City Council/Public Finance and Economic Development Authority/Parking Authority - Regular Meeting

DELL: All right. I'll call this to order. Jennifer.

Agenda item A, study session roll call. Councilmember DuPont?

Present.

Tao?

Present.

Harris? Present. Smith? Zhang?

Here.

Mayor Pro Temboil? Here. And mayor Serato?

Here.

K. Agenda item b, study session. B one, study session for sewer and water rate study.

K. Thank you, Jennifer. Mister Will?

Good evening, mayor and council. Tonight, we have a few slides to go over, on the water and, sewer rates, that we had our consultant work on. Tonight, we have Mark Hillebrand, and he will be going over, the rate study that was done and get some directions from you. So, Mark?

Alright. Thank you, Ken. Alright. Welcome, Mark. Good evening.

Thank you for having me. My name is Mark Hildebrand. I'm a rate consultant out of the Bay Area. And last time I was here was in 2018 doing the water rate study. So it's good to be back. I appreciate the vote of confidence. I will be covering the water and wastewater rates today. We have quite a few slides. The study was pretty expansive. So I will do my best to get through that expeditiously. And I'll go through relatively quickly. But I do encourage you to interrupt me and ask me to explain anything if I'm covering it too quickly.

Okay. Thanks.

Do I have the clicker? Do I just oh, just on the arrows. Okay, great. So here's the agenda. I'll talk about rates in general, give an overview of rates in California. Then we'll talk about the water utility. The rate studies have both a financial plan and a rate design component. So the financial plan is looking at the utilities as a whole and how they're doing financially, and then the rates are more specific details about how the rates are structured. We'll cover that for both water and wastewater. And then we'll cover the capital facility fees, which are the fees that developers pay when they connect to the system.

So when we set rates in California, there's no regulatory body per se. There's really just the California constitution has a law that's commonly referred to as prop two eighteen, which dictates how rates need to be set. So cities such as yourselves have to follow these laws. And if you don't follow the laws appropriately, then you run the risk of getting sued over your rates. So you hire professionals such as myself to make sure that your rates are following prop two eighteen.

Prop two eighteen is pretty simple on the surface. There's a bunch of case law that has complicated it. But on the surface, the concept is very straightforward. You can't charge more than the cost of providing service. So that both means you can't make a profit off of your rates and use that money for other purposes. And you also can't charge one group of customers more in the interest of trying to charge another group of customers less. So there's a proportionality requirement. Another part of prop two eighteen is the noticing requirement. So you do have the authority to raise rates without going through a voting process, but you do have to hold a public hearing and you have to give the public an opportunity to protest against the rates. And if 50% of the rate payers come out voluntarily and protest against the rates in writing, then at that point you are not able to raise the rates.

When we go through a rate setting process, these are the three general steps. I kind of mentioned this in passing at the beginning. The first step revenue requirements is also called the financial plan, and that's looking at the utility enterprise at a high level and looking at all the existing revenue that's coming in and all the expenses that are going out. So the expenses would be operating costs, capital expenses, debt service. And you look at what the future holds for the next ten years.

You know, where do we see expenses going, and what do we need to do in terms of revenue and maybe debt in order to meet those revenue requirements. Once we understand how much the total revenue requirement is, then we look at your rate payers and how they behave to understand how we want to allocate those costs to your different customers. That's the cost of service analysis where we look at single family homes and multifamily homes and commercial, understand how much water they're using, the size of their meters, their different behavior behaviors. For wastewater, we looked at the strength of the sewage, and we allocate the cost to the different customer groups depending on how they behave. And then finally, the rate design is what the bill will look like when when folks receive their their bill in the mail.

So that's how much you're gonna recover through the fixed revenue versus versus the variable revenue, you know, the the usage rates, how much the bill the customers can control versus how much of it's fixed every month. This is a general schematic that just gives you an idea of how how cash flows through these enterprises. So on the left, we have the green revenue. Most of your revenue comes from rates, comes from your customers, their monthly bill. There are some other miscellaneous operating revenues.

You do earn some interest on your on your reserves and you recover or sorry, you receive capital facility fees from developers. That goes in those monies either go into the operating fund to pay for operating costs and debt service and R and R capital. So when we say R and R capital, that's repair and rehabilitation. So that's taking existing infrastructure and repairing it or rehabilitating it as opposed to expanding it, which would be the responsibility of the developers to pay capital facility fees so that you can expand your system. So we'll jump into the water utility.

And just to set the stage, because we are gonna be proposing rate increases both for water and wastewater. Wastewater is long overdue. There hasn't been a rate study since 2011, I believe, twenty two ten, twenty eleven. Water, you did do a rate study in 2018, but the last rate increase was a couple years ago. But if you look at this survey, you see that you're by far the lowest water rates in the region.

Now we don't use these surveys as a way of deciding how much you should charge. That that is not permissible by law. It's just a a helpful data point to understand that, you know, these other utilities are probably not fundamentally very different from Merced, yet they charge significantly more. So while we will be proposing rate increases, we'll still, by the end, still be the lowest rates in the region. So when we start the financial plan, we look at what we're starting with.

So the good news for both water and wastewater is that you do have healthy reserves at this time, and that's going to help us avoid debt in the near term for both enterprises. So you can see that the operating fund for water has $40,000,000 and the capital facility charges fund has about $53,000,000 We will be drawing down on these reserves over the next ten years. And you'll see that at the conclusion of the financial plan presentation here. As a snapshot of revenues, just to give you an idea of the scale of how much revenue you're getting from different sources, you can see that almost 90% of your revenue comes from rates. You have some other rate revenues that come from specific contract services for about $430,000 And then you have various miscellaneous revenues, non rate revenue, for a total of almost $16,000,000 a year.

On the other side, we have operating expenses. So the water enterprise does not have any debt at this time. So this shows all the operating expense. What this does not show is the capital spending, which is a really big part of the annual expense. But because capital spending can be really volatile for one year or the next, it doesn't make sense to really show a one year snapshot of what capital spending is.

So this shows a general gives you a general sense of what what your expenses are for operating in any given year. Taking those expenses, we had to make an assumption for the next ten years on what those expenses are gonna do over time, what the inflation is gonna be. So we we talked through different categories as a group and made the the assumptions that you can see above. So we're assuming that personnel costs, salaries and benefits, and chemicals will go up 4%. Health insurance will also go up by 4%.

Utilities and OPEB, which is other post employment benefits, will go up by 5%. Insurance has been on a tear lately, and so we're assuming that that's going to continue for a few more years before at 10% before settling down at 5%. And then all other expenses, we're assuming will be at the long term inflation rate of of 3%. The other assumptions we make is that interest earnings on your reserves will be 2%. Your growth rate will be at 1.4. And if and when you issue debt, it'll be at an interest rate of five percent and twenty five years of repayment. So here is the capital spending.

And this is

a pretty telling graph of what's happened over the last six years. You can see the average capital spending over the last six years has been about $272,000. And you can see a market increase in capital spending that's planned over the next ten years. That's gonna jump to about $8,700,000 per year. A lot of that includes a backlog of capital projects that has been encumbered.

Dollars 23,000,000 in capital projects has been was previously encumbered and is in the queue to get delivered. So a lot of that capital delivery will be clearing that backlog of capital spending. We don't propose any debt funded projects at this time water. As far as reserves go, so this is just the target reserve level that we sticking with the adopted or or the recommended targets that were consistent with the recommended reserves from the 2018 study. Operating reserve of 50% of annual operating expenses, that's about $7,300,000, And then capital reserve equal to about $6,000,000 about average annual capital spending.

So a total of $13,300,000 in reserve target. In this graph, I'll slow down a little bit because this basically captures everything that I just went through pretty quickly. And when you look at the top graph, what that's doing is it's comparing expenses versus revenue. So in the background, the area graph in the background is existing revenue in the gray. And the dark green is the additional revenue that you'll get from the proposed rate increases.

The proposed rate increases are shown as percentages all the way at the bottom. So you can see that we're proposing 8% per year for three years and then 7% for two more years. That's what's being proposed, a five year schedule. The four years after that 7% is just what's forecasted at this time. By law, you can only adopt five years at the time.

So you can see the five years there. Back up to the top graph, the bar graph in the foreground, those are your expenses. So the dark blue is the operating expense, which you can see increasing based on inflation over the ten year period. And then the light blue is the capital spending. So if you flip back if we flip back to the previous graph here, that dark blue capital spending, if you look closely, would mirror the light blue bars you can see at the top of this graph.

And the way to read the top graph is any time that the bars are higher than the background is a deficit year where you're drawing down on your reserves and vice versa when the bars are below the background, that's a surplus year where you're building reserves. And you can see that play out in the line graph down in the lower middle. The red line is the forecasted reserve levels. And as I mentioned, you have over $40,000,000 currently in the operating reserve, and we'll be drawing that down pretty aggressively over the next four years until you get down to what I would call the reserve target, which is the black line. The dashed line is what I would refer to as the minimum reserve level.

That's your operating reserve level. We don't want to go below that dashed line. But the black line is more of a target. It's Okay to drop below it as long as you have a plan to build back up to it eventually. And you can see in 2035, there is a trend where you're building the reserves back up. So that's the basis, the big picture, financial picture for the water utility and the basis for the proposed rate revenue increases. And I'll just pause there because that was a lot of information. Any questions or clarifications?

Any questions at this point? Council Member Dupont.

Thank you. Thank you, Mr. Hildebrand. I do have a question on the capital projects. Now these capital projects are the R and R projects? Correct. So we're not taking into account the expansion capital facilities projects?

That's correct. Okay.

And then this may be a question for Ken or city manager. What kind of projects the spending over really fiscal year twenty twenty to fiscal year twenty twenty five, the historical spending has been basically minimum to none. Why are we looking at a projected cash funded water capital spending going up to the upwards of $12,000,000 in one year? Why the drastic change? Or what is planned going forward for the R and R capital projects?

I'll let Ken answer that. I do want to just circle back really quickly to your previous question about I thought more about your question. We're not accounting for the growth projects. The study did look at the growth related capital projects. It's not being shown here. But we have determined that the amount of revenue that you'll be getting from developers will be enough to pay for anticipated growth related capital projects. So it's not part of this presentation, but there is sufficient it's part of the full report. So there's enough capital facility revenue to pay for those growth related projects.

Thank you.

Additional questions?

Think Ken's still answering my R and R question.

