

and our Sacramento River water treatment plant near Richards Boulevard.

We have 17 water reservoirs or water tanks that are spread throughout the city shown by the circles.

And we have 30 groundwater wells shown by the triangles.

And you'll notice there is a large majority of these groundwater wells are up in the northeast part of the city.

You might wonder why.

This area was served by groundwater wells before it was annexed into the city.

So when we annexed this area, we got the groundwater wells as well.

But this area is connected into the department and city's water system.

So to give you an idea of how large our system is,

our drinking water system has 1,600 miles of drinking water pipe.

This is more than the distance from Canada to Mexico by car, which is around 1,300 miles.

We also produce 25 billion gallons of drinking water annually.

So now moving on to our wastewater and drainage division.

This is our largest division in our department.

They are responsible for our three systems.

One is our separated drainage system.

The second is our separated wastewater system.

And the third is our combined sewer system, which is in the core downtown area where we collect wastewater and stormwater in one pipe.

This division is responsible for flood prevention and wastewater management,

which largely comes down to the collection and conveyance of wastewater or stormwater.

For our combined system, we provide some primary treatment at the two treatment plants.

And this division is responsible for the maintenance and operation of all of these systems.

In addition, critical infrastructure maintenance on our flood control system includes levees, drainage canals, drainage ditches, and our local creeks.

And this is a large year-round operation.

So now to let you know about these systems, our first one is our wastewater system.

You can see we have two primary treatment plants in our combined sewer system shown by the Purple Squares.

We have five underground storage reservoirs that also support our combined sewer system.

And then our wastewater system as a whole has 50 pump stations throughout the city, or as our department likes to call them, sump stations.

Moving on to our stormwater facilities, we have 109 sump stations or pump stations throughout the city that pumps our stormwater over the levees.

And then our department also manages emergency generators for the entire city.

We manage 71 generators for DOU assets.

And we provide 41 emergency generators citywide for things like city hall, police stations, and fire stations, things of that sort.

So to give you a little bit of a feel for the size of this system, our wastewater pipes are 840 miles.

Our drainage system has 860 miles of pipe.

So that is more than the distance from Sacramento to Seattle, Washington by car for just one of these systems.

Okay, now we're going to move on to our engineering and water resources division.

So this division provides services to our drinking water and wastewater and drainage divisions.

This division plans, designs, and constructs millions of dollars of capital improvement projects a year.

They provide engineering, policy, and technical support.

They develop capital improvement priorities.

This team ensures compliance with increasing regulatory requirements and mandates related to the wastewater and drainage systems.

And they oversee the source water protection program for our drinking water system.

These programs protect local creeks and rivers and include floodplain management and flood awareness.

This division also does all of the development review for projects in this city to ensure those projects meet our DOU utility standards.

Lastly, this division implements city water policy and our water conservation programs.

So our last division is our business services division, which handles fiscal operations, account management, long-range financial planning, and customer service.

This includes management of our enterprise funds, including budget, accounting, and financial reporting.

This team does our utility rate planning and development of long- and short-term financial planning, and our grant and debt activities.

This team also handles billing questions, as well as management of the Sacramento Utility Rate Assistance Program, also known as Sura.

So there are many challenges associated with operating a water-based utility, and I wanted to highlight just a few.

So the first one is deferred maintenance.

Many parts of our system have exceeded its useful life, thus increasing the risk of failure and expensive emergency repairs.

You can see the degree to which we are challenged with deferred maintenance, which is roughly at $2.1 billion for all three systems.

In addition, the cost of homeless impacts on our infrastructure is not factored into our rates.

This causes impacts to our levees that must be maintained.

Also, there are security risks from break-ins and damage to our infrastructure, and these repairs and maintenance are constantly undone.

It's important to note that this maintenance is unfunded and likely underestimated.

The other big challenge that I wanted to talk to you about tonight is related to public health and safety.

We have experienced the impact of climate change with more severe storms and water quality events due to wildfires in our watershed,

as well as increased temperatures and significant power outages.

These are forecasted to intensify.

So our water rights must be protected, considering the challenges of climate change and the associated reduction in water supply.

To prevent flooding, most agencies use gravity systems to move their rainwater or runoff out of their city,

but in our city, we have to pump it over levees because we are down in a bowl.

This makes our drainage system more expensive to operate due to pumping,

and failures could lead to significant flooding.

Maintenance is becoming increasingly costly as we deal with supply chain issues and general cost increases.

Lastly, staffing is an issue.

Since our highly specialized SCADA staff in our combined system and drinking water treatment plant operator positions are difficult to fill,

we struggle as we compete with surrounding jurisdictions who pay better than the city of Sacramento.

So these challenges dictate increased rates are needed,

though naturally this is a balance between affordable rates and maintaining our system responsibly.

We are regularly evaluating our costs and revenues to help ensure we are fiscally sustainable.

According to our planning, we will need to bring water and wastewater rate adjustments forward in the next two years for implementation in fiscal year 28.

Also, our city council's decision to phase in development impact fees for the last adjustment impacts and delays infrastructure projects until sufficient revenues are collected.

This is true of rate adjustments, too.

When decisions are made to decrease them from what the system and service needs are,

these create gaps that cannot be closed and continue to grow larger over time.

Our stormwater drainage rates were not increased since the 1990s.

Our new 2022 drainage property fee that was adopted covers CIP work and new regulatory requirements,

but it does not cover the existing system operation and maintenance.

These rates will need to be brought forward in FY28 for implementation in FY29.

Alternative funding helps, but it isn't enough to replace all of these needs,

and rate adjustments are still needed.

So, I hope with this presentation, it has given you a snapshot into our operations,

and as you can see and imagine, we do a lot.

I think one of the most important takeaways of these slides is just how much is done unseen.

People rarely think about what it means to turn on your tap or flush a toilet

or the work that goes into preventing seasonal flooding.

Our 24-7 services provide the absolute critical basics that form the foundation of a city such as ours,

and without any of these services we provide, life would be much different in the city of Sacramento.

So, I have my entire team here with me today to answer any questions that you might have.

Thank you.

Thank you so much.

Are there any members of the public who should speak on this item?

Chair, I have no speaker slips on this item.

Thank you.

Okay.

Are there any commissioners who wish to speak on this item?

Thank you.

So, Cheryl, thanks a lot for the presentation.

That's a lot of stuff covered in a real short period there.

I'm looking for detail, and so a lot of my questions are going to be around that.

And I guess one kind of overall question,

I'm not asking you to do this today unless you have all that data here,

is provide some more details and better insights about your projected rate increases,

how much of that is operating expense, how much capital improvement,

where are the shortfalls basically.

And for capital improvements, I'd like to see at some point what those projects are

and what rank order in terms of importance.

Another part of that would be what's the potential,

what's the capability to do all several projects,

several capital improvement projects at the same time simultaneously

versus staggering them over time.

And I guess one of the questions historically, my understanding is,

maybe I have this wrong,

is the city tended to gather lots of capital improvement money up front

and then disperse it over time over several years.

Is that correct?

I think the department over time has taken different strategies

to fund our capital program.

We have a certain amount of pay-go funding that we do projects year-to-year based on that funding.

And then there are larger projects where we went and got bonds to able to fund those larger infrastructure projects.

Yeah.

So, the point there is, is it worth looking at a kind of pay-as-you-go kind of approach

versus gather $2.1 billion up front and then disperse it over 7, 8, 10 years?

I'd like to know more about that, what that strategy is.

A couple of questions about individual, well, one of the questions on the collaborating agencies,

would it be helpful to understand the difference in jurisdiction and functions of, say,

the city water department and, say, the American River Flood Control District regarding,

is there, you know, they're collaborating, but is there an overlap in terms of how you separate jurisdictional types of functions?

And there might be some similar questions on other collaborating agencies.

One of the other questions I had, be very interesting, my understanding, I visited the water treatment,

the River District water treatment plant.

I'd like to go back there and look at that again.

And be good to have, in terms of water consumption, what you, there's a difference seasonally, my understanding,

and a lot of the maintenance is conducted when you have kind of a lower water use,

and apparently has a lot to do with weather, too.

And so, in essence, are you restricted in doing either capital improvements or maintenance to certain windows of time during the year

based on seasonal use, consumption, in this case, water?

And a question I have about, you've got a combined district stormwater or wastewater,

and some parts of the kind of main city.

I live in East Sacramento.

That's a combined system.

And I question about the sump stations.

Are sump stations for wastewater co-located with sump stations for wastewater?

Are they at the same site?

Are they, if you have instances, where they're the same site, or are they completely separate?

I'd say they're completely separate.

