Good morning, everyone.

I'd like to call to order the Sacramento Area Sewer District meeting of September 24, 2025.

We've got that part.

Uh can you please call the roll-established quorum?

Yes, madam chair.

Director Desmond.

Dickinson.

Hume?

Here.

Jennings.

Kaplan?

Kennedy.

Orasco.

Pluckybaum.

Rafel?

Here.

Robles?

Rodriguez.

Sander.

Cerna?

Here.

Suman.

Viegas?

Here.

And Chair Kapinski Costa.

Present.

You have a quorum with the members present and let the record reflect that members Desmond Dickinson, Jennings, Kennedy, Pluckabum, Rodriguez, and Soon are not present at this meeting.

Thank you.

Director Rafel, you're over there.

Would you please lead us to the pledge?

For which it stands.

One nation under God.

Indivisible with liberty and justice for all.

Would you please read the public comment procedure?

This meeting of the Sacramento Area Sewer District is live and recorded with closed captioning.

It is cable cast on Metro Cable Channel 14, the local government affairs channel on the Comcast and Direct TV Uverse Cable Systems.

It is also live streamed at Metro 14Live.sackCounty.gov.

Today's meeting replays Sunday, September 28th at 9 a.m.

on Metro Cable Channel 14.

Once posted, the recording of this meeting can be viewed on demand at YouTube.com forward slash Metro Cable 14.

SAC Sewer board members are compensated 100 for their participation in board meetings.

Compensation for Sacramento County Supervisors and City of Sacramento and Citrus Height Council members is paid to the county and cities, respectively to partially offset the cost of those governments.

Compensation for other agencies is paid directly to the individual board members.

Compensation for these legislative body meetings is verbally disclosed at each board meeting in accordance with California Government Code Section 54952.3 to make an in-person public comment, please complete a speaker request form and hand it to the clerk.

The chairperson will call your name when it's your turn to make a comment.

You may send written comment by email to board clerk at SACCounty.gov.

Your comment will be routed to the board and filed in the record.

This concludes your announcement.

Thank you.

Thank you.

First item, please.

First item is consent matters to be approved.

Items one through three.

Does anyone have any items they want to pull for discussion or separate vote?

Are there any public comment on these items?

We do not have any public comment.

Move for a move motion.

I would move the consent calendar.

Second.

Move by Hume and seconded by Robles.

Thank you.

You may vote.

Your vote passes unanimously with the members present.

Great.

Thank you.

Next item, please.

Item number four is comments from the public on issues not on the posted agenda.

We do not have any speaker slips that we received, and we do not have any person.

Okay.

Move along.

The next item.

Item number five is miscellaneous district engineer matters.

Christoph Dobson.

Good morning, Chair, board members.

Just very quickly.

We have our next meeting on October 8th.

We uh I know that there will be some absences, but we're doing a little poll to see how many absences there will be.

We have several important items, including two uh MOUs.

So we're wrapping up our labor negotiations, so we're really hopeful.

And the employees are uh hoping to get those MOUs in place.

So we're hoping to get a quorum.

As soon as we find out, we'll let people know.

But at this point, we still have that meeting on October 8th.

And that's all I have.

Then I encourage anyone who isn't leaving town to be in town to come because you probably only get your quorum by a teeny amount because the cities are gone.

Are you going to League of Cities?

Are you going to Legacy?

Absolutely.

So we're gonna okay.

Next item, please.

Madam Chair, item number six is biogeneration facility project funding and construction update.

Visitor Steven Bozick.

Can you uh cue the presentation for item six, please?

Morning, madam chair, members of the board.

I'm Steve Nabozic, and today I'll be providing updates on our funding pursuit and construction progress for the biogeneration facility project.

The last updates were presented in January of this year, so I'm gonna recap and build on that information.

I'll start with the project overview, then I'm gonna provide an update on the Federal Inflation Reduction Act.

We'll talk about the IRA opportunity status and current credit estimate.

We'll also discuss the self uh generation incentive program, which is a state funding opportunity we're actively engaged in that we didn't share with you earlier this year.

And the construction update is gonna include where we are in terms of unexpected subsurface conditions that were encountered at the site and resulted in the pile foundations.

No actions are being requested of your board uh beside beyond receiving and filing the information I'm gonna share today.

Before moving on from this slide, I just want to kind of we're gonna, I'm just gonna describe some of the photos as we're walking through them.

This is a picture of the biogen site.

Uh you can see the completed piles across the site.

Up in the top left hand corner is our fuel cell area where the rebar's been placed, and then uh over off on the far right is our contractor laydown area.

As far as the project overview, Biogen is a renewable energy project.

It's gonna include 13.4 megawatts of um installed capacity that's gonna use all of our biogas on site to produce renewable heat and power at the Echo Water facility.

The uh installed capacity is going to be provided by four 2.6 megawatt uh internal combustion engines, one 2.8 megawatt fuel cell, and all the necessary support systems and equipment to ensure efficient and reliable operations.

These include gas conditioning, engine exhaust treatment, heat recovery systems, electrical equipment and controls, a building, and a boiler.

The project will also provide hydrogen production capability in the future through fuel cell trigeneration, and we're delivering this project in the design build partnership with Amheresco.

Um the biogen sites located north of our existing digesters, as shown by the red box on the picture on the left.

Uh, your last board meeting was in that uh building on the bottom right uh in our administration building, just to kind of place you uh where where we are on our site.

Um moving to the photo on the right, you can see the fuel cell area in the top left.

Uh, when the differing site conditions were encountered, we're able to advance the design of the fuel cell area a lot more efficiently with that designer than we were than we were elsewhere on the site.

So, in order to meet uh beginning a construction requirements for the IRA funding, we uh we we place significant focus on accelerating accelerating that fuel pad area.

