Good afternoon.

The time is now 2.05 p.m.

on Wednesday, February 4th, 2026, in the City of San Antonio.

B session is called to order.

Madam Clerk, please call roll.

Councilmember Corr.

Councilmember McKee Rodriguez.

Present.

Councilmember Via Gran.

Here.

Councilmember Mughia.

Present.

Councilmember Castillo.

Here.

Councilmember Galvane.

Councilmember Alderete Gavito.

Here.

Councilmember Mesa Gonzalez.

Present.

Councilmember Spears.

Councilmember White.

Mayor Jones.

Here.

Mayor, we have Quorum.

Great.

Thanks, Madam Clerk.

So this afternoon we'll hear from the San Antonio Water System.

And I understand we have some board members here as well.

As we know, you know, the ability to own our utilities is a strategic advantage.

We also have the responsibility to ensure that we have utilities that are meeting the demand, not only today and and into the future.

This is a timely discussion, as you will hear, given the large number of capital projects that need to be addressed to ensure that we are providing that service to the community and remaining economically competitive.

But we also recognize unfortunately the economic environment where we will see, for example, the implementation of the One Big Beautiful Bill, cuts to Medicare, Medicaid Chip, and SNAP.

So we are cognizant of any uh rate increase either by this utility or by CPS that would impact the most vulnerable.

And of course, we look at uh each of these uh um uh the presentation today through that lens.

Um okay, Eric, over to you to get us started.

Thank you.

Thank you, Mayor.

Good afternoon, Mayor and Council.

So um, as the mayor laid out, um SAWS has been going through their own discussions uh in advance of uh council uh discussion uh regarding their 2026 budget and uh potential impact on on SAS rates.

Uh yesterday the SAW staff uh saw his board had a meeting and uh in response to a number of the issues that or questions that the board had uh from their January meeting.

Uh in today's meeting is is really there's it's it's a long presentation but but full of a lot of uh important information and they'll present let kind of and lay out to you all the 2026 uh budget amendment and uh potential rate impacts um and they've also incorporated within the presentation um uh responses to the memorandum that was submitted by uh council members um Govito uh Spears and and White.

Um the SARS board is still in their in their uh their gathering input phase, and I think that's one of the reasons why the uh many of the board members are here today.

Um with that I'm gonna turn it over to Jolene uh Jameson, uh the chair uh to start us off.

Good afternoon.

I'm Jillian Jameson, and I want to open by thanking you for the opportunity to be here today.

Uh but I first like to thank Councilwoman Castillo for coming to the board meeting on yesterday.

We were able to approve uh two pilots, pilot plumbers to people in our sewer lateral program to help customers with uh much needed lateral and um sewer support for their homes.

So thank you for being with us on yesterday.

Um we look forward to the successful implementation of both of those programs, and and of course, it doesn't just impact council district five, but all of our SAWS customers.

So joining me today are members of the Board of Trustees.

Uh our vice chair Ed Belmontis is here, our secretary of the board, Mary Lou Reyna, uh board members Greg Mann, Teresa Rodriguez Sapanski, um, trustee Adriana Rocha Garcia could not be with us today, and of course, our mayor is also on our board of trustees, so they're all here to hear the questions and concerns from all of you.

Uh along with us is our CEO, Mr.

Puente.

He is here, but not moving very quickly.

And if we have to bring an occasional mic over there, we will, but I think he could probably project.

Also joining me this afternoon is our Chief Financial Officer Doug Evanson and Andrea Beamer, our chief operating officer.

Those two will primarily be presenting to you this afternoon.

And we have other members of the staff here as well.

I asked the Board of Trustees to join me today so that we could hear collectively the input from the City Council.

Additionally, I wanted to take this opportunity to share with you the accountability measures and the transparency measures that we undertake as appointed members to the SAWS Board for the operational and financial sustainability of SAWS.

In the area of accountability, the Board of Trustees has two committees.

The first is the Mission Excellence and Alignment Committee, which identifies strategic focus areas to measure and monitor, as well as CEO compensation and administration of the annual performance plan.

That committee is chaired by yours truly.

The second board committee is our audit committee, and it is chaired by our Secretary of the Board, Mary Lou Raina.

The CEO scorecard has three sections.

We have financial gating metrics, which include the senior bond rating, days cash on hand, and debt coverage.

Additionally, we identify 10 tier one metrics worth 65% of the scorecard.

They are presented on the slide, and I know it may be hard to read.

I have them individually should you have any questions.

The additional section of the scorecard is worth 25%, and they are dedicated to five key initiatives, which includes resiliency, reliance, and readiness, sustainable business development, safety culture, water stewardship, and customer experience and data management.

And the final 10% of the scorecard is reserved for a leadership assessment conducted by the Board of Trustees.

The CEO is evaluated on a yearly basis.

The metrics are validated by an outside consultant.

Presently, that consultant is Williams Consulting, which is used to guide the committee in our benchmarking exercises and year over year performance for each of the business units and tier one metrics.

If the gating metrics are not met, no one participates in performance rewards.

All of the scoring is validated by an outside consultant in the March-April timeframe, so we are beginning that process for our 2025 performance period, and the performance scores are then calculated, and the performance award is deposited into a performance recognition plan for the CEO, which is a non-qualified tax-deferred account, and managed by the Board of Trustees until the besting requirements are met by the CEO.

The overall staff has 10% of its annual scorecard tied to CEO performance.

Much of the work that is much of this work is developed and monitored by the Mission Excellence and Alignment Committee.

The consultant contract that I mentioned, Williams Consulting, has recently been expanded to include the areas in need of further evaluation or review.

The areas of concern can either be recommended by the audit committee as a result of one of the internal reviews conducted by our internal audit team, or it can be an area determined by the mission alignment committee that needs further review.

The first engagement that this consultant will take on will be to analyze the efficacy and efficiency of the recently approved MOU with the City of San Antonio for capital project delivery.

The audit committee chaired by the Secretary of the Board is Trustee Mary Lou Reyna, and that board provides oversight of our annual external financial audit and the internal risk assessment and review process conducted by SAW staff.

The committee recently had its first meeting for fiscal year 2026, and in the coming months, the Board of Trustees is expected to consider the 2026 audit work plan, which will identify in alignment with strategic focus areas as well as elevated risk initiatives to review for the 2026 performance year.

High performing water utilities are recognized for data-driven decisions, sustainability and resilience, managing resources with a focus on conservation and drought preparedness, proactive infrastructure investment, addressing aging infrastructure to reduce water loss and system failures, and strong fiscal management balancing capital investments with sustainable rate structures.

SAWS uses data from the American Water Works Association to evaluate key business areas and measure and compare the organization's performance.

It is a nationwide survey of core water utility services.

Here's a sampling of the participating utilities.

The survey covers water and wastewater statistics, water production and disruptions, meter infrastructure, affordability measures, our uplift program continues to be a model across the country, water sourcing and staffing trends.

While the survey results are composite results, they are not individual utility performance.

It is still useful to the staff for comparison.

The information today that we're providing is just an example of how SAWS rates among utilities with more than 500,000 connections.

So you can see these are the results that we pulled from the American Waterworks Association.

We know that we have much work to do with the staff in terms of benchmarking for more direct utility information, utilities that look a lot like our SAWS utility, but I wanted to share this benchmarking information with you this afternoon.

I'm going to turn over some slides, turn over the presentation to Doug Evanson, our chief financial officer.

He will share our rate history structure, our operational challenges that we've experienced since 2020, a financial overview of the recently updated cost of service study, identifying the revenue required for our system to continue to serve our customer base.

That financial review will include customer bill projections and consumption and operating expenses.

After Doug finishes, Andrea Beamer will provide an overview of the planning and prioritization processes for our water and wastewater system, and she will then forecast the capital necessary to avoid system failures.

And finally, we will all be here seeking City Council feedback and input so that the staff can use this information to make an informed recommendation for an amended budget for 2026 and a rate plan to address the system operational and capital needs.

The Board of Request, the Board of Trustees requests this feedback so we can make informed decisions as we consider this recommendation before it is presented to you and city staff for final consideration.

And we're certainly here to answer your questions.

Doug.

Okay, thank you, Jillian, and good afternoon to all of you.

My name is Doug Evanson, and I have been the CFO at SAWS now for almost 21 years.

Given that longevity, and I guess that's a pleasant way of saying I'm getting kind of old.

Um I would like to provide each of you some historical perspective on SAWS rate history as well as to begin to discuss some current challenges that we face, which are likely to have customer bill impacts in the near future.

Before we begin talking about 2026 and beyond, I want to take you back a little more than a decade ago when SAS sought to, and City Council thankfully unanimously approved the entry into a water transmission and purchase agreement for the Vista Ridge Water Supply Project.

A year later in 2015, in order to achieve financial close on this project, we came back in front of council seeking the rate of port rate support needed to achieve that financial close on this more than $1 billion contract.

As you can see on the slide reproduced here from 2015 on the left-hand side.

At that time, SAWS sought and council once again supported approval for five years' worth of water supply fee increases with the first 2016 increase shown in green being a percentage certain amount, with the subsequent years adjustments for 2017 to 2020 shown in purple being up to rate percentage increases subject to review and approval by the city's public utilities office overseen by Ben Gorzell.

At that time, in addition to the water supply adjustments, SAUS also received approval for two years' worth of wastewater and water delivery rate adjustments, with the 2016 amount again being a percentage certain increase while the 2017 amount was again an up two percentage increase subject to review.

The slide on the right then shows the subsequent rate adjustment request, which was brought forth two years later.

So in 2017, we brought this forward.

So in 2017, we brought this forward, and we reduced the requested level of water supply fee increases for both 2018 and 19 while also seeking out additional water delivery and wastewater increases.

These increases for water delivery and wastewater were the last increases requested for these two units.

So we haven't requested a water delivery andor wastewater increase since 2019.

Just to close out this slide, SAWS did implement the final 9.9% increase associated with the Vista Ridge project, which came online again mid-2020.

As noted, this project was and still is the largest non-Edward source of water supply and has really been key in coping with the effects of this record setting drought that we find ourselves in, which we are currently in and which is now entering its seventh year.

While not having had a rate increase for the average residential customer since 2020, SAWS did in fact implement a change in its rate structure, which served to reduce the cost of our average residential bill effective January 1, 2023, when we were finally able to complete the cost of service and rate study analysis that had been interrupted by COVID-19.

With the approval of the recommended changes to the existing rate structure, which shifted more costs to businesses and high use residential customers, the SAW, the SAWS bill for the average residential customer declined from $66.68 to $60.88, a reduction of $5.80 or almost 9%.

Simultaneously, SAWS implemented a new uplift assistance program rate structure that saw the average uplift customers bill decline by a minimum of 40%.

So what else has happened, which has impacted SAWs and all of us in the more than six year period, beginning in January 2020 and carrying through today.

Supply chain disruptions and overall inflation.

This impacted the carrying out and cost of a number of our operational and capital costs.

Looking at the data, since the end of 2020, overall inflation as measured by the consumer price index has increased by nearly 25 percent, while construction costs, as measured by the Mortensen's National Construction Cost Index have risen more than 43 percent.

In order to keep pace and ensure our employees continue to earn a living wage, we have had to raise our rate of pay in order to retain our workforce.

Along with all of our fellow San Antonio residents, we had to deal with winter storm Uri and its aftermath, which in our case had a $340 million price tag in the form of new generators to be installed at our major pump stations.

As you will hear in a few minutes, these resiliency improvements are ongoing.

In addition to state mandates, such as we just discussed for winter storm URI, SAWS is also subject to federal mandates, such as the EPA's lead and copper rules, which require SAWS to inventory the entirety of our more than 8,000 miles of water distribution mains, as well as the line taking potable water from our main to the customers' residence to ensure that no lead lines are present.

While SAWS does not believe that lead in our system is prevalent, with no lead mains detected to date, the cost to conduct the inventory alone could be in the tens of millions of dollars.

During this time, we've also begun, as Jelynn alluded to, a board-driven initiative to drive down our percentage of lost water.

While you can never eliminate water leaks, just as you can never eliminate potholes, we can and must do better.

Many of the proven solutions do cost money.

This investment costs SAWS 200 million dollars but will help us in our efforts to reduce SAWS water loss as well as to provide our customers more timely data regarding their usage and possible water leaks.

SAWS has also invested approximately 80 million dollars in support of the City of San Antonio's 1.2 billion dollar bond program from 2022 that had a significant emphasis on streets and bridges.

And we've been able to do all this while, as previously mentioned, lowering the rates for more than 80% of the bills issued over the course of a year.

All of this has been achieved while dealing with the worst drought that this region has experienced since the 1950s.

Changing gears a little bit, Jolene mentioned the rate study.

While proud of our accomplishments and our ability to not implement any increases to potable water rates since 2020 or wastewater rates since 2019, we know that eventually we will need to seek out rate adjustments in order to assist us in determining our revenue requirements as well as the allocation of these requirements to our various customer classes.

We engaged Corolla Engineers, an engineering firm dedicated exclusively to the water and wastewater industries.

Specifically, we asked them to help us quantify our annual revenue requirements for the utility as a whole.

And finally, we asked them to calculate the required cost of service-based rate adjustments for both water and sewer and to break these down by customer class.

We're going to share some of that information with you here in a bit.

First, while the report that they have issued is still in draft form, it is very detailed as evidenced.

I haven't counted the number of pages, but it's well in excess of 50 pages.

This slide simply tries to summarize the general takeaways from the Corolla rate study findings.

Corolla has reached the same conclusion for both water and wastewater, and that is the current rates and charges are not sufficient to meet the identified revenue requirements of either the water or wastewater system, while also maintaining the fiscal health of each system.

As a result, Corolla recommends a total of almost 30% increases in potable water rate revenue over the next five years, while recommending more than 35% in cumulative wastewater rate revenues during the period 2026 to 2030.

These are not final rate recommendations, just a summary of the rate study findings.

As already shared with you and is once again shown on this chart as a result of the 2023 rate restructuring, SAW's combined water and sewer bill for a customer using 6,000 gallons per month of both water and sewer service has declined by more than $6 per month or almost again 9%.

Over that same time period, Austin's combined cost for the same service have increased by 26.6 percent.

Dallas has increased their rates, combined water and sewer rates by 14.4 percent.

Fort Worth has increased their rates by 6.3 percent, and Houston has increased their rates by 71.1 percent as a result of the EPA consent decree that they've entered into that we are just now finalizing on SAW's behalf.

Combined, those four utilities have increased on average $24.26 or 31%.

This next slide simply shares with you the current 2025 to 2029 budget projections after taking into account Corolla's cost of service findings.

As you can see, the greatest driver in future cost of service increases is currently projected to be debt service followed by OM expenses.

We will drill down into each of these cost components in just a few minutes.

Before we dive deeper into SAWS forecast OM levels for 2026, I want to spend just a few minutes explaining our projections for future usage patterns for both water and sewer, and then talk briefly about SAW's existing rate structure.

During the last 10 years, SAWS has experienced strong patterns of customer growth with customer counts increasing in a range of 1.2 percent a year to almost 3% per year.

The overall average over that 10-year period has been about 1.9% per year.

Projections going forward have this growth rate slowing to about 1.6% per year.

However, we are also projecting a continued decline in use per bill of 0.6 percent, resulting in water sales growth of about 1% per year.

I tell people we have a fairly unique business of our product, and we're pretty darn good.

We're pretty darn convincing, and they do respond.

And we've seen that over history, and we anticipate that it will continue.

On the sewer side, we are projecting the same level of connection growth.

However, we are also forecasting a continuation of the more rapid decline in sewer use per bill since the reset achieved with the rollout of the new Connect H2O meters.