So, for example, McKinley Park, is that considered a sump station, that big underground storage there?

It's a storage facility for the combined sewer system.

So, it will hold rainwater until the storm passes and allow us to meter it back into the system,

so we can send as much as possible to Sac Sewer, instead of sending it primary treated to the Sacramento River.

And you have a separate, a sump would be a pump station, basically?

Yes.

So, you have a separate pump station.

Is that above ground in McKinley?

No, it's McKinley's Gravity.

There's not a pump station at McKinley.

I live on 42nd Street, and there's a similar underground combined storm and water.

I think it's on R Street.

But there's a separate house that's basically converted into a pump station there that was very helpful.

Reduced our flooding of our street.

So, the point of that is, if there are instances where you've got some co-location,

is that a factor in your capital improvement costs?

If not, then it's a separate cause.

On your question on your emergency generators, are all those diesel generators?

Yes.

So, all our standby power systems, we do have two solar arrays that are at, one at Fairbairn.

There's a one megawatt array at the Fairbairn Water Treatment Plant.

But it doesn't have any storage capability, right?

It's just kind of shaving the peaks during peak demand.

And then whenever we have requests from SMUD that we will reduce our consumption,

then a lot of times we shift all the loads to the solar side of the switch gear there.

The array at SAC plant is 350 kW.

But there's no storage.

So, any of the emergency standby power that we have is diesel generators.

And then we do have a paralleling agreement with SMUD for one of our critical stations.

So, the combined system, kind of the heart of that, the pump station at Sump 2.

And so, there's eight megawatts of power generation capability there.

But we have the ability to do closed transition because a lot of those larger thousand horsepower,

we call them river pumps, that push the water to Pioneer.

Or we can go many different directions from Sump 2.

But it's all diesel.

In the January storm event that went for 14 days in January of 23, those saved our bacon.

I mean, if it hadn't been for our standby power, we had some stations that were offline for more than three days, right?

And with 3,000-plus trees down and SMUD backed up and saw teams coming from all over the country to assist,

that was the best we could get power of being a priority one customer was three days.

So, what we do in those major storm events is the portable generators will get put on a route.

And so, we have crews that are out there just taking generators from station to station, pumping down.

And then as that station gets pumped down, they go to the next one on the route,

and they just keep doing that until the storm subsides.

One of the reasons I'm asking, I'm also an appointee to the Sacramento Air District Hearing Board.

And portable generators come up a lot for variances.

And the city of Sacramento is a petitioner several times because of, you know,

when you're using that beyond your approved NOx limits, you're fined.

And so, I've always kind of wondered, what are there...

Is it makes sense to look at other options, even if meaning other power generation options,

both for emergencies and for ongoing...

So, 8 megawatts is a lot of power.

The water treatment plant in the river district is 2 megawatts.

So, the question I've raised to your previous utility director is, have you thought about...

I know there's a cost to this, but have you thought about your own power systems that you own and control,

including a process where you invite private development, but over time,

turn over that project to the city to operate?

Yeah, that's something that Cheryl mentioned.

We do have an engineering group that looks at our energy consumption.

And so, I can't speak to all the options that have been considered as an operations manager.

But, yeah, I think we're always open to looking to things that are cost-effective

that will also improve our reliability.

There's so many times that our sustainability goals will be in conflict with our reliability goals, right?

So, we have to find a balance there.

That's, there again, cost-effective within the amount of money that we have to work with.

Very good.

I got a couple more questions, Cheryl.

Thanks for the insight there.

So, on terms of the $2.1 billion deferred maintenance,

are you going to provide more detail at some point to the commission here on what those projects are?

We definitely can.

I think in, and Jordan, maybe you can help me,

but I think in your binder, we provided the deferred maintenance memo, correct?

If not, we can send that back out.

I know that we've sent that to commissioners in the past.

It still is kind of a general description of these projects,

but we have a 30-year CIP that lists in more detail what are some of the assets and projects that we have

that make up that estimate.

And just the three items you have on your presentation that are deferred maintenance,

aging systems, impact of homelessness, security risk,

what's the kind of degree of each one of those items in terms of what they contribute to the cost,

deferred maintenance costs?

Is it mainly aging systems?

Is the impact of homelessness, how significant is that?

I think the $2.1 billion is the aging infrastructure cost,

so that fee is basically that, but I don't know.

Do we have an estimate on homeless impacts cost annually?

I think the last one we had was just on cleanup of the encampments.

I think we're spending about $900,000 a year.

And so that's staff time, but also the forensic clean contracts.

But let me get back to you on that with a real solid number.

That's just...

And is...

Mike, I got the sense that you were inferring that a big impact impacts the levees.

Hmm.

Definitely.

Yeah.

It has significant damage done to the levees by people that decide to burrow into the levees

and build a garage, build their house, what have you.

And then, so like right now, the big impact is mowing, right?

So we've tried to get everything mowed on all the levees, all the drainage basins ahead of the 4th of July, right?

So by July 1 is our goal to have all that mowing done.

And when we have the encampments out there, it definitely impedes that progress, right?

And us meeting those dates ahead of fire season starting.

But then, again, when the storm season comes along, right, it's hard for us to do our inspections

and do condition assessments on the levee when we have everything covered up with encampments.

And I don't have the amount related to this specifically, but some of the other like physical damage that's done

is we have regularly people cutting into our fences, whether it's our sump stations, our water treatment plant.

At some stations, they'll take out wire.

They'll try to hook up to charge cell phones, get to water.

So it's a pretty regular occurrence where we're going back and making repairs to the same fences multiple times.

Yeah, I apologize if, you know, some of these questions are lots of detail, but if the city is asking this commission to advise them on degree and level of rate increases,

I think we're going to need some of this detail I've raised here.

Appreciate it.

Thanks very much for that.

Sure.

I know there was a lot of questions there, so I can't answer all of them tonight.

But just a few of them that I wanted to touch on is when you talked about more detail related to what we would be bringing forward in our rate proposals

and what that might look like if we're doing pay go or recommending other financing strategies.

That will be bringing that forward to the commission in future meetings this year.

So you'll get to know more about that.

If you want to know more details about our specific capital improvement projects,

our five-year CIP, we have the detailed projects related to that.

And like I said, we've even built out in our 30-year CIP where we've mapped out and projected different assets that we plan to improve

so we can provide you with that information as well.

I'm trying to think.

I think, Michelle, you wanted to touch on one of the questions.

Hi there.

There was a question about delivering projects simultaneously, and we have four CIP teams that focus on, one focuses on drinking water projects,

another focuses on wastewater, then there's drainage and our electrical group.

And so there are a number of FTEs in each of those groups.

You have engineers that are designing the priority projects that are funded and simultaneously or in parallel putting out projects as the design is finished.

And so there are lots of projects that are in construction at one time and under design at one time.

And then there was also a question that you asked about when we do projects at our facilities.

And we do plan and we coordinate the engineering groups, coordinate very closely with the operation and maintenance groups.

And we look at schedules and which projects, which of the priority projects that are in design that we work out schedules.

Like when will it be offline?

During the high demand for water supply months in the summer, we won't take a plant offline and do maintenance.

We wait until there's a low demand period and we plan the projects around that time.

Just another follow-up there.

So is the general approach, the staff does all the engineering design?

Does the city staff also do all the construction or is that outsourced through a bidding process?

Yes, there's a bit.

So for the design, we do in-house engineering design.

And there are times where we contract with outside consultants for the design.

And as far as delivery of the projects, most of them are delivered with contractors that are procured through the procurement processes of the city.

And we do have, we do some construction in-house, but it's minimal.

And it's just, but there is some that's done.

Very good.

Thank you.

Thank you.

We have two additional commissioners.

Vice Chair Everly?

Yes, thank you.

I just have a brief question, really.

We, the commission, I was not on it, but the commission used to receive a CIP dashboard that showed current projects.

And it showed, you know, where they were in their thing.

Does the city still keep those for water, wastewater, and something like that?

Is that still something that's maintained?

Are you familiar with what I'm at?

I'm talking about that.

I am familiar with that.

Yes.

So we did those dashboards related to our last FY17 through FY20 rate increase.

So it was a part of our accountability reporting to show how we were spending the funding related to that rate increase.

So when we move past that time period, the department is no longer maintaining that dashboard.

Okay.

So, but the department has some sort of internal dashboard that they keep that shows where they are on certain plans.

So my next question is, the staff creates kind of a wish list of your improvement projects that you want.

And then do they make recommendation to the council?

I know there's a separate budget item or something that they create.

Or how does it work?

You guys just don't get to decide which program moves forward.

Or do you put a package to, I mean, how does it, does council have to vote?

Do you do, where's the autonomy?

