1 CITY OF RIALTO
REGULAR MEETING OF THE WATER SUBCOMMITTEE
June 28, 2023 - 10:00 A.M.
MINUTES
The Regular meeting of the Water Subcommittee of the City of Rialto was held in the Civic Center Council Chambers located at 150 S. Palm Avenue, Rialto, California 92376, on Wednesday, June 28, 2023.
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CALL TO ORDER Call to order at 10:01 A.M.
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ROLL CALL The roll call was taken by Senior Executive Analyst, Nicole Hemmans.
Subcommittee Members / City Staff/Interns:
Mayor Deborah Robertson
Council Member Ed Scott
Arron Brown, Acting City Manager
Robert Messinger, Assistant City Attorney
Tom Crowley, Utilities Manager
Toyasha Sebbag, Assistant to the CM
Nicole Hemmans, Senior Administration Analyst
Katherine Stevens, Director of Finance
Owen Knapper, Intern to the Mayor
Genesis Ibrahim-Balogun, Intern to the Mayor
Other Attendees
Steve Dopudja, Consultant
Peter Lucetti, RWS/Table Rock
Megan Matson, RWS/Table Rock
Rolf Ohlemutz, Rialto Water Services
Art Griffith, FG Solutions
Dr. June Hayes, Public
Even Kominsky, Ullico
Zoom Attendees
Debbi Fortin, FG Solutions
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PUBLIC COMMENTS None.
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APPROVAL OF MINUTES-
Regular Meeting of March 08, 2023
March 08, 2023, Minutes Approved.
NEW BUSINESS ITEMS
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WS-23-631 - Update and presentation
on Lake Rialto Habitat Management
Community Open Space Project (Lake
Rialto)
PowerPoint presentation provided by Steve Dopudja and Tom Crowley.
Questions & Comments
♦ Councilmember Ed Scott inquired on when the name change of Project would occur, as it has been discussed on several occasions that the name “Lake Rialto” was misleading.
♦ It was agreed that the name Lake Rial to will b e changed to “Rialto Habitat Nature Center” (RHNC).
♦ Councilmember Ed Scott asked if the grading that is taking place on- site will affect the Southern California Edison (SCE) transmission lights?
o Per Steve Dopudja, no, the grading is not affecting the SCE towers, and this was confirmed by SCE when they met in the field.
o Per Tom Crowley, the grading plan stabiliz es the slope; therefore, the grading plan will improve it.
♦ Mr. Dopudja asked for direction on the preferred building type of the education facility.
o Councilmember Scott requested a cost estimate of our options.
o Mayor Robertson suggested looking at some of our
neighboring areas, such as Fontana, and see what they are using for their building facilities at their conservation area. o Councilmember Scott suggested we w ork with our local manufacturing plant that builds premanufactured buildings.
♦ Mayor Robertson inquired on the run- off of storm water coming into the plant from the street of Santa Ana Ave. She stated that r un offs and storm d rains are starting to be intrusive and asked if our plan includes diverting the storm water directly to the Rialto Channel? o Per Dopudja, our solution would correct storm water drainage by pushing the storm water directly into the Channel.
o Mayor Robertson asked who would be taking car e of the project?
o Per Crowley, it will be a part of the Santa Ana Project.
3 ♦ Mr. Dopudja asked for direction on the ADA component in the parking area and presented 2 options:
Plan A - We work with Flood Control; or
Plan B - We purchase a small section of our neighbor’s property.
o Councilmember Scott asked how far is the distance from the parking lot to the Lake? Per Dopudja, approximately 1 mile. o Councilmember Scott asked if we considered the area at the Northeast corner? Per Dopudja, that area was investigated, and it did not work out because it slopes down to the lake.
♦ Councilmember Scott commented that the current location for parking is going to be a safety issue with the homeless and asked if the parking lot will be secured at night.
o Per Dopudja, no, the parking lot will not be fenced due to the way the cars would park.
o Mayor requested a visit to the site to get a visualization on what we are discussing pertaining to the parking.
♦ Mr. Dopudja asked for direction regarding repairing Santa Ana .