You can see that in 2025 we actually had a slight increase in the use per bill, particularly on the wastewater side, but now we're projecting it to flat to level out again, and actually you can see between 26 and 27, there is no increase at all.

The billed usage goes from 57.3 billion gallons to 57.3 billion gallons, totally offsetting the population gains and largely offsetting them in both 2028 and 2029.

Reduced usage per bill does reduce revenue while costs continue to escalate with growth and system expansion.

I showed the board yesterday a chart that shows that we have the third largest system in terms of total miles of water and wastewater main of any utility in the country.

Only New York and LA are bigger than we are.

As many of you weren't here in 2022 when council approved fairly significant changes to SAW's rate structure.

I do want to review it briefly.

While we do tie our rates to cost of service by class of customer, during the last rate study, there was a strong desire of the rates advisory committee members to ensure affordability for all customers for essential uses of water, those indoor uses such as cooking, cleaning, bathing, etc.

This was achieved by keeping the first two blocks of water, those first two, you look at the chart on the left, 2.64, $2.64 per thousand gallons for the first 4,000 gallons, and then $4 and basically 80 cents for the next 3,000 gallons of usage.

So you can see that water, each customer goes through each and every tier of the block, but they only and then any incremental amounts get charged at that higher rate.

You can see that incrementally, as you use more water, it gets more expensive.

That was important to the rates advisory committee.

On the right hand portion of the graph, you can see the totally separate rate structure, which applies to customers that qualify for our uplift water rate structure.

Comparing the two structures, you can see that one of the key differences is that there is no fixed charge or any volumetric charge for the first 2,000 gallons under the uplift rate structure.

So if you qualify for that program and you are, you know, use very little water, you can basically get your water for free if you stay under that 2,000 gallon threshold.

If the customer's usage does exceed 2,000, the fixed charge is only $3 for that uplift customer, significantly less than that for non-uplift customers, which you can see is either nine, nine dollars or eleven dollars, depending on your usage.

If it goes above 4,000 gallons as a non-uplift customer, you do pay that higher amount, that higher rate.

Also provide discounted rates enabling low-income families with large households to have a much lower bill than under our previous affordability discount program.

Last point I would make is that SAW's top-tier water rates for non-uplift customers are up there among the highest in the state along with Houston and Austin.

This graph just shows our existing wastewater rate structure and then compares it to the uplift residential sewer structure.

You can see there differences, there's no fixed charge for sewer service and no volumetric charge for the first two thousand gallons under the affordability again the uplift structure.

If the customers' usage does exceed 2,000 gallons of usage, the volumetric charge is only $2.70 per thousand, which is approximately equal to that, equal to the rate for non-affordability customers that they pay for their first 4,000 gallons.

So a little simpler on the wastewater side.

Just in order to provide you with a frame of reference for SAW's residential usage patterns, this chart and the next chart show the percentage of bills that end in each block.

This first one is showing just residential customers exclusive of the affordability or uplift customers.

So this is non-uplift residential customers, and you can see here that you can see it broken down by blocks.

So block one, that's the usage below 4,000 gallons.

The first set of group bars shows the percentage of bills for that year that did not exceed 4,000 gallons of water usage.

Overall, in 2023 to 2025, as you can see, 45.4% of SAOS bills did not exceed 4,000 gallons, and therefore would have paid the lowest volumetric rate, as well as the reduced fixed rate of the fixed charge.

As you can see, since the inception of this rate structure in 2000, 2023, the results have been pretty consistent with roughly 45% of system billings never exceeding that block one, and another 28% of billings exceeding 4,000 gallons, but being less than 7,000 gallons.

So within those first two blocks combined, almost three quarters of SAWS bills are for 7,000 gallons or less of water usage, while more than 90% of bills have water usage of less than 12,000 gallons.

On average, about 2.5% of bills issued in the last three years were for 20,000 gallons or more, with this amount having declined from 3.1% in 2023 to 2.4% in 2024, and finally 2.1% in 2025.

Finally, in 2025, the residential class used in total 35.75 billion gallons of water through the issuance of 6.258 million bills, resulting in average metered usage of 5,712 gallons per month.

Looking at some of that same information, you can see a slightly different rate structure for our uplift customers.

The first block only goes to 2,000 gallons, where you can see basically 15.8%, almost 16% of the bills fall within that range.

The next biggest clump is 2,000 to 6,000 gallons, of which is about 48%.

So in total, you can see uplift customers still, they do use about 5% more water on average than do other residential customers.

This likely stems from, as I mentioned to the board, one of two things.

Larger family sizes is likely the most likely reason within the home or less efficient water appliances and/or leaks.

We don't believe that it's leaked based upon our review of the most recent data that we get from our AMI system.

Still 64% of the bills are within the first two blocks, again, which the first two blocks here end at 6,000 gallons as opposed to seven.

And all base almost 87% of bills being for 10,000 gallons or less under the uplift structure.

Again, we're excited that with the data from our recently deployed Connect H2O meters, and we've been working with Cavino and his team to make sure we reach out to those customers that are exceeding 10,000 or 15,000 gallons respectively, and figuring out if we can figure out ways to drive that number down.

Before we dive into the current year budget detail, I thought I'd try to place SAW's budgeted headcount into historical perspective.

As you can see during my first year here at SAWS as a CFO back in 2005, the total budgeted payroll was 1,807 employees.

At that same time, you can see amounts detailed for the year-end customer connections served, the miles of water and sewer mains that we were needing to service, SAW's net capital assets and water and sewer service area.

I've then reap replicated each of these five data, each of these data points in five-year increments through 2025 and showed projection levels for 2026.

The final column simply calculates the percentage increases from 2005 to 2026 in each of these categories.

The takeaway is that while SAWS has added to its budgeted headcount, and you can see there, particularly since 2020, this growth has been significantly outpaced by other growth measures such as customer connections and miles of water main water and sewer mains that require maintenance and replacement.

With that in mind, let's begin unpeeling our overall OM budget.

As you can see, our ONM budget consists of four broad categories, with those being salaries and fringe benefits, contractual services, materials and supplies, and finally other charges.

The bulk of those reside in those first two categories the salaries and fringe benefits, which accounts for about a little less than 40% of total ON, and contractual services, which represents a little bit more than 52% of ONM expenses.

If we break these broad categories down into the general ledger accounts that we record our monthly activity into and is consistent with how we budget, you can see that laid out here.

Broken down into salaries, you can see overtime pay, on call pay, employee insurance, retirement, personal leave buyback, etc.

Each of these by account slides are shown with the actual charges by account shown for each of 2023, 2024, and 2025, and then the budgeted level as per the proposed amended budget for 2026 shown in the column to the far right.

While I've listed each of the accounts here, I particularly want to focus on those three accounts are those accounts highlighted in green as they represent more than 93 and a half per more than 93 percent of the 2026 salaries and fringe benefits totals.

They've also all grown from the 2023 actual to 2026 amended budget, with salaries having grown almost 30 percent over that period, employee insurance 22.7, and retirement 14.9.

However, it's important to note that each of these accounts is impacted not only by the cost per employee, but also by the absolute number of employees.

And that's what I've tried to show you on this next slide is that taking into consideration the average number of employees either employed or the average number factored into the budget for 2026.

You can see that the average salary per employee, as well as the health insurance and retirement costs per employee for each of the last three years actual compared to the 2026 budget.

Some figures of note are that the average salary for a SAWS employee in 2023 of just more than $70,000 is projected to grow in 2026 to almost 79,000, which is a third three-year growth percentage of 12.3 percent, which equates to approximately 4% per year.

At the same time, per employee insurance costs are projected to grow only 6.1 percent over that three-year period, while per employee retirement costs are actually projected to go down over this period, reflecting the strong financial performance that we've seen within our retirement plans and the movement of employees out of our more expensive defined benefit plan.

We closed that plan to new employee entrants uh several years back, and now new employees all go into basically a 457 plan, which is like a 401k.

Next, contractual services is the category with the most GL counts.

I just say that because down the second line from the bottom, I've kind of grouped several accounts together, but the breakout is available if you should so desire it.

But this just shows you a breakdown of our contractual services.

I'm not going to speak to this entire slide.

It's got a lot of information here.

The only thing I really want to point out is that growth in that water options.

You can see that water options has been consistently 125, 124, 128 million, and now it's budgeted at 144 million.

That has to do with a couple things.

First off, is a contract that we inherited from bare met whereby we are required to pay for if they make it available, water that comes out of the Trinity Afer.

We budgeted $8 million for that in 2026, even though we may be on the hook for as much as 17 million.

Given the level of the aquifer being so low, they have been restricted from pumping it, and we haven't had to pay for it.

If they don't, we negotiate it or if they don't make it available, we don't have to pay for it.

So that's the biggest driver of that increase.

Materials and supplies, I'm not going to spend much time there.

Again, we have seen some significant price increases in some of our chemicals.

Chlorine prices that we use a lot of is up 41% per ton since 2023, and the price of ferrous sulfate, which is used in our wastewater system quite extensively, is also we've seen a price increase of 25% per pound.

Even with those increases, you can see that overall proposed materials and supplies budget is less than the historical three-year average spend.

Finally, on other charges and capitalized costs, you can see that uh the big thing here is really on the costs are pretty nominal.

Uh you know, four or five million dollars for the most part in the charges, other charges total.

The big item is on capitalized costs with the cessation of employees working on the rollout of our connect H2O program.

We're gonna have less of those costs that are being able to be capitalized to our capital program, and they are gonna reside in OM.

With that, I want to turn it over to Andrea to talk a little bit about our proposed capital improvements.

Thank you, Doug.

Thank you, council.

So I have the opportunity today to talk to you about our capital program.

This is a slide that's not in your packet, and I apologize for that, it was a late edition, but we wanted to provide the council with some context in regard to our capital improvement program before I go into details on the program itself.

The prioritization of projects within the CIP is based upon numerous master plans for each of our systems, which were developed by a team of national experts who assessed our infrastructure, conducted capacity analysis as well as hydraulic modeling, analyzed changing regulatory requirements with TCQ and EPA, amongst other issues.

This is in addition to the 2025 water management plan, which was approved by the SAWS board last year and presented numerous times to council.

The projects in our CRP are also balanced with our regular system requirements that fund our much needed pipeline replacements, as well as other initiatives such as our governmental program.

Doug mentioned the City Bond program.

These support the city as well.

Given the capital-intensive nature of SAW's business, it's no surprise that SAWS maintains a large annual capital spending budget.

As can be seen, SAW's capital plans for the next five years total more than 3.2 billion.

As Doug mentioned, we have one of the largest water and sewer systems in the country, behind just New York City and Los Angeles.

We have to maintain over 14,000 miles of combined pipe.

In addition to the pipelines we maintain, we have significant infrastructure needs at our wastewater treatment plants, also called water recycling centers.

Our newest plant was built in 1987.

Technology has changed a lot since 1987.

Environmental regulations have become more stringent since 1987, and our population has grown significantly, which means the flows coming to our plants have increased significantly since 1987.

All of these are key factors in the much needed investments we need to make in our treatment plants.

Over the next few slides, I'll talk more about the drivers for these heightened CIP levels.

I want to start with our most fundamental ongoing investment needs, and that's regular replacement of our water distribution and sewer collection mains.

This is the fundamental maintenance required for any water and wastewater utility.

And while not as attention grabbing as some of the other more high-profile projects that need to be done, it's vital in the performance of a healthy water and sewer system.

As you will recall, SAWS maintains about 8,000 miles of water main.

Of these water mains, you see 22% of them, roughly 17, 1,765 miles of them are greater than 50 years in age.

And every year that passes, more of them meet this criteria.

Some of these water mains are in perfectly fine condition.

Others need to be replaced, as these replacement targets are not necessarily based just on age.

But we have factors such as the pipe material, the soils that they're in, the pressure, the amount of stress that those pipes are under.

This ongoing replacement is crucial to our water stewardship initiative.

So we discussed with this council working very hard to address our non-revenue or lost water.

We've heard the message from you loud and clear that the level we're at is not acceptable, and we agree.

Water main replacement is a key component of our water stewardship program.

So I want to share some key findings of our program with you.

In 2024, there were over 2,500 breaks that were based on water main condition failure.

The X-axis on this graph shows the worst 10% bracket as defined by our AI prediction model.

So the top 10% category makes up about 80 miles of pipe, where the model says these are the worst of the worst.

And of that, 1,749 of our 2500 breaks occurred on these 10% of pipes.

These are the water mains that we need to focus on.

So over the next four years alone, we're programmed to replace about 56 miles of these problematic water means.

And we're continuing to fine-tune our AI model to get ahead of main brakes and prioritize the replacement of the worst pipelines in our system.

I was before you in October to provide an update on our water stewardship non-revenue water program, and I discussed our goal to drive down water breaks, water main breaks over the next 10 years.

We want to reduce our total water loss in half over that period.

And as I said, it's going to take innovation, manpower, and resources to achieve this goal.

The three primary focuses are crews for faster response and repair time, enhanced leak detection staffing, as well as increasing that water main replacement level.

Together, these interventions form a comprehensive approach to managing water loss.

While we're investing significant resources on water main replacement, we cannot forget about the sewer collection system.

As just discussed, the ongoing replacement of sewer mains within our wastewater collection system is one of the core functions of any wastewater utility.

We have just spent 1.3 billion on the replacement of sewer mains in connection with our nearly completed consent decree with the EPA.

But we know there's still more work to be done.

As you can see, about 19% of our more than 6,000 miles of collection system is also more than 50 years old.

We have an extension condition assessment program that uses what we call CCTV, the remote controlled cameras that are put inside our pipes to evaluate the condition of the sewer mains.

And based on this information, we've identified about 400 miles of sewer main that require replacement due to condition.

This is a snapshot of our sewer condition assessment results.

It's on a grading scale, A being the best pipe, D and E being the worst pipes that we need to replace.

And as you see, about a little over 6% of our system falls in those DE categories that are at high risk for failure.

And as we go on every year, we have more pipes that start to fall into that category.

So these two issues, water and sewer replacement, are critical to our available our ability to provide safe water service to our customers.

It's a critical component of our CIP.

This chart summarizes our projected level of spend for our essential water and sewer replacements.

Water is shown in the blue bars totaling 683 million, roughly 140 million per year.

And essential sewer mains are shown in green at 422 million or roughly 85 million per year.

These are essential utility needs.

However, we have several major projects identified from our master plans that also need to be addressed due to risk.

As I mentioned before, we classified projects that cost over 35 million as major projects.

All our wastewater treatment plants.

What happens if we push off this project?

We will not be able to meet our permitted two-hour peak flow capacity, which will result in system violations with the TCQ.

We have original biosolids equipment at this plant.

Biosolids technology has changed a lot since 1987.

And what we have today is inefficient, and some of the parts are obsolete.

Right now we have rental equipment on site in order to meet our treatment requirements.

But this project will provide us with a more efficient system with new technology and will eliminate as well our cost for rental equipment.

We have our Stephen M.

Klaus rehab phase one improvements project.

This is an important project to our biological processes at the plant.

It will replace age infrastructure, including our RAS pumps, boilers, and filters.

This equipment is all at the end of its useful life.

Moving to 2027, we'll start with a generator project, which Doug mentioned briefly.

This project is a mandate in accordance with 2021 SB3 resulting from winter storm URI.

SAUS is installing 35 generators across our water system to meet minimum pressure requirements after a 24 hour power outage.

SAUS has already committed more than 220 million on this program.

We require roughly another 120 million to meet full build out.

Delays of this project could result in pipe failure and sewer spills.

We'll construct new primary clarifiers, electrical and instrumentation.