That sort of question.

So for the capital, the capital improvement program is what you're talking about?

Yeah.

So that is a piece of the budget process annually where it's taken before council and council will hold hearings

and adopt the capital improvement program for the department of utilities as well as other departments.

Internally for our department, we have kind of a supervising engineer over each fund

that will work with their own planning and design teams to identify and prioritize projects.

They also meet regularly with our O&M teams to identify what their needs are and the highest priorities.

So the SMEs from the different groups throughout our department will get together.

And with the funding that we have available that's been allocated for capital improvements in that fund for that year,

we'll make a recommendation to our executive team.

And then based on that review, the executive team and the director will decide the package that is moved forward

to our assistant city manager, our city manager, and then ultimately to council for approval.

Okay.

And last question, is that done on an annual basis or is it sometimes like a five-year,

or does it just depend on what the project is, I assume size and things like that?

How often is it?

So the budget process is an annual process, and it's kind of interesting to me.

We present a five-year CIP budget to council, but annually you're kind of approving the CIP budget for that year,

so if that makes sense.

So we plan out five years, but really the funding is allocated just for that one single fiscal year,

and so then the next year we bring back the four years plus one more.

So it's kind of done every year.

And then, like I mentioned, for planning purposes in our department, we've created a 30-year CIP that is constantly being evaluated,

and priorities are being shifted.

And we try to update that annually.

We definitely do a comprehensive update when we're doing a rate initiative,

but our teams do try to keep that up to date.

So there's all kinds of different pressures, whether there's some emergency needs that we weren't aware of,

a facility or system that is in worse condition that we were anticipating.

They'll move those projects and defer others.

They're trying to collect money for some projects that are a larger price, right,

so that we're putting money away year over year to be able to fund a larger project.

So there's lots of different things that go into the CIP for prioritization and planning.

And Michelle is very familiar about that, if you have any other questions.

Well, thank you.

And next we have Commissioner Shambay.

I had questions about the security aspect.

It would be nice, I think, along the lines of Commissioner Olson, I believe,

to know how much of the budget is that and how much are the concerns as far as the security

or utilizing in-house security, or is it by bids from different security companies?

Is there an analysis of some of the bigger security companies that perhaps in the past have did a better job of keeping costs down?

For instance, you mentioned break-ins.

You mentioned about some of the homeless utilizing different aspects and areas of trying to use it for other purposes,

electric or things of that nature.

Is there any type of thought into versus the actual security staff utilizing them

or utilizing something that's more progressive as far as AI?

Those are some of the concerns I'm thinking about as far as keeping costs down as we think of the projective costs,

so to speak, from the past.

But keeping the costs down as far as the general public, if there's any type of analysis of, hmm, basic, for example,

if you have a certain group of companies that are utilized throughout the areas,

how would it be cost-effective perhaps if something could be, instead of using a human aspect,

if you could use something with AI or something with robotics?

So I'm very curious on that, if there's any information on that and also any available information about projected costs

and current costs so they can be some type of analysis of, hey, how can we cut the costs in this particular area

to help to keep the rates down?

Yeah, I'll ask my O&M managers to maybe help with that, answering that question, but I'll start out a little bit.

You can see by the slides that we show that kind of give you a feel for where these assets are across the city.

Almost all of the assets are unmanned, right?

They're remote.

They do not have staff there 24-7.

So they all are locked, badges.

Some of them have cameras, but they are very susceptible to people causing havoc at those stations.

We do have a contract security team that assists with some security,

but it's not at every site or every place all the time.

I don't know.

Yeah.

Charlie, if you want to add anything or David?

So there is some automation that we've already implemented, right?

So as Cheryl mentioned, we have over 200 sites, right?

And so we have a central control center.

So during, and this is another kind of a way that we're leveraging the resources we have.

So during the day when there's a lot of maintenance activities going on,

there's a control center that monitors all the wastewater and drainage stations

for the staff that's out there going and doing maintenance.

But that control center can see every intrusion alarm, right, when the doors are open at those facilities.

At night, that rolls over to one of the water plants where they're monitoring all those SCADA alarms.

And so all those alarms are brought back through our SCADA system.

And then, you know, if there's an alarm after hours, then that operator can see the alarm,

dispatch, right, staff to go and investigate or call the security company that we have on contract.

But as Cheryl said, and so the manager that's over that group is out of the country right now.

So we can get you more answers on that as far as the details of that contract.

But it's assessed regularly as to where do we need to have them patrol, right?

And so they're not just patrolling, you know, the entire site.

We try to prioritize where we do have them patrol after hours.

And there's been, you know, different waves of things that have happened.

So just like we mentioned with a lot of the unhoused folks, we see more vandalism, right?

And so there's monitoring of those type of sites that where there's been recent vandalism or whenever the scrap prices were high.

We were seeing a lot of copper theft, right, that was happening, right?

And so we prioritize some of those more critical sites for the contract security.

But we don't have any, you know, just designated security classification, you know, personnel in DOU.

We have some groups that manage that, groups that assess that.

But they're also part of our emergency preparedness group and planning group.

But the cameras, so there's, we do have cameras at the water plants that, you know, that's another way where we're not actually having somebody have to go out and patrol.

There's, those feeds come back to the control room where the staff can see what's happening at that location.

And then we do have some sites there, again, that are part of, you know, deemed that they're more critical when CIP projects happened, right?

There were cameras that were put in at those locations.

We do have challenges there because video takes a lot of bandwidth, right?

And so if we don't have fiber infrastructure there to backhaul the video, then we're trying to do some type of compression or store it on site, right?

But then you just kind of, if it's after the fact, right, where it's stored on site, it can be used to help, you know, assess if there was some crime committed.

But often it's just like, yeah, you can see the guy was wearing a red jacket and they're long gone.

So there's, there's some, some limitations, right, on, on what we are able to just do to resources, where we can have all the cameras, where that we can backhaul all the video.

So, but the, but I can tell you all the sites are, are monitored with, through the SCADA system with the intrusion alarm.

And so that's kind of gives us, you know, if there's somebody that needs to respond to a location, we're not having to just go patrol all those locations every night.

Okay.

Okay.

Thank you very much.

I, it would be great maybe for the next meeting, if it's possible to have the particular person that's in charge of that, because I would be able to ask more detailed questions in the security section, simply to try to assess that maybe in certain areas, as far as budget-wise, it could possibly help the general public,

as far as keeping rates low, if there's certain pointed questions that perhaps could be asked.

All right.

Thank you.

Okay.

Thank you.

That item was for recommendation only, so no vote is required.

And we'll move on to the next item.

Item number three, the city treasurer's office overview presentation.

Good evening, Chair Zito and Commissioners.

My name is Brian Wong.

I am the city's debt manager.

At the UREC meeting on March 26th, Commissioner Olson inquired about kind of the ongoing partnership and services that our office provides to the Department of Utilities.

So, happy to be here and happy to provide a context of what our office does.

There's often a little misconception of what does the church office do.

And then go from there in terms of providing details specifically related to debt financing.

So, there are a few things that we want to cover today.

So, kind of the first is are the different divisions within our office.

Overviews specifically of the debt management division.

So, I manage that division.

The primary services, advisory services that the debt management division provides.

And then ad hoc services that our office provides to the Department of Utilities.

So, at a very high level, the church office is one of five charter offices.

And by charter, I mean under the city charter, there are five officers that are appointed and report directly to the mayor and council.

And they include the city manager, the city auditor, the city attorney, the city clerk, and the city treasurer.

And so, a number of the different departments fall under the purview of the city manager.

The city treasurer, as created under the charter, is kind of on equal footing, equal as the other charter officers.

And so, as we go through some of the specifics, the purpose of the charter's office are kind of three main things.

So, one of the main things is we provide citywide banking services.

And this is for things like vendor contracts with our depository account.

We maintain all the credit card and payment systems.

So, for example, the Department of Utilities.

When customers go to 1395 35th Street, 35th Avenue.

Or they go to City Hall to pay their bills.

Right?

So, or if it's a lock box.

Or if there are credit card payments.

Or checks.

Right?

So, that kind of falls under the purview of the banking function where our banking division handles kind of interfaces not only with our depository bank,

but each and every department that interfaces in terms of revenues or constituents, payment online, payment in person, payment over the phone, kind of that function.

And then for debt management, that's kind of my responsibility.

Under the city's overall program, I manage $1.6 billion in debt.

And in the next couple slides, you'll get a sense of kind of the types of debt.

And then kind of the specifics of what our division does.

The third division in our office is investments in cash management.

So, the city manages different pools.

One of the main pools is what is known as the city's pool leg.