Good evening. Ken speaking. So with the r and r projects, so every year we go through our capital improvement projects list and and we've had projects on the books that have been carrying over. In the past, typically, we have with the engineering projects, they've tried to tag team those water projects with roadway projects, typically. So as you know, with the roadway projects, we've been one or two projects a year major projects a year.

So, the projects have been identified and are on the books, and I know we have some commitment from the engineering department to have some outside consultants work on those projects, to move those projects along. So that's why we're saying that there should be a a big jump in those projects moving forward and not waiting on those road projects because we have so limited money with less roads due, so we can't wait for the roads to do the project. So we we have to go ahead of the road projects because we just can't wait. There's just not enough money to to keep on par with the projects that we have on the list. So that's my explanation. Thank you.

Additional questions? Councilor Jean? On the graph that it's on right now, the bottom portion, so can you remind me what that dash line is? So I understand that the solid black line represents the target reserves, and that looks like it lines up with the $13,000,000 on the previous line.

Right.

But on the dashed line, represents the minimum reserve. But what is that number?

If I go back one slide here, the operating reserve, there's two different reserves, the operating reserve and the capital reserve. When you add them together, that's the target, the black line. The operating reserve, I would consider your minimum reserve. So you never want to draw down on that. These two reserves are fundamentally different. The operating reserve is something that you for completely unplanned for emergencies, whereas the capital reserve is designed to be sort of a buffer where you can draw down on it and build it up. So that's why it's together they make the target but the operating reserve by itself is the minimum. Thank you. Additional questions?

All right

seeing nothing further great back to you sir thank you

so switching gears to what the to the rate design if you look at the water system there's over 24,000 accounts over 20 almost 21,000 of those are residential, and then the rest are multifamily or sorry, we call it residential quotas or basically single family homes. The rest of them are apartments, non residential, and irrigation. You get all of your water for groundwater wells, and there is some treatment at the wellheads. The existing rate design is currently based on a fixed meter charge. So that's almost 80% of your revenue is fixed, and it and it's charged based on the size of someone's meter.

And with that meter charge, you get what's called a water allocation. So there's a certain amount of water that you're you get for free or that you're paying for water usage built into that charge. So right now the policy is that for the smallest size meters they get 20 HCF which is about 15,000 gallons per month that's included in that charge. So based on their usage. They don't start getting charged the usage rate until they use more than 20 HCF per month.

And the usage rates are uniform as opposed to being a tiered rate or some other design, and that's just over 21% of the revenue. The only change that we're proposing with the rate design is that we are proposing to take that 20 HCF and to lower it to 15 HCF. And that's based on analysis of single family homes behavior. The average water use is closer to 15,000 than it is to 20. It's about 16 or so.

And so we are proposing to change that policy so that it's better targeted at your average customer. There's a bunch of math that goes into these numbers here, but we take different categories and we assign certain costs to your accounts. So that's a cost that are driven by the number of accounts in the system, which is about $438,000. The meter charge are fixed costs that we recover through the meter charge, And then the commodity costs are about $4,000,000, and that's associated with your your usage. And it's a variable cost.

And so we divide the cost by the number of accounts or number of equivalent meters or amount of water, and we get these unit costs of $17.38 per account per year, etcetera. So those are the unit costs that will be the basis for the proposed water rates. And this is the rate structure that's being proposed. So the current rates are shown in the first column or sorry, in the second column. The proposed rates for year one are in the second column.

And you can see that the percent change is not the 8% increase that's being proposed. And that's because of the fact that we made some structural changes to the rate. So in year one, because there's some fundamentally different differences to the rate structure, most importantly, the fact that we changed that water allocation from 20 to 15 moves costs around and results in the fact that the usage rates actually going up by 11% and the fixed monthly charge is only going up by 1.7% and sometimes even decreasing a little bit depending on the size of the meter. Overall, your total your customers as a whole will pay 8% more, but different customers will be affected differently depending on how big their meter is and how much water they use. So that's just in year one.

Years two, three, four, and five, everybody's race changes will be identical. It's just in year one their results vary a bit. This is the rate schedule for the full five years. Not much interest there just for sake of documenting those numbers. But this is the slide that I think is probably of most interest because this is a what we call a bill impact.

So in year one, this shows what how people's bills will be affected both as a percentage as dollars depending on what type of customer you are. So for example, in the very first row there, a low use single family home is currently paying 32.25 based on your existing rates for with exactly the same water usage of seven HCF per month. Their bill is going to go up by $0.55 or 1.7%. So very minimal change and much less than the 8% average that most folks will pay. The higher water users for single family, their rates are going to go up by 13.4.

And again, it's because of the structural changes that they're paying a bit more. And these differences you can go down the list and you can see the different percentages or different types of customers are being affected differently in year one. Again, I'll repeat, in years two, three, four, and five, everybody will have exactly the same percent change to their bill. This is just a year one phenomenon. And here's that survey again that shows that with that rate increase, the average single family home really is only going up minimally.

And it's going to take quite a few years before you even overtook the second place utility out there. And I can tell you that a lot of these folks are well, actually, not a lot of these. Some of these clients are my some of these folks are my clients. And everybody's looking at rate increases. So they're not going to be standing still while your rates go up.

Can I ask you a question? How are we able to deliver this service for such a lower cost than the other agencies?

You know, it's it's it's very Is that good or is it It it it can be good and it can be cautionary. Right? Sometimes, you know, the source of water is a really big deal and the fact that you get a 100% groundwater is a huge benefit to to you. So you're you are starting off on a great foot there. So you're, you know, in a better spot than a lot of other folks who rely on surface water, requires a lot more treatment. The delivery of a proactive capital program is very important to do. And you can see that the city has not been delivering probably as much capital as it should have been over the last few years. And that increase in capital spending is very important. So it's really important to put these rates in place so that you can deliver that program. Okay.

Good point. Obviously, source of water makes a huge difference.

Then Huge difference, yeah. And then And then size, you know, being a bit larger helps. Know, smaller utilities are generally more expensive just for it because of economies of scale.

And then another question to the drop from 20 to 15 for the baseline, one, the rationale behind that, and then two, how, if at all, do you think that will change consumer behavior, potentially with implications when it comes to conservation. We're not we're at a drought right now but still our aquifers in a state of overdraft and drought is going come back at some point in California.

You know my recommendation back in 2018 it was at 30 back in 2018 and we dropped it down to 20 and now we're at 20 we're going to 15. My recommendation is that every time you do a race day you need to continue to whittle away at that allocation. It's practice that was very popular a long time ago, and it's becoming less common in the industry because of the reasons that you cite the conservation. Know, when people get free water, then obviously they don't worry about the first 15,000 or, you know, 15 HCF of their water usage during the month. And so from a conservation standpoint, it doesn't do a lot of favors for the city.

But, you know, I think the city is going in the right direction. It is it you know pulling the band aid off all at once would be an extreme rate shock to your customers so I think it's good to move it down incrementally.

Do you have I may forget the exact numbers but when we went to meters some years ago that had significant impact on conservation.

Yes, absolutely. Yeah.

All right, thank you.

Anybody else? Go ahead. Great. Okay. So that's that's it for the water rates specifically. I'll talk about the water shortage surcharge. So you currently have a policy, and I'm proposing a modification to the policy. So a water shortage surcharge is it basically recognizes the fact that if you go through some sort of significant reduction in water sales for whatever that reason that might be, there's a financial impact on the water utility. And it can be pretty significant financial. So it could be because of drought.

It could because the state decides to mandate lower water usage. Or customers could simply change their behavior. Whatever it may be, the race study that I just did assumes that customers are going to use a certain amount of water. And if over the next five years that behavior changes dramatically, there will be a financial shortfall by the city. Your water sales will drop.

Some of your costs will drop. You know, your pumping costs and your chemicals will drop a little bit. But your water conservation costs and efforts will go up. So there's a bunch of you know, the there's costs that, you know, go up and costs that go down. I did the math, and you can see in this graph, which is a little complicated, but it shows how some costs will go up, some, you know, some the revenues will go down.

This is the the six different columns here are the drought stages that are defined by your water shortage contingency plan. It's part of your urban water management plan. It's required by state that you develop this. And there's these six different stages are defined in that plan. And you're currently in shortage level two, which implies that you're using between 1020% less than normal.

Obviously, we did the study based on what your current behavior is, and so there wouldn't be any change to your rates. But if you were to go to a levels a shortage level three, the the policy would simply say that your rates all your rates would go up by 5%. And you go up to 11%, 16%, and 21% if you went all the way up to shortage level six. It's a way to protect the city against, you know, financial shortfall in the event of a major drought without having to go through an emergency rate study in order to to make sure that the utility stays full. It does assume that you'll be drawing down on some of your reserves.

So we we assume a shortfall of about of a quarter million dollars. So part of it does use your reserves as a backstop. But we mitigate the damage of the financial shortfall through these surcharges. The other thing that's important to note about this policy is that it's not automatic. This council would need to approve of any staff would approach council and say, hey, we're in the level three.

Can we implement level three surcharge? And there would have to be a majority vote on this council to approve whatever level you're in and to approve of that policy. This just shows a graphical illustration of what that surcharge is doing. So you can see that in the normal situation in level one, level two, there's really no financial impact. But the dark blue represents the revenue that you receive.

And you can see that if you didn't have that light blue, which is the surcharge revenue, the deficit would be pretty significant. So the light blue shows how it's sort of plugging the deficit not 100% but enough to minimize the damage. Also, very quickly, we updated the fire service lines charges. So there's some customers that receive dedicated private service lines for sprinklers in their business, and they pay a fee for having that direct connection, which is partially maintained by the by the city and requires extra capacity to to deliver. Okay.

So switching to the wastewater utility. A lot of these slides will be similar. So here's the survey. Again, you're not as low relative to the rates compared to the water, but you are still the lowest wastewater rates in the region for wastewater. Same situation in terms of the reserves, very healthy reserves, which is going to be even more beneficial for wastewater because we will be looking at a debt situation for wastewater potentially.

And this $65,000,000 in reserves is gonna be really helpful in minimizing the amount of debt that you need to issue. The revenue is about 78 79% rates with the other miscellaneous revenue similar to water. On the operating side, there is some existing debt service, about $2,300,000 in debt service and then other operating expenses. And here is the capital spending scenario. So in this one, it's a little bit different because I am showing the blue.

Well, first you can see that the historical spending has been 1,900,000.0 per year And the average plan is 22,900,000.0. And that's because of two really large projects that are coming up. One is an R and R project at the wastewater treatment plant. And the other one is an expansion project at the wastewater treatment plant. So this graph actually does combine both the funds, the funds 6,000 and 6,004 and 5, which is the capacity facility charge because they are going to sort of be interdependent on each other in order to support the capital spending.