Options are to have IEUA do the design and construction which will take 24 months; Or have the City design it and IEUA will pay for the cost, and it will probably be done quicker.
o Dopudja suggested having IEUA handle the design makes more sense unless there is a desire to improve Santa Ana sooner than 24 months.
o Mayor Robertson and Councilmember Scott agree to have IEUA proceed with handling the design and construction.
♦ Steve Dopudja received confirmation from DWR’s Division of Safety of Dams that this project does not fall under their jurisdiction.
♦ Rolf requested status of the CEQA documents.
o Per Crowley, Enplanners has completed all their studies and are in the final stage for us to give direction on the CEQA process.
o Mayor Robertson asked has the area been identified and preserved as protected?
o Per Crowley, the only protected area is the area described as the Fly Habitat.
The Lake area is not suitable for the fly
habitat. There is no significant impact due to the flies.
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WS-23-623 – Amendment to San
Bernardino Basin Groundwater
Council Framework Agreement
Tom Crowley presented a First Amendment to the San Bernardino Basin Groundwater Council Framework Agreement extending the agreement through June 2024 providing sufficient time to conclude the productive discussions on additional refinements for a successful cooperative groundwater recharge program.
4 Tom Crowley requested the Water Subcommittee bring this item forward to the City Council and Rialto Utility Authority for discussion of the Amendment to San Bernardino Basin Groundwater Council Framework Agreement.
Questions & Comments
♦ Councilmember Scott asked is the water we purchase ours (the City)? o Per Crowley, no, the water is not purchased as an individual agency, but as a collective group.
♦ What percentage of the amount of water that we buy into are we using?
o Per Dr. June Hayes, the 6% we are contributing is based on the City’s production.
♦ Councilmember Scott asked Robert Messinger to put this item on the next closed session as potential litigation.
♦ Mayor Robertson asked who agreed on the strategy we are following?
o Per Crowley, Valley District preferred we discuss recharging Cactus Basin after the final agreement is approved.
o Per Dr. Hayes, the reason she was given for the approval of the non-Cactus was so that we would have a place to put all the water, given a wet year. It was either delay C actus, or delay everything and not make use of the surplus water by letting it go to the ocean.
o Councilmember Scott commented that everyone treats
Rialto as if it’s a stepchild. We have no water in our basin, no recharge, and are a disadvantaged community. Just like everything else done in San Bernardino Coun ty, Rialto is always on the bottom. We are tired of it and w e’re going to do something about it!
♦ Mayor Robertson asked why was this issue brought to the attention of Dr. Hayes, but not brought to the attention of the City of Rialto ? Has this been discussed with anyone at the City?
o Mr. Crowley advised that he was informed that this was the direction Valley District decided to go.
♦ Mayor Robertson asked who in the City is in daily co llaboration with San Bernardino County on the status of their project in our City – Public Works?
o Per Mr. Crowley, Public Works would be his guess, but he will confirm.
o Mayor Robertson suggested we need a Project Manager.
♦ Mr. Crowley asked if we would agree to extend the framework agreement for one more year , so that we can decide on what a 5 framework agreement would look like going forward if the agency still wants to participate?
o Councilmember Scott asked when does it need to be agreed by? Per Mr. Crowley, he would like to have it completed as soon as possible.
o Mayor Robertson asked how many meetings have we had
about this topic? Per Mr. Crowley, he has been meeting with the San Bernardino Basin Groundwater Council in reference to this item.
o Councilmember Scott asked who sits on that council? Per Mr. Crowley, staff from the different water agencies sit on the council.
o Councilmember Scott commented, “so no elected officials”. o Mayor Robertson asked if this council also buy-in to signing the agreement without Cactus Basin in the agreement ? Per Mr. Crowley, no, this Ground Council had nothing to do with that.
o Councilmember Scott asked if they were aware of it? Per Mr.
Crowley, yes, they were aware of the conversation that
Valley District was pursuing an agreement.
o Mayor Robertson and Councilmember Scott both asked if the Ground Council had any objections? Per Crowley,
Councilmember Scott commented that we keep letting the
water pass us by and we are about to let another wet season pass by again.
o Mayor Robertson asked if we will be buying water to put water into our basin. Per Mr. Crowley, when we go to buy water, Fontana will be putting in the first 61 -acre feet. After that, we will be accumulating additional funds of $6M that we will use to purchase State Water for developing projects. But that won’t happen until the 61K acre feet is purchased and recharged. However, we will not be able to do any recharge until the basins are done.
o Mayor Robertson asked when will the basins be done?