And staff in the investments division manages about $1.8 billion.

And so, as we're talking about department utilities, the water fund, wastewater fund, the drainage fund, they all participate in the city's pool leg.

So, our investment officers, they actively trade, whether it's fixed income securities, commercial paper, whatever, to generate returns.

And so, the water, wastewater, and drainage funds receive the interest earnings on a regular basis as a result of the investments, ongoing activity from our investment staff.

Now, I'm going to kind of provide a little bit of overview of what is it that the debt management division does.

So, as I mentioned a minute ago, we manage about $1.6 billion in various debt obligations.

So, bonds, loans, various kind of other obligations.

And so, we're responsible for the issuance and management for city debt, city financing authority debt, public financing authority.

And when redevelopment dissolved in 2012, we became the accessory agency.

So, our office, specifically my team, we manage all of the redevelopment debt as a result of dissolution of state law in 2012.

One of the things that's worth pointing out is, you know, facilities like the building we're in here or the Golden One Center or the Convention Center Expansion.

Those are all funded in part from the use of debt.

One of the things, another thing that our division does is, we manage all communication with credit rating agencies, investors, bond insurers, et cetera.

And the reason and rationale for that is, you want a single point of contact.

Because if they go to the city manager's office, or if they go to finance, and then they don't know where to turn to,

you often get different voices carrying kind of pieces of the overall story, right?

So, the purpose of having centralized communication to the external, right?

Rating agencies, bond insurers, stakeholders, et cetera, that's kind of the responsibility of our division, specifically me.

So, I'm kind of the point person for any engagement external folks for our debt.

The big thing is really the third one, is compliance.

And people often say, oh, you know, once you issue the debt, that's, you know, your responsibilities are over.

And not so.

So, our, when, for example, when we go through and we work with the Department of Utilities to issue water and wastewater debt,

whether it's bonds or loans, there's a commitment to provide ongoing disclosure, ongoing obligations for the life of the debt, right?

And so, if we're talking about issuance of bonds, 20 or 30-year bonds, there's an ongoing commitment that we as a city need to have to provide not only to radiances,

but also to, as we get later on, to external stakeholders.

And the rationale behind that is, when the bonds were issued, there was certain information that was provided to stakeholders.

And if the story and the credit changes, the external folks need to know.

And so, we work closely with all the different departments, whether it's Department of Utilities or Finance or others,

to pull the information that's needed to be able to easily disseminate the information and summarize it into a manner that's accurate, complete, and timely.

The fourth item is kind of a catch-all.

One of the things our office, and specifically our division, we often do is we get assigned a lot of special projects.

And they come by way of either the city manager's office or the mayor and council or other departments.

So, an example of some of those projects include the Sacramento Valley Station project and trying to figure out how do we fund the capital stack?

The need is great.

We're talking about hundreds and hundreds of millions of dollars.

Cheryl mentioned a minute ago, you know, one consideration are impact fees.

Well, okay, when you couple impact fees with other things, does it fit the whole picture in terms of how much,

in terms of capital improvements need to be funded?

Or are there other things that need to be kind of included in the mix as well?

So, that's why our division is included as well, trying to find ways to come up with, you know, financing and funding solutions.

So, this slide really kind of highlights what are some of the primary things that, you know, our office provides to the Department of Utilities.

So, long-term debt financing and refinancing and interim.

So, we'll get into some of the more kind of nuances in the subsequent slides where I want to walk you through what does it mean to go through a bond financing?

What does it mean to go through a bond refinancing?

And sometimes those are terms that are so foreign.

But it's important because the level of involvement with DLU is important in order to be able to provide a funding mechanism that can fund a portion of the water treatment plant.

Or a fund portion of, you know, some other asset.

A few years ago, the Department of Utilities reached out to our department.

What if we were to look at, you know, commercial paper?

Or some other type of interim instrument like bands, bond anticipation notes.

And so, we looked at that and we have, you know, that ultimately, that program was ultimately tabled, right?

But we have conceptual discussions and with different underwriters, with different financial advisors about how we could come up with a program that could meet the Department of Utilities' capital needs, you know, absent rate increase.

Or absent some other type of increase in terms of revenues that could sustain a long-term, you know, bond financing.

The second one is management of ongoing, you know, water and wastewater debt.

And kind of my remarks today are focused on those two enterprise systems because those two systems have a considerable amount of outstanding debt.

But more importantly, you know, in the weeks and months ahead, you'll hear about the capital needs, right?

Of those two systems are immense.

And so, whether it's this body's consideration or the city council's consideration, right?

In the months and years ahead, there's going to be the consideration for rate increases that could be considered, right, for necessary capital improvements.

And so, one of the things that we look at is what is it that we have in terms of the existing bonds and loans and how is it that we can work with Department of Utilities to either make things more efficient, identify cash flow savings, or, you know, find ways to meet their needs, again, you know, kind of in the construct of the pro forma and their cash flow considerations.

The third is kind of helping with the financial policy, and we'll get to that in a little bit, and also the preliminary development of the long-range financial plan.

One of the things that, you know, our office worked with Department of Utilities and with the help of one of our municipal advisors is putting pen to paper.

We know that the Department of Utilities does a great job in terms of fiscal management, and they have, you know, ad hoc policies that they've worked with, but it's a matter of kind of codifying it and putting that pen to paper to meet best practices, whether it's the Government Finance Association, whether it's, you know, the Water Works Association, whether it's, you know, the finance community.

It was a matter of trying to figure out how do we formulate and how do we classify the policies that utilities, for the most part, already had in place and putting it at the paper.

So that way it shows and demonstrates to rating agencies and to stakeholders that Department of Utilities is on top of it in terms of their water and wastewater enterprise systems.

So now I'm going to kind of go through and provide some details specific to the water and wastewater systems, just again, because there is a fair amount of debt that each system has currently.

And I want to provide a nuance in terms of, again, the partnership that we have with the Department of Utilities and the service that we provide.

So I wanted to start off on this slide just to provide kind of a high-level overview of credit ratings, right?

So just for this body, credit ratings are a third-party impartial analysis, in this case from Standard & Poor's and Fitch, as to the creditworthiness of the city, specifically the Department of Utilities, whether it's a wastewater fund.

And the way it works is the higher the rating intrinsically, the lower the cost of borrowing, right?

And vice versa.

If the lower the credit rating, it means that there's a slightly higher cost of borrowing.

Now, some of the things, as we get through some of the other slides, there are some nuances, right?

So some of the commentary that I've had with the different rating agencies is, you know, when we started in 2013 is a new credit, right?

So it was the first time that we issued the enterprise bonds for the water and wastewater systems.

So the way that the rating agency community looked at it is you have to kind of prove yourself, right?

You have to kind of show that, hey, city and city department of utilities, can you, do you have good fiscal management?

Do you have good plans in place?

Do you have good rate discipline?

Do you know, do you have long-term objectives of what you're trying to achieve that you can demonstrate?

Do you have good rate?

And so the reason why I started out with this slide is, if you look at where it started in 2013, right?

Very high investment grade, AA minus, from both standard and pours and Fitch.

And I think it's very telling and it's very, it's a great observation and great commitment from the rating agencies that over time, right,

now both have been upgraded one notch to AA flat, right?

And so the commentary I mentioned a minute ago is the lower, the higher the credit rating, it aids to a slightly reduced cost of borrowing.

So now I'm going to kind of just dive into how our partnership with the department of utilities specifically for the water system.

I want to first start with kind of the water bonds because that was the first time we issued enterprise revenue bonds.

And so let me back up a step.

And so we did issue bonds for the water system as part of the least revenue bonds about 20, 25 years ago.

So the issuance in 2013 was the first time that we issued revenue bonds just on the credit of the water system.

And there were a couple of interesting things that were part of that deal that later on fell off.

One is when we were working on that credit, it was suggested by the bond underwriter that the department of utilities set up a rate stabilization fund, right?

So we created a rate stabilization fund with the attorneys and with the underwriter to determine, okay, 25% of the debt service for all water bond,

all water debt would be set aside.

And the aspect of that is it helps to provide a level of assurance to stakeholders,

specifically bondholders that, again, the department of utilities is good.

Again, they can prove that, you know, credit worthiness.

That 2013 issuance was a good partnership because there were a couple of things that were involved.

Not only was it the inaugural enterprise credit, but at the same time, the city, specifically DLU and with other departments,

also commissioned the fiscal report that was undertaken by Corolla engineers.

So imagine, you know, the fiscal report that was prepared by Corolla engineers,

and we're trying to work on a bond issuance, right?

So the purpose of a bond issuance is we're trying to identify all the project.

What is the money going to be spent on?

What are the project risks?