So that $68,000,000 water rehabilitation project is going to require either a grant, which is in the works, or if you don't get the grant, then you're going to have to issue debt. So I'll show you those scenarios. Same idea in terms of reserves, dollars 9,000,000 in operating reserves for wastewater and $5,500,000 for the capital reserve for a total of about $15,000,000 target. And so we ran two different scenarios. The first scenario is that you receive the grant that has been applied for.

It's a $30,000,000 grant. I believe it's a seismic retrofit grant, federal grant. Sorry? Yeah. And so the balance so the first $30,000,000 would be grant funded and the balance would be cash funded for $37,000,000 If you don't get the grant, then you will have to issue debt for that treatment plan.

And we are proposing to target a $50,000,000 SRF loan, is a low interest loan, in cash finance the balance of $17,000,000 What's really interesting I've actually never seen this before with two such vastly different scenarios. They actually result in the exact same rate increases. Outcome at the end, the last four or five years is sorry, the last in years nine 10, the rate increases will be different. But that's off the radar for right now. So it doesn't affect our recommendations.

So this is the first scenario where if you receive the grant, you can see the main thing I want you to focus on here is that line graph, the red line there. You can see that the reserves stay pretty healthy until 2028. And that's when the capital project happens and it draws down dramatically by $37,000,000 which is the cash funded portion of that project. And then it levels off pretty easily. And so we're looking at 5% increases for two years and then 4% thereafter.

And you would be there is some debt that would happen here, but it wouldn't be through the operating fund. This would be a debt funded loan for the expansion project. So if we go back to here, that $62,000,000 wastewater treatment plant expansion, you don't have enough cash in your reserves, in your capital facility reserve to cash fund that project. So you would have to take out a loan for that project. But that doesn't affect rates.

That would be paid back by developers over time. Now I'm gonna go to the next graph. Keep your eye on the line graph there. You can see how instead of dropping down dramatically, it just drops down a little bit in 2029 and then it gets drawn down over time. So that's because we're issuing debt.

We're not receiving the grant, but we are issuing debt. And so you're cash funding $17,000,000 in 2029. And in that drawdown that you can see, that trajectory is happening because you have debt service to pay for. And so it's drawing down the reserves. And that would continue to go down below the reserve level, which is why we need to bump the rate increases up to 8% in years eight and nine.

You can see the last two years are 8% instead of 4%. So that's really the only difference financially between these two scenarios is that the last two years would be higher for this one because you have that debt service that you're going to have to pay for. But it really doesn't come into play because of your health reserves for another eight or nine years. Any questions about these two different scenarios? Again, as far as the recommended rates, they're identical.

What I am proposing is that the report assume this scenario. We're to show this scenario in the report. It's easier in the report. The report ends up being a financial document, a legal document that if you do end up going to court that they're going to ask that it's going to be a pretty important part of the case. And so it keeps it much cleaner just to have one scenario that you say, Okay, this is where, you know, this is the scenario that we're assuming is gonna happen. This is a more conservative because it's assuming you're not gonna get the $30,000,000 of free money that you're gonna have to to fund it all yourselves. And it's it's just a more conservative approach. And it really doesn't affect our recommendation. It just shows that in years eight and nine, it's an 8% increase.

Any questions? I don't see anybody. I see Councilor Smith move his finger too. Councilor Smith.

Thank you. So a quick question. Why not maintain the rate increase at a flat 4% in fiscal years 3233 to kind of build up that reserve so the rate increases less in 3435.

We could. You're right. Because it's not a recommended action, to be honest, I could make it more consistent with the other scenario. Make it 4477. And that's actually a good recommendation. I'll do that. All right. Thank you.

Anybody else? Proceed, sir.

So so I've either thoroughly confused everyone or I've done a good job of explaining it.

A little bit of both.

Okay. So looking at the rate design, there's no proposed changes at all to the rate design for the wastewater rates. About 80% of your revenue is you recover from your residential rates, which are all fixed based on the number of dwelling units. Non residential customers have a fixed monthly account charge. Actually, there's a small change that it's kind of insignificant. But that monthly account charge was previously treated as a minimum charge. They basically charged a usage rate, but a usage rate with at least a minimum charge of the account charge. It's a small charge. So it's a very minor change to the rate design.

If I could stop you real quick. How many slides are there total just for time management purposes? There

are 52. Got it. Okay. Oops. Can you put it back into oops. Oh, I can do it. Thank you.

Great.

So, yeah. So there is a small change to the rate structure that the fixed account charge will be assessed to all customers. Previously, it was considered a minimum charge and now it will be simply a standalone charge. And then special industrial customers are going to be they have their own special rate that they're being charged and the proposed rates just align it more consistently with the same unit rates that are being charged to all the other customers. You have about six really large industrial customers that are charged based on their actual flow and loadings.

And I'm simply aligning their rates to be more consistent so that there's no questions that it falls outside of the proportionality requirements of Prop two eighteen. So you have a bunch of different categories, a really long list of different customers and to be honest, the impacts to their rates is shifting a bit. As I mentioned, hasn't been a rate study done for wastewater since 2011. And so a lot almost fourteen years. So a lot has changed, which is why these percent increases are affecting different customers differently.

But you can see single family is actually going to see a 7% increase in year one, multifamily mobile homes 5%. And then all the different non residential customers are going to see different increases depending on what type of industry they are. This comes down to the assumptions that we make about how much wastewater they're producing and the strength of their wastewater. And here's the schedule for the full five years. And then this is just a look at the rate schedule for the special industrial.

Again, there's about six customers that get charged every month. You look at the actual amount of flow and BOD, is the biochemical oxygen demand, the number of pounds of BOD and number of pounds of suspended solids, and you'll charge them based on on what they actually produce. And here's the survey that shows again you will remain the lowest rates in the region in year one. And that's it for the wastewater rates. Any questions? Questions at this time?

Okay. Seeing none.

All right. So capital facility fees are again paid for by developers. There's two different approaches that you can take when calculating capital facility charges. One's called the buying approach. That's when you build your you overbuild your system and you have extra capacity laying around and you're just waiting for folks to arrive. And when they join the system, you charge them to buy into the system. That fee tends to be a little less expensive because they're usually joining into a system that has aged. And so that calculation accounts for the depreciation of the system. The incremental approach is the opposite. When you are at capacity and when new folks arrive, you need to build new infrastructure to accommodate them.

And we call that the incremental cost because you're incrementally increasing the size of the system and so you're paying you're they're paying for brand new infrastructure and so that fee tends to be a bit more expensive and that is the approach that we're using for this study. These are the numbers. I'll let know, again, a lot of math went into these, but ultimately, we identified a $131,000,000 in expansion costs for the water system over the next ten years or so based on the master plan. And that's going to create about 14,400,000 gallon million gallons per day of capacity. When we look at the average demand of new development, it's about 608 gallons per day, But you have to size your capacity based on peak demand.

And so the peak demand per equivalent residential unit is eleven fifty five gallons per day. And when you translate all that into meters, you can see that the fees that we come up with are actually pretty similar to what you're already charging. So it's really just about a 2% increase on the water side for capital facility fees. So I don't think the developer community will raise any eyebrows over these risks. In fact, it helps justify the fees that you've been paying you've been charging recently.

And now they've been updated and there's no more questions. Wastewater is a little bit different. The fees are going to change. Oh, and this is a survey that just shows that from a attracting development standpoint, you're right in the middle there. You're not chasing developers away. And you're also not a free ticket. So this actually is the kind of server that it's sort of a market based thing. There's less scrutiny on capital facility fees in terms of proportionality and whatnot. You can charge less than the cost per provided service if you wanted to. So if you wanted to attract development, you could choose to charge less, although that's not really something that folks do anymore these days.

On the wastewater side, it's a little bit more complicated because we break it into lines versus plants. So the lines are the collection system and the plant is the treatment plant. So we've identified $33,000,000 in collection system costs and $52,000,000 in plant expansion. And you can see the number of EDUs that that will serve and the unit cost. So it's going to be about $970 per EDU of to expand the lines, and it's gonna be about almost $10,000 per EDU to explain the plan.

The percentages here are pretty different. So you can see that there is for a single family home, if you add up the plant component and the line component, it's $10,828 per home. You're currently charging $7,433 so that's an increase of $3,400 more or less, which is a 45% increase in your capital facility fees. The wastewater capital facility fees have not been updated since that 2010 study. I believe it has been increased by inflation on occasion, but this is the first formal study that's been done since that time.

So it's understandable that it's changing pretty dramatically. And here's the survey. You can see your, I would say, your lower middle currently, and this will put you sort of upper middle of the pack with the proposed rates. And that's it for the capital facility fees. Any questions on water, wastewater capital facility fees?

Same

question about wastewater, too. I think it was slide 41, 42, somewhere in there. How are we what strengths do we have that enable us to have some of the lower rates?

Yeah. I mean, it's it's it's similar similar answer. The receiving body that you discharged, I'm not familiar with the engineering. But when I when I think of the things that affect the cost of treating wastewater, one of the biggest ones is what's the sensitivity of your receiving body and how much how much do you need to treat your water? I know that, you know, up in the on the mountains, they have a huge problem because those creeks and the rivers that they have up there are very clean, and you can't discharge dirtier than what's flowing by.

And and the rivers down here, I imagine, aren't as pristine. So that might be one of the reasons. But there's a bunch of operational explanations that weren't part of my study that maybe Ken could answer the questions to that.

We appreciate your work. Very knowledgeable, very detailed. We have another question from Councilor Smith.

Thank you, Mr. Mayor. Thank you for the presentation. I apologize for being a little bit late.

No problem. I do have one more slide, but that's it for the rates.

No, why don't you go ahead and I'll ask my questions then.

Okay. The very last slide here is a new law. It's called AB two thousand two fifty seven. This is a good thing for water and wastewater utilities. It's optional, but we are recommending that you implement it.

This is basically an add on to the prop two eighteen process. And just to break it down, the the problem that AB two two five seven is trying to fix is the fact that, as I mentioned earlier, there's no regulatory body in California that tells you that you're charging the right amount or you're charging the wrong amount. The way that water and wastewater utilities have found out that they're charging the wrong amount or that they're being accused of charging the wrong amount is a lawsuit in the mail. And their lawyers have to open the letter, you have to basically lawyer up right from the get go. There was no administrative process for challenging rates on a legal basis.