Council member Scott replied, “No one knows, they are in litigation.”
o Per Mr. Crowley, that is where the agreement comes in with Flood control.
♦ It was agreed that we will not move forward with considering the Amendment to San Bernardino Basin Groundwater Council Framework Agreement until after t he discussion on the Cactus Basin recharge goes to closed session in July.
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WS-23-630 – Amendment No. 1 to the
Marketing License Agreement with
Service Line Warranty of America, Inc.
Tom Crowley presented a First Amendment to the Marketing License Agreement with Service Line Warranty of America changing the terms of 6 the contract so that the royalty is no longer calculated per service plan, but instead as a flat royalty-fee of $7,200 paid to the City of Rialto annually, with the first payment beginning in January 2024.
Crowley requested the Water Subcommittee bring this item forward to the City Council and Rialto Utility Authority for discussion of the Amendment Number No. 1 to the Marketing License Agreement with Service Line Warranty of America, Inc.
Questions & Comments
♦ Mayor Robertson asked where does the royalty go?
o Per Mr. Crowley, the money goes into a RUA misc. revenue account and is spent against O&M expenses accumulated
throughout the year. Currently, our revenue is under
expenses, so it’s been fully absorbed.
♦ Councilmember Scott commented that out of 13,000 sewer connections, we only got 800 policies and feels it is due to the marketing. If the mailer was in a n RWS/Veolia colored envelope, as oppose to the black & white mailer they send out, more residents would probably sign up. If it was marketed SLWA properly we could be above $28K in royalty revenue.
♦ Councilmember Scott asked what keeps RWS/Veolia from promoting SLWA? If RWS/Veolia are getting the money, then they should be involved in promoting the program.
o Per Mr. Crowley, we can consider having RWS/Veolia help promote the warranty.
o Per Dr. Hayes , she recalls th at this question coming up before and recall RWS/Veolia advising that they don’t do service line warranty, so they don’t market it.
♦ Mayor asked if service line warranty is the only product they sell? o Per Mr. Crowley, he will confirm if service line warranty is their only product they sell or if the re are other
services/product they provide that we can offer in addition to just service line warranty.
♦ Councilmember Scott advised that we need to find out the legality of having RWS/Veolia promoting SLWA through their programs.
o Per Mr. Crowley, he will work with RWS/Veolia in finding that out.
o Per Robert Messinger, the issue with RWS/Veolia promoting the program is that the insurance agency needs license d 7 agents promoting the insurance and RWS/Veolia does not have a license to sell insurance. Mr. Messinger will confirm this.
o Councilmember Scott asked how do we get around that and can we suggest to our customers who they can use for the repair of their service line? Per, Mr. Messinger, he will investigate and confirm this.
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WS-23-624 – 2022 Consumer
Confidence Report.
Tom Crowley requested the Water Subcommittee bring this item forward to the City Council and Rialto Utility Authority to receive and file the 2022 Consumer Confidence Report.
Questions & Comments
♦ Mayor Robertson asked if there is anything in the report that we should be concerned about?
o Per Mr. Crowley, he read the entire report and there is nothing we should be concerned about.
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WS-23-607 – Present Findings of
Phase 1: Water/Wastewater
Revenue Analysis
Item presented by Toyasha Sebbag of Rialto Utility Authority. PowerPoint presentation provided by Art Griffith, consultant with FG Solutions , presenting the findings of Phase 1: Water/Wastewater Revenue Analysis of the Water and Wastewater Rate Study.
Questions & Comments
Q &A - Wastewater Revenue Analysis
♦ Art Griffith provided the following informa tion pertaining to RUA reserves for wastewater:
8 ♦ Mayor Robertson asked if there is an amount associated with the Additional Restricted Reserves held in Trust?
o Mr. Griffith advised that there is an amount associated with the restricted reserves and he will provide that amount after the meeting.
♦ Art Griffith provided the following FY 23/24 RUA Budget for Wastewater:
Total: 29,006,018
♦ Councilmember Scott questioned why the lease payment for the FY23/24 Budget is 1.6M instead of 2M?
o Per Art Griffith, 1.6 represents the wastewater portion of the combined water/wastewater budget, so
the remaining
amount is in the water budget.