What are some of the other things like, you know, cybersecurity or earthquake risk or any other risks that might be incorporated or susceptible to bondholders?

So that process took about eight or nine months.

And the way that that entailed is, you know, on our department, a lot of legal review.

I'm not an attorney, but over my 25 years doing this, I worked on, you know, over 100 bond issuances.

And so very familiar with reviewing bond issuances and indentures, trust agreements.

Another thing we worked on on those deals, we had a lot of collaboration with the underwriter, a lot of discussions with Goldman Sachs,

a lot of discussions with Sandra Bors and Fitch to gauge where the ratings could be, right?

So, again, it's kind of getting a feeler out there of what if we were to do this?

What if we were to do that?

And the purpose of that was to go out with a sure footing, if you will, to identify where the rating would be rather than to say one or two notches lower.

And that was end up being a very successful sale.

The issuance in May of 2020, that was an interesting and a very complex deal.

So in 2017, Congress and the president passed into law what's known as the Tax Cuts and Jobs Act.

And one of the major details that was related to that Jobs Act is the elimination of what's known as advanced refunding.

And so simply put, what an advanced refunding is, when you issue tax exempt bonds, normally they're not callable for 10 years, right?

So the reason for that is they want to provide certain investor protections.

And because of the change in the tax law, the only way that we could refund for savings the 2013, which were tax exempt bonds, is to issue taxable bonds.

And normally, taxable bonds have a higher yield than tax exempt.

And the reason is because you would need to report your interest earnings on your income taxes as opposed to tax exempt bonds.

But in that deal, which took many, many months to come to market because of the complexities of the structure,

and with the underwriter and with our municipal advisor, we were able to work with the department of utilities and save the water system, water fund, over $30 million.

And so over $30 million in cash flow savings.

So, you know, had we done nothing, right, the debt service on the 2013 bonds would be expected to be paid through the final maturity.

And following that, in December of 2013, we were working with another one of our underwriters and our municipal advisors to take advantage of a further improvement in interest rates.

And so this one was another interesting yet complex deal that we worked on with the department of utilities.

This one was known as a tender and repurchase.

And I know these are kind of complex terms, but essentially, in 2020, we issued taxable bonds.

So in 2023, what we did is we issued tax exempt bonds to now take out a portion of the taxable bonds.

And so that process, this process took about eight or nine months to kind of materialize,

but we were able to save the water fund, water system, about another $4 million in cash flow savings.

So in terms of, you know, other things related to this is where I'm kind of going to get my commentary in terms of outside the aspect of debt financing,

where we partner and we work closely with the department of utilities is ongoing disclosure.

So when we issue public bonds, right, to the open market, there's a requirement that is put upon us by the underwriter.

And the underwriter won't buy the bonds from the city, and therefore we don't have bond proceeds,

unless we enter into an agreement known as a continuing disclosure certificate.

And so the purpose of that certificate is to identify and provide key updates, fiscal information like debt service coverage ratios, revenues, number of accounts,

other key information that would be meaningful to bondholders.

And so the purpose of that is to, again, provide the bondholders a sense of has the story or credit changed from when they bought the bonds in whatever year.

And so we work closely with the department of utilities to ensure it's complete, it's accurate, and it's timely.

And so those three are kind of the three main agencies that we work with.

But the ongoing chuckle internally is it seems like the amount of regulation, specifically on the tax dump bonds, continues to grow.

When I started this in this field at the state 25 years ago versus now, it pales in comparison the number of additional regulatory requirements.

And that's to ensure transparency and to ensure that the tax dump issuer, the city, is not doing anything that shouldn't be committed.

And so we work closely with the department of utilities to ensure our eyes are dotted, keys are crossed, to ensure all of our disclosure are accurate, complete, and timely.

So flipping to kind of on the wastewater side, similar to when we started the water credit, right?

So on the Fitch, on the water side, it was at AA minus, slightly one notch higher on the wastewater side.

So they were perceived to be slightly higher than on the water system.

So this list of kind of different debt issues that we've worked on with the department of utilities is a bit shorter.

Again, for the July 2020 issuance, again, it's kind of similar scenario as on the water side.

Because of the change in tax law, we were able to take advantage of issuing taxable bonds and the spread differential between taxable and exempt.

We were able to generate approximately $4.7 million in cash flow savings for the wastewater system.

And then similar to kind of for disclosure, those regulatory bodies, they have kind of set things that we work on with the department of utilities on a regular basis to ensure completeness.

So in terms of ad hoc things that we provide, you know, our office has helped with the review.

I think it was the last quarterly meeting, there was a presentation of the RAF-TELUS fund review reports for the water and wastewater systems.

So our office helped review in part portions of that report and provide some suggested edits or recommendations.

Additionally, we helped with the development and kind of crafting of the reserve policy.

One of the things that came to light was, I believe it was in January of 23 or 24, the department of utilities took an item to council which formally identified those three reserves.

So the rate stabilization, the operating reserve and the capital reserve.

And as I mentioned a minute ago, because of kind of changes in terms of the credit and the improvement of the water and wastewater credits,

there were amendments which helped to free up some of the dollars that would otherwise be obligated in terms of the water and wastewater systems.

That's kind of one of this.

That's kind of my brief overview.

Happy to answer any questions you may have.

Thank you.

Okay.

Do we have any, let's see.

Do we have any members of the public who should speak on this item?

Thank you, Chair.

I have no speaker slips for this item.

Thank you.

Are there any commissioners who would like to speak on this item?

Push your little green button.

Push your little green button.

Yeah, okay.

Okay.

Okay.

Let's go with Commissioner Olson, please.

Yeah.

Thank you, Mr. Wong.

Very good.

Lots of stuff there to unpack.

So just some clarification questions.

I'm still trying to understand, you know, we're going forward on a pretty significant rate increase for a lot of capital improvement projects.

And we're not seeing the details of that yet, but we're expecting that over the next year and a half.

So historically, when these capital projects come forward, are they mainly financed first with debt?

And then the pool of money from the rate increases and the impact fees basically pay that off on an amortized basis every year?

Is that how the system works?

Or is there a better understanding of how that works?

So I can speak to kind of the bond and capital part.

Maybe Cheryl or someone else can speak to in terms of the priority.

So when Department Utilities approaches our office for wanting to do capital financing, whether it's entering into a loan or a bond,

one of the things that needs to occur is first kind of the identification of the project and projects that are going to be reimbursed or paid for from those proceeds.

And the reason why that needs to be clearly spelled out are a couple reasons.

Again, in the construct of taxed on bonds, there is a reasonable expectation.

So when we issue taxed on bonds, there's a reasonable expectation that 85% of the proceeds will be spent within three years.

So in other words, the federal government doesn't want the city to issue taxed on bonds and sit on it for five, seven, ten years.

So one of the many documents that we review as part of the overall structure of the deal that our office reviews

is what's known as a tax certificate.

And oftentimes the tax certificate will have some level of specificity about the general types of projects.

It doesn't have to be on a dollar by dollar basis, but conceptually what projects are envisioned.

And while there's some level of specificity, one of the things we want to do is we want to ensure that Department of Utilities has enough flexibility

that if there are some savings on one project, that they have the discretion to be able to earmark it for a different project.

But to answer your question, Department of Utilities comes forward and identifies the projects they want to be capital financed,

whether it's bonds or, say, loan.

And then we will convene the team.

Oftentimes there will be some internal meetings with the finance department.

One of the things we have clearly spelled out in our debt policy is before any consideration for any kind of capital financing,

whether it's Department of Utilities, the finance department, or anyone else, it's not as CTO, it's not as church's office discretion.

It's one of the things we do our things as a team.

We involve the city manager's office.

We involve the finance department to ensure that, looking at it pro forma-wise, can the water fund afford it?

Can the wastewater fund afford it?

And maybe the answer is yes, but we want to ensure that there are no surprises

and that all the decision makers kind of internally understand what the ask is before we get too far along.

Hopefully that answers your question.

Commissioner Olson, just to let you know, the numbers that I presented earlier in my presentation

where I talked about our five-year CIP at about $226 million

and our annual CIP, I think it was $26 million if I remember correctly,

that is all what we call pay-go money.

That is all rate money.

None of that is finance.

So we currently build our CIP based on the funding that's available.

So when we bring proposals forward for a rate increase,

we could propose that we do some loans or some bonds,

or we could just propose this is what we want to move forward in our CIP just with our rate funding.

But currently right now, our CIP is based on rate funding that we have available year to year.

So what's the decision point on, I guess one other question would be,

are you combining projects into one package for a bond finance?

And would they be, the water department projects are separate from the wastewater?

How do you normally go about that?