Um, sorry, uh as we progress through the presentation, I'm gonna reference fuel cell area and balance a plant area.

The differentiation is just due to the advancement of the project to minimize delays after the uh differing site conditions were encountered.

Infrastructure highlighted in the balance of plant area that's shown on the slide includes the engine building, which will house the engines, uh, as well as the gas conditioning and boiler areas.

Numerous of our there are numerous other support systems not shown that will be constructed in both the fuel cell and balance of plant areas.

Before shifting to the funding update, and just uh the photo on the right or the photo on the left shows underground work to support utility installation in the fuel cell area and that one on the right is the fuel cell module being offloaded to offsite storage.

And I as a as we uh as I present this to you today most of the fuel cell equipment is now at the biogen site.

So the IRA opportunity was made possible by significant changes to Section 48 of the IRS tax code.

It now allows tax exempt agencies like SACSUR to directly participate in qualifying renewable energy projects with direct payment provided as a tax credit paid after the project is complete.

It's a prescriptive program, meaning we're not competing for a pot of money.

We just need to meet the IRS requirements.

IRA was announced during Biogen's development and we acted quickly to ensure that the project contract requirements aligned with new program rules for combined heat and power systems.

We are already doing the right projects so alignment involves doing it the right way.

By right way I mean Biogen does meet the IRS definition of an eligible system that's our combined heat and power system and it meets that standard using eligible energy properties that's our internal combustion engines and the fuel cell the right project also means the ability to the ability to blend natural gas which is going to improve operability and system resilience.

IRS rules do not allow for natural gas blending for projects starting starting construction in 2025 or later.

By doing it the right way I mean hitting federal prevailing wage and apprenticeship requirements domestic content requirements and beginning construction in 2024.

So SAC Sewer has met the beginning of construction milestone which was a make or break deadline for receiving any tax credit we our tax advisor has provided a favorable tax position in terms of project eligibility and start of construction.

Now our team's focus to deliver the project in accordance with PWA and domestic content requirements to maximize the credit payout.

Amoresco's contract includes these requirements with penalties and incentives based on performance right now we're just monitoring progress currently the uh prevailing wage and apprenticeship is tracking really well and Amaresco is compiling domestic content information for the tax advisor's request.

So this slide it'll take me a minute to unpack it but I'm going to pause at the end and make sure you guys don't have any questions.

This table presents the IRA funding matrix and the expected range for each of the four possible payout scenarios.

Total capital expenditures are estimated at approximately 150 million dollars and they include the design build owner advisor and tax advisor contracts as well as the construction inspection inspection and SACSUR staff time.

So why the range?

The payout is established on the eligible cost base and our tax advisor indicates that the combined heat and power systems usually fall somewhere in the range of 70 to 85% eligible cost of the total capital expenditures for these types of projects or the 105 to 128 million shown in yellow in the middle of the top row so that's the kind of our high end and low end estimate for each of these scenarios that I will run through the eligible the eligible cost base will change as the project develops and will be determined by the final cost segregation analysis at the end of construction.

So we have a qualifying base project which was secured by beginning construction in 2024.

So as you know that that's our first row there we're uh we're on target for six percent of uh at a at a minimum we're on target for six percent of eligible costs.

When you drop down to the next row domestic content's only worth two percent if you don't meet the prevailing wage requirements um that would get us to an 8% credit if we were falling in that row.

But the good news is we expect to meet the PWA requirements and that places us down in the bottom two rows um if PWA is met we receive a five time five times multiplier on that base credit so we're up at 30% now the missing or meeting of domestic content results in a 3% penalty or a 10% bonus that results in a credit range of 27 or 40 percent of eligible costs as we show in those bottom two rows um and the expected credit range that we've shared with your board of 28 to 51 million dollars when you go to the far right column amoresco pays SACSUR two million in liquidated damages unless the 40% credit is received which would result in a two million dollar IRA bonus for amoresco that's a mouthful um I'll pause and let you guys look at that slide and see if any questions before I move on to the other opportunity are there any questions thank you I I just want to make sure I understand that last column so this is a four million dollar swing for amoresco.

If they hit their targets they're gonna get two million if they don't hit them they're gonna be build two million correct okay thank you.

I also had a a question so um this is there's a lot of moving parts here um and I I understand the concept here of um incentive and penalty is this a standard um way to uh do this uh historically for amoresco have they done entered into contractual arrangements like this with other um parties uh I'm I'm not sure we we just knew we needed to be during the finalizing the contract negotiations for the design build contract we knew we had to offer up something to motivate them because there is some rigor and some cost to meet that domestic content and and track some you know work with us um this is where we landed they didn't share with us if if if you know this is typical of their agreements I know IRA is it's the IRA act of 2022 so as far as them participate in anything associated with IRA this is all new and there's not that many projects that have that are are that far along um as as far as uh the the federal IRA is there any speaking of that is there anything in in this structure that uh has been negotiated that um adds or could add uh additional risk to us to the to the district based on just the blanket uh collection of uncertainty at the federal level um i i do not think so um the you know it's we we've met the the we we got our ticket to the game by you know meeting construction in 2020 i've heard about the goldpost moving to extend your go for so the the federal the the the federal government has made some changes to IRA with the new administration those changes have been focused on wind and solar um the last change was January July 4th of this year and it changed certain things but for wind and solar um a lot of what it changed was beginning a construction to forcing project end dates as instead of beginning a construction date so even if that did apply to us we would have been clear of that because we met beginning of construction already um but there has been there's been no changes to put us at risk of what's shown in the matrix right now or changes that we've heard spoken about at the federal level um based on what our tax advisor has told us for uh combined heat and energy system projects.

Okay.

Is there uh um has there been any discussion about additional language and uh ultimate contract about um uh about those federal uncertainties uh the the what ifs?