Again, the key here is aging infrastructure at our treatment plants.

And our Land Creek flow management upgrades is really driven by growth.

We have more flow coming to the plants, and we need to be able to address it.

In 2028, we have the last package of our resiliency program.

We have an upgrade to our water production facility in pressure zone 1295, 1400 east.

This is in the Stone Oak area.

We're replacing a tank as well as infrastructure.

We have our Metal Creek Water Recycling Center rehab improvements phase one.

This plant was constructed in 1972.

We need to upgrade the headworks, solid transfer, and disinfection, which are also beyond its useful life.

And we have our ASR plant expansion.

This will increase our plant capacity from 30 to 60 MgD.

This will accommodate the planned local corrizo expansion and maximize use of our ASR.

This is very important, particularly when we're in drought conditions.

We have our Stephen M.

Klaus Side Stream Phosphate Harvesting.

The construction of a phosphate harvesting reactor is important to the maintenance of the plant.

But beyond that operational aspect, this is what's seen as coming as a nutrient limit from TCEQ with our permit renewal.

And it's the same thing with the Stephen M.

Klaus Flow Management Project, as well as biological nutrient removal.

We're anticipating TCQ is going to be coming with this change.

We will construct about 80 miles of wetlands to improve water quality.

This is important to meet water supply for our community.

We will expand from roughly 9,000 acre feet.

We'll build another 14,000 acre feet to expand our non-Edwards sources.

So I know I have gone over a lot of projects.

I think in summary, I'd like to say these projects overall are important to our community to meet environmental stewardship, to meet water stewardship, and to meet the level of service our community expects.

I'll turn things back over to Doug.

Okay.

And then in closing.

I just obviously uh just talked about the importance of these projects to our community.

I can tell you, having worked at SAWS as a CFO for 21 years, it's a long process to get up to achieve a ratings upgrade from the bond rating agencies.

You can see that for both Moody's and SP and SP, we got upgraded at our junior lane level, that's our operating lane level to AA plus back in 2002.

And we received a similar upgrade from Moody's to AA1 in 2024.

So it takes a long time to get those upgrades.

Been working at it for a long time, and it doesn't take very long for them to go the other direction, unfortunately.

So again, we're proud of our ratings.

These are the highest we've ever had.

Uh it would not take a lot for SAUS to receive a ratings downgrade, which in turn would drive up the cost in our long-term borrowings.

And I just leave you with a couple of the factors that they cite there.

You can read them there for yourself, but factors that could lead to negative rating action.

They specifically talk about CIP cost increases not supported by adequate rate adjustments.

They talk about weak operating performance that drives down key metrics.

And finally SP talks about how they're expecting it to have sustained our financial performance, sustained robust financial performance, and it's mostly debt finance capital plan.

So we need to be they haven't put us on, or not on credit watch negative or anything like that.

But uh if we don't get rate support at some point in time, I think they will take some action.

So with that, I think we are looking for input from city council.

So I don't know if Robert or you or Jillian have anything else you want to close with.

Thank you, Doug, Andrea, um, Chair.

The um Ben, would you like to add anything before we go into comments?

Okay.

Um so colleagues, as you can see, uh, we are dealing with unfortunately lots of delayed projects.

Um, and as you know, with any delay, you risk the cut the the instance where those become more expensive uh than what they would have been had we addressed them sooner, unfortunately.

But we are here, and uh as we look at what has been um described and outlined here, uh a couple of things to to consider.

Um the real impacts of uh tariffs, inflation, immigration related stresses on on labor.

One thing that wasn't brought out today but was shared with the board yesterday is our five year um capital plan 2016 to 20, Doug, that was only two billion, correct?

Two billion.

Two billion, correct.

And so now with this one, 26 to 2030, we find ourselves at 3.2 billion.

Um so you can see the significant increase in in the cost there alone.

I also want to foot stomp as we're having this discussion, the point that we have the third large largest um and third greatest number of miles of pipe to maintain, and so there is certainly a discussion to be I mean, LA is three times as large as us, New York is eight times as large as us, and so we have in part kind of done this to ourselves when we look at the amount of sprawl uh that we are now having to maintain.

So part of the conversation that we did have yesterday is um what are some policy approaches that can be helpful as we think about the ongoing maintenance costs just of what we have now, and if we wanted to mitigate those moving forward, so I understand we're you know looking at what we've got to maintain now, but there are opportunities to to help ourselves moving forward.

Um I think what um as we are looking at this and then also understanding that CPS will uh will come to us later similarly with um with the a rate increase and a justification.

Doug, can you lay flat um for the for the body here that you're using the same planning assumptions as CPS when it comes to growth, correct?

Yes, uh I I think our growth projections are very similar.

Again, we have a meeting next week with Ben and CPS to talk about what we talked about the other day about large volume in particular data center growth.

Make sure we're all on the same page.

They have a slightly different service territory than we do, so they may be impacted to a degree that we are not, but um, but we do need to make sure that we're have those consistent projections.

But right now, yes.

Okay, thank you.

One thing also that you might uh be thinking about, I was thinking about it as we were listening to the briefing, and and frankly, in some of the other board meetings, there's the cost of service study that was conducted, um, and that is helpful to understand, you know, what is the cost of providing the service?

That's one thing.

The other thing though, as we've talked about, is the importance of considering ways we might modify behavior in the interest of conservation, et cetera, right?

So this is something that I raised with the um uh with the board yesterday in terms of how we might um uh how we might identify what that approach looks like, and maybe it looks different than what some of the recommendations are out of the cost of service.

Again, that sensitivity analysis that under that helps us understand, yes, customer X, whether they be residential or commercial, maybe providing or consuming this level of water, but what is that um what is that number or what is that cost rather that um incentivizes them to change their behavior, which is then ultimately better for us in the long run if they're conserving and frankly putting less strain on our on our entire infrastructure.

Um I did not get an answer in terms of when we would get that, but I know the SAS team is is working to help us understand um what that might look like.

Correct, Doug?

Yes, okay, I appreciate it.

Thanks.

Um, and just to level set with everybody else, um, as we look at kind of options here, right?

Obviously, there's the uh the five-year plan, 3.2 billion.

I did ask yesterday for an approach that allows us to, if we wanted to just look at what are those things associated with fulfilling mandates, one, and then two, um, addressing those uh most at-risk projects, right?

Um, it doesn't jump out at you at the uh from the presentation, but if we think I think we had an understanding of the floor, uh then we could that would help us as we understand, okay.

So this is the minimum, what does it then look like over time?

And certainly as we are dealing with today, um not signing ourselves up potentially for um a longer commitment, given we're dealing with some of the worst economic factors.

If we had an idea of what is absolutely necessary and then a shortest amount of time uh committing ourselves to that, I think that gives us the greatest flexibility as we try to get more certainty about what the economy is going to look like moving forward.

I think as we also have have discussed, um thinking about this in the context of our legislative agenda, as you as you heard Doug mentioned, um we were on the hook for the implementation of SB3, which was the need to identify provide generators, 340 million, and as a result of that, some of the projects that would have been um addressed came out of that fund.

That that 340 million came out of our capital fund.

So you know, no one's saying that uh that resilience is is not is a bad thing, but understanding that we may get these things that impact our ability to do the projects at the scope on the timeline that we initially forecasted.

Um but now some of those projects that were bumped were now exp we're having to do them at a time as mentioned when costs are much higher than um than we would have expected.

Okay.

Um and is and would have been part of um you know any presentation before this body about a rate increase.

So really appreciate you going a little bit deeper than you traditionally have in have in the past, as we're all concerned um with uh with the economic picture for our most vulnerable.

Um okay, councilwoman Aldrette Gavito.

Thank you, Mayor.

Um I'm also just really quick gonna agree.

I think that when we're looking at the rate increases, the last couple of slides seeing what is kind of bare bones needed, I think is will be helpful for us.

Um it's no surprise that my issue is water leaks, and and for me, I'm not inherently opposed to rate increases when but they need to be warranted.

And so sometimes that's difficult to do when we're seeing in district seven, we're seeing water up and down our streets.

And so, you know, we know that in 2024, SAWs lost almost 20 billion gallons of water in water leaks.

I think we um Councilman White and I were talking about a Texas Tribune article.

I think we're the second highest major city in Texas with with water loss.

Do you know that?

Donovan Donovan's a little he heads up our water supply.

Just uh just very quickly.

Uh the the Tribune article I think your referencing was from 2023.

We put a lot of things in place since then.

We've had over a 10% uh decrease in those numbers, and so we've done a whole lot better over the past couple of years.

Yeah, really, those other cities aren't necessarily facing the drought, and it's really the drought that has driven that.

Yeah, and so I think about this, and and maybe you all have the answer.

If we had billed for that those 20 billion gallons of water, could we have potentially offset this customer rate increase?

A little bit rhetorical, but a little bit um, you know, pushing for an answer because you know, all of us are accountable to our residents, and when again, when we're seeing that much water loss on our streets, and then asking residents to essentially pay for it, that it that you know is something's not sitting right.

Well, if we had built uh we haven't done that analysis, but if we had built, and I don't have any idea what it would have taken.

We we're never going to, nor is any city ever going to get to zero in terms of water loss, particularly when you have 600,000 customer connections on our water system.

Um every one of those places is a point of the leak.

But if we had built for that, obviously our CIP would have been needed to have been greater in prior years, which would have probably caused our rates to be higher than they are today.

We might not have had the rate increase, but the rates would probably already be escalated in today's dollars.

Right.

Well, I mean, I I know that y'all aren't gonna get to zero, but you know, we're asking SAS to be better because I again we see um the water going up and down our streets, it is a scarce resource.

Um, and it it it becomes a very frustrating narrative for District 7 residents, and I think other parts of the city see and fill it too, where you know, we're seeing water leaks sometimes, you know, in the past it took up to two weeks to fix.

Um, and and and water is a scarce resource, and so asking residents to pay for something when when it's literally flowing down our streets, it it just becomes it becomes uh tough, and and it's and it's uh uh upsetting, and we hear about it constantly at my monthly uh coffee with the councilwoman.

I'm sorry, did you want to say something?

Well, okay.

And what I wanted to say was number one, we agree with you.

We agree we cannot afford to lose this water.

Right.

We can't afford from a a water supply perspective, from what we're asking for our customers to do.

Please pause, please pause the time.

Thanks.

Um, but also just what I wanted to add is um our targets.

You asked about where we were in in 2023, we were in terrible shape.

It was a terrible drought.

Our crews, we didn't have enough crews.

So your point about two weeks, absolutely.

Where we are today is it's taking two days to respond.

Yeah, to so those six that were taking two weeks.

And for priority one, they're there within an hour.

And in terms of our target, while we were at 20, we're cutting that number in half within the next 10 years, if not sooner.

Yeah, and thank you.

Thank you for that information.

I mean again, I'm glad to see the progress.

You know, we and I agree that we need to continue moving forward in the right direction, but our residents are filling the squeeze, and it's hard to reconcile them feeling more of a squeeze when we're seeing again a scarce resource up and down our streets.

I I mean, I get that that we're never gonna get at zero, but we absolutely need to do and be better, um, especially if we're asking residents to pay for it.

The other thing I think of is you know, I kind of see it as a double whammy because not only are we having the scarce resource up and down our streets, but you know, I think about district seven, we have some of the highest uh F-rated streets in the city, and so then you're thinking about okay, if this if these water leaks are constantly on our streets and we're constantly having to fight each other for infrastructure dollars to fix these streets, you know, I'm kind of curious how much money the city is investing in our streets to fix it because water is on our streets.

I mean, Eric, it is a little bit rhetorical, but or sorry, Ben, um, you know, I'm curious how much money public works is is spending on our streets to to constantly fix these streets that water's on.

Uh counselor, we'd have to follow up.

I don't I don't have the answer to that question.

Like I your question specifically is is the water leak causing additional damage to our infrastructure that we're then repairing?

Yeah, I mean, the the question is we know that water does cause damage on our streets, you know, and so not only are we losing the value of the water on our streets, but we're also uh you know, causing disrepair to our streets at a much more frequent basis.

Um it'd be interesting if we could quantify that.

I'm not sure that we can, but I think that that's an important point we need to take into consideration because again, not only are we losing the value of the water on our streets and not being able to sell or bill for that, but we're also wreaking havoc on our streets, and I think that that needs to be taken into consideration as well.

Um so you know, I I'll just I'll just leave it at that.

You know, convincing residents of a rate increase again when when everyone is filling the squeeze is is it's a tough sell, especially when we're seeing residents drive on buppy streets and water on them, you know, and and so that that again is is uh a daily occurrence for residents in District 7, and so you know, I'm just gonna leave it at that.

Thank you.

Because I'm a comment thinks.

Did you want to add anything, Doug?

No.

Okay.

Okay.

In case it helps anyone else's um informs anyone else's comments, Ben, can you speak to um Doug talked about the impact potential impact of a rate um uh of impact to our ratings as if something is not improved as a result of the the the CIP that is the CIP that is put forward um and that potentially not not passing, but a ding to SAS's rating does what to our own rating to the city's rating?

Well, I think uh it depends on on what caused that impact to SAW's rating, but it could impact our rating as well.

And so, in a scenario where uh a business case has been presented to the city as the owner of the utility, and the business case is there to support some level of rate increase to address uh critical infrastructure needs for the utility.

If that were um not approved, and we didn't have a strong reason for why that's not being approved, that could certainly permeate and impact us as well.

Councilman White.

Thank you, Mayor.

Do we have a water shortage here?

No.

No, no, okay.

So seeing as we don't we don't have a water shortage.

Technically, we're in a drought.

Right.

Okay.

But we're managing supply.

We know we don't have a we don't have a water supply shortage.

Right?

Correct.

All right.

Um what are we doing to maximize all of our revenue here?

And and let me let me I guess begin with with with Vista Ridge.

How much water are we selling?

From Vista Ridge?

Yeah.

Zero.

None.

Okay.

We're using it all.

We're using it all.

Every drop.

Okay.

Sometimes it doesn't even get out of Stone Oak.

Okay.

And um what does it cost us to operate Vista Ridge?

Uh there's uh specific.

I mean did you want to so Vista Ridge is a P3, and so it's a little bit uh disconnected.

A company runs it, if a private sector company runs it, we we hold out our cup and we pay for whatever water they put into the cup.

So it costs us roughly 2100, 2150, I believe, an acre foot, $2,150 per acre foot.

Um they send about 50,000 acre feet uh per year.

So the cost is roughly, I forget the uh roughly in the hundred million.

It's in that water options category that we cited, uh that 144 million in water options, the single largest chunk of that is Vista Ridge.

Then when there's some utility costs, some other costs associated with it, but that is 100 million of it relates to Vista Ridge.

Yes, on an annual basis.

And do we have the revenue from there to cover that?

Yes.

Yes, yes.

Right now, our our bond or we have a debt coverage ratio, our debt coverage ratio right now is about one point, somewhere around 1.8 times.

We haven't got our final year-end results, but it should come out around 1.8 times.

We've said our target is no less than 1.75 times.

Okay.

What about um cash on hand?

How much how much cash on hand do we have?

We have when you look at our or you're gonna look at our year-end financial statements.

We showed a statement to the board the other day or a slide to the board, which shows at the end of November, again, we don't have December, we just got it closed.

I haven't even seen the results yet.

But so the end of November of 2025, we had basically one and a half billion dollars worth of cash of that, about 1.1 billion of that is committed.

We either have to have when we take a project to our board, just like when you bring a project to council to get approval a capital project, you either need to have the funds in the bank or you need to have available capacity to draw on your commercial paper program.

We have about 1.1 billion dollars worth of projects that need to get funded.

