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Board asks staff to explore emergency reserve after consultant warns savings will deplete under capital plan
Summary
Directors asked staff to investigate boosting emergency and CIP reserves after the consultant’s model showed fund balances would draw down if the treatment project proceeds as planned; board directed staff to return with reserve proposals for the rate study.
Board members raised concerns that the district’s current reserve policy might leave the district vulnerable as planned capital work proceeds. The consultant noted the district’s operating reserve target is $1.5 million (three months of operating) and the capital reserve is $750,000, and modeled that reserves could be drawn below targets once major capital projects occur in FY29–30.
Directors emphasized that past emergencies have required the district to front costs while awaiting FEMA and Cal OES reimbursement. One director said the 2018 debris flow cost about $2.2–$2.3 million to repair and the district ultimately recovered roughly $1.6 million in federal/state reimbursement, leaving the district to temporarily cover the remainder.
The board requested staff prepare a recommended emergency-reserve policy or target and return with those figures for incorporation into the rate-study modeling and the Proposition 218 materials. The motion directing staff to pursue the debt issuance option includes an explicit instruction that staff bring proposed reserve adjustments back to the board for consideration.
Staff indicated that reserve adjustments could be phased in over multiple years and that the board could adopt an emergency-reserve fund through rate-modeling assumptions and a subsequent resolution.