Um not in our contract.

That's something that SACSUR, I think.

If there was changes, we'd would have to see if we could respond to those changes and if our project was still viable for this funding if the federal government made changes, but um really it's it's the contract requirements require uh the the domestic content and the prevailing wage and apprenticeship be met at the federal level.

So we're basically shifting that that risk on them.

Correct.

Okay.

With we're all we're also partnered with them.

We brought a tax advisor on, you guys approved that contract last August, and it's significant.

It's you know three quarters of a million dollars.

The it's this is uh we've learned really quickly.

It's it's it's a like a forensic every when you ask questions, it's a forensic evaluation.

There is not an easy question.

It goes through multiple layers of tax code review and things when we do um well when we're when we're being advised by our by Ernst Young, our tax advisor.

Um, so I guess we've partnered with them to make sure that what you know, and we've we've tried to reduce risk by making sure we have that tax advisor.

They have tools we're using to track domestic content to track the the PWA.

Um, so we've we've tried to we've tried to handle risk in that way.

Very good.

Thank you.

Director Sander.

Thank you, Madam Chair.

Um, could you tell us a little more about the domestic content because that's really the only variable left uh left us here?

What how is that calculated?

What does that look like?

100% of structural steel has to be uh domestic, and manufactured products have to be 40% domestic.

Uh, you know, in order to meet beginning a construction deadlines so we could enter into this funding with the project that we need to deliver, it had to be in 2024.

And um, and we're on a very accelerated pace.

Umesco, uh on the onset has purchased uh right when you know last uh you know I would say from March through summer of 24, did a lot of the equipment purchasing.

They were aware of the IRA domestic content rules when they made those purchases.

Now it just that we've met beginning of construction that we feel we have a good handle on PWA.

We actually have time with the tax advisor and amoresco to start going through those packages and making the determinations of if amoresco has succeeded in the domestic, you know, in in meeting it with their purchasing if they've succeeded in the domestic content requirement.

It sounds like the structural steel is not a question at this point.

That's we would know.

Structural steel is not a question at this point.

We're you know, we're getting the fuel cell packages, you know, things like that.

Um you have to really dig down into those.

Some of those things come on skids, so where somebody might want to call it a hundred percent it's it's a it's a the whole thing is manufactured, and then show documentation that 40% of that is domestic.

EY is going back and making we have to break out all structural steel first and then go through.

So it's just uh it's it's time consuming process.

We're starting it on one of the we're starting it on the fuel cell right now, and then we're gonna keep moving through the packages.

You know, we're gonna go to the engine package next, gas conditioning package, and methodically evaluate domestic content and if amoresco uh achieved a meeting the requirements when they made those those purchases.

All right, that's good, thank you.

Thank you.

Any other questions?

Move forward, Steve.

All right.

The self-generation program is another opportunity we're pursuing, similar to the IRA funding.

It's prescriptive in nature, so we're not competing with other projects.

All we need to do is meet the program requirements.

Uh Biogen's fuel cell is eligible.

The engines and the boiler are not in this program.

Um, our the fuel cell requirements include we have to be a PGE, gas or electric customer.

We hit the gas, um, and uh you have to have a hundred percent biogas-fueled project.

As I mentioned earlier, Biogen is going to have natural gas blending, but that's mostly for uh good uh trimming out of the engines as they're operating and things like that.

It is also helpful for the fuel cell upon startup.

So we're currently coordinating with the program administrators of the SDIP at the state, put in metering if we need to to so we can document that we will only put natural gas in that fuel cell upon startup.

And they seem to be okay with that concept.

So we're we're working through that.

We do expect the payout.

Sorry, we expect the payout to be about 4.3 million dollars.

The breakdown to arrive here is shown in that table on the right.

We essentially get $2 a watt for the first megawatt of that fuel cell, a buck fifty for the second megawatt, and uh a dollar a watt for that last uh 0.8 megawatts of the 2.8 megawatt fuel cell.

That totals up to 4.3 million.

Um, there is a 5% application fee that's refundable if the project is determined not to be eligible, and if you do meet eligibility, that application fee is just baked into your payout.

Um, half is paid when the project is commissioned, the other half will be paid out over five years based on performance.

Um there's a requirement to use a third party independent data collector, and that should cost about $50,000 over the performance period.

All considered, we think the final payout's gonna be on the about uh a little above four million dollars for the SGIP funding.

Any funding, any more funding questions?

Okay, before I move on to the construction update.

Don't see any.

All right.

As mentioned, the pile installation was work uh pile installation work for the entire site was complete in August.

These photos are taken in the fuel cell area, and they show some of the preparatory the show some of the preparatory work leading to the poured fuel cell pad on the left.

On the top right, we show a picture of a pile cut to elevation filled with slurry and rebar paste for uh rebar placed for tie-in with the slab, and below that is a picture showing the installed underground utilities, rebar placement, and uh form work.

As we shared in January, prior to beginning construction, liquefiable soils were encountered uh during Amaresco's subsurface exploration.

The conditions weren't expected uh or observed in previous work or near the site.

Uh it did require uh deep foundations and an increase in the change order allowance, which your board approved this morning with the uh on the consent items.

Um Biogen Change Management Board provides oversight of the releases as we move forward.

In terms of completed activities, we've really already touched on the first four bullets of this slide of this slide as I've gone through the pictures and the presentation so far.

Basically, the piles are complete and a lot of preparatory work in the fuel cell area that led to that poured foundation.

Um the hot water system, the last bullet, hot water system modifications have also been completed, and that was a significant milestone.

Our current source of heat is from smud, and uh we we use that to heat our hot water loops and ultimately transfer that heat to our digesters.