You could protest against them, but you only had one vote. And that didn't really carry much weight and it wasn't much of a process. So this was basically the creation of an administrative process, an administrative remedy whereby anybody who wants to challenge the rates, thinks that there's a legal problem with the rates, has to write a formal written objection after we notify them by mail. So we're going to send out the Prop two eighteen notice. Within that there's going to be a notification that if they object to your rates on a legal basis that they have to write a written objection within a certain deadline.

They get forty five days. If they fail to write that written objection, they forfeit the right to be able to sue the city until the next rate study. So it's a huge protection for the city. Once you have gotten through that process and if no one's objected, then you can get through the next five years without having to worry about receiving a lawsuit regarding your rates. Now if somebody writes an objection and the only requirement on the cease part is that you have to respond in writing how you know, you have to give a response in writing to the objection.

And in my experience, most of the objections are, not legal. There's no legal basis. It's a, I'm on a fixed income. Please don't raise my rates. There is no legal argument. If there is a legal argument that we think has merit, then actually that's a good thing because we can now change the rates before it's too late and you don't have to go through a long legal process. That would be on me. So if there is a legal basis for the rates being incorrect, that's because I made a mistake. So I hope that doesn't happen. It hasn't happened yet.

But yeah, so that's the process. And it does make the notification period take a little bit longer because you have to give yourself time to provide the written responses. Any questions on AB 2,257? It's kind of complicated. The biggest problem that we're having with this is that you're going to send out a notice and you're going to invite folks to protest and you're going to ask them to object.

And those are two very different things. And to the layperson, obviously, it's pretty confusing. So we're going to do our best to make sure that the notification letter very clearly explains the difference between a protest, which is simply a vote of no confidence, a vote of saying, I don't want these rates to go up, as opposed to an objection, which is a legal argument. It's a more elaborate response where you have to write out, cite the legal basis of your argument and submit that. And it's a different form of objecting.

And that is my presentation.

All right. So come back on February 17. We'll see you back then. Again, thank you for all your work, very good presentation. Councilmember Smith.

Thank you. So I apologize for jumping in a little bit earlier. The statutory objection process sounds comforting in a way. It's a little bit more than just the usual political pressure that we feel. It's good to get some rationale from folks. I had a couple of questions for you going back to the water rate study component. I think it's probably applicable to both the wastewater and the water study. So just at a high level, what you're proposing is that we reduce the amount of water that residents get with their flat fee. So they get they get less for the same price, and then we build on usage based increases on a year over year basis over time. Is that is that fair?

Yep.

Okay. And you mentioned that the water usage per month is about what people are using now, although you mentioned that people are using 1,600 cubic feet and you want to reduce it to 1,500 cubic feet?

On the allocation is 20 currently and we're proposing to reduce it to 15. The average use is around 16.

Okay. So some amount of people will be incurring a usage charge then just because there's a 100 cubic feet that they

need purchase without changing We use air. Between

fifteen and twenty. We'll now start seeing a usage component in their bill that they didn't

see before. GREGORY In your experience in other cities, do you see people take measures to improve the water efficiency of their homes or reducing usage?

Not at that rate. Not at that. That's a pretty small part of their bill. Most of the bill is fixed. I don't think you'll see any kind of reaction to that policy.

Okay. The proposal, it looks like if you look out over five years, most of our residents are going to see about a $10 a month increase. In your experience, does that cause people to try to improve the water efficiency of their homes or reduce usage?

Ten years after in five years, it will be a ten year $10 increase?

Maybe I got it wrong. Thought I read that off a one

year chart. That sounds about right. I just hadn't thought of it in those terms. No, I also I think that the amount that you need to change someone's water bill has proven to be pretty significant. The types of rates that do change behavior are tiered rates where folks go from one usage tier to the next one.

And if that usage tier is massive, you know, we're talking $3 a unit jumps up to $12 a unit, then you do see folks trying to stay out of tier two, trying to stay out tier three. But these usage rates are pretty modest, to be honest. And wouldn't expect to see a very significant change in behavior. Does the drought surcharge have that impact? Again, are pretty small percentages.

I think what's gonna have a bigger impact during that time is that you're going to the city will be doubling down, tripling down on conservation efforts, messaging, and whatnot. And that's always a hard thing to tell why people are reducing their rates because during droughts the rates are going up. But you also have a lot more messaging happening. So it's really hard to discern where the change in behavior is coming from. Okay.

In your experience as rates go up, do municipalities experience collections issues? Like are the number of accounts that we have that are delinquent, would you expect that to rise?

That's I've never received that question before. I don't have any data on that and my clients haven't shared that result with me.

It would be interesting to know if as rates increase the number of unpaid accounts increases so we're actually, you know, what's the balance, right?

Yeah. Well, have noticed from your finances that Merced does have sort of a higher amount of delinquency revenue than most of my clients do. So that obviously is an issue around here. So I can see where your question is coming from.

And I imagine the answer is it's outside the scope of your report. But I mean, in your experience, there things the city can do to try to improve collectability or improve payment?

The fact that you're the lowest rates in the region, I think you're doing everything that you can.

Finance director, Venus Rodriguez.

Good evening. I just wanted to make the comment that because of being able to turn off water when payment is not received, A lot of times we do end up getting the payments, right? So if you're going to see amounts going into collection, it's usually people that have moved out of a home or left the area. And so they've not paid that final bill. But it's very rare to see people not paying their bill because of being able to turn off the water until they paid their services. Does that make sense?

It does. Is that something that we can and do do?

I'm sorry. Say that one more time.

Is turning off people's water something that we do?

We do. We have to follow a law SB nine ninety eight. We have to give them a is a very lengthy amount of time that we give them until we do that. But that is something that we can do based on current policies.

Okay. It's hard for me to quantify this now. I do have some concern that we're not going to realize 100% of the dollars from the rate increases, which maybe ordinarily wouldn't be an issue, right? But in a lot of these cases, we're trying to drive revenue so we can fund capital projects. We're also proposing to draw down our operating reserve to close to the bare minimum.

And so I think maybe these are some issues that are worth studying. What's the percentage of dollars that we expect to realize from the increases? And then how does that impact maybe our plans for acquiring debt or capital improvement projects, the expense of that? Anyway, just want to put that concept out there for everybody to think about. If I could go back to the consultant, please.

First of all, do you know you probably don't know this, but I mean, do we have any expectation that we're going to have problems drawing water out of our aquifer in the near term? I mean, as a city that doesn't rely upon any surface water?

Yeah, it's outside of my scope. But

That's fair.

Tell us about the Wells.

Yeah, believe that outside the scope of the rate study. But at the moment, no. I mean, right now we have Sigma, which we follow GSA or Groundwater Sustainable Agency. There are some limits on how much water that's mainly right now is the is the farming community that's has certain allotments per year. It's 1.1 acre foot per year on that.

But the whole goal of that program is to get the sustainability. Right now, we are critically overdraft aquifer, but the reason why we're in that category is because of the subsidence we have in places like El Nido. But there's the volume of water is still there. And with the measures that's starting to go into effect, it's to maintain or sustain that water over a long period of time. But, yes, we do have to be good stewards of the water use, and I think our city in general, since the drought of twenty fifteen, we've dropped our use down to 25% to 30%.

So our residents have really made that effort to water conservation has been a part of their life. So so that's all I have.

Does the city have any riparian surface water rights?

No. That's all through MID.

And

we've had some initial talks some years ago about getting surface water from MID in the future. So that's something that's still in the works that will pull the plug on that. And

Alright. We're getting away from the rate study. But, Mr. Elvin, I appreciate it. So we feel like we have enough water at least for the next five years is what I take away. One final area for inquiry. It's probably a consultant and Venus question. I just want to take us through the, I guess, the pie chart, different components of our costs. We've got administrative costs on water side of 20.2% and on the wastewater side of 17.8%. And if I read the chart right, those administrative costs don't include salaries and benefits, the human elements of administration.

I mean, that seems really high to me that a fifth of our budget is not going into operation are people. My question is, why is it so high? I recognize that we're talking about rate payers and dealing with individual customer accounts. But is there a way that we can see into that and potentially reduce our admin costs and get more of our money in between the chalk, so to speak, opposed to going into overhead?

So a lot of it is semantics. And Venus will probably weigh in. But I believe that's mostly over cap costs, right? Cost allocation

costs? So

in the general fund, we have certain departments that are considered administrative funds. So that's your city attorney, city manager, finance department, purchasing department, city clerk's office. And so those admin costs are based on an allocation that the city gives all funds. So there are people costs in there, people and overhead of your administrative departments in there.

So it's like the baseline indirect cost to run a city?

Right.

Those exorbitant city council salaries?

Exactly.

Right? Okay. All right. Well, that's fair. Then I understand better. I think my comment kind of still stands, but I understand it's outside the scope of the study. All right. Thank you for indulging my questions. I appreciate it.

Additional questions? Okay. Thanks again, you guys. Appreciate it. Looks like we're in good shape. Obviously, challenges on the horizon. But I want to thank you. And Ken, thank you for running a really good operation. Mr. And Mr. Whilling, I want make sure you, in particular, heard the lowest rates in the region, sir. Right.

Mayor, just for the record, I want to say we

didn't get any requests to

speak for this item.

Okay. Thank you. I will take a short break, and then we'll return with the high speed rail discussion.

I do have the PowerPoint, and then I'm pulling up the other draft letter just in case you guys want to.

Minute. One minute. We'll call the special meeting on high speed rail to order. We'll begin. We're going to have Fire Chief Wilson who's going to lead us in the Pledge of Allegiance.

So if everybody could please stand. Chief Wilson.

Agenda item D, roll call. Councilmember DuPont?

Present. Tao?

Present. Harris? Present. Smith?

Present.

Zhang?

Here.

Mayor Pro Temboil. Here. And Mayor Serrato.

Present.

Okay, Mayor, I'd like to remind the audience that if they wish to address the city council, they must submit a green request to speak form located at the podium in the back of the chamber. Additionally, citizens can submit public comment to the city council electronically no later than 1PM on the day of the meeting. And comments received by the deadline will be sent to the city council and will be part of the record and will be mentioned as part of the public comment portion of the agenda and will be posted on the city's website. Material may be emailed to cityclerk@cityofMerced.gov. And any correspondence received after 1PM will be distributed to the city council and retained for the official record. Also for those audience members who wish to hear the council meeting translated into Spanish, please let our interpreter know.