♦ Councilmember Scott asked i f the RUA lease payment is suddenly eliminated, how will it affect the outcome of the Budget? o Mr. Griffith advised that he show a demonstration on the change in scenario and how it affects the budget later on in the presentation.
o Later in the presentation Griffith provided a scenario on how much capital RUA wastewater revenue pays for:
9 o Based on the scenario above, which includes RUA lease payment, $1/month from each EDU would pay for either
$450,000 in annual cash spending, or Debt Service on 6-7M in loans.
o To Answer Councilmember Scotts questions pertaining to the elimination of the lease payment, If the RUA lease payment of 1.6M to the general fund is eliminated , RUA could borrow 20M and pay the Debt Service with what is being paid towards the lease payment right now.
o Per Mr. Crowley, the $450,000 per year cash in the scenario above would increase to 2M per year.
♦ Councilmember Scott advised Mr. Griffith that the City is being sued over the lease payment, therefore there needs to be a discussion on discontinuing the lease payment for water and wastewater.
♦ Mr. Griffith advised he can restructure how we communicate on this topic.
Q &A - Water Revenue Analysis
♦ Art Griffith provided the following information pertaining to the water reserves:
♦ Mayor Robertson asked if the rate stabilization held in trust of 2.785M will be used entirely in FY23/24.
10 o Per Mr. Griffith, approximately 4.5M was applied towards Rate Stabilization with a portion being applied in FY22/23 and the remaining will go towards FY23/24.
o Per Mr. Crowley, these are ARPA funds that were allocated towards RUA for rate stabilization.
♦ Mr. Griffith provided the following financial projection of RUA water fund:
♦ Mr. Griffith advised the Water Subcommittee that RUA has a contractual requirement to maintain the coverage calculation within the trust, however, that requirement is not being met. RUA has used revenue stabilization over the past couple of years and plan on using an additional amount next year, however, beyond that the contractual requirement doesn’t go away.
♦ Dr. Hayes asked what the impact would be if the City stops the lease payment to RUA?
o Per Griffith, the lease payment of $400K to RUA does not affect the coverage calculation, but affects the cashflow.
Therefore, there would be over 5 years of an additional 2M that would flow out of the water flow and possibly backfill the revenue stabilization needed. However, revenues right now are lower than expenses, therefore there is a need of money from somewhere to pay the bills.
♦ Mr. Griffith provided the following information on how much capital does $1 per month from each EDU pay for:
11 ♦ Griffith stated that in his experience debt issuance agencies want to see that borrowers can pay their debt. In RUA’s current position, Griffith doesn’t believe RUA would be able to qualify for a loan, however RWS is in direct communication with the lending agencies can define a definitive answer based on actual conversation.
♦ Councilmember Scott asked Mr. Griffith if a performance on the life of the concession was completed by him at the beginning of the concession agreement?
o Per Mr. Griffith, a 5-year Schedule of Rates was completed.
To compare concession alternatives, Mr. Griffith went out over 30 years to compare the various bids received.
However, for the schedule of rates, it was a 5-year schedule.
♦ Councilmember Scott asked Mr. Griffith how RUA has lived up to the 5-year schedule?
o Griffith advised that he felt the 5-year schedule was a good outcome because within the 5 years, a rate increase was implemented and there wasn’t a need to do anything
different from what was planned. Also, one of the events that occurred was the 2015 drought that tanked water
consumption. One of the advantages w as that RUA’s fixed charges were comparatively high compared to other utilities.
What that did was stabilize the revenue so that when water consumption dropped by approx. 20%, water revenue
decreased less than 20%. Lastly, other agencies had to have the difficult conversation with their customers on why their rate will be increased, while RUA did not have that issue at all. Overall, the 5-year schedule was a good outcome.
♦ Councilmember Scott asked how was the $30M that the City received from the concession shown or recorded as on our accounting books?
o Per Mr. Dopudja, he believes it was an advance on the lease payments.
o Mr. Griffith doesn’t know the answer to how it was booked in the financial system, However, he confirmed that $25M was based on the wastewater side and $5M on the water side. o Katherine advised she would find out and provide an answer to the Water Subcommittee.