Um, you know, and and they're they're under regulatory requirements to run at certain temperatures and things like that.

That's those are items we've discussed with your board in the past.

Um, the the interconnection for the smud heat source is near our I and E building, and Biogen sits far away from that.

So we're gonna be reversing flows, a lot of piping modifications and things like that needed to get underway so we can support the change of the water loop once biogen is commissioned.

So the water loop modifications were needed to prepare for that.

Um the work was heavily supported by our operations and engineering staff and represents the first major shutdown of a sack sewer process to accommodate biogen's construction.

The picture on the right of this slide is just showing some of those piping modifications that's taking place down in the tunnel system under our digesters.

Timely procurement of equipment is vital for a project like this, especially with some of the lead times we saw when we were signing the contract with Amaresco.

Biogen's doing well in that regard.

We have major sys, all our major systems are purchased, and many are either at local storage or at the site.

We did attend factory testing for the electrical gear, fuel cell, and engines before they were shipped.

Those are the items that are shown in those photos.

Other equipment secured but not shown includes the standby boiler, gas condition equipment, built and the building structural components, and just a ton of miscellaneous and supporting equipment for the project has also arrived.

Upcoming activities for the fall 2025 to spring 2026 includes final delivery of this fuel cell equipment to the site and placement and anchoring to the equipment.

And then the remaining work in the balance of plan area is just gonna mirror the work we discussed in the fuel cell area, and we're just working and leading towards uh all the you know, pouring the remaining pads so we can start building up uh the the other areas of the site as well.

That's all I have for you today.

Um, unless there's any questions.

Are there any other questions?

Director Hume.

Thank you.

I just have one question back to the uh the beginning of construction make or break deadline.

Yes.

Did we hit that just by by luck and not realizing this program eligibility was out there?

Maybe luck is the wrong word, providence, uh serendipity.

Well, it the the timeline is pretty interesting.

So we had we originally had a the all-engine project that we were going to procure, and then your board um yeah weighed in and said, No, we need to bring more.

We want non-combustion, we want some non-combustion technology, right?

At the time, staff was concerned that that delay with the way inflation was gonna go could put our project where maybe it's not as economically viable.

In that delay, the IRA act of 2022 was born.

There wasn't a lot of information on it, but we piled everything we could about IRA into the uh design build agreement.

Um, so it was by luck that IRA appeared.

It was by perseverance and a lot of hard work and dedication, staff, SAC sewer staff, amoresco staff to meet the beginning of construction deadline.

It was a push um to get the air permits so we could start construction and do that.

We signed a contract in February 2024, got air permits in September of 2024, and had most of the fuel cell pad piles complete by the end of December.

So it was it was a it was a rush effort.

So there was some luck and and some hard work.

Well, congratulations and thank you on the hard work portion.

Really appreciate it.

Appreciate it.

Thank you.

Any other questions?

Just a quick one if I could, madam chair.

Please just thank you, Steve.

In terms of the luck or serendipity harbor, it turned out to be was the design method that we chose the design build methodology delivery method, was that factored in, or was that always the intent with this project, or did we switch delivery methods?

When we saw when it is something, it was baked into our project.

It is a decision we made before IRA, but there was a lot of thought put into it.

And ultimately, and what we are weighing is design build where you lose a little bit of control and a really important project where you're you're doing a lot of interconnect and interconnections to some really important plant processes.

So that's where we were a little bit tentative with it.

But we also knew we're bringing in a completely new process that we've never operated before, and we wanted the assurance that we could have a long handoff.

So with the design build delivery, we have Amheresco after commissioning.

They have a year prove out, and it is it with and our staff will be shadowing their staff.

We're gonna be learning a lot about it, how to operate, maintain, um, reviewing all the, you know, uh a lot of the project documents and and things like that.

So that is why we those were the two decision points we had.

We we leaned to design build, knowing we're a little bit at risk given a little bit of that control up, but we really wanted that long handoff at the end of the project.

A little bit of a development agreement approach with residential.

Okay, very good.

Thank you, Steve.

Vice Chair Serna.

Thank you, Madam Chair.

Thanks, Steve, for the uh presentation.

And uh again, I want to echo uh what my colleagues have already said about all the um hard work, maybe even brain damage that has gone into this thus far.

Uh I a question, uh technical question about the building itself, or uh I think you had uh diagram that showed was it three or four buildings structures?

Yes.

Um the technology, especially that which is around what I think is still the critical path for this to work in some respects, which is the um the gas cleansing or the sulfur reduction that has to occur.

Um is there have the buildings the building interiors been planned uh in terms of volume uh or square footage for um maybe uh future uh equip uh equipment pads or uh future equipment needs um because to me it seems like that's probably the most um uh that that technology in particular probably has the most likelihood of changing over time.

So has there been any thought about kind of from an architectural standpoint or engineering standpoint about space needs relative to new technologies that might come along?

It's a great question.

We we have a we have a pack site.

Um I can confidently say that we've in the building itself, there is an extra bay for an engine in the future.

The fuel pads uh and and the gas conditioning pads and all those, they're gonna be pretty populated with our current equipment.

I don't think there is a lot of footprint there.

It might be, but um, I I really would need to go back and and verify.

And I assume we have enough uh approximate exterior uh space that if we had to uh you could look at, and I'm talking way in the future, and amending the footprint in total.

Yeah, we we could uh we could go north um and we can go to the to the east where that lay down area was.

Um, some of the uh solids improvements will include primary sledge thickening, that's gonna alleviate the need for digester, any new digester in the near future.

Um so I and I just mentioned that because that contractor lay down area, kind of in our our master plan type of look at things, that is where future digesters would go.

But I think those future digesters are far enough out on the horizon now that you know there might be new processes all all around where we're we're doing something different as opposed to building a new digester.

So very good.

