President Gambs stated that the Board unanimously voted on July 17, 2024, to settle the litigation between Zone 7 and the County of Alameda. The settlement includes the County acknowledging Zone 7's exclusive authority to negotiate with unions representing Zone 7 employees. The County will also pay Zone 7 $84,800 and process longevity payments for eligible employees. This settlement was confirmed by the court.

Second, Zone 7 settled potential litigation with Overaa, the general contractor on the Patterson Pass Water Treatment Plant Ozonation Project. Overaa initially claimed over $2.8 million due to construction delays and impacts. After negotiations, Zone 7 agreed to pay $1 million to resolve these claims, as documented in a written settlement agreement.

Third, the Board approved motions to intervene in the CEQA cases related to the Delta Conveyance Project.

Item 4 -

4. Pledge of Allegiance

President Gambs led the Pledge of Allegiance.

Item 5 -

5. Roll Call of Directors

All Directors were present.

Item 6 -

6. Public Comment on Non-Agenda Items

There was no public comment.

Item 7 -

7. Minutes

Director Palmer made a motion to approve the special Board meeting minutes of July 9, 2024, and Director Green seconded the motion. The minutes were approved by a 7-0 voice vote.

Director Benson made a motion to approve the regular Board meeting minutes of July 17, 2024, and Director Palmer seconded the motion. The minutes were approved by a 7-0 voice vote.

Item 8 -

8. Consent Calendar

Director Narum wanted to emphasize the importance of public awareness regarding Zone 7's receipt of the Certificate of Achievement for Excellence in Financial Reporting for the eighth consecutive year. She extended congratulations to Mr. Solitei and his team, highlighting this achievement as a testament to Zone 7's ongoing commitment to transparency in financial reporting and accounting.

Director Palmer moved to approve Items 8a through 8g and Director Narum seconded the motion. The Consent Calendar was approved by a roll call vote of 7-0.

Item 9 -

9. Delta Conveyance Project Update

Valerie Pryor, General Manager, introduced the next item, the Delta Conveyance Update. She highlighted the importance of the Delta Conveyance Project (DCP), which Zone 7 has been involved with for several years. The project is vital for improving the State Water Project's resilience, as the Tri-Valley Area receives about 70% of its water through this system, which is increasingly threatened by factors like climate change, ecosystem concerns, and seismic risks. The DCP is seen as a critical climate adaptation strategy to modernize infrastructure and protect the Sacramento-San Joaquin Delta environment.

Ms. Pryor mentioned that progress has been made, including the approval of the Environmental Impact Report (EIR) last year. Future Board action will include a request for $6.6 million in funding for the next phase of permitting and conceptual design, which is within the current budget and water rate structure. Ms. Pryor introduced three presenters: Katherine Marquez from the Department of Water Resources, Graham Bradner, Executive Director of the Delta Conveyance Design and Construction Authority, and Dr. David Sunding, Emeritus Professor at UC Berkeley.

Ms. Marquez provided an update on the DCP's planning schedule, which has received support from the Governor's office. The key milestone is obtaining permits by the end of 2026. She began by discussing the CEQA process, noting that the EIR was finalized at the end of 2023, while the federal NEPA process is ongoing, with the Army Corps of Engineers expected to finalize their EIR by the end of the year.

Regarding Endangered Species Act compliance, both federal and state processes are in progress. The DCP's operations will be permitted programmatically through the long-term operations biological opinion process, expected to be completed by the end of the year. The construction biological opinion is anticipated to follow shortly after. On the state side, the incidental take permit is expected in October 2024, which will support discussions during the water board hearings for the project's change in the point of diversion petition. These hearings are expected to begin in mid-January 2025 and conclude by mid to late 2025, with a final decision from the water board anticipated by mid-2026.

Additionally, the Delta Plan consistency process will follow the water board hearings, with certification expected by late 2026. At that point, other actions, such as property acquisition, can be considered.

Ms. Marquez also highlighted a missed opportunity where, if the DCP had been in place between January 1st and June 13th of this year, it could have captured 941,000 acre-feet of water, enough to supply over 9.8 million people or 3.3 million households for one year.