Hello. Good evening. My name is Elizabeth. I'm with Healthy interpreter for this evening. If you need me, I will be back there. Okay. Thank you, Elizabeth.

Agenda item E, public comments. Members of the public who wish to speak on any matter that is the matter that's listed onto the agenda will speak during the portion of the meeting and will be allotted three minutes. The mayor may propose a further limit to the time available for all speakers at the discretion of the city council in order to accommodate as many speakers as possible. And mayor, just to start off, the clerk's office received emails from Alex Carrillo, Peggy Sue, Margaret Ramp, Strong Towns Merced, Curtis Thomas, and David Watkins regarding agenda item F1. The emails were received by the 1PM deadline. They were sent to counsel and posted on the city's website. And any emails received after the 1PM deadline will be sent to counsel.

Thank you, Jennifer. Ladies and gentlemen, because tonight we only have one item, all the comments have to pertain to the agenda item which is on the agenda, which is the high speed rail discussion. It's a special meeting, so comments will only be allowed in relation to that topic. Also as well, in consultation with the city attorney, I think best course too to begin, well, a brief staff presentation from our deputy city manager. So he'll start with that. And then after that, we'll take public comment. So Mr. Quintero.

Good evening, mayor, mayor pro tem, council members. Tonight, we're continuing the discussion regarding conceptually relocating the high speed rail station from downtown to Southeast Merced, Mission Avenue, Highway 99, basically following along the Union Pacific Railroad tracks. Before I forget, also joining us from the High Speed Rail Authority is Peter Whippi and he's on via online. Tonight, council, we are asking for the following action. A discussion and reconsideration of the conceptual relocation of the high speed rail station followed by authorizing the city manager to submit to the high speed rail authority a letter stating so.

The draft letter contained in the administrative report sets the framework for several items such as conceptual support of the relocation. It's a support of the idea of the relocation. Continuing dialogue with high speed rail, transparent and collaborative evaluation of what it will take to get there and to get a station at that location. A seat at the table with high speed rail, the county and MCAG and other partners, because other cities such as Livingston have expressed some concern over this, not concern but support on where the city stands, along with the county and MCAG who have been instrumental in our discussions with high speed rail. And of course, more discussion about economic development, environmental review, land use, infrastructure facilities, and other matters that were raised at the meeting of the twelfth.

Previously in 2010, the station was identified to be located at Martin Luther King Junior Way to G Street between 16th And 15th Streets. Later on, after discussion between high speed rail and the city of Merced, it was then moved to its current location at 0 Street in between 0 To R Street between 15th And 16th, which the city supported. The new concept now is generally to locate it along locate the station along Highway 99, excuse me, Mission Avenue, straddling along the Union Pacific Railroad. For illustrative purposes, I just outlined an area Cause we had some people at the last meeting think we were talking to fairgrounds. Some thought that we were talking Central South Merced.

Others thought that we were locating elsewhere in South Merced. But this would be the general vicinity. Again, this is simply for illustrative purposes only to get a general idea of where the station may be relocated. During the discussion of the twelfth, council identified several options including Mission Avenue, improving the street from Highway 59 to Highway 99, the fire station and other public facilities on how they would serve such a station. Annexation procedures, assuming that high speed rail in the county would want the facility to be annexed into the community.

Campus Parkway, extending it from Yosemite Avenue up to UC Merced. The timeline, when will acquisition start construction completion end as such. A lot of discussion was focused on the last mile connection. How will people who arrive get to Downtown Merced, UC Merced, Merced College or other destinations throughout the community? The list is there.

A lot of discussion was also focused on SB 198 and the commitments which basically said, Merced, you will have a high speed rail station in the downtown area and it will be served by the ACE train and by Amtrak. That will eventually have to be changed through the legislative process, and we want to make sure we have a seat at the table for it. And of course, supporting infrastructure. What needs to be extended, installed, and is the capacity sufficient to be able to take on a project like this. Since the meeting of the twelfth, we have had four meetings with our partners, a subcommittee meeting on transportation of council members, High speed rail met with the local partnership, MCAG, Merced County in the city, and other cities such as Gustine and Atwater participated in a meeting with us.

And then we provided public comments at the high speed rail board meeting on January 21. So again now, council's consideration includes whether or not to support the idea of a conceptual relocation of the station from its current location to Southeast Merced and authorizing the city manager to submit a letter stating as such to the High Speed Rail Authority. I'm available for questions along with Mr. Whippy from the High Speed Rail Authority. Thank you.

Thank you, Frank. Questions from the council before we take public comment either to our deputy city manager or to Mr. Whippi from the High Speed Rail Authority? Councilor DuPont.

Thank you, mayor. I'd like to start out with Mr. Whippi, if I could. Good evening, Mr. Whippi. Yes.

Good evening. Happy be here at your service. I apologize in advance if I interrupted tonight. It's witching hour for my five year old.

No worries. I do have a question. I was looking at the August CEO's report. There's a mention here of Station Arizona and tax increment value capture. Can you explain to me what the authority is conceptually thinking about doing with that section there?

Sure. Yeah. It'd be a bit long winded, but I want, yeah, I want to start by acknowledging a concern that we've heard that this proposal could be seen as taking local land use authority or diverting local revenues, and that's not the intent. And it's not how we would want this to work. In fact, we'd want to partner with the city and the county to establish enhanced infrastructure financing district or similar mechanism to effectuate this.

You know, I think the the the genesis of this is that high speed rail stations create extraordinary economic opportunity, but they also create extraordinary infrastructure needs of streets, utilities, great separations, bike and pedestrian access, and those last mile transit connections all have to be delivered early for station areas to succeed. So what we're aiming to accomplish is not overriding local general plans or priorities, but providing the authority these very limited defined tools in very specific geographies to coordinate development and infrastructure around land that the authority owns and within a half mile of stations where the success of rail system and the success of the community are really inseparable. So in our view, cities retain control over land use vision, those housing goals, affordability standards. Those are local decisions. What this concept would help us with is delivery by capturing value created because the station exists, which are reinvested into the station area itself.

But bear in mind that the program, high speed rail, is not fully funded, and it's far from it. It's our responsibility at the authority to pursue every reasonable opportunity to supplement funding and deliver high speed rail as soon as possible and as efficiently as possible, and we're committed to working with station cities through formal agreements. So this is a legislative concept. The path from concept to bill introduction to passage is a very iterative one, and we would like it to also be collaborative. Like I mentioned, we'd want to partner with the city and the county to establish an EIFD to effectuate this.

The goal is not to take revenue off the table. It's to create more value faster and reinvest it locally. It's about partnership. And like I mentioned, we like to partner with the city and the county.

Thank you. You mentioned collaboration, which is a keyword. Are you currently having any discussions with the state legislature on a bill or bill language to this effect?

No, think what we're doing at this point introducing these legislative concepts that would either not, you know, it comes with a package of several. So some of these, hey, if it's not yet done, things aren't done, then things won't get delivered upon the time and schedule the that we're putting forward, things like utility relocations, more judicial powered, more de more more judicial resources for, right of way acquisition. And then there's also opportunities to, you know, advance funding such as this that would allow us to accelerate, you know, stationary development, things like that. We're not at this point engaged with specific legislators on the topics now.

And then you talk about right of way acquisitions. Currently from the Madera stretch to the Merced stretch, how many acres or parcels are still needed to be acquired to complete that section?

I would have to get back to you on the exact number of that. I'm sorry.

No worries. Thank you. And no further questions at this point.

Additional questions at this time, either for Deputy City Manager Quintero or Mr. Whippi. Right. Seeing no further requests to speak, we'll turn I to the public for your

apologize, Mayor. There is one good point to bring out, and that is our local senator, Anna Cabrera, was appointed DELL: to the High Speed Rail Board. And we learned that on Friday. So something very good for Merced. Thank

Yeah, for sure. Most definitely. Jennifer, we'll turn to public comment at this time.

Okay, Merritt. We have 13 requests to speak for him. So I'll have the first five come to the podium to my left. If I could get Paul Amida, Rich Barnes, John Carlos, Curtis Thomas, and Mary Muah.

Your first, sir. Go ahead.

Was submitted with Alejandro Creo earlier today. These are hard copies. Hello. I'm Paul Almeda. I'm a sociologist at UC Merced.

And we implemented, I think, the most systematic survey on high speed rail in the city of Merced to date. And I just want to summarize some of our results and reflect a little bit on community participation over high speed rail. So we conducted a house to house survey in English and Spanish. In the most impacted census tracts where the current location of high speed rail is set to be located in Downtown Merced. It's a survey of a little over 400 residents.

And we used representative sampling procedures. So we have a plus or minus five percentage point error on the survey. And with my limited time here, I just want to emphasize some of the highlights of the results. There's much more information in the handout of the results of the survey. There's a lot there.

I think it's really good data, the best data we have on kind of communities thoughts that are most impacted by high speed rail to date. So some of the highlights. 91% of respondents strongly support extensive community participation and representation in matters related to high speed rail. 50% stated, which is very high for civic engagement, that they'd be willing to come to a community meeting like tonight to discuss high speed rail. The majority of residents have heard of the project.

However, most do not know the full details showing the need for more community engagement. The majority of respondents also said they would ride high speed rail once it was operational with 62% saying they would ride to visit family or friends and 19% for business travel. The top three concerns with the proposed projects are rising housing costs. That was 48%, about half. Also about half were concerned with projects, the cost of the project itself, and 41% were concerned with environmental impact.

The study also found that new projects in development should also include a community benefits agreement with about two thirds of respondents considering job creation and job quality in that community benefits agreement over high speed rail. Establishing good and reliable commuting options between the high speed rail station and neighborhoods in Merced was also crucial to ensuring that city residents have access to use the new railway bore. About two thirds preferred that authorities prioritize investments in pedestrian walkways and about the same number in low cost public bus services connecting neighborhoods with the high speed rail. So in summarizing, the survey confirmed that when approached through trusted community rooted channels, Merced residents are ready to engage in the planning process. And this can be found I'm

sorry about it. I've to cut you off after three minutes.

This can be found

on I'm sorry. Have to Yeah.

You see Merced, Community And Labor Center, Red Site.

You. Thank you for your discussion. Next speaker.

Good evening. My name is Richard Barnes. I hope I'm not reiterating what has been said at earlier meetings. But when I heard about this meeting, did have some concerns. The opinions I state today are my own and not representative of any other individual or organization. And I'm more interested to hear about these last mile connections, and here's why. The decision that you make here will be your legacy. An important decision is before you that will chart the course of the life of Merced for generations to come. You can continue on the path of locating the proposed high speed rail station south of town at Campus Parkway. I'm sure it'll be fine.