Thank you.

Yeah.

Any other questions?

Comments?

I have a comment.

So uh you mentioned luck.

Um, so maybe maybe the science quote of the day from Louis Pasteur, chance favors the prepared mind.

In our case, um, it's probably more like the old Latin saying, which is something about um opportunity or chance.

What is the quote?

Luck is what happens when uh preparation meets opportunity.

And I think that's where we found ourselves with, you know, remarkable uh vision and foresight in getting this done.

Great partnerships, great technical expertise, great leadership from this organization.

Uh Director Hume and I were up here discussing the thickness of the concrete and the foundation, looked a little excessive to us.

So thank goodness we have actual experts and not people who are capable of pouring like a garage footing and not a bio gen uh footing, because that probably would not have worked out.

So I just want to congratulate you guys on uh a job really well done here, and it's not luck.

It's probably.

I appreciate it.

And that is Guillermo Roblace and Evelyn Trin.

They are the project managers of all the construction, and they're what is making this happening.

They're uh good job, a very good job.

Thank you, Steve.

Were there any public comments on this item?

Madam Chair, we do not have any public comments on that item.

Okay, so this is just receive and file, so no vote required.

What's the next item?

Item number seven is Harvest Water quarterly report for April 1st through June 30th, 2025.

Presenters Jophil Borja and Mike Brooks.

Good morning, Madam Chair, members of the board.

Uh my name is Mike Crooks.

I'm the Capital Program Manager for Harvest Water, and I'm gonna team up with Joe Phil, provide you with a quarterly update, and we'll start with the capital side.

Um, the bullet points of what we're gonna touch on today, again, starting with the capital side of the program, the program updates and program financials.

Um, then Joe Phil will come up and he'll discuss administrative program uh information, and lastly, he'll touch on upcoming board actions that we see coming.

Um, a little bit of repetitive information you've seen before, um, but just real briefly on the capital side of the program.

Um, we've we've divvied up the improvements that need to be constructed into what we're calling six separate projects.

Two of those projects are going to be implemented through two different phases.

So that means we end up with eight construction contracts to manage.

Um, at the end of the day, we'll have a pumping station with a rated capacity of 105 million gallons per day.

We'll have just over 41 miles of pipeline installed, various sizes.

We'll have roughly 120 service connections.

That number seems to change um kind of on a regular basis, depending on um the attitude out there in the service area, but right now we're planning on around 120.

Construction did begin early last year in February, and it continues today.

The pipeline projects collectively are represented here.

Um we have the the four independent or the four different projects and then combined totals of pipeline miles.

The light color is what's been installed to date, the dark color is what's included in their contracts.

So this this represents the end of August, so just last month, uh, and we achieved 90% of our pipelines installed, and so we have very little left to go.

This map again represents the installed pipeline segments.

Uh, the green lines are the installed pipelines.

Uh the red areas are areas that are currently under construction.

So, as you can see, we're working on our final segments right now, and and we're getting very close to completion.

Excuse me.

Um, somebody had asked me earlier this week if we had a total of um the amount of roads that have been resurfaced, uh, final improvements, and how many culverts have we replaced?

So some of the pipeline construction has seen final paving as well, and so right now we're at 19 miles of resurfaced roads, and we're also at a total of 80 uh culverts replaced.

This is south of the city of Elk Grove.

Some of them we knew about, some of them we didn't.

Um, a lot of them are buried and plugged and pretty much out of sight, so those did result in change order.

Um, as we approach the end of uh pipeline installation, what's next is completing the roads.

So we still have quite a bit to do with respect to road restoration and final paving.

That's gonna get going in earnest by the end of this month and continue into November.

Um, weather permitting.

Uh, I'm gonna share some construction photos that'll touch on each of the construction projects, and I can talk about our progress at this time.

This these photos are for the construction of the harvest water pumping station.

Um first picture on the left uh shows the VT is vertical turbine pumps, so those are the type of pumps that we're installing.

This is the suction header that's been installed.

That that header will be connected to the disinfection contact basin that was constructed with the Echo Water Tertiary Treatment Facilities project.

Uh, the middle photo is a photo of what we call pump cans.

These are the vertical pipes, basically, that the pumps will be installed within.

Um, these items were fabricated off-site in Texas.

Um, we've had challenges with the manufacturer's quality control process.

And so these have taken longer to fabricate and deliver to the site than we had hoped.

But as of this week, they started showing up on site, so the contractor is now actively installing these pump cans.

And that's those pump cans laying on their sides at the uh at the manufacturer's factory.

Elkrove transmission pipeline, that's what connects to the pump station.

This photo is of our railroad crossing at Sims Road on plant property.

This is a launch shaft that's been constructed.

So the tunnel machine starts here, goes under the tracks and pops out on the other side.

This is a rather deep tunnel to miss some utilities that are installed parallel to the tracks.

So it was a very interesting construction of that shaft.

This tunnel is now complete.

And also our pipeline, our 66-inch pipe that goes inside the tunnel has been installed.

Sure.

If I could.

If you can go back to that slide.

Yep.

Maybe this one out.

How do you there we go?

So is that is that the width of the tunnel, the full, is that a consistent width across the bit that's bigger than the tunnel.

Um the tunnel itself is 78-inch diameter.

Okay, whereas this had to be big enough to fit the tunnel the machine and also the pipe segments.

I was just saying, that looks like it's about 25 feet.

I think closer to 15 to 20.

Okay.

Definitely much bigger than our tunnel into the tracks.

Gotcha.

All right, thank you.

Uh, this is another look inside that shaft on the left.

Um, you see them placing I I think is another piece of section of casing.

So they they as they drill, they push sections of casing behind the tunnel boring machine.

On the right side, that's a photo inside what we call the receiving pit.