Mr. Bradner gave an overview of the Bethany Reservoir Alignment, a 6,000-cubic-foot-per-second facility. He explained that the project design is at approximately 10%, with some elements more advanced than others. The project includes constructing two new intakes along the Sacramento River in the North Delta, a 45-mile tunnel with a 36-foot internal diameter, and a new pumping plant near the federal Jones pumping plant and the state Banks pumping plant to deliver water to Bethany Reservoir. This setup adds redundancy to the State Water Project by providing two parallel means of water delivery.

The cost estimate, which factors in direct construction, labor, land acquisition, power supply, environmental mitigation, and community benefits, totals $20.12 billion in 2023 prices. Mr. Bradner emphasized the inclusion of contingency and risk treatment costs to manage uncertainties, following a deterministic, bottoms-up approach. He also highlighted a reconciliation process with the 2020 cost assessment, demonstrating confidence in the updated estimate.

Mr. Bradner provided an overview of the project's timeline, with major permitting activities slated for completion by 2026. Early construction activities, including power connections and road access, are expected to begin in 2029, with tunneling operations starting around 2033. The peak of construction will occur in 2035, and the project is anticipated to be completed by 2042, with full operation handed over to the Department of Water Resources by 2045.

Additionally, Mr. Bradner discussed innovations aimed at reducing impacts, costs, and improving constructability. He showcased one such innovation for the Bethany Reservoir Pumping Plant, which could reduce construction time by 1,000 days and save $140 million. These innovations have the potential to reduce the overall project cost by $1.23 billion or 6%, which will be explored further as the project advances through permitting and design stages.

Director Palmer asked for reassurance that the proposed innovations would not impact the existing California Environmental Quality Act (CEQA) or EIR analysis. Mr. Bradner assured that the innovations were designed to remain within the boundaries identified in the environmental analysis, without extending impacts, increasing emissions, or affecting key considerations. However, he noted that the department would still need to assess the innovations for any necessary CEQA modifications in the future.

Director Benson inquired about the critical path to project completion. Mr. Bradner identified permits as the current critical path, with the longest tunnel drive-14.4 miles from Lower Roberts Island to the Bethany complex-also being crucial. He explained that the transition from permitting to implementation, including geotechnical investigations and land acquisition, is essential for advancing the project to the design and construction phases.

President Gambs inquired about the lengthy timeframe for the tunnel project, noting it spans 20 years and asking for an explanation of why it takes so long. Mr. Bradner explained that the project is expected to have a 13-year construction window, beginning in 2029 and concluding by the end of 2042. The initial three years will focus on setup, including building roads, upgrading bridges, securing power supply connections, and constructing elevated shaft pads to mitigate artesian conditions and provide safety from potential flooding. Each shaft will take approximately a year and a half to complete.

The tunnel-boring machines (TBMs) also require time to build, so major construction activities are expected to begin around 2033 or 2034. From that point, the project will span about eight or nine years, primarily driven by the TBMs' progression rate of about two miles per year. Although four tunnel sections will be excavated simultaneously, the longest drive-14.4 miles-will dictate the schedule, taking about seven and a half years to complete.

Director Green asked for details on the geotechnical work being conducted, including its specifics and any findings so far. Mr. Bradner explained that the work began under an initial study with a mitigated negative declaration to support the Department of Water Resources' (DWR) consideration of alternatives across the Delta. With the EIR finalized and a project alignment selected, the focus has shifted to specific geotechnical work along that alignment. For the past few years, data has been collected, including historical information from other projects, to enhance understanding.

Dr. Sunding presented a comprehensive overview of a benefit-cost analysis conducted by his team over 18 months for DWR. He began by providing background information on the State Water Project Service Area, highlighting its significant economic contribution, with a GDP of approximately $2.3 trillion, and its dependence on surface water imports. Current water deliveries from the State Water Project are around 2.56 million acre-feet per year, serving both urban and agricultural customers.