Um so it leaves about 300 million dollars of cash that we have that we can either apply towards additional C cash funding of our capital improvement needs, as we alluded to, or Andre went over, we have 3.2 billion of those uh coming up in the next five years.

So you can either use that $300 million of cash to increase your cash funding for CIP, or you can use it to pay down debt, which we've done over the last several years.

What are the we've been talking about the bond agencies?

What do they look for in terms of how much cash on hand they they would like to see?

My slide that I had on, can you pull up my the slide right before 56?

So that Moody's rating right there says weak operating performance that drives down key metrics to levels at or below 1.7 times debt service coverage.

So that's if we go below that, they're saying here's something that could lead you to get downgraded.

So we're at 1.8.

We've been trending, we've been above two, and we're trending downward.

And if we don't get a rate adjustment this year and execute the capital program that Andrea laid out, I think we would fall short of that 1.7 times.

All right.

So then now back to my back to my original question.

Um what what with that as a base, what are we doing to maximize revenue in terms of do we sell, are we selling water anywhere else?

I mean, what any anything we're doing?

We don't have the ability.

Like CPS does to sell water, there's not a separate group we've got, we're using.

We are using and/or storing into our aquifer storage and recovery project.

And right now we're in a position where we're in a net withdrawal position.

We're drawing down on the aquifer storage and recovery.

We it's got about 120,000 acre feet in it right now, but we were up uh like 200,000 a couple years back.

So we've been drawing down.

And you attribute that to the to the drought.

Okay.

Almost almost 40 percent last year.

Um if we go to the uh the Corolla presentation now, and I think it's slide uh slide 20 um 26, right?

You you know, Corolla says, listen, current rates and charges aren't sufficient to meet to meet the the revenue requirement needs.

But if you go back a slide to 25, when you guys bring this company in to do that, they're right there in phase one.

What are the annual revenue requirements?

You guys give Corolla that information.

We had them review our estimates and projections, and they deem them to be reasonable.

Right, but but you guys had had to tell Corolla here are the requirements for them to do the study.

Uh yeah, they evaluated our again.

We put forth this is what we think.

You look at it and determine whether or not you think it's reasonable.

Well, well, you you said here here's here's what our requirements are, what what we want to do, um, and then based on that, they look at your financials and everything and determine whether or not the rates are adequate.

Correct.

They are not evaluating whether or not this CIP project needs to get done.

Sure, but it's based again upon what you what you tell them is coming.

And so the that's what I what I want to move to, and and the mayor touched on it a bit, um, as did Councilwoman Aljete Govito, but really we need to look at the needs versus versus the wants.

And I'll tell you that a lot in that capital program to me looked like it was really deferred maintenance.

Is that is that accurate?

Well, I will say that we had a very large she talked a little bit, mayor talked a little bit about the capital program, but we had both the EPA consent decree as well as the Vista Ridge water supply, as well as bringing online brackish desail.

So we were spending a lot of money on other projects, and I told the board yesterday I think there may have been some opportunities where things got squeezed out, and so they got deferred.

Our wastewater treatment plants, we did not spend the money because we were involved in a 1.3 billion dollar consent decree with respect to our collection system.

Yeah.

Uh and I hear you on that, and I and I appreciate I appreciate the background, but again, is is it fair to say that a lot of I think what I saw in the capital program, it's a lot of it's on the maintenance side primarily, if not all.

It's replacement, replacing aging equipment.

Right.

And so um I I get I guess where I'm going is I I would like to see us move to a more sort of proactive approach here where we can start, and you're nodding your head.

We would love that.

You would let you would like to do that.

I'd love that.

And and you know, I know, and I've talked with with um with Jalen and Robert about this this CPS energy um, you know, operational efficiency review that they did that they did a few years ago.

And um in the executive summary, one of the lines that this company found that um CPS energy found we found a utility that is moving out of uh a reactive and into a proactive um approach.

know I know and I've talked with with with with um with Jalen and Robert about this this CPS energy um you know operational efficiency review that they did that they did a few years ago and um in the executive summary one of the lines that this company found that um CPS energy found we found a utility that is moving out of uh a reactive and into a proactive um approach and and so uh my point is it looks like we're doing a lot of catch up here and this catch up is now causing us to go to the citizens again and and ask them to to pay more whereas if we were being more proactive if we could get get to a spot where um we were we were selling water let's say um we we wouldn't have the the these revenue needs that now again are causing us to go to the citizens and and ask them to to again pay more to to raise their rates um let me ask you this as my time's running down um Senate joint resolution seven right this water fund that the state is uh is putting together um have we looked at accessing that for some of the projects here uh we we will that is coming and it'll be a few years there there that's in two tranches there is a a small tranche of it that's happening over the next year um we're actually making comments in fact today we're making comments about the rules and so we will look at uh at those funds when they become available um it's a little bit difficult some of those have a lot of strings sometimes they increase the cost of a project and then increase the timelines and so sometimes it's difficult but that is certainly a source of funds that we'll we'll continue to look at it.

All right well we know of that councilman could I address the selling water part so we do have the ability to do wholesale water but of course that would require us to build a pipe to take that water to that entity that we would sell to so we would be back here asking for a capital program to create the structure to sell that water to those communities but other than that we sell to our customers.

Yeah no I mean again I mean the these are the kind of capital projects that I that I would love to see us looking at we would love to be there as well except we have a system that's very old and is need in need of replacement and so which is what we're bringing forward to you today after these items have been prioritized in the various master plans for all of the systems water and wastewater.

Yeah and so the the projects that were were um were listed on on on the slides I guess that we don't have but that y'all added those are those are top priority um for this for this rate hike we're trying to communicate is we have an annual CIP that is directly generated from the various master plans for either water or wastewater and then what we're showing you are those major projects I believe 35 million was the threshold to define major and so we're showing you the major ones per year in addition to the annual CIP that's required to meet all of those master plans to keep the system from failure.

And in that proposed four year model that I guess was talked about in the in the media if if if that were to go forward I mean what's the total dollar amount in revenue you're looking to to um to create customers yeah yeah with the what's the dollar amount you're looking to to create through the rate height he's asking for the revenue the the comparable revenue for the after we make the four year capital what is the revenue projection for that four year period with the customer growth assumptions.

He may not have that number we can get that number councilman white if you have additional questions we'll go in the second round thank you Councilman McKee Rodriguez.

Thank you mayor and uh thank you all for the presentation you got through it a lot faster than I thought you would um I want to first convey I appreciate the board coming to us with uh with this request and with this plan um I can definitely appreciate the gravity of the need uh that you've expressed today um and I take very seriously every proposed rate increase that comes before us um and at any given time we're weighing uh a number of factors including um current economic conditions for our own for our residents uh and for ratepayers and we're also thinking about the need and how do we best protect and serve them uh through every mean right um that being said there are a few I think there's a few things that come to mind when I think about SAS and several years ago I think we were in a very different place I think uh I would have considered CPS the the naughty child and SAWs to be uh the good one I think we've seen with CPS uh a lot of changes especially with the change in leadership I think they're uh moving in a very different direction than they once were and with SAS when I think about these past few years um that I've been on council I think about a lot of conflict and a lot of unnecessary uh turmoil and so I think about the coordination of projects that uh leads to complications delays and collapse of trust uh specifically as it relates to our bond program and I know the council members have uh brought forward a number of uh potential solutions and ideas as it relates to coordination with saws and uh how we identify utilities and and the like I also think about the shutdown of water and apartment complexes that impacts residents more than it does uh the property management companies and that was a conflict that I had very directly with um with Robert Puente and I also think about something that we're going through right now and it was so interesting to hear council uh member elderetecovito uh bring this up but at government hill right now we're dealing with this this water leak that's leading to

Uh I also think about the shutdown of water and apartment complexes that impacts residents more than it does uh the property management companies, and that was a conflict that I had very directly with um with Robert Brent.

And I also think about something that we're going through right now, and it was so interesting to hear council uh member Alderetta Covito uh bring this up, but at Government Hill right now we're dealing with this this water leak that's leading to endless water being wasted, and you have a developer that wants to resolve the solution, has uh an idea and a proposal for such, and it feels like they're being battled every step of the way, and through all of these things, it feels as though SAW's leadership has been unwilling to compromise and come to solutions to address some of these issues.

And so when I think of what it would take to get me to support a rate increase, I think it comes down to uh I think it comes down to leadership, a change in uh philosophy or uh practice.

I I I don't know, but right now I struggle with the conflicts that I've had with SAWS leadership, and that residents and developers and the business community that we the very real conflicts that we've had that have led to not just these three issues that I've named, but a suite of others that uh go unnamed today.

Councilman, I'm aware of the government hill issue.

I'd be happy to speak with you this afternoon about that, or at a time that's convenient with you, but the board has been briefed on that situation, but the rest of your comments we hear you for sure.

Thank you.

Thank you, Mayor.

I mean, the short of it is that's not SAS's water, is our analysis.

Right.

Our analysis is it's groundwater.

It it's been tested a number of times, and it is not the treated water that saws provides to our customers.

But we can certainly talk with you more about that.

Can you address the fluoride and the other chemicals that have been found that the water is treated in some way?

Can you address that?

Donovan's could probably speak to this better, but just in our groundwater fluoride is present in our groundwater before it's treated by SAWS, before it's delivered by SAWs.

So those chemicals are normally found in our groundwater sources.

Okay, and I it is my understanding also that the developer is uh approach saws with ideas and hopes to be able to connect, uh, and that that's just been denied.

We can take it, we can take this offline, but the short of it is that there's conflict that go beyond just this one thing, right?

It's it's consistent.

Given that it's groundwater, we probably need another partner at the table, and that's probably gonna involve the city of San Antonio as well as SAWs and that and that owner.

Thank you.

Yeah.

Councilman Viegadon.

Thank you, Mayor.

Uh, thank you for the presentation.

Thank you, Jalen for being here.

Mary Lou for representing uh our side of town, um, and then to our newest board members, uh Teresa, Greg, and Adriana, thank you for kind of jumping in as we look at uh what comes next.

I think the city needs to build a coalition with the state and the county to address concerns and key topics regarding water infrastructure needs, and I think as we look globally and nationally, water and water conservation is key.

We we know that it is a resource that we need to take care of.

Um we have seen that because we face a drought, but I think this is something that is throughout other communities, and that other communities see what we do in terms of the aquifer level, what days we have that we are are getting um this paid attention to.

So um building effective partnerships with effective communication with the state and county should be priority for the city regarding the future of our water resources.

I want to go and dig into some of the slides.

I appreciate that y'all are um 20 2018-2019 was the last ask for a rate hike, but in 2023 we did see a rate restructuring restructuring, and some bills went up for primarily businesses.

So while I I hear my council members saying rate height, rake height, I think we can look at this also as a rate restructuring if we take our time and we look at the possibilities that we have to help incentivize people conserving to conserve water.

Because I think that that is going to be key.

Because as I move on, and um let me find the slide.

As we move on to the electric meters or the yeah, the electric meters, which are very helpful.

I want to move on to the slide regarding the usage, which was uh I have it as page 30.

I don't know if it's a different slide.

As we look at at this for the existing residential water, if we have a home that is using more than 18,000 gallons, uh I'm ready to charge them more.

Um yeah, the existing, it was the other one, the existing residential water.

Okay.

So if you if you're I and this is what I would like to see is what is our expectation for a family of four in terms of water usage, and I think y'all have done a good job of that.

If you are using more than that, is that because instead of buying the energy efficient dishwasher or appliances, you bought the luxury appliances that use more because they offer more services, and if that is your choice, then I think you should pay more for water.

And then as we look at the uplift uses, I I appreciate this has gone on for three years since 2023.

Why we have people in our uplift program using more than 10,000 gallons, we need we need to figure that out.

That's that's too much.

We're giving them uh, and this is slide or page 33, the uplift residential water bill frequency.

And I and I understand that you're saying, oh, they may have uh appliances that don't work or uh their larger households, but we need to figure that out because what that communicates to me is there may be some leaks there that they are just not addressing.

And I I want to I appreciate Councilman Castillo and her plumbers to people program, but we we need to address that because that is like 35% right there, and that's unacceptable to be on a residential program and then to be basically wasting water like that.

So uh I want to make sure that we prioritize that as we move forward.

Yesterday we discussed that at the board meeting and Gavino's team now that all of our meters have been deployed, we now can see those customers with high usage, and so Govinos team will be reaching out to that customer base to ask them if they would like to for us to take a look at the potential for leaks and make those programs available to them.

And and I would like you to to communicate with us in terms of district-wise, how we can help.

Uh, district three in particular, the majority of houses are peer and beam, and the majority of houses are over 100 years old.

So there's gonna be problems there, and I want to make sure that we're addressing it because uh asking my residents, and that's where I'm like we we have a rate restructure.

If we tell them this is what you've been doing wrong, but if you start doing it right and reduce it at the end of the year or the end of the month, you get a rebate for coming in lower than what was expected.

So I'd like to see us look at that.

I would also on the salaries and benefits per employee on page 30.

Uh for me, it's 38.

I'm not sure what it is on the slide.

Uh I would like, and you can get this to me later, uh, the lowest paid and the highest paid employee.

Uh I I appreciate the average salary, but I would like the um the lowest and highest paid employee, and I would like to see the majority where where do the majority of employees sit.

Um I have the team that comes into my office once a week and work with my um my residents to help with their bills.

Amazing group.

And and I want to make sure I would I like to see, I'm hoping they're well compensated and that we see that team grow higher.

So I think if you know, and he knows exactly who I'm talking about.

Um then the contractual services, as we look at this and we take any sort of rate restructuring out to the public, I think it's important that we tell them these are contractual services that we're going, we we anticipate happening in the future, whether it's um whether it's legal, whether it's maintenance because of the the temperatures, the extreme heat, I think we need to take them out there because what I want my uh residents and the residential ratepayers to see is real actual growth and real actual um tangible things that improve their life.

Saws went in to South Cross because they were putting in new pipes, they fixed the street.

Everybody in the neighborhood noticed that.

They understood that the that we were getting new uh water mains and the street was fixed in the meantime, so they can appreciate that.

If it's too technical, where it's like, oh, this is the fancy thing we put over here to monitor it, there they're not gonna think it's worth that that that rate increase or that rate restructuring.

So the other thing in terms of CIP and entry, I I don't know if you could come up and answer this question.

So I know you have the over 50 pipes, but do you have, especially in the south side from the west to the east?

We still have um we still have people on septic takes, and we still have people that are um and I I this is personal experience.

My mom had a well on on one of our properties out in what we call the country, but out below by Los Soya.

Do we have a list of of areas that are within the city limits or within the customer service areas of SAWs that are still on septic tanks or still on you know, using well service and not connected to a line?

Do we have that in it somewhere in our data and information?

We have um information on customers who have a water account and not sewer, which leads one to believe, and then they're on septic.

We've also been working with the county to try to get a better understanding because they have um if you're getting if you're on septic, you're supposed to get a permit through the county.

So to get maybe some information from the county of the folks that they have on septic.

Yeah, because as we annex in and and one thing we we do want them to use less, but in in the same time, we want more customers you know to utilize our sewer and our water system.

So I think that's important to see to understand where we don't have the infrastructure that if the infrastructure was there, we would we could have a um we could have somebody build, and I know we have our developers go in and do that, but if we had it more easily attainable in some of our rural areas, or I call it the rural areas because we have it all, but in district uh three and four in particular, where people could could build and really what would be the easiest way for them to get into the the waste the wastewater areas of there.

And I think I know that we talked about some of the projects got pushed away because of wastewater, but I think I think that's kind of all right because the technology has moved that where we can go in in our wastewater and how we treat water uh in treatment plants has advanced that we've got more opportunity there.