Travelers can stay at the five story, a 133 room Hilton Garden Inn instead of travel recently restored El Capitan Hotel. They can stop at Tractor Supply rather than any one of our many boutique stores downtown. They can grab a six pack at the Arco rather than enjoying a cold draft from the Tioga Sequoia or Unumas, or wake up to a McGriddle in Starbucks rather than a freshly brewed and locally roasted coffee from a whole cafecito or Aesip, or delicious breakfast for Antonio's or Rainbord Cafe. I'm sure it'll be fine. And who knows what other big box chain stores or restaurants will plan new establishments at that location, drawing customers away from downtown?

It will certainly ease the parking. And after the new station is built in, Is is my understanding, and maybe mister Whip can confirm this, that phase two includes connecting Merced to Sacramento with the rail alignment right along the already proposed path adjacent to 15th Street. Riders may glance out the window and see the towering Merced Theater sign or the Tioga Hotel sign in the Greyhound bus station, just like the passengers do right now traveling North of 99. The decision you make here today will be your legacy and the legacy of those who live, work, and enjoy what our gem of a downtown has to offer. And I'm sure it'll be fine. Thank you for your time. Thank you,

Mr. Carlos.

Hi. John Carlos, president of Citi in Merced. I still have my underlying opposition to the high speed rail project in general. However, being the realist I am, it is going to move forward. I wanna commend the mayor, city council members, staff, the county leadership that's been involved in this process.

You people stepped up to the plate, you jumped through hoops, you busted your butts, and you came up with a very nice letter responding to the high speed rail. You did that in what I believe is an impossible time frame just because high speed rail can't get their ducks lined up and plan ahead. Last time I spoke with you, I used a phrase, trust but verify. I see trust but verify in the second paragraph there. It's not a a blank check to the high speed rail.

Yeah. Do what you want. It's yeah. We understand what you wanna do. We're willing to work with you to get it done, but we are not gonna sit here idly and get run steamrolled.

There's been concern about the extent of facilities or station to be provided. I expect a fully functional, at least moderate sized station with capability to expand without constant construction, construction, construction. So the riders do get the services they deserve and what they're paying for. I I think we got a long way to go with this. I'm I'm glad the, our state senator has been appointed to the the High Speed Rail Commission.

I'm very pleased by that announcement today. We've got a long way to go. We can move forward with this, but we need to make sure that plans and money that have already been spent, such as the proposal to relocate Amtrak from Burlington Northern on the Union Pacific, are not wasted efforts. If there's going to be additional expense in that four mile stretch from the downtown station to the proposed Southeast Station, High Speed Rail needs to fund it. High Speed Rail needs to dig into their pockets and reimburse the city and county for additional expenses involved in land acquisition, infrastructure, and other things like that.

There needs to be adequate parking, and there needs to be a good communication hub to get people from one location, the high speed rail station, to their destination. Thank you. And, no, I'm not running for roads.

Maybe in '28. Thank you, Mr. Carlos. Move.

Hi. My name is Mei Muah. I am the CEO of the Boys and Girls Club of Merced County. And on behalf of our organization, I want to express our support for the high speed rail and its relocation, ensuring that it remains in our community to contribute to future generational prosperity. While earlier plans for the high speed rail would have directly impacted our club at the McCombs Youth Center, We have continued to be in support of the high speed rail being located in Merced.

From the beginning our position has been grounded in collaboration and partnership. Our request was that if our site were affected we receive support identifying an alternative space so we could continue serving community youth without interruption. And we have always believed that both the high speed rail and the community youth center play a critical and complementary role in a thriving community. The decision for a downtown high speed rail station prompted us as an organization to evaluate our services and the evolving needs of our community. Regardless of where the high speed rail ultimately locates, we are committed to moving forward with an expansion plan as our current space does not fully meet those needs and we encourage decisions that retain and strengthen critical services for long term health and vitality in this community.

And we look forward to continued partnerships with the city of Merced as we plan for future expansion. Thank you.

Thank you, Ms. Moore. Thank you for being here. Mr. Thomas.

Good evening, counsel. Let's see. My name is Curtis. I am here today as a resident of District 1 who has been closely following the high speed rail for years. In previous comments, I've tried to see the potential upsides in a compromise with the rail authority on relocating the the station.

As I've had time to sit with it and understand that there are no enforceable commitments, and please correct me if I'm wrong on that, there's no enforceable commitments from the authority not to reorder our station to the end of phase one, I've come to appreciate that this is no compromise. A compromise necessitates that both sides lose a little to get something that they both want, but I failed to see what our city gains if we lose our station placement and get reordered to the end of phase one anyway. First and foremost, there's no functional distinction between getting a station at the end of high speed rail phase one and the start of phase two, which is the LA to Sacramento segment. Second, if you look at the mode at all of the most successful high speed rail stations and conventional rail for that matter, they're located in downtown areas where they're as useful as possible to riders and best served by urban transit systems. Consider the usefulness of the Turlock stop on the Gold Runner versus the Sacramento stop or even our own stop.

Suburban stations are always the worst performers from both the rail system and for the city. Third, the financial impacts of subsidized sprawl are already making our city into a castle built on sand. If we want a future where the city doesn't have to keep hoping it can pass more sales taxes just to perform basic functions, we can't afford to build a city with three city centers. Neither the suburban station placement nor the tire shops and storage units that may inevitably surround it will bring in enough revenue to balance the cost. I feel that if we go through with it, this suburban placement is a choice that our children and mister Choudhry's successors will chide us for all for.

Fourth, this letter that the city proposes to send, as I understand it, is part of a gentleman's agreement between itself and the authority. Without something enforceable from the authority, their half of the agreement amounts to a trust me bro. I know of at least four lawyers in front of me. Maybe one of you guys can tell me how far a trust me bro gets you in court. I've been telling my son who loves trains that we'll have high speed rail in town by the time he's 14.

I've been sparring with people who say it'll never happen here for years. I'm a big believer that through deliberate and consistent effort, can be a country that does hard things again. It's said that society grows when people plant trees whose shade they may never enjoy. It pains me to say this, but I believe that the moment calls for us to keep to plant those trees. Rather than panic, let's keep our heads and remember that the authority probably plans to reorder us no matter what. A station in the right place in 2050 is better than one in the wrong place in 2049. Thank you.

Thank you, Mr. Thomas. Our next speaker, Sean.

If I can get the next five speakers, Rick Windling, Marilyn Sobel, Andrea Uribe, Rocio Pena, and Latanya Richard.

Mr. Wendling.

Good evening council. Rick Wendling again. Good to see you again. I was all set tonight to speak about moving the station down into that more suburban area. But after this last speaker spoke so eloquently about traffic in the downtown area, I think it's going to be worth our while to tear down the existing structures and remove them and build them new spots for the seniors and the kids in the area.

So please consider that while I spend my waking hours trying to get Sacramento to stop this silly thing called high speed rail. If you stop to think about high speed, you have to remember that the passengers in the coaches have to endure the acceleration to high speed and then deceleration for the next station And then accelerate and decelerate and so it's stop and go. So the basic purpose of high speed rail isn't going to come to fruition. And then we can attack going up or through or around the Tehachapi's. The Tehachapi's are fault ridden and not a good mountain range for boring through, although we have the technology to do that.

So going around is just going to add time. So please continue working on your station for downtown and I thank you very much. Thank you.

Our next speaker, Ms. Sobel.

Good evening council members. You will not be surprised to know that I am speaking in objection to the letter that you want to send mainly because this is a very momentous and expensive decision and it's being made extremely hastily. I know you technically aren't making the decision to move the station but you're certainly showing a lot of support for it and inch by inch we're going to see that it's going to become more and more difficult to keep the station downtown where it should be. It's only been two weeks since the last meeting and I do not believe that you have had time to answer the many many questions that people had particularly how much is this going to cost taxpayers. Now we find that there is this infrastructure method but that's going to have to go through the legislature.

That's just going to add even more time and maybe money to the project. However, I have a couple other things that I just wonder whether council has thought about. And one of the most important is when is the station being built in relation to the branch that's going to the Bay Area? Because presumably we are going to see much more growth and much more revenue when it's connected to the Bay Area. Okay?

And I'm guessing that's gonna be what ten years before that actually happens. So you have the station in Merced. How many people are gonna be using it? We're gonna be paying for this station way down that's not anywhere near downtown for ten years while we're waiting to connect to the Bay Area. We could have the station downtown where many many more people would want to utilize it. You know when we're connected to Fresno I'm gonna hop down to Fresno because their stations in downtown. I'm not gonna have a car. I'm taking the train. So I want to go somewhere where I can access things easily. Are we gonna have a shuttle bus that shows up every half hour?

Has anybody actually thought about what we're going to do? That's what really concerns me is that there seems to be no effort to actually visualize the future and visualize this station versus downtown. What would actually be better for Merced? Not what would be better for the high speed rail people. Okay?

What would be better for us? And it seems really clear that a downtown station would be much better for us unless you are willing to invest in that area. And frankly I just haven't seen a big effort on the city to invest in areas that are not North Merced. So I have some questions about whether or not that would actually happen but is there a plan for that to happen? Are you planning to you know have a bond or you know is there gonna be a committee? That's what I'm hoping to see some plans. Thank you.

You. Mr. Ribbe, good evening.

Good evening everyone. My name is Sandra Ribbe. I'm a land use transportation policy advocate for Leadership Council. Through our organizations, we have community meetings. We had one last night.

It was originally to talk about the general plan and the workshop that you have upcoming tomorrow. This conversation ended up taking the majority of our of our time. I see that you've done some work that you've met you've had four meetings since the last meeting on January 12 with the high speed rail, MCAG. What I didn't see was any outreach efforts. I'm wondering why you're continuing to push this fast agenda without involving any of the residents that have been showing up and giving you themselves their times, their commitments, and their opinions, and their priorities to you directly through workshops, through city council, through study sessions.

There's one scheduled for tomorrow. Why was this meeting scheduled beforehand? Additionally, for tomorrow's meeting, I've been receiving some email notifications through the website Imagine Merced. Like people want to be involved. We had somebody up here that said that they collected over 400 surveys wishing for the support of the to get it for their involvement. Why weren't we all notified? Not even through the downtown station area plan which you have been collecting data for. During the last meeting, there were comments like, oh, well maybe it's because you haven't been briefed. We've been knowing about this since August. Why hasn't the community been informed?