The focus of the analysis was on addressing future challenges, particularly climate change and sea level rise, which could reduce water deliveries by 22% by 2070, and the risk of a major earthquake near the Delta, which could disrupt water quality and deliveries. Dr. Sunding explained that the benefit-cost analysis assessed the costs of the DCP, including construction, operation, and environmental mitigation, against the benefits, such as improved water supply reliability and quality.

The analysis revealed that the DCP would provide significant benefits, with a benefit-cost ratio of 2.2-to-1, meaning that for every dollar invested, consumers and businesses would receive $2.20 in benefits. Dr. Sunding also compared the DCP to alternative water supply solutions, such as desalination and recycling, concluding that the DCP is a more cost-effective option. Dr. Sunding emphasized that while the challenges of climate change are inevitable, the DCP offers a viable and economically sound solution to mitigate its impacts and ensure long-term water supply reliability for the State Water Project.

Director Palmer inquired about the cost analysis of the State Water Project, specifically questioning the impact on agricultural users. Dr. Sunding acknowledged that benefits vary across agencies, with urban agencies generally benefiting more per acre-foot than agricultural ones. He clarified that the economic study conducted focused on aggregate benefits and costs without delving into financing or cost allocation, noting that such analyses would inform future discussions. Director Palmer also asked whether the project's outcome would remain positive for major agricultural users in the Central Valley. Dr. Sunding reiterated that his study did not address this aspect.

Director Green raised questions about operations and maintenance (O&M) and sought clarity on the associated costs. Mr. Bradner explained that the project accounted for the periodic replacement and refurbishment of major equipment, sediment management, and operational costs. Director Green further inquired about water quality issues, specifically salinity. Dr. Sunding confirmed that salinity was the primary water quality aspect analyzed, given its significant impact. Director Green asked about the definition of "central tendency" in scenario five. Dr. Sunding explained that central tendency refers to a method used in climate modeling to represent a suite of results, with the details outlined in the EIR.

Director Narum questioned the project's ability to reduce seismic risks. Mr. Bradner highlighted the tunnel's design, which goes below vulnerable peat deposits and is engineered to withstand maximum credible earthquakes. Dr. Sunding added that current infrastructure, like the Delta levees, poses a significant risk, potentially leading to extended outages in the event of an earthquake.

The conversation shifted to the distribution of State Water Project resources, with Ms. Pryor noting that South Bay contractors, including Zone 7, represent less than 10% of the project's total allocation. Despite the bulk of the water going to Southern California, the importance of the South Bay's share was emphasized.

In discussing climate change impacts, Mr. Bradner explained that decreasing water reliability is primarily due to the loss of snowpack as a natural reservoir, leading to more extreme weather patterns that challenge the existing system's capacity.

The Directors thanked the panel for their presentation.

Item 10 -

10. Reports - Directors

Director Palmer mentioned attending a recent meeting focused on making conservation a way of life in California, particularly concerning the efficiency goals for urban users. Although Zone 7 is not a retailer and is not directly subject to these regulations, Director Palmer highlighted that the regulations and goals set for retailers could still impact their constituents and ultimately affect ratepayers. She emphasized the importance of understanding the implications of these regulations.

President Gambs informed the Board that signups are now open for the ACWA Fall

Conference. He encouraged those interested in attending to notify Donna Fabian, Executive Assistant, and noted the value of the conference based on past experiences. Additionally, it was mentioned that ACWA's Region 5 is hosting an event on September 13th in the Pajaro area.

Item 11 -

11. Items for Future Agenda - Directors

There were no requests for future agenda items.

Item 12 -

12. Staff Reports

Ms. Pryor announced that the Agency has once again received the Certificate of Achievement for Excellence in Financial Reporting for the eighth consecutive year. She commended Mr. Osborn and his team for their continued excellence. Director Narum inquired whether the presentation on the Delta project, given during the meeting, could be made available on the Agency's website for public reference. Ms. Pryor responded that there is a water supply reliability page and suggested staff could add a reference to the Board presentation from August 21, 2024, on that page.

Item 13 -

13. Adjournment

President Gambs adjourned the meeting at 8:42 p.m.

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Zone 7 Meeting - August 21, 2024

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