So maybe this is the um opportunity that we invest in that too.

But I think part of it is getting people that aren't aren't connected uh hooked up into the system.

So um if we could get that or start looking at that, I would appreciate it.

Thank you.

Thank you, Mayor.

Councilman Spears.

Thank you, Mayor.

Um, thank you very much for the presentation.

I did find it pretty thorough.

Um there were several things though that in our meeting on the 21st, I thought we were gonna get in advance, and and I just had wished I'd had more time to really study those documents, but we didn't really get those.

But I do appreciate what you did here today.

Um, I too was surprised it went so quickly.

But um, is there a way we can get a copy of the Corolla study?

The actual study.

Okay.

Um, you issue that we we have submitted it to your staff.

To the council microcompany.

Oh, sorry.

I was I was asking if Ben was going to share that with you because we've issued it to the public utility staff, but we could certainly do that.

So, council when I have that document, we have received it, but it is in draft coordinate with Saws and getting that over to you.

Okay, okay, great.

Um I think that'd be really helpful.

Um, a lot of what I want to say today are things that I've heard directly from my constituents, and I'm just gonna echo their concern or relay their concerns to you.

Um, and a lot of them are the same concerns I have.

Um, I expected really to see some tangible expectations and metrics of what we're gonna be seeing with this rate increase, meaning maps, what is this project really look like, how long will it take, when will it be executed, uh, where are these leaks?

Um, how are we going to address them?

What contractors are we using?

Because a lot of the times I get complaints about the projects and the contractors that are being used not finishing on time and on budget and getting into litigation, and they are upset and they call me because they also don't know it's a SAWS project, which is another thing.

I'd like to see better signage so that they know this is SAWs and this is what we're doing.

They're blindsided, their roads are shut down, and then it'll take what it should have taken three months, six months is taking two years.

So we have not bid any of these projects, so we don't have any contractors on board.

The projects that we show for 2026 have been designed.

Some of these others are in design, but we can get you the project specifics in terms of location.

That would be great, and I think everyone wants to see this.

My certainly my residents, and you're welcome to come and present and do that.

And I know Robert said he'd come and show them, but that's what they're asking me for.

Um, before we ask people to pay more money, we just really have to be very clear about what they're gonna be getting in return because um, you know, if they're seeing all this water loss, they're thinking that they're just paying for that water loss.

And and what um councilwoman Aldretti Covito was saying is is exactly what I'm hearing as well.

Um we have to be able to explain this, and I know that we've done a lot of capital investment, which is another question.

Do you have a lot of flexibility there on the capital improvement schedule?

Can they be moved around at all?

Not based on need.

Total or on water replacement.

Total.

We have very little flexibility just due to some of the age infrastructure, particularly at the plants.

Okay.

Um I I noticed too that there wasn't a lot of talk about general class usage here, a lot about residential.

My residents are telling me that their rates have gone way up with the smart meters going in, their bills have gone up, and they want to see tangible results, measurable results about um, and they want to be able to give feedback too, because they're upset and they don't know how to give feedback about their smart meters and why all of their bills have gone up.

And then also, are we tracking that at all?

I know it was a huge investment, but um that's one of the biggest complaints I get is that um they're getting higher water bills ever since the meter went in.

We haven't seen a overall significant increase.

We have seen a slight uptick in usage.

I think I showed one slide that we showed the usage per year, um, and we saw a slight uptick in usage, one or two percent, but nowhere sometimes people had a sick meter and now they have a meter that's functioning, and so maybe they were using that water all along and and it could be now they are seeing the results of a more accurate read on that meter, but we haven't seen system-wide again.

We're talking one to two percent type increases.

That can really be true, but I don't know how to say I don't know how to explain that to my residents.

And when they were told this is gonna be accurate, this is gonna be better for you, and then boom, your bill goes way up.

And what we hope people can use, they can see, you can see if you flip on your irrigation system, you can see the usage, how much water that's using each time you run that irrigation system.

So you have a better idea of okay, if I use 10,000 gallons or if I use 15,000 gallons, what did you use that for?

Right.

And I know we met with Jacqueline Klein uh from your district, um, and she gave us specific customers, we were able to walk through.

Unfortunately, on their side, it was a customer leak, but if you give us any names and if they want to reach out to us, I know we gave her my information, uh, we've given her all the information that if they have any information that we can look at in their account, most of the time that we come out and we look, it's a customer side leak.

So again, we can help pinpoint it on in Gavino's team in conservation.

We help pinpoint inside and outside leaks, whether it's a water heater, a water softener, an irrigation system leak.

We have experts that can help pinpoint it.

So we definitely have provide and we can if you give us any information from any council district, we will come in and look.

I hear that.

I appreciate that, and I do want to come present that to the residents.

I just think if there's a way to explain this to them that this is somehow better, because it's an overall sentiment about it.

And again, if you're um your residents, uh if we have current contact information, they are receiving these continuous usage alerts.

So again, any leak, they would be notified.

They never were notified before until they got their bill.

So 30 days into it, 40 days, when they actually open their bill, they would see the issue.

Within 48 hours, we are letting them know when they have a leak.

So as long as they have we we've been given a current contact information.

So the process is to ask about the bill.

Yes.

Um obviously you can always call 704 SAWS to ask about your high bill.

Again, you can always contact Gavino if there if we're obviously we do get um requests straight from your offices.

So again, they can come through Govino, we will get you an answer.

Okay.

So I want to then that leads me into I want to double down on what councilman Via Grand said about if there if there are people on the uplift program and they are going over the average, I think we do need to address that because I it's just not fair to everyone else.

Um then let's see.

Okay, yeah, back to the general class use.

So their rates are measured still, is it by prior year usage, or is that the same thing?

Yeah, we have a different rate structure.

There's a different rate structure.

Can businesses are so diverse.

We have little mom and pop that uses very little water, and you have Valero or Microsoft or whomever that uses a lot of water.

Um, and so it is uh the rate structure is called a base excess model.

So we look at your usage, and if you used five million gallons last year, make the math a little easier, six million gallons.

Um that equates to 500,000 a month.

That's what your base is, and anything above that base gets charged a higher rate.

So are do you have data you can show so that the residential is there a gap between um overall revenues received from residential versus general class?

No, a disparity there.

Each class covers their cost of service, and that's in that Corolla rate study.

That's one of the things they go through and analyze, make sure each class pays their fair share of the costs of the system and the costs that they burden the system with.

Uh but there are differences again in our residential class, you saw that tiering.

We do have uh higher tiers for people who use higher amounts of water.

We're trying to encourage people to use less out in those you know, high volumes, because that really puts a stress on the system when we have to just like coming home and flipping on your air conditioner all at the same time at six o'clock at night.

If everybody turns on their irrigation system at the same time, it it can it drains our tanks and we have to build bigger infrastructure in order to manage that demand.

I think what I'm thinking about is if I'm in an apartment and I don't really see my bill, right?

It's sort of under a commercial rate.

It's hard to think about as much conservation as if I'm in a home and I have to think about um my appliances.

It's just a different thought process, right?

Do you know where I'm going with that?

That is one of the challenges we have is that our apartments, unlike CPS has a separate meter at each individual apartment.

We have one master meter for the apartment, and so there might be 200 tenants in that apartment that they don't they can make changes in their behavior and it doesn't really feel like it benefits them.

Right.

And I don't know.

I mean, there's probably a lot of ways we can address that.

We looked at splitting that class out as a separate class of customers, but that was going to cause their rates to go up for those people that live in apartments, and so we decided not to do that.

So kind of my last thing, I'd I still think maybe an outside efficiency operational audit would be helpful.

I I would like us to see where we can cut.

If we're gonna ask for more, I'd like to see cuts.

And I'd also like just uh I'd like to see all about the salaries and benefits for our executive management team and how those costs have changed over time.

So those are just a couple other things I'm looking at because I agree.

We can find some other buckets of money as well if we do this audit and look for more cuts.

But thank you.

Councilwoman Messagonzalez.

Thank you.

Thank you for the presentation.

Um I guess I'll I'll just start kind of with a general question.

What happens if this rate increase is not approved?

What happens to the health of our water?

Well, we would have to go back and decide you know what we would adjust because we'd need to make some adjustments.

I said we're gonna struggle to meet our targeted debt coverage, so we'd have to consider as part of that.

We need to think about okay, are we going to get a potential?

I don't think we will get a downgrade right away, but we could get something you could be could put on something called credit watch negative negative outlook.

Um but I would I would add add from the board's point of view, um, I would begin to question the staff bringing forward utility service agreements because what they do from the development community is just continue to add customers.

Um but I would I would add add from the board's point of view, um I would begin to question the staff bringing forward utility service agreements because what they do from the development community is just continue to add customers, and so if we were not in a position to have a rate structure to support growth, I would really begin to challenge some of the utility service agreements that are brought forward to SAOs asking for more customers.

Understood, thank you.

And uh and on slide 26.

I think you said you were gonna provide the um report excuse me.

Yeah, the report.

The report.

So I I wanted some background more on phase two of that report, but that'll be in that full report that you're providing.

So I won't ask that.

But um on site 26, uh can you kind of share more about kind of the staggered rate rate approach versus just a flat rate across the board of whatever six percent across the board for the next five years?

Can you 20 20?

Which was the slide?

26.

Oh okay.

So this is what they defined as the the revenue requirements.

If we had six percent a year or something that got you know, we could figure out how to make that work, but but I I'm not sure I'm answering your question.

I'm just trying to understand the staggered approach of starting high essentially at the 7.9 versus a flat rate across the board every year.

Yeah, I try to very similar again.

Corello all uh also did the Houston, the latest Houston uh rate study as well, and they came up with a very similar approach.

It's a five-year um analysis, and as some as you said, for for Houston, it they didn't want the up and down uh for their customers either, and so they did a smoothed-out approach.

Now the 7.9 is not something that 7.9% for residential for 2026 is is based on as Doug said, our revenue requirements.

So everything that if we didn't get the 7.9% in for residential in 2026, it's a higher number for 2027.

Just draw and so on and so forth.

So the 2.8% in 2030 is dependent upon all the four previous rates going into play.

So all of those rates would need to be adjusted.

If we don't get the 2026 or 27, it just gets bigger as we go um later down.

Okay.

Um thank you for that.

On slide 47, it shows the uh is there a schedule to get those water, I think it's the water mains that are more than 50 years old upgraded.

There is a schedule to replace the water mains that are based on we have a AI model who looks at the vulnerability of those mains.

So not all of them are the 50-year-old mains, but they're the ones that we know are at risk for break.

And then do you have a a general how many miles would be upgraded?

50 miles if there was an increase?

50 miles over 56 miles over the next four years.

56 miles, okay.

And then if you're looking through like I would say slides, you know, the project drivers, um slide 51 through 53.

I it it it reads like there is whether it's new state law or agency law uh requirements that are requiring these changes.

Is there any way that you can maybe provide a list of what's required now with new state laws, state regulations?

Um I guess throughout this presentation, right?

It's uh an inability to comply with SB4, um potential failure resulting in regulatory violations, uh nutrition limits imposed by TCQ, inability to comply with MS4.

So is there a way that you can kind of pull out those that are coming to us because of new state regulation or TCEQ requirements?

Absolutely, and some of these uh just to clarify, um, if we didn't do them, we wouldn't be meeting our existing permit with the TCEQ.

Right.

But we can specify that.

Okay, I think that would just be helpful because it I think it does um there are they are there are projects that are yes or delayed, but some of these are also because of new requirements, correct?

By state law.

Yes, right.

Um, and then as we uh related to SB3, have or the I'm sorry, the Texas Water Development Board.

Have we looked at any grant opportunities with with them?

And we have um we we submit typically every year.

Um but that would hit on any of these projects?

I don't know that we submitted on any this year, but um yes, we are always looking every year at what projects are a good candidate to meet TWDB funding.

I guess you have a do you have a column in this list of projects that we can add that?

Can you yeah, if you can add that so state regulated or state regulations, TCEQ requirements, uh any Texas Water Development Board.

And those are loans.

Yes, right.

Right, sorry, excuse me, you're right.

They're loans, they are.

You're right.

Uh and if we did if we did approve this rate, would we be able to increase any bond capacity for Edwards Aquifer Protection Program?

I'm gonna have Doug answer that.

You know that guy?

Uh councilman, that wouldn't impact our capacity.

I'm sorry.

It would not impact our capacity on the Edwards protection program if we increase thaw's rates.

It wouldn't allow us to bond for more.

No, so the the security for that debt that we use is the SAWS transfer.

That's how we get to the legal statute in terms of how we can issue that debt.

But it's essentially coming out of the general fund.

So we have programmed in 100 million dollars, 10 million dollars a year over a 10-year uh program.

So we wouldn't be looking to increase that capacity for that program based on an increase here.

Okay, understood.

Well, thanks again uh for the presentation.

And um, I think most of my colleagues have said this that this is a tough ask, right?

Um, for residents, and we all know what it costs to maintain our homes and we maintain and then we we plan for the future, right?

Every one of us does this in some capacity.

So making sure that residents really understand what um this is for and the intentions I think are are are key.

I know we have a town hall uh tomorrow in my district.

Um and I've just talked to my colleagues about this.

If if you can uh get your residents to go on a rain to drain tour, I do think it's helpful.

We had um I'm I'm uh planning a second one, but um we had 45 residents come out in the first one, um, and really just impactful um for residents to see close up uh what SAS does every day.

And so uh I just highly recommend that for residents.

SAUS takes care of all of it, all the work, so it worked out for us.

Uh but just really recommend that.

But thank you again for the um presentation.

Thank you.

Councilman Gulvan.

Thank you, Mayor.

Thank you for the presentation today.

I know it's a big one.

Um I'm gonna pick up, I think, where council member uh spears of your grind left off talking a little bit about general class um rates.

I know that of course we've apparently focused on residential ones here.

I wanted to ask us a quick clarifying question on slide 32, which would be the residential water bill frequency.

Um I just want to make sure I'm understanding this slide correctly.

Given that the residents are paying 45 percent, typically within the residential customers make up 45% of the 4,000 gallons tier.

Uh is that the general class of the opposite?

45% of our residential customer bills that have been issued over this three-year period, never got above 4,000 gallons.

Right.

So this is just residential billing.

Do we have a general class one similar to this?

We would, but it's a completely different rate structure, so it's not 4,000 gallons.

Again, I mentioned they have this base excess rate structure, so I could tell you how much got billed at base, but each entity has a different base depending on how much they used in the prior year.

Again, if they use six million gallons in the prior year, their base is 500,000 gallons a month.

I see.

Is there a reason we do um a year by year versus month by month?

Um because year by year, we look, we try to figure out if they're peaking.

So if they're peaking, so if they use 500,000 one month, but then they use two million the next month, that's difficult for our system.

So um we try to blend that out, and any time you have that peak usage, they pay more, just like the residential customer would.

The peak users in just a year by year, right?

That one year is it's higher than the other one, that one's gonna be their locked rate, or is it change every year?

If you did it month by month, they would be very difficult to bill because it we'd be having to change every the base every cycle.

So their bill would be very unpredictable if they use 500,000 one month, two million the next month, so the base is five hundred thousand.

They use two million, then the base resets to two million, they're back down to five hundred thousand.

It just it would get very awkward, I think as well.

Right, because the restructures just set for different form.

And so uh I mean, is there a specific rate for them with that?

Or what's the specific rate for the the base?

Well, the base and it's comparable, I would say residential customers.

We look at this and they all got to again, we set uh we make sure from a cost of service perspective that each class is covering its costs.