Good question, Commissioner.

So the short answer is yes, water and wastewater are separate because they're depicted as separate credits.

So there's no commingling, there's no crossover between the water fund water credit and the wastewater fund wastewater credit.

So while the ratings might be similar, the way that investors perceive it is kind of the indenture.

So the indenture is the legal document that sets forth what are the rights under that document that the city has to make the payment.

And in the definition of what's known as system revenues, right, under the water credit, it's very clear, right?

So system revenues are only confined within the water system.

And likewise, for the wastewater credit, system revenues, the defined term in the indenture, is confined to the wastewater indenture.

And maybe going back to Cheryl, your earlier comment, what's the decision, what's the critical decision point on deciding whether projects will be funded out of the revenue stream of the rate basis versus financing it through debt?

Is it the size of the project?

Is it having multiple things come forward at one point in time early, then you can't spread them out?

Is that what goes into that decision making?

I can't speak to the strategy for all the different bonds that Brian presented over the time since all the way back to 2010.

But I think simply it usually is for those larger infrastructure projects that couldn't be paid with just our ratepayer funding.

An example would be improvements or expansion in our water treatment plants, right?

That one of those bond issuances were upgrades to our Fairburn and SAC plant.

The upgrade, the project was just too large to fund.

And so we sold bonds to build that project.

And in that case, do the annual rate pool of money, is any of that used to pay, is that used to pay the annual debt payments?

Yes.

So user fees are kind of the largest source of repayment for any consideration for debt.

If I can add one comment kind of to what Cheryl is saying, one consideration of when debt is considered is the whole notion of generational equity.

And what I mean by that is when the Department of Utilities, and this goes back to way before 2013,

I've had the benefit of working with the Department of Utilities for probably upwards of nearly 20 years now.

And so one of the considerations that the city, whether Department of Utilities or otherwise, looks at is kind of what Cheryl mentioned,

whether it's the large-ticket items but also the useful life of the asset to be financed, right?

So if you think about pay-go revenue, right, you're thinking of kind of near-term revenues next two, three, four years, right?

If you're to capital finance that over 20 or 30 years, the whole notion of generational equity,

which means that the current rate payers aren't the only ones who need to pay for this

because the useful life of this asset may go on for many, many, many years, 20, 30, 40 years.

And so that's one consideration that has been incorporated in the past is a treatment plant or a large, you know,

other water, water, wastewater facility.

And there's the whole notion that it could be spread in terms of from a cost point of view, you know, over many years.

And, Brian, do you have – you mentioned the Fitch and other ratings here.

Do you do independent – do you calculate ratios, debt equity ratio, cash account,

basically looking at cash flow and solvency?

Do you do that for your department for these individual projects or for the overall –

overall, like, utility department or individual projects?

And how – and if you do, how does that compare to the national standard for these – for this kind of subsector?

Good question.

So one of the tables that we have in our disclosure – annual disclosure –

for water and wastewater is our historical operating results table, right?

So in this case, the most recent is FY24.

So one of the key rows or key pieces of information that's included there is that debt service coverage ratio, right?

So the minimum, the floor, has to be 1.20 times, which means that your system net revenues have to be at least 120 percent above your total debt service that's payable from the water or wastewater system.

And so there are a couple of thoughts to that, right?

So, you know, a couple of slides ago, we were looking at the very, very strong investment-grade ratings for both the water and wastewater.

So if hypothetically, you know, DOU takes the coverage ratios all the way down to 1.20, there could be a couple of ramifications as a result of that, right?

So rating agencies, S&P and Fitch, could see that, ooh, there's some cash flow issues.

There could be some weakness here.

And so they could put, you know, they could put water or wastewater systems on credit watch, or they could maybe ding the rating.

So while 1.20 is the floor, in order to kind of maintain or maybe seek and upgrade on those ratings,

we never want to approach the 1.2, which is the absolute floor in our indenture.

Very good.

And so I didn't quite understand the comment you made, your brief comment you made about your investment group.

I'm familiar with the person, maybe it's in your department, that manages the investment for the non-CalPERS pension.

Some of your longtime staff are not in CalPERS, and that's really good.

That's been managed extremely well in terms of returns.

So does your group also do a similar, a different kind of fund for these other, basically, cash management?

Yeah, so our third kind of division within our office, investments and cash management, so they wear a couple of different hats.

So one is the city's Pule, which is kind of the city's overall investment vehicle, of which water, wastewater and storm drainage participate in.

But one of the other things they manage, like you said, Commissioner, is they manage the investments related to SCURS, the Sacramento City Employee Retirement System.

And so that's a closed-end pension fund, similar to CalPERS, but there are only four employees that predate and started employment prior to 1978.

I think there's only one active SCURS employee.

So I think there's one remaining SCURS employee.

So one last question is, I'm not sure you have an answer.

This might even be Cheryl here.

And it's how much of the anticipated rate increase that we're talking about will be addressed with, is any of the potential anticipated rate increase going to cover current debt, going to refinance or absorb current debt?

Thank you.

The debt adjustment has multiple components.

Number one is to identify the finance plan, as well as the cost of service.

And the debt financing is going to be rolled over.

Our debt rate adjustment, I mean, I'm sorry, our rate adjustment will cover a portion of our debt payment.

So I think we'll want to know, as a commissioner, we'll want to know what those breakdowns are at some point.

I have one other question.

Thank you very much for that.

Absolutely.

We did not disclose this.

So all of the questions that you have been asked have been written down by our staff, and we will find you with a formal written respond.

Whether it's going to be at the next meeting or the future meeting, we will definitely going to respond to every single question that you have tonight.

Yeah, very good.

Appreciate that.

Thank you.

Brian, I have one other question.

And it's, I've forgotten what it is.

So I'll probably get back to you at some point.

Thank you very much.

Thanks for the good answers.

We have one other chairman who'd like to speak.

Vice Chair Eberle.

Sorry.

Sorry.

I'll try to be very brief because I know we have one more presentation.

I want to thank you for coming because what I've learned is there's a lot of complex funding sources for both DOU and RSW.

So does your, does Treasurer only concern with loans and bonds?

That's what you guys maintain on behalf of the city?

That's your.

It's so that's on the active financing side.

Yes.

But I think what's been growing in terms of our level of responsibility are our special projects.

And so what I mentioned on one of the slides is we get our office, specifically our divisions, me specifically,

we receive a number of special project requests from the city manager's office and the mayor and council that likely won't materialize into a loan or bond financing.

But they want brainstorming of, you know, feasibility or does this make sense or financial analysis.

And so one of the things, you know, I want to point out is we have the benefit of two excellent municipal advisors.

Right.

So we do a lot of things in-house, but we also utilize the services of two municipal advisors.

And what the municipal advisors do is they have a fiduciary relationship with the city.

Right.

So we've bounced things about looking at affordable housing projects or this kind of scenario.

Is this feasible?

But more importantly, what are the risks to the city that we need to be aware of, you know, before we kind of move forward, you know, kind of and give everyone a green light.

So we do a lot of things in-house.

And we also have two municipal advisors that we kind of bounce things off of as well.

Okay.

Thank you.

You mentioned briefly about trying to go out to the commercial paper market.

Does the city currently have any other debt instruments that they have other than those loans and bonds that were those the only ones that we're actively participating in?

Good question.

So we did look at commercial paper a number of years ago, whether it's apartment utilities or others.

And I think at the decision at the time a number of years ago, we didn't move forward is because the need from other city departments to kind of commingle as part of issuance and get economies of scale wasn't necessary.

And I think one of the realistic scenarios that we're dealing with now, and not surprisingly, is kind of our large multi-year budget deficit.

So departments, certain departments that are outside the purview of 218 are being a little bit more cost conscious and kind of revisiting whether or not there is a need for capital financing or to do it and defer, you know, defer their capital costs.

So, but we have looked at it, but the decision at the time a few years ago was to table it because there wasn't enough, you know, of a kind of a frequent need to really set up the need for a commercial paper program.

My last question is, I think you indirectly answered my question from Commissioner Olson, but for debt servicing,

do the individual enterprise funds pay for their own debt servicing or does it come out of the general fund or where, where is it repaid from?

Does each, do you understand what I mean?

I do.

Yeah.

Okay.

Again, good question.

So the answer is, you know, it depends on the credit.

So if we're issuing water revenue bonds, the repayment source is the water fund.

If we're issuing wastewater revenue bonds or loans, the repayment source is solely the wastewater bonds.

And because it's governed by Prop 218, the general fund isn't involved or secure the repayment of any obligation related to water or wastewater.

So it falls under 218 that it, because it's part of the overall providing of service.

Okay.