So that's on the east side of the tracks, and you can see kind of through the shadows, the cutting face of the tunnel boring machine has actually made its way into the receiving pit.

So that was a completion of the tunnel.

Um the other part of the Elk Rove T-Mane goes down Franklin Boulevard and Willard Parkway.

This is a shot of what we call phase two, it's between Laguna Boulevard and Elk Road Boulevard, showing paving over the completed pipeline.

This is another shot from that same project, but at the south end, the very south end of the project, which is Willard Parkway.

At this point, there's another tunnel that goes back underneath the railroad tracks to the west side.

So that's all in place and all complete.

Um Franklin Eschinger, that's that's in that's south of the city of Elk Grove.

And this shot um shows the road restoration process for that particular project.

Uh it's referred to as full depth reclamation.

Um, it's a process that we've implemented more than we thought we would on this project to address some of the roads in the South County.

I'm sorry, shocking.

Shocking.

Yeah.

Um, so this one we we plan to use this process on this particular project, and what it involves is this big machine, basically pulverizes all the material in place, the old asphalt, any road base if there is any, and then dirt underneath it.

Sorry.

Can you done there?

We have some other roads.

That's still on dirt.

What's wrong with that?

That's a county reaction, sorry.

Um, so they as they do that, they mix in cement and and water, and and so they they create basically a firm base upon which we apply the final paving.

So it's very cost effective if you have the majority of the road in very bad shape.

Um, same project, but this this photo just shows what every project has to do after they install the main in the road.

There's a lot of work on what we call pertinences, the blow-offs, the air valves, the connections to the turnouts.

So there's a lot of work that happens after the pipeline's actually installed in the pipeline or in this in the roadway.

Central South Pipelines project.

Um, this shows large diameter pipe, steel pipe being constructed in Carroll Road.

Um, this particular stretch we were concerned about leading up to it.

There's a number of dairies along this road, as well as residences.

It's also a path for Elk Rove school school buses to go.

And so we were very concerned about our impacts to to all of that.

This stretch is completed, to the to the the dairies hauling their milk uh to market for the school kids getting through on buses for the residents with a lot of hard work from our public outreach folks.

Another thing that we've been dealing with ever since we started construction is coordinating with all of the ag activities out there.

There's more than you think if you don't travel in that area for too frequently.

So again, a lot of routine communication and coordination with the property owners, understanding what they have coming in the coming weeks and months.

Right now, we're working very diligently to make sure a very popular pumpkin patch out there in the point pleasant area does not get impacted by us.

Lastly, the on-farm connections project, phase one has started construction.

They've just done a lot of prep work right now.

They've they've had to install environmental fencing that's required, has to be up by September 15 if they want to work in those areas during the wet season.

So they've successfully done that, and they'll start actually on the underground work and some of the mechanical work, mechanical work in the coming weeks.

A new element that we've not talked about a whole lot, it is something that was included in the grower agreements, and that is the connection of our system to their existing irrigation systems.

That gap is going to be filled by improvements that the farmers or the growers are going to install themselves.

Either they'll self-perform or they'll hire it out to contractors.

But our program has committed to reimburse them, those costs to make sure they can connect to us and use our water.

So that's the need.

I'm gonna get to it.

Environmental quality incentives program.

It reflects reality, what we should expect to pay for these types of improvements, and so we're basically gonna utilize that structure to basically inform what our max reimbursement rates would be based on what the installed improvements need to be.

I'd like to mention today we are actually modifying what we've been carrying as our budget for the capital program.

We've been carrying roughly 501 million dollars for capital delivery based on where we're at, what we know about our construction contracts, what we know about our consultant contracts, and and how things have been going in terms of spending.

Um, we're reducing that roughly by 24 million dollars.

So we're now looking at a budget figure of 477 million dollars moving forward.

These charts just represent what we spent to date on the left.

It's construction costs only.

Um, so looking at a budget of 316 million dollars, we've spent roughly 53%.

Program total, which represents capital and administrative side, we've spent roughly 39 million dollars of the total budget of 597.

And that's it.

Oh, wait, one more slide.

Um I wanted to basically show a snapshot of where we are with respect to change orders.

Um you guys hopefully are receiving monthly change order reports from me, but this reflects where we're at um with all of the active construction contracts.

Right now we have seven of eight that are active.

The last one is phase two of um on-farm connections, and we're holding at 3.1%.

That will not be the final figure.

Um our target is five percent.

So we're we're gonna try and hold that.

That is the end of my.

So if you have any questions, I'll take I can take them now, or I can hand over to Joe Phil and he can do his thing.

Jack to Hume.

Well, I'm not sure if I should wait until Joe Phil's done or go ahead and I make some comments.

Either way would be fine.

Okay, so the first thing is after seeing that picture of the road reconstruction, my colleague Mr.

Desmond would like to volunteer to have some harvest water contracts out in district three.

Uh, yeah, there is a slight silver lining.

Um, but the other thing, I'll I'll start one with one that I'm uh I'm sure you're aware of, but I'm getting a lot of complaints about um some sinkage around the valve covers.

Are we aware of this issue and it's happening at uh I believe these are at the on-site connection locations?

I've not heard about that.

Okay.

So I have heard of some potential trench settlement on Franklin Boulevard.

We're keeping our eye on that.

Yeah, it would be a warranty item that the contractors would have to address.

Okay.

Um, I have not heard about the the valve boxes.

And and just so I know are the warranty items.

Is that something that I should be patient about and and tell people that once things are wrapped up, we will come back and and address those at the end, or are they being uh addressed in real time?

I think the former, um the former.

So yeah, if if the contractors go out and do something to it right now to address it, that their warranty period is a year, so at the end of that year, if if settlement continues, they'd have to come back and address it again.

Gotcha.