So their costs need to cover, so we take the total usage and figure out you know how much how many bills they've been allocated, and that helps determine what the base level is.

That base would be somewhere akin to what the residential customers are paying in those kind of first two or three blocks.

So if you look at block one usage for residential, it's lower than the base usage for general class or business class customers.

But block two would be closer to average, and then blocks four and five would be higher on the residential side than the base.

I can get the exact figures for you if you'd like.

That'd be great.

Okay.

What what's the thought process for the lower rates for general classes or sorry?

Yeah, lower rates on the bases as they continue to increase.

What's the what's the kind of thought process for that?

Given the fact that they're using more water, I'm just wondering what's the thought process of reducing the rate comparatively to an equivalent rate for residential.

So if I understood correctly.

Yeah, so general class lowest will be like two eighty right now, because this is right recommended.

But that's is that water delivery and water supply?

Yeah, um, oh, has water delivery, but five dollars and eighty cents for both water delivery and water supply, and like you said, five dollars and eighty cents per thousand per thousand gallons.

And that compares again that lowest block for residential was two dollars and sixty-four cents.

And I think the second block was four dollars and eighty cents from my memory.

So it's it's somewhere in the third block for residential is the equivalent rate that general class is paying at base.

And the reason that is because roughly 80 to 82 percent fall in that are always billed in that hundred percent.

They're they're always built in that first tier for general class.

Okay, they're always most general class, eighty percent of them stay very, very consistent year after year with their usage.

I see, and so for the outliers we're having them to pay a little bit, or the rates a little bit less given the fact that it's so few of them doing it.

Yes, and then you know, again, 175%.

Um, whereas residential, as Doug said, the highest rate for residential is roughly $17 per thousand gallons for residential, it's a little over $10 for general class.

So we understand that just because you're using a lot of water HEBs, obviously it we shouldn't be penalizing you just because you're using a lot of water, but you should be paying more than somebody who's using obviously you know more than they use the previous year.

Sure, okay.

I think I'm understanding what's what you're laying out, so I appreciate that.

I I don't think I agree with the thought process and just the idea that despite the fact they're using a lot of water that because it's so minimal of them using it that they should be paying a lower rate than the majority of folks.

To me, I don't think it's a penalizing.

I think that's just sure it's part of their business plan, but I assume anyone using that much water, any general class customer, likely is able to also produce an equivalent amount of revenue in to hopefully pay for something similar.

And we can you know further discuss as we go forward.

Um it just seems to me like a large industrial user, a large office user, uh, that's probably making a significant amount of profit, but the fact they need such a large space, I would assume, uh, can afford to pay a significant amount of of water.

Uh and that means the rate's a bit higher for them.

I think that should be something we are encouraging.

Um given that I mean if our emphasis is conservation, I just don't I don't fully grasp why we would charge a lower rate for people who are using less water or businesses that are using less water.

That's just my blanket thought.

But just remember they're using, but they're more consistent users, so they're not peaking.

So we're not having to build a bigger infrastructure because of them, right?

Because they're using consistent usage throughout the year, whereas again, residential and irrigation users, residential irrigation, and again, general class is irrit it it's independent because a general class user has two meters.

They have their regular domestic meter and they have their irrigation meter.

So we're we're talking about very two different things, right?

But people who do peak is is the reason why we have to build a bigger infrastructure.

Can you go into a little bit of what the differences there?

Because I guess my thought process is that okay, so then if you're using consistently the highest amount of water in our entire system, why why would that still be okay?

That's that's uh a lower rate than folks who have occasional peaks, but yet have a lower total amount typically of water usage.

Right.

So we would just have one big pipe.

And I know we we did not have the irrigate, we didn't have the the visualization, but it's usually like you have one big pipe to say for a base usage you have one big pipe.

If you have to add in layers for peaking, uh-huh.

It's specifically for the peakers is why we have to have larger pipe and have the more infrastructure built, and or why we're having more main breaks, right?

Because we're we're putting more pressure on the system.

Got it.

Okay, that's helpful.

Thank you for that.

I still feel a little bit of a gut reaction of I think any kind of any significant use of water if it's the highest volume users should still be paying the highest rate.

I think that's we again we can continue discussing it and make break it down a bit more with me offline, but that's something that I think I just consistently feel should be true.

Um I know we talked a little bit earlier about even breaking out, or there was a thought in the past about breaking out the apartments from the general class.

Um was there any other thoughts on breaking those out at all?

Or are they all gonna stay you anticipate that they all stay within their same kind of grouping?

Yeah, we did look at that in the connection with the last full-blown rate study that was done and got rolled out, the results got rolled out in 2023.

And when we looked at an apartment users were gonna see an increase, and which so we decided to leave it within the general class.

Because we didn't want that to happen.

And I fully support that.

I mean, I there's still residents, right?

Renters, including myself.

Um are still residents.

Um but I guess my point is do we anticipate any other other portions of the general class, whether it's looking at large industrial users, even certain uh commercial commercial users that are you know maybe employing 10,000 plus people or something of the sort.

Um just divvying out a little bit more about uh the highest end users.

Well, there are some uh utilities Austin being one that has super utility user rates.

Uh you know, I know as we go through our discussions with respect to these data centers, we got to determine is there a separate rate that we should be charging these data centers.

I've read that that's something that you have a little bit of answer.

Just kidding.

I'm just kidding.

No, I appreciate that.

And that's I think the biggest component there, right?

My constant focus is just is the high-end users, um, how are you making sure that they're paying efficient.

I know it's part of the cost service analysis that was done.

Um, but I think it's just critical in these conversations, whether it's to the public and/or to us, right?

That we are being clear on where everybody's where everybody's paying at the moment, where everybody's share is.

Um, I think I'll I'll leave that there.

Thank you so much.

Thank you, Mr.

Hire.

Uh Councilman Castillo.

Thank you, Mayor.

Thank you, Doug, for the presentation, as well as uh the chairwoman president and the board members who are present today.

Uh yesterday, uh, we did have our district five utility town hall.

So thank you, Doug Gavino, uh, Sarah Jean and all the team, uh, Norma Jean rather, and all the team members that were present last night.

Uh, we did have CPS Energy also present to present on their generation plan, and there was lots of value in having both CPS and SAS present at the same time.

Um with Doug, he laid out um the argument to and the need of why there's the opportunity and the need to explore what a rate increase can look like.

And what we heard time and time again, uh essentially was what community valued is that the SAWS rate structure is designed to provide a balance between residential and business rate uh uh rates, rather, and strengthen conservation pricing for all white water users.

And as Doug mentioned in the presentation and last night, uh SAS's tiered structure that the less water used, the lower the rate paid.

Uh now, some of the comments that district five residents did have were concerns around droughts, um, what type of revate programs, if any, were available to help remove green space and and uh help alleviate the need to water their grass.

Um but ultimately what district five residents uh were asking was hey CPS Energy, how can you replicate SA's rate structure?

Um so my team and I were very surprised but found a lot of value in having both in terms of laying out the need and of course the request um for a potential rate increase.

Uh now the meeting did end with Araceli, she's a very active San Antonio resident.

I don't think she lives in district five, but she comes to a lot of district five events, and she closed off uh the meeting with the last word and in Spanish, so I'm not uh saying verbatim what she said, but she grounded us, right?

That people all throughout the city of San Antonio are experiencing economic insecurity, um, stagnant wages, and just the increased cost of living.

And this is something that council uh and board members that we need to ground ourselves in, right?

That there's just a lot of moving pieces with families' financials, and she hoped that we keep that into consideration.

Um but uh again, something that we also have to keep in mind is the aging infrastructure, and I also share the concern of the leaks.

This is something that uh while we didn't hear last night, I do hear within neighborhood association meetings about uh the response time.

However, uh in reviewing the SAW's water management plan, uh my understanding is in 2026 y'all intended to uh or have uh already hired additional crews, um, six field utility coordinators to assess leaks more quickly and schedule repairs, and then also in 2026, SAS will hire additional field crews to respond to leak repairs for a targeted of 3,000 acre uh feet per year of savings.

So um within the management plan, it has several other bullet points of improvements in 2026.

Uh so I'm hopeful that that'll help alleviate uh some of those concerns that we're hearing in terms of infrastructure and response time.

Uh now something that can be helpful uh moving forward as we continue to digest this presentation uh is I I would like to understand if there is not a rate adjustment, will we potentially see uh some of those recommendations in the water management plan dissolved or not fully implemented?

Uh, because I think uh so much as a councilwoman uh asked, right?

Uh, what kind of impact will we see in terms of services if there isn't uh a rate restructure?

Um so those are a couple of things that I would like to see.

Um again with the record drought and it's in the management plan, right?

It it affects soil, so we'll see more faulty pipes and more leaks.

Uh and I think this is gonna take a multi-pronged approach, coordination with uh the city and CPS on how we continue to implement things like an urban tree canopy, uh, because it is going to get hotter.

Um, these droughts are going to continue, and how do we plan for the future uh to help alleviate um potential um uh pipes breaking because they are going to happen, but how do we alleviate it uh based off of the changing uh environmental climate?

Uh now with the uplift program, uh I I hear the comments about the folks that are exceeding a specific amount of gallons.

Um, but my understanding is um you know, 9,000 um to 12,000 gallons is typically like a four to five person household.

So I want to ensure that we're being mindful when we're talking about adjustments to the Ufflip program that uh in my district we have a lot of multi-generational households, so there are up to seven plus folks in one household.

So you will see that amount of water and the need to participate in programs like Uplift.

Um similar to uh a couple of my colleagues, uh, in terms of the prioritization of projects.

Of course, I I know this is the same shared value with the board, right?

Of course, those with the urgent needs, those that were are mandated by the state should of course remain priority, and I know that's uh priority we also share as well.

Um, but I do also believe uh what would be a value, and it's been requested as well, with the water collection system and the pipes that are 50 years or older.

I'd like to understand uh where in the city those pipes are.

I think I have a general understanding, but I I I'm assuming that it may overlap where we're hearing that there's a lot of breaks, right?

And how can the rate adjustment potentially help us address those 50-year-old pipes within a five, 10 year plan?

See, and then um the questions already been asked around like the bond impact.

Uh lastly, just want to thank the SAS board.

Uh, as um the chairwoman mentioned, you all approved uh an item for a pilot program that was initiated through a council consideration request.

So grateful to my colleagues who signed on to that.

Uh and this is something that's going to benefit uh folks uh all throughout the city.

I know uh my Southside Council members experience the same uh infrastructure needs.

We're also on septic tanks, aren't connected to suit uh sewer lines, so just grateful that the board saw the need and the value to support that.

Uh and I look forward to um uh getting some uh an understanding about uh the the increase of support for the issues that I mentioned within the water management plan.

Uh and lastly, as the mayor mentioned and in the plan it emphasizes right sprawl and how we need a plan uh in terms of adding more houses or or more need rather, but also as a council, how are we having conversations about annexation?

My concern when we have something like that on the agenda is I'm thinking about the maintenance of the infrastructure uh for the streets and sidewalks while we already have such a high need uh within our current limits.

So um uh interested to see what type of policies council can co-create in terms of how do we alleviate uh that concern with uh sprawl and annexation?

And lastly, I I think it's really I what I really value about this presentation uh and I was sharing with uh councilman Monguilla is y'all include the wages and the benefits of your employees.

Uh and I think as the constituent mentioned yesterday, right?

Wages are stagnant, and I think if this um rate adjustment is going to provide an opportunity to increase wages and benefits for SAWS employees, I am hopeful that that's something that this council will take into consideration because it's it's getting expensive for everybody.

Uh and um I I'm just um grateful that y'all included um the the breakdown for employees.

My last question is with some of the projects they overlap with Leon Valley.

Um does the city of Leon Valley contribute in any way to those projects, or is it similar to City of San Antonio like SAS projects within City of the City of San Antonio that SAS absorbs the entire cost, or can you just help me understand that relationship with uh Leon Valley, for example?

If we did a project in Leon Valley, they would not participate with us since we would just be working on our infrastructure.

If anything, we may try to work with them on the paving requirements on the restoration, but that may be the only area where they would help, and typically they don't.

Okay, thank you for that understanding.

Thank you.

Thank you, Mayor.

Uh Councilman Mungia.

I do want to start off by saying thank you to a couple remarkable employees that you have.

Uh Cecilia Picasso, who I saw somewhere on the back there, and um the uh other Terry Castillo who works in uplift, not the one say next to me.

Uh they are fantastic.

I think I was just talking to my staff earlier.

We have about at least once a week a resident coming in with a SAWS bill issue, not to mention other SAWS it related issues that come up, and they're always very responsive and very helpful.

And with Terry on the team, we've been able to put a lot of folks into uplift program, which is saving them a lot of money, and so that's extremely important work that they do every day.

And I know it's not always easy working with Johanny on my team, but I appreciate y'all doing that.

In a good way, in a good way.

Um so, you know, you had a slide here about the age of water mains that and a significant amount over 50 years old, and also some of the uh sewer mains.

Uh, do you have that by geographic location or on a map where the oldest ones are located?

We can provide that.

Yeah, I would appreciate that.

Um, it's been mentioned earlier, but yeah, a lot of some areas of my district do not have septic, uh including uh they have septic and they're not on the wastewater.

That actually includes my field office, we're also on a septic tank over there.

Uh and some places actually don't even have connection to the water line.

Uh and I think that's because especially south of 410, there was a lot of large tracks, so they probably the system wasn't set up for the development that we have now.

And we came to an issue a few years back where we had a business owner um does really well ask contract for the city on Zarzomora, didn't have the water line going to their AC business, they're on a well.

And in order to connect, they it was you know, three properties down, of course, they'd have to pay for that line extension, they'd have to pay for the road work on their own.

And another uh, you know, uh a family friend reached out and they said, you know, we're building a house on the south side, individual piece uh individual home.

And they asked me, you know, your counseling, why do I have to bring the water line all the way up to my house from from the main street?

Wouldn't that be SAS responsibility?

And I'd tell them, you know, no, yeah, you know, you as an individual home builder are classified the same way as D.R.

Horton building 500 homes.

You are a developer, you have to bring that line all the way down.

So I think it's uh worth making distinctions there.

I don't think everybody that is trying to get a water line should be treated the exact same way.

Um and I don't think y'all currently have plans to change that.

Is that correct?

We don't.

Um we can certainly look at these specific examples.

We have a few tools in the toolbox, like a local benefit extension, but um we can certainly look at these specific institutions.

Yeah, that's important, especially because that you know mainly exists on my side of town, right?

So as residents are paying more, they're gonna ask me what's happening in district four in our area, uh, which excludes the wastewater treatment plants that I actually have in my district.

And so um can you talk to me a little bit about um the rate increases that you all had uh from 2016 to 2020?

So if you could pull back up uh let's see.

Trying to remember what slide we spoke to that on.

I think it was um slide 10.

So you can see there we had a 7.5% overall increase to the average residential bill in 2016.

2017, we actually came in as opposed to the 7.9 that you see on the slide, it came in at 6.8 percent.

Um and then I think I cited in 28 and 20 or 2018 and 2019.

You can see the percentages on the slide at the right there.

We had a 5.8 percent increase, and then a 4.7 percent increase in 2019 to the average residential bill.

And then finally in 2020, we did have the 9.9 percent increase that is again is cited over on uh slide or the left-hand slide.

So if you could do the math for me real quick, what's the total rate between four years?

7.5, six.

I didn't bring my calculator, but um what is that 24, 20?

I I want to say it was just less than 30 percent.

Okay, so about 30 percent over four years.

Over the five year period of five years, 16 to 2020.

Okay, gotcha.

And what is uh welcoming back, what was the reasoning for this almost 30 percent rate for five years?