So that was my last question.

Okay.

Thank you so much for your presentation.

Thank you.

Don't go away.

Commissioner Johnson.

Yes.

Thank you.

Thank you.

Thank you for your presentation.

I heard you say something tonight that is the first time I've been sitting here for, I think, a little over two years.

And tonight is the first time I heard the term generational equity mentioned.

And so I'd be interested in, not necessarily tonight, but in the future as we look at making decisions moving forward that impact both current rate payers and future rate payers.

I'd be interested to find out a little bit more about the history of the decision-making process that has this current commission looking at an inherited $2.1 billion deferred maintenance budget.

Like, how long has generational equity been a consideration?

What kind of decisions have led to the inherited debt that we're facing?

And how do we learn how to address that in future decision-making?

Sure.

I can provide a little bit of context because I recall in the URAC meetings that occurred in 2012, that was kind of the initial for the first multi-year rate increases that enabled for the inaugural water and wastewater bonds in 2013.

You know, again, the consideration that kind of Cheryl mentioned, which is not only the large ticket items, so a large component of the 2013 water bonds was the Sac River plant and kind of the improvements there.

So, you know, there were various taxpayer groups that were protesting at the URAC meeting in 2012, and I remember vividly that, hey, we need to do everything by pay-go.

And I think there was a back-of-the-neck analysis that was done.

If that occurred, the utility rates would need to increase by 60%, 70%, 80%.

And so if you think about the kind of question, Council Commissioner, the whole notion of generational equity is if you're trying to, you know, put the entire cost of a facility or an improvement on just the near term,

but yet that asset has a useful life of 15, 20, 30, 40 years, those folks in their future years are benefiting without having to pay for their portion of the cost of the improvement.

And that's about the whole notion of generational equity is there should be some type of incremental cost that spreads to the future years.

And how, for how long would you say historically that has been a consideration?

I'm curious, you know, I'd be curious, learning moving forward, just about how it is that this current generation of commissioners is looking at a $2.1 billion inherited debt.

I don't know the history, but I know it was definitely considered when we were, our office was working with the Department of Utilities in 2012 and 2013 to, number one, try and secure the necessary rate increases,

but also to establish the inaugural, you know, water and wastewater revenue bond issuances.

So it may have happened prior to that, I don't know, but it definitely happened in conjunction with those inaugural bonds.

There's one thing I do want to point out that, if I haven't said already, is kind of the ratings and impacts to financing rates.

So, you know, Cheryl and, you know, in the prior, also in the prior UREC meetings, you have heard that, you know,

there's going to be the consideration in the months and years ahead of rate increases.

And one of the things that in my discussions, ongoing discussions with Standard & Poor's and Fitch is, you know, they've upgraded us,

but one of the things they've cautioned the city is, because there's been a rate holiday, right, for a number of years,

that they could, if there's not a consideration for a rate increase, to, you know, ding our outlook or rating.

And the reason for that is, kind of what Cheryl mentioned, is the need is a $2.1 million backlog, right?

That's in today's dollars.

But the reality is, if it's going to be incrementally increased by some amount based on inflation,

that $2.1 million at full build-out is going to be a lot more than $2.1 billion.

And so the concern from Standard & Poor's and Fitch is that we know there's a huge backlog,

not just unique to Sacramento, but also to other municipal utilities.

But the question more is, how is Sacramento trying to tackle it?

And the key is, kind of, incrementally.

And if there's an ongoing, you know, rate holiday,

that's one consideration that the rating agencies will look at as negatively.

So it's just something, food for thought, for your consideration for future rate increases.

Thank you.

We have no more comments.

Thank you.

This is for recommendation only, so there will be no vote required.

And we'll move on to the next item, which is updates on water planning efforts.

Good evening, members of the Utility Rate Advisory Commission.

First, I'd like to apologize for not introducing myself earlier when I came up to answer a question.

My name is Michelle Carey.

I am the Interim Engineering and Water Resources Manager for the Department of Utilities.

Presenting with me this evening is Ann Sanger, the Government Affairs Manager at DOU.

We will be providing an update on two significant key water planning efforts that impact both the city and the region.

I will begin the presentation with some background on the city's existing water system.

Then Ann will speak about why these two projects are needed.

Lastly, I will end with project components, timelines, and funding outlook before we go into questions.

This presentation might take us over the allotted time.

I don't know if we have a time constraint or if it's okay if we go past 730.

I just thought I would mention that.

Thank you, Chair.

Yes, we do have a time constraint.

We'd need to take a vote.

We need a motion and a second and vote on extending the meeting by an hour past 730.

How long are you thinking that you would need?

I would say that the presentation itself would be about 25 minutes.

Then that will take us past the 730 point.

At this point, it would be probably a good idea to go ahead and extend the meeting.

Okay.

Do I have a motion to extend the meeting by one hour?

I'll make a motion to extend today's meeting in one hour.

Do we have a second?

I second the motion.

Okay.

Thank you.

All right.

Commissioners, please unmute your mics.

Commissioner Tanakela, absent.

Commissioner Gaspard?

Aye or no?

Aye.

Okay.

Thank you.

Burdock?

Aye.

Thank you.

Steinbaum, absent.

Shambay?

Aye.

Thank you.

Nelson, absent.

Olson?

Aye.

Hugh Iberle?

Aye.

Hugh Johnson?

Aye.

Thank you.

Commissioner Tran, absent.

And Chair Zito?

Aye.

Thank you.

Motion passes.

Please proceed.

Okay.

This presentation is focused on two major projects that reflect our long-term planning approach

to water reliability and resiliency.

The River Arc Project is a regional water supply project

which will help our region adapt to a drier future.

The Water Plus Project is a City of Sacramento Capital Improvement Project effort which has

multiple phases.

The early delivery phase includes high-priority projects.

Phase 1 includes resiliency projects.

And Phase 2 is expanding capacity at the Sacramento Water Treatment Plant.

These are both foundational to ensuring long-term water resiliency and reliability.

Both of these large, complex capital improvement projects are included in our five-year and 30-year CIP

with a high priority for design and delivery.

Our intent is to present these projects to the URAC as they will both be included in DOU's package

for future utility rate recommendations.

To begin, I will do a quick overview of the City's two surface water supply facilities.

The first one is the Sacramento River Water Treatment Plant, which came online in 1924 with a 40 million gallon a day capacity, or MGD.

The Sacramento Plant is located in downtown Sacramento off Richards Boulevard.

It pulls raw water from an intake on the Sacramento River and pumps water under the freeway to the water treatment plant,

which now treats up to 160 MGD of water per day.

The last large improvements done at the SAC plant was the rehabilitation project 10 years ago for roughly $170 million.

The long-term planning for this facility estimates an additional 150 MGD capacity could be added when it's needed in the future.

This would bring the total build-out at the SAC plant to 310 MGD.

It takes roughly 15 years or more to build a water treatment plant capacity project from inception to operation.

The Fairburn Water Treatment Plant was originally built in 1964 on the American River with some newer components constructed in the early 2000s.

The plant has that 100 MGD capacity and is operated in a way that is compatible with the river's sensitive ecosystem and wild and scenic river status.

The city takes its stewardship of the environment very seriously.

We believe you can only have a healthy water supply if you have a healthy river.

And I'm now going to ask Ann to present the next few slides.

Ann.

Good evening, Commissioners.

My name is Ann Sanger.

I'm the Government Affairs Manager at the Department of Utilities.

Great to see you all.

My first slide is – sorry, I'll take these off.

Slide five, why long-term water planning matters.

The drivers behind the projects we're discussing tonight, RiverArc and WaterPlus, are significant.

These drivers include climate change impacts to our region's water supply, aging infrastructure nearing the end of its useful life, an increase in water supply demand, regulatory changes, and a need for a resilient and adaptive system.

All of these issues create a challenge for the future of our city's water needs.

It is critical that we plan ahead because, as you've heard, these projects can take decades to build.

A resilient system will have diversification and redundancy in order to withstand the changes in supply and hydrology from year to year.

Our objective is to be adaptable to these many drivers and the impacts that they will have.

Slide six shows a map of the surface water supply sources in the Sacramento region.

The orange areas show that 80% of our region relies on the American River.

The blue areas show the percentage that rely on the Sacramento River.

And the blue and orange striped areas represent the communities that rely on both, which includes the city of Sacramento.

So you'll see the two projects we discussed tonight are both primarily focused on moving some of this reliance over to the Sacramento River.

While we're talking about service water supplies tonight, there are other components to water reliability.

Like groundwater access and water conservation.

Both of which the city heavily invests in.

We need new projects in order to adapt and meet the demand of the future.

But we'll always continue to promote water conservation.