So if they wait for the 12-month period, then they address it one time.

If it gets to a point where it creates an unsafe condition, then that would change.

We would have them come out and address it immediately.

Okay, and are we holding back a retention during that warranty period, or is it just implied that they have to make good on their promises?

Uh good question.

I do not believe that it's handled that way.

I think as soon as we complete the construction contract, they get they they receive the retention, but they are held to their warranty.

We we do have legally a warranty that that's applied to the projects.

Okay.

And then you know, one of the reasons why I've been kind of hounding about this project, and there are many, uh, but one of them is because in the agricultural world, um, there's oftentimes it's once a year that that payday comes in, whether that's harvest, whether that's selling off a portion of that year's herd, or in this case, uh it's the pumpkin patch season, uh, that is when they make their money that that keeps the the farm afloat.

And so I know that uh uh chema pumpkin patch has been uh you know pretty aggressive in trying to make sure that this is the season, you know, make hay when the sun shines, this is when the sun shines for them.

And so they've they've said that uh we're gonna have uh a signage trailer with signs directing them south on Franklin so that they can access.

Yep, that's correct.

Yep.

And during field trip days, there will be a flagger on Bruceville Road.

Yes.

Okay, and we'll have signage directing people to our to their farm during construction.

Correct.

Okay.

And uh the field chips, we're there being contacted when the field trips will happen so that we'll know them when that okay, great.

So I just appreciate, and I and I just want to uh iterate again like I did uh during Steven's uh presentation.

I appreciate the hard work that staff is doing.

One to realize the project, two, to work with um the the folks out there and make sure that there are better roads at the end of this.

But then the third thing, and this is the intangible, is uh just recognizing how sensitive an issue it is and and how tight-knit this community is.

That if if we are not making friends, you know, you catch more flies with honey than you do with vinegar.

If we're not making friends, that ripples, and it will be harder to realize the the full benefit of this project by having those contracts signed.

So it's all this sort of feedback loop that we need to be kind of making sure we're being a good players uh throughout the whole way.

And I'm not saying we're not, I just I always want to have that front of mind.

I have great appreciation for those comments.

Uh so living with this for the last year and a half, we've experienced a lot of that, and um communications with Miss and Mrs.

Kema, we fully understand that this is their one moment in the year.

You know, this is all their hard work for the year, this is what it it comes to.

So we totally get it.

We we try to make sure we understand that.

Um it's hard for her, I think, to believe it until it actually happens.

Um, I do believe she has a better um feeling of comfort that we are gonna help.

Um field trips start on Thursday, and so I think one on Thursday, a couple more on Friday, and then they open for the public.

And so again, I I mentioned our our public outreach um staff or team have been in constant communication with her and continue to be for the next, you know, and as far as as long as we have to.

In the meantime, um improvements to roads in that area are gonna continue, and so before the end of October, we should see things starting to open up and people have an uh easier time reaching that location.

Good, good, good.

And and I appreciate everything that's happening at the staff level here and within you know, sort of the organization.

There's the other issue of the contractors in the field sometimes can be gruff in their interactions, which doesn't help any of us.

If I may.

Um, I mentioned Carroll Road and the concerns with the dairy farms and the school buses, and um the same contractor who's now working closer to Kema's property.

They were on that stretch of road, and they were fantastic.

Um, and we we received actually a lot of praise from the residents out there on how they were helping and how they were they're managing the project.

So I feel I feel good, good.

Bring them donuts and pizza, it goes a long way.

Absolutely.

All right, thank you.

Thank you.

Any other questions so far?

Okay.

Good morning, everyone.

Madam Chair, members of the board.

Joe Flavor here, manager of the uh APMO program.

So we're gonna be providing you with updates and highlights.

In the spirit of um board director Hume and talking about working with our partners community um the last month in September, um, as the legislature uh came back into the a mad sprint towards their September 12th deadline.

We really realize the importance of having to work with our partners both in the state and regional level, as well as um having and meeting and briefings with legislative offices or delegation or caucuses to make sure that we one understand the implications of what could potentially be introduced in the last few weeks of session as it relates to protecting the harvest water project, but also to push forward the voice of many of our coalition partners, sacks who were included, to make sure that the legislature actually provides the expenditure plan that uh many of our programs need in order for Prop Ford to uh materialize and realize on the grant programs, and so in the last two weeks alone in September, we've really pushed for our advocacy and education, but also in and incentivize or push for the legislature to get this expenditure plan because we do have benefits on both the water recycling program and the California Water Commission that's dependent on them moving that budget um item, and so we were able to be successful in that regard.

Um there is 386 million dollars that's been proposed and prop for expenditure plan with over 150 million dollars in proposed state budget.

We were able to advocate for protecting our WISIP expenditures, and with that, we are now exploring additional grant um dollars from state board.

Um, and we also in parallel continue to work with our federal partners in Congress and really understanding the potential impacts of other large-scale projects as it relates to harvest water.

And so, as Director Hume had mentioned, um there are different boots in the ground from the harvest water team, um, not just our contractors, not just the construction folks, but really our community engagement liaisons.

Um, we're there every day in the community, having meetings with the families, the farmers, and some of the generational growers that have been there for decades.

We have one-on-one meetings with the key stakeholders to address their specific concerns.

Our phase two AFCA agreements and easement meetings are coming in every day.

We continue our groundwater level monitoring.

We've developed recycled water program materials that really do answer to FAQs that they may have or concerns that may have coming at it from different angles.

And we continue our eco plan development.

We're excited that our first grain management pilot were executed, the forage management completed, and another agreement signed by another landowner.

Our procurement package for native plants were released, and we awarded that to two contractors.