The big drivers you can see there is the Vista Ridge Water Supply Project, but uh certainly we were in the midst of the EPA consent decree, which we entered into that consent decree, and we agreed under that terms of that consent decree that we were gonna spend roughly 1.3 billion dollars.

Yeah, and the 1.3 billion doesn't include any federal funding that you all received.

We didn't receive any federal funding for the receive any federal state any additional money outside of SAWs for the consent decree.

Not for the consent decree, no.

Oh no.

No?

Okay, I just want to make sure.

So now that and we're out of the consent decree.

We have two projects that we're still wrapping up.

That have a deadline of 2027.

It was a 10-year consent decree, but we got a four-year extension for a couple of projects.

That's great.

And uh Vista Ridge is 100% complete.

Vista Ridge is 100 percent complete.

Okay.

So now that we're kind of through most of that capital investment and you've had this 30 percent increase, you're you're needing additional on top of that to continue with maintenance costs, even though those things that you asked for that rate increase for are more or less completed.

So again, you're never completed as we showed on the wastewater mains.

Again, the collection system, we need to continue to spend money on the collection system.

But the two things that aren't up there that are really driving the rates now are wastewater treatment plants, and you saw Andrea went through the bulk, those are the biggest expenditure items, particularly in 2026.

There's 350 plus million dollars dedicated to those three projects in our wastewater treatment plants, and then this water stewardship initiative to replace aging water mains, which again wasn't necessarily one of the big pieces of these rate increases here.

Okay.

So of this 30 percent increase you've had in five years, you're saying that you still need additional to do additional work, that this is not helping cover the work that you still need to do.

There are is additional needs of the system, yes, on top of what we did here.

Yeah.

I think you know, I'd appreciate maybe going in a little deeper, and maybe Ben, you can help me on with this, is okay.

We've gotten the 30 percent since 2020.

Now we're you know, 25, 26, asking for another, so that extra rates from 2016.

Where is that kind of feeding into now when these projects have been completed?

Okay, councilman, maybe if I can if I understand your question, the so for example, Vista Ridge, that rate plan was put in place to allow them to enter into that contract, um, have that third party deliver that water to to the SAW system, that rate increase is covering that cost of of acquiring that water every year.

So the project got done, but you still need the rate support because we've got to acquire the water.

The wastewater and water delivery projects that they funded there on the capital side, they continue to fund today.

And because they've issued long-term debt.

So that those rate increases covered what they needed for those projects.

Um, but it did it didn't end once the project was completed, if that makes sense.

Okay, so those projects that you're working on still continue to use that 30 percent increase of investment.

Right.

Okay.

That's why we go through the full review and look at all of those changes, but for the most part, they're still paying for projects that they did during that time frame.

Okay, thank you.

That's helpful.

And then um also I've talked about this before, but the purple pipe program.

Uh are you all looking at expanding that at all?

We are we are doing an exhaustive look at into our recycle system looking at different ways we can expand it.

There are ways you have to look at how much water source you have, you have to look at the pipes, you have to look at the pumps, a lot of things that we we are looking at.

But yes, we are looking at at the expansion of that.

It it depends on how much some of the big users, some of the big uh uh water users will need out of that system and how much is left off of it.

But uh, to do that, we need to make sure that our rates, the the recycle water rates cover um any expansions look that we look at, and also just just fixing the system, re making re making it a redundant system so that it's not uh it doesn't have main breaks and that sort of thing as well.

Right, and also I guess trying to make sure that that water is is still cheaper than regular water, right?

Otherwise you lose the incentive on that.

Uh I think that's important.

And uh are you all able to send us you know your I'm not sure if it how I think it's public information, right?

But like your top 25 commercial users of water.

Uh we we could definitely send that to you.

We have a page in our annual comprehensive financial report that lists our top 10 users that would be both water and wastewater services.

Yeah, thank you for shipment.

So I think you know, for me, the next conversation is gonna have to be uh what your proposed projects are gonna look like if you are to get this rate increase uh right and so that's important in my district, we have a lot of older infrastructure, so you know if a lot of work is not gonna be done in our area of town or residents are gonna say why am I gonna pay more to to not really get a direct benefit in our general area from that.

I know system-wide, that's an improvement that everybody benefits from and I get that.

But again, my residents are gonna look at what's happening in our geographic locations.

I understand that.

I I've listed the list of projects for several of you that have commented, and I understand that.

And our flexibility, while it is not as great as say the city has when they look at their street maintenance schedule and you can look at the streets that are being proposed in your respective districts, and you can move them around.

We don't have that level of flexibility because to the degree that you look at a project that may fall in your district, it may or may not it will impact the upstream and downstream of the system a little differently.

Of course.

So I just wanted to say that I understand how street maintenance projects and bond projects are created and presented to you for consideration.

We are happy to give you the list of projects that fall in your council districts, but I would just ask all of you to remember that it's part of a larger system, and the flexibility isn't necessarily there that you have with moving those projects around because they are connected to the overall system.

Yeah, I think that's a good thing.

So I would just a bad pipe no matter where it is, right?

And every resident of San Antonio deserves that.

Uh and just to clarify, if we were to increase the rate, that is for all SALS rate payers, right?

So that is the Leon Valleys and all the costs of the incorporated people in Bear County.

Okay.

Yeah.

The rate applies to all of SAW's customers.

Regardless, depending on what class you're in, customer class.

Uh and I know you all think about this, and I'll just reiterate it that some of my colleagues already mentioned.

Um the current wages and salaries in San Antonio are definitely a concern to me as well.

Uh, you know, it's not your fault directly, right?

That wages are stagnant, uh, but at some point it does become all of our problems that that is the case uh here.

So I just want to mention that.

Thank you.

Uh councilwoman coor.

Thank you, Mayor.

Um the benefit of going last is you get to say what everybody else said.

Uh but there's a couple of things that I want to really double down on that folks have already shared.

So one, I wanted to shout out Councilman Castillo for the Plumbers to People program.

We and Cecilia and also what Councilmember Mungia said, Cecilia and Terry work really close with our team and now you have my team to really help.

We had a 80-year-old resident whose partner was on an oxygen tank, had a massive water water leak, and and and it wasn't massive in the sense that um it was easy to fix, but it it the bill got his bill got up to three thousand dollars, and they had to work really creatively to be able to even move the washer dryer to be able to help them.

And so it's a really important program that I think we should continue to invest and make sure that the barriers that people do face if they have any with the program that we address them as well.

So um, I just wanted to start with that.

I have some questions just on the slide, so I'm gonna go through them and and before I even start, I spent some time looking at my water bill during this time to try to calculate what the differences would be in pay in in my water bill, and it's I did it, I wasn't able to do it, and I um like numbers, and so I just think what the mayor said what would be helpful uh in that if you could show us the example water bill for different types of customers, it would it be helpful for us to better contextualize the data that you are showing, um, and then also be able to use that for the wastewater system as well.

Um so I'll start off on slide eight as the comparison.

This was an interesting slide to me because we have a in your later on slides, there's a lot of um data regarding the amount of wastewater work that needs to be done and and costs increasing for that, but we're actually pretty good on lowering the cost for operating and maintenance of our wastewater services.

Why are we better at that than regular water services?

A lot of that is gonna be related to the size of our infrastructure.

Um so there's some savings and cost because of the amount of water that we treat.

We have purposely centralized our solids handling at one plant, while many other cities have multiple plants with multiple um, I'll say solids handling facilities.

So we've worked really hard to streamline as much as we can.

But where we are, and what's this we expect our numbers to go up is our equipment is efficient inefficient, and we want to bring in more efficient um equipment, particularly from an energy perspective, a chemical perspective, a manpower perspective.

Understood.

But we work to centralize is a short of it.

Yeah, it just based on the percentage difference between OM for water and wastewater, you would think that the needs costs are similar or the percentage difference would be similar, but they're not.

Right.

Um, that's because our water system is not centralized.

We have 50 plus pump stations throughout our system, and they're very energy intensive.

Okay, that didn't quite understand, but that might um be over.

I guess what I'm asking is if you could go to the slide that it in the in your CIP before your CI plea, um, that shows the difference in like maintenance costs that you need for water and wastewater.

Um let me find it.

Do you remember which slide I'm talking about?

Because if not, it might take a few seconds.

Talking about the operational cost.

Okay, I'll have to follow up with you because I don't remember which is where where I was looking at it.

Oh, right here.

Um, so slide 49 in comparison to this is how much of the water and sewer main replacement programs that you would need.

So oh, I have a different slide 49.

I think it's the next one.

It's 50, I think.

Okay, yes.

So this I would have expected the percentage change for water and wastewater to be similar to oh what the percentage differences between O and M for each.

Well, this is um showing our capital investment for the replacement of pipes, so it's not related to the facilities.

Yeah, okay.

It's just the all right, I'll move on from that.

Um council member White and other Tecuito asked about the the water loss.

Why does drought affect um why does drought affect it?

Does it damage pipes?

Our pipes are we're using more water.

Um Cecilia talked about that peak rate.

So at night, our mains get stressed in particular when those watering hours come on, our tanks are dropping, our pumps are going full blast, and that puts a lot of stress on our pipes.

Okay.

And when especially in areas with soil conditions that are poor that are clay soils, and you have metal pipe, it's we see main breaks.

Okay.

Um, on slide 35, what are the posit positions that you're projecting that is an increase?

Because I understand, and I know Jalen made the comment of like we wouldn't want to serve additional people, or we wouldn't be able to maybe that's better, serve additional people.

What what are those additional um 40 or 37 positions and where do you reach economies of scale where you're you're creating your servicing water after the pipes are created?

So the bulk of these positions as we've talked about, we need to respond to leaks faster, so we put more crews into responding to leaks faster and actually uh in-house construction crews to work on replacing age water mains.

The other big area this year for 2026 is that lead and copper rule that I talked about.

We've got to conduct that inventory.

So I think there's 12 or 13 people that are added relative to that lead and copper program, helping us get the data that we need to get to complete that inventory of the lead and copper service lines.

So it's not actually directly related to system expansion, it's more so maintenance.

Well, it it's I don't know that it's directly related, but the system grows whether you add people or not, and you can see it grew a lot while we weren't actually we were reducing people between 2005 and 2015.

Um the system grew a lot, so there's not a direct connection, but it does.

That's why we saw 14 days responding to water main leaks as opposed to two days now.

So there is an impact to you after a while if you don't add enough positions.

As we add miles, as we add water miles and wastewater miles, and you need crews to maintain that.

So we from a board standpoint, when they present their annual budget, we do look at that benchmarking customer to uh employee ratio to see if we're in the right space as we expand.

And kind of on the line that Councilmember Galvan was going down a little bit, right?

One thing that we've been talking about recently with water is sprawl, and that sprawl costs additional uh as an additional cost of services.

So I do think when we have um folks coming to develop in the suburb in far out where we have to go develop significant amounts of miles, that they should be paying more to ensure that they're recovering later on some of these costs.

So do we build that into like agreements that we set with developers of, you know, we know if we're building you 20 miles of, which is I know I'm exaggerating, but 20 miles of what main water line, this is how much your escalating costs will be because in 30 years we're gonna have to replace that those miles.

Generally speaking, you want to speak to it.

Well, I will say, in terms of impact fees, if you're further away from our system, if you're further away from our water production zones, you're paying more in impact fees.

I hear that, but that's a one-time impact fee.

Yes.

In terms of rates itself, um at this point in time.

Oh, let's go.

The only rate differential we do have if you're outside city limits, again San Antonio City limits, we charge those customers a 30% premium on their water delivery rate and a 20% uh premium on their wastewater rate.

So any customers that reside outside city limits.

Yeah, I would think of some other way to be able to like get the and I don't know what the right process is for the developers, but maybe we think of some creative um work for it to for them to help support the maintenance.

But okay, um, why do we have a different fee fee structure for water versus wastewater?

Well, first off, water we are able to measure each and every month.

Yeah, we have to estimate your wastewater usage, and that's based upon how much water you use during this time of year during the winter time, sometime between November 15th, we look at three consecutive months' billings between November 15th and March 15th.

Yeah, and we determine how much water you use during that period, and then that carries forward.

That's your winter average for the entire year.

Yeah, I understand what it is, but I just didn't understand why.

Like, do you see do we see a higher or a lower impact to residents when we do that?

Or does it actually just average truly average out over time?

Because if you're using an average every month, wouldn't you end up paying higher than if you just picked the same uh fee structure as the water usage?

If you just picked the same rate.

So that was confusing question.

Yeah.

Um sorry, Robert.

If if uh what you're saying is why do we charge this much for wastewater different from water?

And he was explaining that you take the average you say, why don't you just do it across the board?

Yeah, Houston does that, but can you imagine what your wastewater would bill would be in August?

Because you're using so much water, even though you're not using it through your sinks, your Camo's, you're putting it on your lawn, then your wastewater bill would just skyrocket.

No, the reason why I was thinking was the opposite to use the same structure as the water um the your regular water usage where it's a thousand, two thousand.

That way the folks that are using less um would be able to pay less in a certain month for wastewater.

Does that make sense?

Yes, but they would pay more in other months.

Yeah.

Okay.

Okay, so it'll average it would be ended up being the same for uh whatever their winter access.

Yeah, because summers would hit them harder.

Yes.

Okay.

Um for so I think some of my council my council colleagues I oh I'm already out of time.

Okay.

Um I will ring back in.

Uh second round, Councilman Galvan.

Thank you, Mayor.

Just some last quick questions.

Um we have any uh information on how many customers have utilized uh conservation programs that SAOS has.

Um both you know, general class and residential.

I don't have a direct number for the conservation program, but what I can get you are the number of uh programs that have been utilized.

So rather than a number of because sometimes a house will use more than one program.

Sure.

So I can get that number for you.

Well, so you said the number of of how many utilized?

Is that what you're saying?

Well, there's uh like how many programs have been utilized?

Yeah, we have various programs, so one household can use three or four.

So I'll get that number for you.

What's the number of programs that have been utilized, and we could try to average that out amongst our customer base?

Okay, but so we don't have the data on how many each customer or we don't have data on how each customer has whether they've utilized conservation programs or not utilized yes, we have that as well.

Okay, because I think I would prefer that a percentage of you know, out of the 100% of our customers, this many have used this conservation program, and then we can add them all up, right?

That's what I was doing.

I'll get that information for you.

Thank you.

Because I think that would be helpful to tell us the kind of story about how many people are using these programs to begin with, how many folks are actively conserving, and both the differences in classes as well, whether it's residential or customer.

If we can break it out more from there, I'd prefer that even more so.

Um but thank you.

Um I don't remember the exact question that Council River Via Graham mentioned talking about the uplift program.

Um, but I really appreciate uh Jalen your point about um the smart meters and the kind of automatic support uh for some of the plumers of the people.

Um I would like to see I don't know whether it's the through this rate increase or not, or rate request uh that that program could be expanded upon uh so that way there's more automatic enrollment into some of these programs if we're seeing those kind of discrepancies with the people's bills, um, particularly of course our lower income folks, uh just so that way it's less of a burden on their end to reach out and say, hey, this could be the problem that we're always reaching out first.

And I think you already are, but is that part of the well of a any kind of rate increase to expand that program further?

So what one of the things that we did was back in the day, like 10 years or five years ago, you'd have to apply for every program if you qualify for our uplift programs.

Right.

So what we did was we created one application.

So as families apply for that, they then are notified of all the different programs they qualify under that umbrella.

And plumbers is that uh pro one of those programs, Lagerls is another program, Project AWA.

And so rather than making them come to us every time, we now have a lot of employees, we have employees that go into the community.

Okay, we want to go where they're at, because I know we're at many of y'all's offices with staff.