I know I personally submitted a current conditions workbook comment letter in November. However, I think some of my comments and my concerns could have been shifted had I known that the station would be involved within South Merced instead of Downtown Merced. In response to some of the benefits that the high speed rail presented for it being cheaper, faster, and for there to be more connectivity for UC Merced, I presented these points to the community. In response to it being faster, residents wanted to know why this was at the cost at their public engagement. Residents wanted to ensure that there will still be time for new conceptual designs, property acquisitions, and annexations.

Residents wanted to ensure that there will still be time for environmental clearance for VMT analysis, air quality impacts, for noise. In regards to be it being cheaper, residents wanted to know how there will be new connectivity, how South Merced will be included, and how the city will be able to afford the water and extension water and sewer connection services to the downtown area and how it will continue to support existing communities and not communities that will just sprawl around a new development. In addition in regards to more connectivity and it being for UC Merced students, the station is roughly the same distance in miles. And if people are arriving by train, they're not gonna have their cars. Currently, from that general area, it takes an hour and a half to get from there to UC Merced and likewise from South Merced.

Additionally, what framework is going to be used to guide this project if the South Merced specific plan is outdated since it was created in 2007? Thank you.

Thank you. Appreciate your comments. Ms. Richard.

Hello. Good evening mayor, and community members. I'm Latanya Richard, resident of North Merced. In order to build the rail, the city will need to build new infrastructure, water and sewer lines, roads, and new lighting. It require rewiring of the current transit systems connect Amtrak, UC Merced, and the airport. Parking lots will need to be built. It will cause more traffic and safety challenges for people to even use. Where is that money gonna come from? I ask that that you conduct a focus group with all the residents, as many as you can, because they're left out of this whole movement. There needs to be noise and environmental pollution studies.

And will this move increase the city's efforts in building new infrastructures in in that area for the residents and neighborhoods of South Merced? If it does, a grocery store would still be great. Thank you.

Thank you very much. Next speaker. Can you hear miss Pena?

Hi. My name is Trosio Pena. I lived in here in Merse for twenty years. My decision for the train, my decision train is is Okay.

So my name is Rocio, and I'm a resident of Merced. I've been here for twenty years. And I feel that the position I'm in is the people should have a say in the construction of the train. Now with the university being built and she understands there's residents who are natives of Merced. Uh-huh. As soon as you that. You know, the city has grown and it's expanded. Now it's a bigger populated

city. I

say that the land should be explored. Explored for the,

yeah, for the year, for the construction, the In

reality, the city needs a lot of reconstruction.

And infrastructure.

In reality, I still think it's up to the people to decide to make this train because it is a bigger city, and it's all up to the people. Okay. More transportation services should be available in more schools.

Uh-huh. And And

it's all up to the residents whether they want to expand Mercer to make it into DELL: small the decision for a small city or if they want to make it into a larger Thank city.

You.

GREGORY All right.

Thank you very much. Thank you for being here tonight. Jennifer, next speaker.

Okay. If I can get the next three speakers, Robert Delina, Ingrid Braunstrom, and Eric Hamm.

All right, Mr. Delaine.

Mayor, council members, city staff, it's been interesting to watch people get engaged on this issue, some light commentary and thoughts early on. It's fascinating to watch people's interpretation of the political system evolve. It really is. We have elected representatives up there. Your role is to get educated on these things and help us make decisions.

There's been a rally cry by some members of the community who incidentally benefit, some nonprofits in particular from trying to engage large number of people under a single banner for certain issues, and elected officials who also seem to obsess about community input. I guess I'm maybe one of the lone folks against that that says it's kind of not really the way our political system is built. Again, our opportunity largely, aside from public comment here, is heard in who we elect to the positions. I trust in that process, the elected representative process. I think each of you will look at the facts and determine what you think is going to be in the best interest of Merced.

I'll repeat on topic largely exactly what I said prior on this topic, which is if, in fact, we are going to look at moving the station to the south, which reading the language in the room from high speed, that's ultimately all they're after. A lot of what was asked here today is incredibly premature. We need exact facts. We need environmental studies. That's all to come.

As I understand it, High Speed wants to know, are you even willing to move the thing? Because we're not going to spend any money on doing environmental reports and all this stuff if you're not willing to even look at a relocation. That's my interpretation. Take it for what it's worth. All things considered, personally, I'd be interested in seeing.

Just like I said at the last council meeting, I'd be interested in seeing what that looks like. But it's got to come with some caveats and certain conditions. Downtown has been, for lack of a better word, neglected investment wise because everybody knew. By law, this whole area was going get redeveloped with a station. People that I know of personally not invested in their properties downtown because they knew that it was going to be impacted in some way, torn down or otherwise.

If we're going to relocate the station, the state needs to take that into consideration that if we're making concessions that they need to make concessions as well. Other than that, I trust you all to look at it, get educated on it, and make the right decision. Thank you. Thank you, sir.

Next speaker. Ingrid, I think that was you.

Good evening council members. My name is Ingrid Brosstrom and I work here in Merced. I have appreciated many of the comments that I've heard here tonight and at previous public meetings. These comments have identified valid concerns and benefits for both the proposed location in downtown and the new proposed station location in South Merced. My primary concern, however, is the timing and sense of urgency that has driven the decision making process.

The planning processes that initially led to the selection of the current station location were many, many years in the making. And now the city is being asked to consider significant changes to the project in a matter of months. It is not clear to me what is driving, such a truncated and rushed process, and it is not clear to me what the city loses by taking a closer look at the options and the costs and benefits of each option before offering its conceptual support. The implications of this important decision cannot be overstated. The station location will drive community development and opportunity for generations to come.

It is important that the city council not only act as stewards for the current residents of Merced, but also for many future generations to come. As was identified in the representative survey cited earlier tonight, Merced residents have expressed clearly that they want more information, more engagement, and more involvement in the planning process. A thoughtful and considered process will take time. Neither the public nor the city council has sufficient information to move forward with any decision today. More importantly, community stakeholders need additional opportunities for engagement before the city commits any conceptual support.

Good decisions simply do not come from hasty processes. Thank you. Thank you.

Mr. Hay, welcome back, sir. Thank you.

Counsel, Mr. Mayor, having spent my entire adult life negotiating on almost daily basis, I thought I'd spend my three minutes making sure that you understand how a good negotiator can pull the wool over your eyes. Now four of you are attorneys, so I understand or I assume that you'll understand some of the principles I'm about to mention. If I were negotiating on behalf of the high speed rail authority, I'd start with a technique known as creating the facts on the ground. I'd go to the media first with my new plan, removing Merced from their initial iOS.

You wouldn't learn about the proposal until you read about it in the news. By the time I presented you with the facts, the narrative would already be set and public expectations would have already shifted making it harder to push back against something that was already announced. Then I'd employ the door in the face technique. This is what a textbook example might look like. After I'd done a little anchoring by making an outrageous initial demand like removing Merced from the iOS, I'd let you react with outrage.

Then I'd offer you a compromise like say a Southeast Merced station. Then second, the second option makes you feel like I'm making a concession even though it was my goal all along. If you took that bait, you'd be thinking that sounds reasonable compared to getting nothing. And if you were negotiating pros, they may not might even have you starting to believe that that compromise was a better solution. Then I'd use a technique called take it or leave it or the ultimatum. I'd say, if you don't accept South Eaton Merced, you're getting nothing. And if I was really feeling strong, I'd throw in a little artificial scarcity. I'd say time is of the essence. We need a decision in two weeks. And you would feel obligated to respond for fear of losing your second rate concession.

And through all of this, I would be exploiting your loss of aversion your loss aversion. Psychologically, people fear losses more than they value equivalent gains. Here's the framing. You're about to lose your station. You react with fear. But you can keep a station if you accept the Southeast Merced location. You feel relief. Through it all, I'm exploiting your cognitive bias. The pain of potential loss makes you feel better about accepting worse terms. Here's the core manipulation.

The high speed rail authority is using the threat of total loss to make us grateful for accepting something far worse than what we are legally promised. It's a mugging by negotiation disguised as problem solving. What they really want is your blessing to overturn SB one ninety eight. Then they can avoid the political firestorm that will come with trying to overturn that in Sacramento. Plus, they can make that our idea. It makes it much harder psychologically for us to bring lawsuits against them. After all, we were accomplices in the crime. By the time we realize we've been taken for a ride, the narrative will already have been set. We wanted a Southeast Merced station. Remember the first technique?

It was called creating the facts on the ground. It will be harder for us to push back against something we've already announced and public expectations will already have shifted. You're negotiating with pros. Please act accordingly.

Thank you. Chair for any additional speakers.

We have one more mayor from Sharon Wardell Trejo.

Welcome, Sharon.

Good evening, mayor pro tem, council members. My name is Sharon Wardell Trejo, and I'm the treasurer for Merced Senior Citizens Inc, the nonprofit organization that runs senior activities at the Merced Community Senior Center. I'm here this evening to express our support of the city's concept of support for the potential relocation of the Merced High Speed Rail Station. There's a number of reasons why we feel this is beneficial. We also feel that it provides economic opportunity for the city without the loss of tax revenues while the businesses are becoming established through the process.

We believe that the conceptual relocation will not affect downtown businesses, the community senior center, the McCombs Youth Center, which will ensure the well-being of the community through the development of the high speed rail process. So thank you for this opportunity.

Thank you very much. Appreciate your comments.

Those are all the request to speak forms we have, With

that, we'll bring it back to counsel for further discussion and action. Councilor Harris, this is your request to expedite it to this meeting. Sir, if there's any open comments from you.

Thank you, mayor. I have to apologize for my voice. It's heading out for a while. A couple of observations. Mr. Delaney was absolutely correct. We are not anywhere near the point where we're going to look at environmental things, etcetera. But it doesn't mean that that's not going to happen. We're looking right now at alternatives. I appreciate Mr.

Ham's op ed. I appreciate his hour long meeting with me where we discuss things back and forth. It was well thought out. But it relies on a statistic that I think is not consequential and that's revenue per acre. Downtown clearly has a higher revenue per acre than anywhere else.

But what is consequential to me is the actual revenue itself. Marketplace Merced has 17.6% more revenue than downtown. Gateway marketplace, which is fairly new, is 6.64% more than Downtown Merced. Downtown Merced is mostly built out. It's not gonna develop a whole lot more revenue.

I know that if we were to build in Southeast Merced, we would avoid relocating businesses and organizations, and we would not lose revenue downtown during the building of the station and once it was open. And keep in mind, I'm not advocating one way or the other. I'm just making observations. So I don't think we lose revenue during the construction and implementation of a Southeast station. We do create another economic center there.