And the pictures on the right really shows our community liaison team working with the farmers, not just taking selfies, but really answering them and celebrating on the potential opportunities because they do know that this is not this more than just a construction project is going to be a generational commitment that the district has with these families as we bring these benefits to life.

To that extent, we're excited to show that 56 AFKs with recycled water service agreements at the end of quarter two have been signed.

This represents again 68% of summer irrigation demand goal.

The bit of phase one AFCA package were completed, and as my colleague and partner in crime, Mr.

Crooks had mentioned, the construction of FAFCA phase one have started, and we're working very hard every day, even after hours because we do respect that they are very busy during the day during their harvest season to maintain that communication so that we can get the remaining service agreements through 2025.

I'd like to switch over to the APO program financials.

This chart shows the program funding received to date.

As you can see, the value of our project is still at 597.2 million, our potential funding to date, as we work steadfast every day to make sure that we're closing the gap.

We are at 416.3 million with a number of different grant programs and different commitments in hand and executed, and a number that we're still continuing to work specifically with the state water board as well as with USDA.

This shows our APMO budget and ACL projected monthly expenditures, and so you can see it's on the darker shade of to me, it looks like it's salmon.

It might actually be a little bit toned down orange.

But on the lighter shade on the left side of the screen, you'll see that we have not been spending as much because there's been a number of the different work that we needed to do as an organization, but also with our partners in order to get these uh improvements in place.

Whether it's your negotiating with CDFW or state partners on our CAPBS program, that's taking us a little bit longer in time to really start this program going, just getting an agreement with their economists on what is the public benefit values of every single aspect of the ecological program.

That's taking a little bit longer time.

We are the first agency in the state to actually have these contracts negotiated with state.

And so other larger water projects, dams up north, regional water storage down south.

They're actually looking at us as the example of negotiating these types of benefits that we've had to work very strongly with CDFW and with the state governor's office.

And so that's taking us a little bit of longer time.

However, we are going to be anticipated that more and more expenditures will be coming in from the EcoPlan.

And from the last board meeting that we had at ECOWater, your board actually approved our EcoPlan Master Services Agreement, and so you'll be actually seeing some of the fruits of that labor materialized.

And as we've developed this program in the last few years, we've uh come to understand that there were other factors that were out of our control that really impacted our ability to look long term.

We are proposing um a change, or not exactly a change, but we wanted to make sure that you are aware that our APMO budget expenditures uh are looking to grow.

A 24 million adjustment to the APMO budget from 2022.

Uh, it's a reflection of all of the cost increases and inflation that's materializing in the field that's greater than CPI since 2022, and so when we completed a very long and enduring negotiations process with our CAPBs, that is our contract for public benefits, they were looking at 2022 numbers.

And so now that we're going to be heading into the 2025 season, we've experienced that land prices have actually gone up an average of 5.14% per year, and the NRCS, that's the National Resource Conservation, practice costs have also increased 7% per year.

And so these are the benchmarks that we as a district would need to uh be able to compensate for our growers and our and our partners in the community to make sure that they that we are aligning their um costs into market, and so we had to revise our understanding of our required NRCS practices for crane habitat, that's one of our larger cost controls programs.

Um the pictures on the right, um are diagrams of what you would eventually be seeing in the field when we're looking to improve crane roosting habitats, and so uh berms and the um right next to their silage, um fencing for uh to prevent their cow sir grazing to uh our riparian features.

Um, these are all ecological benefits that we're contractually obligated to provide for the state, and these are all practices that we would have to compensate and provide for in order to have the eco plan uh be successful.

Um, but these types of practices do have a benchmark of cost.

These are federal costs that we're benchmarking with, and those costs have also gone up.

And so we've had to reflect and change that into our budget.

Um, but we are keeping in mind that even though there's many conservation estimation practices, that there's a number of cost control mechanisms that we have when it comes to not just real estate our practices but also reviewing, auditing, and making sure that we're appropriately budgeting for these types of practices.

Our potential APMO budget increase can be offset by savings and design and construction costs, as Mr.

Crooks had previously mentioned before, and and our teams dedicate again every day to make sure that we apply for state and federal grants.

The good caveat in ensuring that these ecological benefits materialize is that when we get more ecological points, it opens up other opportunities for us to apply for grants.

For example, we're applying for wildlife conservation board grants that otherwise the district may not have you know looked into prior, and so while these are all parts of our meeting or CAPE, we're also looking at it as an opportunity for us to unlock more uh funds for the district to again help offset that cost and close that gap.

Our total project program budget still remains at 597.2 million, and I'd like to close that we do anticipate upcoming board actions.

Our customer reimbursement framework for on-farm improvements for the use of recycled waters can be coming to your board.

Um, our partners over at the CPMO team uh will be bringing forward consultant amendments for services during their contract, and our eco plan procurement activities will be beginning and we'll be implementing those benefits.

With that, I'd like to invite Mr.

Kirks, who's right behind me.

Um, we're happy to answer any questions, hear your feedback, thoughts, and concerns, and thank you again for your support of this project.

Are there any questions?

Good job.

Thank you.

Doesn't see anything.

Okay, I don't see any questions.

Thank you, Joe Phil.

Thank you.

And thank you, Mike.

Any public comment on this item?

We do not have any public comment on this item.

And for the record, I like to state that director uh Desmond is present, and I think I made the mistake of saying Director Hume was absent, my apologies.

What?

As we heard, it's a good thing.

I thought I was saying things.

Madam Chair, item eight is miscellaneous director matters.

I think that one.

Are there any other uh items that any board members want to bring forth?

I don't see any miscellaneous matters.

What's next?

Item number nine, you're receiving file.

That's it.

So we do have a closed session, is that correct?

Yes.

In hearing room one.

Okay, so we're going to adjourn for closed session and we'll be back to report at the end.

Okay.

Any number.

I have this pen.