Sacramento Area Sewer District and Financing Authority Meeting - July 2, 2024

Note: The raw transcript indicates the meeting was held on Wednesday, June 12, 2024, but the provided instructions specify the date as July 2, 2024. This summary uses the instructed date.

This joint meeting of the Sacramento Area Sewer District (SACSUR) and the Northern California Sanitation Agency's Financing Authority was called to order at approximately 9:16 AM. Roll call established a quorum for both bodies. The meeting included approval of an appropriation adjustment, consent calendar items, miscellaneous director matters, a retirement announcement, a new director introduction, a bond refinancing report, and a quarterly update on the Harvest Water program.

Consent Calendar

• Financing Authority Item 1: Approval of an appropriation adjustment of $10.5 million to increase the appropriation authority in the treatment and resource recovery operating budget by transferring available appropriations from the capital budget. Motion by Desmond, second by Frost. Approved by voice vote for SACSUR. A separate roll call vote was taken for the Financing Authority: Directors Polecki (yes), Karpinski Costa (yes), and Chair Hume (yes) – motion carried unanimously.
• SACSUR Consent Calendar (Items 2–7): Motion by Director Kaplan, second by Director Desmond. Approved unanimously by voice vote with no public comments.

Public Comments & Testimony

• No public comments were made on any item during the meeting.

Discussion Items

• Miscellaneous Director and District Engineer Matters (Item 9):

  • The June 26, 2024 board meeting was canceled; the next meeting is July 10, 2024.
  • Retirement announcement: Glenn B. Lefelt, Director of Operations, is retiring after over 30 years with the district. He expressed pride in the organization, highlighted staff achievements, and noted that SACSUR operates the second largest treatment facility of its type in the United States. He reflected on technological evolution from paper-based operations to world-class status, and mentioned upcoming Biogen and Harvest Water projects. Board members thanked him for his leadership and energy.
  • New Director of Operations: Sunny Lundy, an internal candidate with 22 years at the county, was introduced. His appointment was approved by the Board of Supervisors, effective June 16, 2024.
  • Bond Refinancing Report (presented by Tepa): The district refunded 2014 series fixed-rate bonds and three variable-rate bonds (2012A, 2013C, 2013D) and terminated swap agreements with BNP Paribas. The transaction was priced on June 5, 2024, and was oversubscribed nearly five times. The final interest rate was 3.41% (15 basis points above the estimate of 3.26%). Net present value savings of $60 million after swap termination costs (which were under $10 million, versus an initial estimate of $12 million). Average annual debt service savings of $4.3 million (estimated $4.9 million).

• Harvest Water Program Quarterly Report (Item 10) – January 1 to March 31, 2024 (Receive and File):

  • Presented by Mike Crooks (Capital Program Manager) and Heidi Oriel (Program Coordinator).
  • Program Overview: Goal to deliver up to 50,000 acre-feet of recycled water to over 16,000 acres of agricultural land south of Elk Grove for crop irrigation and winter flooding for ecological benefits. Public benefits include groundwater restoration, ecosystem improvements, water quality, conjunctive use, and climate resiliency.
  • Funding: Approximately $300 million from California Water Storage Investment Program (WSIP) and $30 million from the U.S. Bureau of Reclamation. Total program budget is just under $600 million, with a remaining gap covered by the district.
  • Capital Program Updates: Six projects identified; five of up to eight construction contracts have been awarded. The Harvest Water Pumping Station (awarded to Overa) is mobilizing. Oak Road Transmission Pipeline split into two segments: Segment 2 (awarded to Mountain Cascade) starting potholing; Segment 1 awaiting Union Pacific permit for Sims Road crossing, expected advertisement late 2024. Franklin Eschener Pipeline (awarded to Stephen P. Rados) active in Elk Grove – 10 miles of pipe installed; currently installing 66-inch steel pipe on Franklin Boulevard. Central South Pipelines (awarded) mobilizing, construction starting July/August. West Pipelines (awarded to Sukut) active, with a closure on Twin Cities Road for a railroad crossing. On-Farm Connection Assemblies (AFCAs) – design complete; first construction package expected to advertise late 2024, dependent on executed landowner agreements, with a second package anticipated late 2025.
  • Permits and Easements: Coordination with City of Elk Grove (easements before council that day), County Department of Transportation (pavement restoration agreement), and Sacramento County Water Agency (cost share). Union Pacific permit for Sims Road crossing expected soon; other railroad permits need annual extension. Environmental permits amended for alignment change.
  • WSIP Compliance: Harvest Water is the only WSIP project to have completed final funding award and broken ground. First annual report submitted May 2024. Early draw of 5% of grant ($277.5 million remaining) received; first invoice under final agreement submitted for $11 million (2022 work). Future quarterly invoices planned.
  • Landowner Outreach: Approximately 120 connection locations; focus on finalizing recycled water connection details and utility easements. Groundwater monitoring continues with eight existing wells; plan to add a dozen more. Eco-plan implementation tasks underway (land protection, fencing, grazing management, habitat for sandhill cranes).
  • Expected Board Actions in 2024: Landowner agreement template for eco-plan, amendment to administrative program management office support agreement, advertisement of Elk Grove Transmission Pipeline Segment 1 and first AFCA package, and amendments for engineering services during construction.
  • Director questions: Director Viegas requested identification of metrics to track value of nearly $1 billion investment for ratepayers. Director Kaplan emphasized caution in construction cost expectations.

Key Outcomes

• Appropriation adjustment approved for the Financing Authority and SACSUR (unanimous).
• Consent calendar approved unanimously.
• Bond refinancing completed successfully, achieving $60 million in net present value savings and lower-than-expected swap termination costs.
• Harvest Water quarterly report received and filed (no vote required). The board noted progress and requested future metric tracking.
• Next meeting: July 10, 2024 (the June 26 meeting was canceled).
• Meeting adjourned after completion of all agenda items.