And so then we try to eliminate the barrier for the customer, then at the same time let them know everything they qualify for so that we can help them all at once rather than making them come back to us every each and every time.

Right, right.

And I think I think that's great we uh have that's also helping us out in district six, but I think it's also just the it is any way that we can continue to try to do it in a bit more of an automatic fashion, where there isn't even the need to go to the district six field office during the week uh to meet with the meet with Teresa, then it's just an automatic kind of hey, we saw your number, or you saw your increase uh your bill increase drastically.

Is there a way that we can check on and so what we do is especially through the Connect H2O, we now know and we get notifiers.

So then we reach out, I think Doug mentioned it earlier.

As we see any of our customers, not just Uplift, are reaching certain um limitations, I guess, we then reach out to them and let them know, hey, you have either constant use or you're about to exceed X number so that they then are notified and then they can know the different programs up to them.

But a lot of that is gonna be incumbent on them updating their information with this.

As long as we have like a valid phone number, a valid email address, then we can reach out.

Because what we try to do is reach out via email or text message, and if we can't, then we then we'll snail mail something, wait a few more days, mail something again so that we find every which way we can to try to get a hold of those customers.

Got it.

I appreciate that.

Thank you.

And I guess one of the last uh points I was gonna just make, um was you know, I know we talked about earlier general class, um the difference between the general class rate structure versus the residential rate structure.

I still be interested in finding ways that we can make I know we did a really great push in 2023 um to change that, and I think it's working really well.

Uh but I think any continue, I think we should always look at continued efforts on that.

I know you mentioned, of course, the data center component, other kind of larger classes that we could look at, or larger customers we could look at.

Um I just think that'd be worthwhile to explore as we go through any further conversations on this.

But thank you so much.

That's all my questions.

Councilman White.

Thanks.

Just a couple of things.

Um one, I'm glad a couple of my colleagues brought up the uplift program and that extra water usage.

I I I guess I understand there may be reasons for it, but but it it does seem to me that um we need to look at that if if they're using significantly more water than than the average user.

Obviously, that's coming a c that's that's gonna uh add cost to the general rate payer, and so I I do think we should check that.

Uh number two on fixing the price in that Texas Tribune article that uh my colleague mentioned earlier, um it talked about how El Paso was on pace to um stop their their the water they were losing by by 44% over a certain period of time.

Do we have any goal here as to what I mean how much are we trying to do?

Yes, um, so as Councilwoman Capito said in 23 we were roughly at 20 billion gallons.

Our goal is within the next 10 years to cut that by 50 percent.

And we'd like to do it quicker, but we need the the rates to be able to do so.

You need the you need the increased rates to be able to stop the lot of water loss quicker.

So we can fix those pipes that are problematic, so we can bring those crews on to get to those leaks faster.

So and and can we is there any way after this you can get us a cost, for instance, if if we are fixing, you know, five miles of of piping.

Um what will what is that cost and how much water will we we will we then be saving?

Yes, sir.

We're our board has asked us for that kind of data, so yes, we can provide that.

Awesome.

Thank you.

Um that's really I mean I I guess I'll just say that that I'll go back to to where I began.

You know, this this Corolla report that says you need to raise rates.

Um it's based on what you're telling them that you want, you know, and and it's like again, if if Mark wants a a new lake house, I can find a financial advisor to look at my uh my bank account and say, I'm sorry, Mark, uh you don't have enough money.

So either get a job that pays you more or go rob a bank.

You know, and I mean, so so here again, it it's it's what you're telling Corolla you want, is how they've come up with this this plan to help you create create the money.

And I'm not saying again that some of this isn't needed, but but what I'd like to see, I guess, or understand more going forward is exactly what we got to do, and you've heard this already.

What we have to do right now versus versus what we want to do, and I would like to see some sort of plan going forward on how we can move to a more uh what I would call a proactive approach.

Sure.

Um so first of all, I don't think we're presenting what we want to do today.

I think maybe we haven't communicated fully to you, but what staff is presenting to you is a result of multiple master plans that have identified the status of the system, and they have ranked and prioritize system improvements necessary to avoid system failure.

So that's what's being presented to you as a composite.

Secondly, cost of service studies are not just to validate your wish list.

Utility companies have their reputation risk as well, and they pull the information, they look at our customer base, they look at our system as a whole, our water and wastewater, the number of miles, how we treat them, our treatment philosophies.

You know, there was a very good question earlier about our benchmark rate on wastewater versus water.

Well, we are very blessed in that the big plus we have on our wastewater system is everything flows downhill.

I won't use the word, but it flows downhill.

And so we use gravity, and so that changes the cost, the burden cost or the cost of service for our wastewater.

Our water system is very different.

Our sources and pipes, the majority of them, some the largest one is on Warsbach Road.

It's north.

And so the pipes and the energy required to move that water around the system adds to that cost.

So that's a very different cost of service burden.

So it's not just validating our wish list, it's maintaining their reputation, and they have an excellent reputation to go in and look and validate the metrics and the performance of utilities to determine the cost of service that we are required by statute to build our rate structure around.

So I really, you know, I I understand your role, but I want to make sure our customers understand the the effort that was taken to produce that cost of service study because it is not a rectal extraction.

It is based on actual performance metrics of the organization.

And I appreciate that, and I'll follow up more with you offline about that.

But in my last 40 seconds, I I did want to I did I did want to clarify something I asked you in the first round.

So from what you've said, it's a hundred million dollars is our cost to operate Vista Ridge annually.

No, it's the cost of the water and all it's water, it's the line item for water options, I do believe, and it's the cost for Vista Ridge and the operational cost.

Okay.

And then I I asked you after that.

We have more we create more than a hundred million dollars in revenue through selling that water to our ratepayers.

What's our overall revenue for our customer revenue?

Our overall revenue is around close to a billion dollars, and we sell 250,000 acre feet of water.

So uh two of them.

So 50,000, yeah.

We we cover our costs for selling that water.

Uh okay.

For that water option.

We cover the cost of that water option.

We're paying for the infrastructure over 30 years, basically.

We're paying for that pipeline.

They had to construct that pipeline.

We're repaying them for it.

We get the pipeline at the end of 30 years.

And and how how how many gallons of water can Vista Ridge take in?

Do we know that?

Take in or deliver 50,000 acre feet is the expected delivery.

They can produce up to 53,000 basically in a year.

Councilman White, just to be respectful of everyone else.

If you have follow-on questions, you can submit those, and and then we'll make sure that those answers are shared with the body.

Thank you.

Thanks.

Councilman McCormick.

Thank you, Mayor.

I just wanted to comment on the last couple of slides regarding the rate change.

I think what you've heard, and you know, Eric does, and the mayor will, I'm sure, summarize, but is of course slide 45 scares us, right?

There's a lot of water lines or 46.

There's a lot of water lines that are broken in our or old and potentially going to be broken in our city.

If I could never get a text from Gavino about an emergency line break again, I would be so grateful.

And so unfortunately, it takes money to put in to figure out how to get these breaks done.

It's the same problem we have with our streets and sidewalks.

You mentioned it earlier, and we don't really have a great plan for our streets and sidewalks either.

So I don't know that's a good comparison.

But honestly, this is the challenge.

We all see this, we all want to address.

We want maps because we want to know where our our neighborhoods are going to be affected.

We want to be able to help plan for it, help communicate so that they know we're gonna fix your water line because what you don't want to happen is wake up in the morning and have a water line break on your street.

So we see that, and at the same time, we know the reality that some of my council colleagues already mentioned with what is true about our city and our community and the residents that they're facing.

So what I think would be really helpful is making sure, and the other thing that I think most of us recognize is we want the folks that have the ability to see an increase in rate to take on the majority of that rate.

I think if we can figure out a way to grow our um the support plan that you have for assistance, and try to assess the rate, break down the rate so that we can see what would it mean for someone on utility assistance, what what what is their rate going to increase as versus someone that is using 10,000 gallons a month?

And how can we ensure that the people that are most vulnerable in our community are not the most impacted?

And when we say most impacted, most impacted doesn't mean um the amount, right?

Because if I am at a basic wage, my most impacted a five dollar increase a month might be more than probably is more than 20 dollars for someone who's making 200,000.

So I just think we need to be really judicious about how we implement this.

And I know you guys, I mean, Jalen, it is amazing.

You are the board chair, and you presented as if you worked for SAUS today.

You did an amazing job.

You knew so much so much information, and that shows the leadership that you've had on that board.

And and so I know you guys care.

So I I charge you to figure out an increase in structure that helps us address the biggest problem that we have in our community of aging infrastructure, and at the same time, does it impact our most vulnerable populations in our city?

Thanks, Mayor.

Anyone else would like to engage on the second round?

Oh, Spears.

Councilwoman Spears, okay.

Wasn't on the list.

Go ahead.

Sorry, thank you, Mayor.

So if I heard you right, with this rate increase, it would reduce the water loss by 50 percent.

So not with this rate or rate increase.

That target was by 2030.

By 23.

10 years.

10 years.

I'm sorry, 10 years, 50 percent and 10 years.

That was the target.

So, what do you have any other rate increases anticipated right now, or what's the projection for the next 20 years and how are we gonna fix the rest of it?

To answer that question, we'll have to have staff.

We wanted to get input from everyone today.

Staff will have to go back and present a recommendation to the board on the actual class impact, bill impact, and the term of the rate, and then that we can we will be in a position at that point to answer your question about future rate increases.

That would be really helpful.

I think that trust is gonna be so important here, and that comes with transparency for our rate ratepayers.

And I'm as we were talking, just this last bit is when it started to click for me.

Well, okay, we're talking about now, but what's gonna happen in five, 10 years, 15, 20 to really fix it because then everything's continuing to age.

I mean, we can't get rid of it all.

But what's the rest of the plan is what I want to do?

The horizon on the majority of the master plans are 10 and 20 years.

So we we the board feels your okay, your pain.

Okay, thank you.

Thank you, Mike.

I think that was the last the last one.

Okay, great.

Um, thank you, uh Chair, thanks, Robert.

Thanks to the team for doing such a great job.

Um, I want to follow up on a a couple of questions, and just to reiterate this presentation and the potential cost increases is not reflective of any resources needed to move a chilled water plant downtown, correct?

Correct.

No, does not include that.

Okay.

The um the data centers piece um, just for everyone's edification.

Um during the board presentation, it was indicated that we've got 35,000 acre feet available for for data centers.

Right now, we're currently using 20,000.

How does this plan account for and as was mentioned, I think by Donovan, some of the larger users are going to be at five, right?

So you don't actually have much more headroom after some of those come online.

So how does this plan um create additional capacity in that respect?

Put more simply, what is needed, what what part of this plan is necessary because of the anticipated um data center uh introduction into the community or increased demand for that?

I would say it's a complex uh complex answer.

The data centers, some of them are using some potable water, some of them are using recycle.

So specifically to the recycle piece of it, um, and Doug, you have to help me on the recycle rates, but uh we are we are addressing some of the recycle rates, which is supposed to pay for its own self, the recycle system, to the extent they're using potable water and the the large data centers that have been proposed, the large amounts of water are primarily recycled water.

So really it's the recycled water rates that are gonna address the the data center question, I think mostly um if you could provide um that full explanation in writing to the council, that'd be very helpful.

Thank you.

I mean, out of um it Councilman White's question about um selling water makes us think about, of course, CPS's model, right?

Um so I think it'd be interesting for us to understand are there actually other examples of communities that are generating so much water they are they are selling it?

And is that something that we have reviewed as an option?

I'm not aware of any communities that are selling large quantities of excess water.

Um it would be right now.

We have excess water in times when Edward's awkward is a little higher.

As I mentioned earlier, we got our permit cut back by almost 40 percent last year, and we're projecting it to get cut back by if we don't get some rain that same amount this year.

And with that's the case, we don't have any water to sell.

And if you don't have water at times to sell excess, you know, people only want it when it's really dry.

They don't necessarily want it when it's fallen out of the sky and it's coming for free.

Um but so that's a challenge.

So I I don't think we have any excess water to sell, and I'm not aware of any models that where other communities, certainly in South Texas, nobody's sitting on excess water right at the moment.

Okay, thanks for that clarification.

Um, what percentage of our customers are water burdened?

And define that for the group, please.

Um we look at what water burdened.

I'm trying to remember the exact figure, but I want to say it's deemed to be what combined water and wastewater with less than four percent of your income.

And where you if you could we did have a slide in here.

Can you go to slide 60 for a second?

I had a couple in back up.

So 60 six zero.

So this just shows you where we're at as a percentage residential annual bills, a percentage of median household income.

I think this is something that I showed with the board the other day.

Uh yeah, but my question is what percentage of the users are are water burdened.

I mean, I understand how many people are in the program, um, but that doesn't necessarily mean that's reflective of our understanding of what percentage of the population of our of those being served are water burdened.

You can follow up that'd be helpful.

Uh CPS has that number, and again, as we're looking at um looking across, uh it'd be helpful for us to understand that as well.

I would imagine there's quite a bit of overlap.

Okay.

Okay.

And you've so you've heard a couple of folks um express interest um in in wanting to understand how we can help ourselves with it when it comes to sprawl.

I I appreciate it actually, slide um 35 yesterday and and certainly today as well.

It's on the budget employees over time.

Uh, but there's actually when you see the thank you, when you see the increase um uh in terms of miles and uh over how quickly that is that has happened.

Um I think what would be helpful for us is if you could do like a chart, right?

That says on the bottom it's by year, um, and on the y-axis, you could do miles that had as it's increased over time, and then you can plot on that kind of average commercial, average average residential.

So folks can very clearly see if there is a correlation between increased miles that we need to maintain and increases in people's bill, like a real quick snapshot.

Is that does that make sense?

Thanks, Doug.

Okay.

You don't have to answer it if you don't have it now, but if you would share with us, again, as you heard, I think a lot of concern about folks that are potentially going to qualify for uplift, even if they don't currently, as we look at things like the implementation of the one big beautiful bill.

So if you have some um some planning assumptions that you all are operating off of as you look at uh even the next 18 months about uh the the assistance needed in that program, that would be very helpful for us to understand.

Um okay, so you know, not surprisingly, not unlike a lot.

Oh, actually, one more thing.

Um you didn't show it here, um, but it was helpful in the discussion yesterday when you looked at the average commercial monthly bill, and uh we are uh much on the much lower end as compared to Austin and Houston.

And you talked about their differences in approach when it comes to impact fees and et cetera.

But I think as you heard here, there's a lot of interest in making sure that we are in fact charging our commercial customers as um an appropriate rate.

Uh that is um allows for other things, but I think also um is reflective of their capacity to pay.

So again, this goes back to what I was asking for earlier.

It's not just the cost of service, but also cost of conservation, but also an equitable approach to um to their bill.

Okay.

Not unlike the board uh meeting.

Uh, again, as you heard here, better fidelity on on the projects, the timing, and and the scope and the prioritization that you also that was also asked for yesterday.

So we look forward to that.

Um, clarity on some of those unfunded mandates that are impacting the work.

Um, so we understand again what a minimum level of uh of investment is necessary.

Um, and then as mentioned the cost of service versus kind of a cost of conservation is what I'll I'll call it at this point.

But um, I think we recognize the necessary investment to ensure that these facilities are operating in a way that they need to today and in in the future.

Um but you could of course hear the the caution and concern uh to make sure we're paying the minimum amount in light of some of the other um in lot of the other investments that we need to make.

So thank you very much, and we look forward to the follow-up.

Okay.

The time is 50 uh 507 on Wednesday, February 4th, and this meeting is adjourned.

We do have public comment.

47 individuals for public comment.

Thank you all.