Slide seven shows the results of the American River Basin Study.

In 2022, the United States Bureau of Reclamation completed a long-term comprehensive study in partnership with many of the local water agencies, as well as SAFCA, our local flood protection agency.

The study showed an increase in temperatures in the American River watershed of four to seven degrees by the end of the century.

The most significant temperature impacts were shown to be in the upper watershed.

This will cause more precipitation to fall as rain and less as snow and result in diminished snowpack and an earlier than usual runoff.

This creates a conflict during the winter and spring months as reservoir levels are scheduled to remain low for flood protection purposes and will require our region to find new ways to store water.

Slide eight shows the water level at Folsom Reservoir in July of 21.

As many of you may recall, the drought of 21-22 brought the lake levels at Folsom to historic lows.

The snowpack in the Sierra Nevada mountain range is our biggest reservoir, so we need to find new ways to adapt to a future with less snow.

Slide nine shows a recent map from the U.S. Drought Monitor.

Despite the last three winters being relatively wet, two-thirds of California is now considered either abnormally dry or in some range of drought.

So having a water supply that can withstand a drought is critical when, which is why the city has just started a comprehensive groundwater well rehabilitation project.

Recharging our groundwater in wet years so we have it for dry years is a high priority for us.

I will now have Michelle discuss the two projects that we're looking at in a bit more detail.

Thank you.

The river arc is a regional water supply project.

In addition to the city of Sacramento, the river arc project partners are Placer County Water Agency, the city of Roseville, and Sacramento County Water Agency.

The river arc project is designed to shift some of our current and future water supply diversions away from the lower American river,

which is a state and federally designated wild and scenic river with a sensitive fish habitat.

In addition, this project will support more conjunctive use, helping groundwater agencies access more surface water in wet years,

which allows their groundwater aquifers to recharge.

The river arc project concept came from the original water forum agreement, which was signed in 2000 and enjoys support from the environmental community.

This agreement between water agencies, environmental groups, and others was a compact that created peace on the river with the co-equal objectives of ensuring a reliable and safe water supply while also preserving the lower American river ecosystem.

The components of the river arc project are as follows.

Sequa environmental work, the river arc project has received over five, a little over $5 million, one grant from the wildlife conservation board to complete the environmental work.

Another component is the use of an existing intake already in the Sacramento river.

There will be raw water pipelines, a new water treatment plant, and treated water pipelines.

The river arc project begins at an existing water intake on the Sacramento river owned by Natomas Mutual Water Company,

which includes modern state-of-the-art fish screens.

It's important to note that this location is considered less environmentally sensitive than the American river,

since it does not include spawning or rearing habitat for fishery.

No in-water construction is required, which significantly reduces environmental impacts.

Raw water will then flow through a transmission pipeline to the new water treatment plant for processing.

After treatment, the water will be conveyed through pipelines to support each of the river arc partners and will serve the city of Sacramento.

These new facilities represent a regional partnership with a joint powers authority, or JPA,

currently being developed between the project partners.

The Water Plus project is a city of Sacramento project to increase resiliency, upgrade infrastructure,

and prepare for future water demand.

It is a critical internal investment aligned with our water system planning goals.

Water Plus will improve reliability and treatment flexibility at both the city's water treatment plants.

It also enhances safety by replacing chlorine gas with sodium hypochlorite and includes the addition of ozone

to better address changing water quality conditions.

Together, these upgrades address longstanding operational challenges like water quality fluctuations and disinfection safety

and help ensure a more reliable, responsive water supply system.

Water Plus focuses on improving our existing treatment infrastructure while preparing for the long-term water demands

of Sacramento's growing population.

Like River Arc, it includes a combination of treatment conveyance and system upgrades,

but this is an entirely city-led initiative.

The project will be implemented in phases.

The initial phase planned between 2026 and 2037 will replace aging infrastructure at both the city's treatment plants

and will incorporate ozone treatment systems to improve resiliency to changing water quality.

In phase two, which is a decade or more away, we will design and construct a new intake, pump station, raw water pipelines,

in addition to upgrading existing facilities at the SAC plant.

Phase two is designed to increase treatment capacity to meet projected demands through 2050,

especially during peak usage periods.

Ultimately, Water Plus is about ensuring a reliable, resilient, and safe water supply for Sacramento.

The CEQA schedules for the projects are as followed.

For the Water Plus project, just last week, we released the draft EIR,

and we are expecting that the final EIR certification will happen in early 2026.

And for the River Arc project, in May of this year, we issued the Notice of Preparation,

and in the spring of 2026, we are hopeful that the draft EIR will be publicized

with a final EIR certified in roughly the fall of 2026.

We are taking a multi-pronged approach to funding, setting aside funds each year for the early Water Plus projects,

pursuing grants, and preparing for potential future rate needs.

These projects require a long-term financial strategy.

We are committed to keeping the URAC updated on both funding progress and how these efforts may shape future decisions.

To wrap up, both Water River Arc and Water Plus are important and foundational to ensuring long-term resiliency,

reliability, and sustainable growth in the city's water system.

These projects not only address near-term infrastructure and supply challenges,

but also position us to meet the region's needs well into the future.

As you've seen today, environmental and preliminary design work is already underway.

It is critical that we adapt our water supply to a changing climate

and that we stay ahead of the region's water supply needs.

So thank you for your time today.

We appreciate your dedication to the city's water future,

and we are available to answer questions.

And before I take a question, I wanted to introduce Megan Thomas,

who is a senior engineer, and she's the project manager for the Water Plus,

and is also heavily involved in the River Arc project as well.

Thank you.

Clerk, are there any members of the public who wish to speak on this item?

Thank you, Chair.

I do not have any speaker slips.

Thank you.

Are there any commissioners who wish to speak on this item?

Yes, we do have.

So Commissioner Burdock.

Hi, thank you very much.

For the River Arc, what's the increased take from the Sacramento River

that this project is designed for?

Let's see.

Are we going to double it?

So there's, the project will be done in phases,

and the first phase, I believe, I want to verify.

Kate, you want to come up and answer?

Okay.

So for the city of Sacramento, our portion would be about 30 million gallons per day from the northern part.

The other agencies will cover it.

I mean, what's seasonally?

I don't, that gallon's a day.

Sorry.

Do you know acre feet?

So people use a lot of things on acre feet.

To give you an idea, our winter runs about 30 million gallons per day on average throughout the entire city.

During the summer, we're near 140 million gallons, so extreme shifts.

River Arc, we have, our needs is we want a different diversion point because all of our treatment plants today are South American River.

And so River Arc will be North American River, which provides us that resiliency north.

So phase one would include 30 MGD for the city of Sacramento's needs,

and it would provide 20 MGD for PCWA and 10 MGD for the city of Roseville.

These are existing rights they currently have in American River that they're hoping to divert.

We're trying to use our existing rights and just have a different point we can pull from.

And this is primarily because the precipitate, the snowmelt runoff happens late spring, summer.

Because of climate change, it's going to shift earlier.

But we can't store that water in the minimum fish flows that the Bureau lets out of Folsom.

We're not going to be, it's going to be lower.

We're not going to be able to take your water out of the American.

Is that correct?

A lot is the flexibility in current contracts people have for water rights.

Okay.

And just to follow up between all that, between the takes between us and Roseville and all the other partners,

what's the cost share with that?

Is it in accordance with the percent of water capacity you're taking, or is it, do they?

We're working on a, I don't know the acronym.

The JPA.

JPA, thank you.

Joint Powers Agreement.

To basically make sure that everyone's paying their share based on their need and purpose of that facility.

So right now the partners are the City of Sacramento, City of Roseville, and Placer County Water Agency.

So based on how much water they're intending to pull, it would be proportional based on their needs of that facility.

But build out is going to be 189 million gallons.

And so the initial phase is only 60.

So each phase, as it produces more, there's going to be a different shift on who wants how much from that facility.

Thank you.

Okay.

This item is for information only.

And we will now move on to the next item, which is Commissioner Comments, Ideas, and Questions.

Is there anybody who would wish to speak?

Well, I will call on myself.

I have a comment.

Just some general information.

I think you all received the email that there's two additional meetings that have been added.

One in July, correct?

Yes.

One on July 23rd and another on December 10th of this year.

Just for your information.

So there we go.

And that's all I have on that one.

It seems there's no one else.

So is there any public comments for matters not on the agenda?

Thank you, Chair.

I do not have any speaker slips on this item.

Okay.

Well, with that, this concludes today's agenda.

Thank you for your participation.

And the meeting is adjourned.

Thank you.

I'll break it.

I'll break it.

I'll break it.

Thank you.

Thank you.