♦ Councilmember Scott asked when the money was transferred from the City general fund for the Renaissance project, how was the transaction recorded as? Was it shown as a loan or a capital improvement payment?
o Katherine advised she w ould verify this information; however, the standard accounting practice would have been a loan.
12 o Councilmember Scott advised Katherine that previous people in the finance department described it as a gift, but it should have been a loan paid to the city.
♦ Councilmember Scott asked Griffith if he had any
recommendations, if we were status q uo, on what the
recommended rate would be?
o Per Mr. Griffith, per the status quo, there are no rate increases. Griffith advised that he has prepared many
scenarios that are not included in today ’s presentation, however, he will make them available to the Water
Subcommittee.
♦ Councilmember Scott asked that Griffith prepare th e following scenario’s:
(a) The elimination of the lease payment to the city; and (b) The repayment of $30M from the City to RUA.
♦ Mayor R obertson asked Stephen Dopudja, regarding the agreement between the City and IEUA, when is the revenue expected to be received and what will the amount be?
o Per Mr. Dopudja, he has been working with Nicole on the billing invoice to IEUA. The supply deposit fee was invoiced in June in the amount of $128K.
♦ Mayor Robertson asked if the revenue would go towards wastewater?
o Tom confirmed Yes.
♦ Councilmember Scott asked why would it go towards wastewater when the end result is drinking water?
o Per Mr. Crowley, this is because the expenses of developing the water are on the wastewater side, therefore, the revenue will be applied to the wastewater side as well.
♦ Councilmember Scott commented that due to the number of capital projects for wastewater there will need to be a rate increase because the capital projects will need to be paid for and the money will have to come from somewhere because the
projects can’t fund themselves.
♦ Mr. Dopudja shared that his council district has 2 years remaining before a rate increase, but they are not waiting because all the projects that they budgeted for have increased in cost due to inflation. If they wait 2 years they will be 4 times behind. Many other agencies are re-evaluating their rate structure now and not waiting till the end of the 5-year term to implement a rate increase.
13 ♦ Mayor Robertson commented that to move forward we need to review the CIP list to determine what is essential, critical, and involved in additional operations. However, she didn’t see it being possible to achieve right now.
♦ Mayor Robertson asked if any of the projects on the CIP list below were on the original list of projects?
o Per Mr. Crowley, some of the projects were on the list within the 5-years.
♦ Advised that if you were to complete the high priority projects on the wastewater side, there would need to be a rate increase of
2.5% per year, at the most, but possibly a little less than that.
♦ Mayor Robertson asked Mr. Messinger what would the outcome be if we were to back out of the lease payments and what is the statute of limitations?
o Mr. Messinger advised that the maximum is 3 years that they can go back , however, he will consul t with his
colleagues and will provide and verify.
♦ It was confirmed that Mr. Griffith would return to provide the following scenarios:
a) Revisit s tatus que presented today of no rate
increase and no capital improvements;
b) Discontinuation of lease payment going forward;
c) Discontinuation of lease payment going forward,
with plan to repay the $30M , and no rate
increase;
d) Rate increase scenarios that don’t require
revenue sta bilization and support high priority
capital improvements only;
e) Conversation on the wastewater side that will
include what type of reserves will RUA want to
maintain.
f) Conversation on the water side on what type of
projects does RUA want to build.
♦ Mayor Robertson insured Dr. Hayes that she will not be looking at a 25% rate increase, in which Dr. Hayes thanked her.
♦ Mayor Robertson requested moving forward to phase two of the RUA rate analysis.
♦ Dr. June Hayes made an announcement that the City of Rialto will be receiving a check for $80K from San Bernardino Valley Municipal Water District for the City’s water saving over the past year.
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UTILITIES MANAGER’S UPDATES
WS-23-625 – Utilities Manager Update
Note: This item was not discussed due to time restraints:
Utilities Manager update by Tom Crowley.
Discussion items:
a) Conservation Projects/Rebates
b) Orangewood Mobile Home Park Agreement c) SAOU Site Visit by EPA - completion of project
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ADJOURNMENT
Meeting adjourned at 12:22pm.