The people who are gonna go to McDonald's or Tractor Supply are not residents. They're not taking anything away from Downtown Merced. But if we plan the last mile correctly and get those new customers downtown, then we've opened up a whole new avenue for them. And if anybody is going to travel to Merced and done any research, they're gonna look at the wonderful things we have downtown and wanna go there. No matter what we eventually back in the future, downtown or Southeast, let's understand that the state could yank anything from us.

They could pass legislation. They could decide that they're gonna skip us entirely. They can decide that they're gonna put us at the back of phase two. There are no guarantees. There are no guarantees now. There are no guarantees in the future. Just because it's legislated now doesn't mean it can't be unlegislated later or delegislated. Public comment, public input is very important to all of us. We had some at the town halls, but there's way more to come. And that is in the future.

I'm sure my colleagues have gotten feedback from their constituents. I know I have. And I invite them to share what they've learned from their constituents after I'm finished. So basically, think the high points here that I want to make is we're being asked to look at another option. We're not being asked to endorse it. We're not being asked to fund it. We have a lot to to ask of high speed rail when it comes

to

infrastructure. I'm certainly not in favor of getting a big bill to do all this. There's a lot that we're gonna be dependent on as far as fire, police, water, sewer, everything else. And just because we say we're going to move it to a new location doesn't automatically say that we support the city funding it. It's a negotiable item. So with that, I would ask if anybody else has observations on the counts. Thank you.

Thank you for your comments, Councilmember Harris. Additional comments at this time? Councilor Smith.

Thank you. Thank you, Mr. Harris, for setting the stage. I appreciate that. I everybody's comments. I've heard my constituents reach out to me. And it's clear that our community needs more time to digest and get information. I want to kind of pull it back and focus on the very narrow issue in front of us today, which was the same issue that was in front of us two weeks ago, which is are we open to having a continuing conversation about station location options, period, full stop. I have a lot of questions. I've expressed them up here.

I've expressed them to the real authority. We've heard them from all of you. The reality is that we don't have answers. That's because we still have to have the conversation. And I think it's an important conversation to have. There's

going to

be tremendous opportunity for community engagement along the way for discussions as a council. I don't think a decision is even this year. Maybe it's next year. But if we're not open to considering an option from a government partner who's going to build this asset for us, then I think that we're basically turning our back on the whole idea of high speed rail coming to Merced. And it's not something I'm willing to do right now.

I don't agree that this is somehow like setting this making a fait accompli or setting the stage for our results. And even if it was, you know, I'm hearing support for Southeast Perced or downtown at a station location either way. So I don't know which side of the community has it right. I don't know how to think about everybody's concerns yet. I want to get some more information from the authorities so we can actually have that conversation.

And so however we want to phrase it in the letter can be debated. But I would rather we continue to get information from the authority, find out more what they are thinking, what they're willing to do, what they're not willing to do, line that up with what we are thinking and willing to do and not do, and then have a more definitive conversation that everybody thinks that we're having now at a future time.

Thank you, sir. Councilor Dupont.

Thank you, mayor. Thank you for my colleagues, their comments. And I'm going to start out with I do not trust the high speed rail authority one bit. I was in Sacramento last week. We were at League of California Cities, Councilmember Harris and I and Councilmember Tao.

One of the conversations that was had was specifically on the sales tax revenue and property tax revenue that I had questions about. While I understand the narrow issue, I think it's also important to point out some of the disparities that high city rail likes to state in the sense of we're here to partner with you. This is why I think verifying information is important and having some skepticism to the high speed rail authority is warranted. In the August CEO report, it specifically says, empower the authority with certain regulatory powers including zoning and land use permitting controls over land it owns and land within a one half mile radius of high speed rail stations to facilitate the development of transit oriented communities and allow the authority to capture cells and property tax increment resulting from such development to support station area infrastructure investments. So I go to Sacramento.

And this was actually a topic of conversation at the League of California cities. There's actually been conversations within the legislature. Mr. Whippy says no. But the lobbyists with the league says there's already been conversations within the legislature that there is conversations about exactly that, property tax and sales tax increment being taken away from the city.

Now, I say this at the last meeting. I do not want our citizens to be burdened by the fact that the station comes, put a station here, take sales tax and property tax within a half mile, has permitting controls within that half mile, and we're left to maintain the infrastructure that is in and around the station. I mean, let's be honest. They the federal government took away $4,000,000,000 from this project. They're looking for funding.

Now I I do have some language changes. I think the letter reads as if we are supporting the relocation. I mean, it specifically says I'm writing to express the city's conceptual support of the Merced High Speed Rail Station relocation. I've provided a red line. And if city clerk would, that it would be appropriate to put my red line up on the projector just so the public is aware of what I'm talking about.

I've provided a red line to that specific language because I think that language is a little too strong in the sense of we're supporting the relocation. And what I heard from council member Smith and council member Harris is we're not at that stage yet, but we're supporting a continued conversation. Right? So I changed it to I'm writing to express the city's support in a collaborative review of the concept of moving the Merced High Speed Rail Station to Southeast Merced. I also included in the the second paragraph because I didn't feel and I appreciate city manager's approach to this letter.

It allows us to have this conversation as a starting point. So thank you on doing this. But the second paragraph I included, the Southern Merced County site warrants an analysis because, let's be honest, the high city rail authority is not being objective. It's a subjective approach from them. So an analysis, particularly given impacts including but not limited to the lawyer and me to infrastructure, utilities, and city services.

And then it continues to the potential advantages. Now that's not the whole laundry list that I think we've discussed previously. But I hope that gives enough to the authority in the sense of we want to continue this conversation because none of my questions have been answered from the last meeting. I didn't expect them to, two meetings two weeks from today. So but that's that's my initial thoughts and my reservations to this.

And I don't want us as a city to say, you know, Southeast Merced doesn't have this, isn't great because I think that's let's not pit ourselves against each other. High speed rail is causing this problem. So the conversation should be, how can we better our communities and better our districts? Southeast Merced District 1 is a growing district. There's a lot of infrastructure and other projects going on in Southeast Merced.

There has been in the last year. So I don't want to discount that momentum forward. But I do think that I don't trust the High Speed Rail Authority because their actions have spoken louder than their words. And their actions have all shown me that they're trying to do things not in a collaborative approach, but in a this is what the high speed rail authority wants. So I provide my red line, open to any conversation and discussion on it. So thank you.

Thank you, sir. Additional comments? Okay. Further discussion, comments, questions for staff, or a motion? Councilor Dupont.

Sorry, Mayor. One thing that I didn't see deputy city manager on our slide was a Southeast Merced station area plan. I think needs to be in the discussion as well. If they do want to move it, we're doing a downtown area station plan. So one would need to follow the Southeast Merced area plan as well.

For sure. All right. Anybody else? Additional discussion, questions, comments, or a motion? Councilor Jean.

Just want to reiterate what I said last time around. I think it's important that we engage the community. There's folks out here today that are talking about it, right? But in the long term of things, this has all been pretty much under the rug, right, behind closed doors. And so I think it's important that we continue to engage the community.

It was mentioned up here that this decision, we could do that later, right? Public comments could be provided later. But I think we're playing our cards if we show support now rather than hearing from community members. The survey, somebody mentioned up here, we don't know which side of the community is right, whether or not it should be downtown, whether or not it should be. And sophomore said, well, community wants engagement. 90% plus wants to be engaged in this project. And so as it stands, we haven't done any of that. Two weeks past, no meetings with community members. So I think it's really important that we do engage the community. And we ask High Speed Rail to do this.

I think I mentioned it before. We have High Speed Rail continue to do their town halls and have pictures of things that what's being changed, a whole presentation. Yeah. So I'm not fond of us supporting the relocation without community support.

All right. Council member Councilor Harris.

Thank you. Again, we're not supporting the relocation. We're supporting looking at it further. We're supporting looking at an alternative. And the city, the community can reach out to us. We've reached out to them. We went to town halls. We discussed it at town halls. As, again, Mr. Delaina said, this is a representative democracy.

We are here to represent the people. And that doesn't preclude community meetings. I'm in favor of those. But at this point in time, that is down the road. All we're being asked to do now is tell the authority that we are open to looking at another alternative rather than downtown. And with that, I would make a motion to do so incorporating the red line changes that Councilmember DuPont has suggested.

Okay. Is there a second to Councilmember Harris's motion? Second. Okay. Are there any further discussion from the council?

Councilor Smith.

So I don't know that we can do this immediately. But I think it would be wise if the council subcommittee charged with having the discussions with high speed rail comes back to the full council and community with a quasi timeline. We need to know what the authority's timeline is. We need to know when we're going to have formal, if not consistently informal, opportunities for community feedback. But also just to point out, we've been kind of put on an island here.

I don't think that we know where our state representatives stand. I don't think we know where the High Speed Rail Authority Board stands. I don't think we know where Governor Newsom stands. So to Mr. Ham's point and Mr. DuPont's point, this kind of information vacuum where we're having to negotiate against ourselves, if you will, that also has to end pretty soon too. So I think I would suggest that my colleagues on the committee pivot to implementation of the discussions with everybody involved pretty quickly and let the community and the council know what we're doing. We all feel like we're on the same page when we get to the next decision point.

Yeah. Just on that point, currently SB as many of you in the room are aware, SB 198 currently requires the station to be in Downtown Brissett. So current state law requires it to be there. It's going to require a legislative change that the governor signs off on to do it. Obviously, legislature and the governor can change as well. That's the current state of state law. High speed rail authority obviously is looking for our support to the extent possible to approach the legislature about those changes. If they decide not to do it, then the station's going to remain downtown if and when it's built there. And as was discussed earlier, there's a lot of pluses and minuses to both. I mean, downtown comes with a big promise of downtown revitalization.

But it also comes with a lot of risks to cause damage to downtown. It comes with a lot of risks to negatively impact downtown both in the short term and the long term. Relocating city facilities, on and on. There's a lot of potential risks and downside as well, and a project which is significantly more expensive and will take longer to deliver as well. So again, I mean, you have to look closely at the pluses and minuses to both.

And your current state law, again, requires it to be in downtown. But if and when that changes, then we'll continue to have these discussions. But again, no easy decisions here, no perfect decisions here. But I certainly support exploring moving it to the Southeast part of town. And I think there's lot to be said for it, too. There's a lot of pluses if you look at it closely.

All

right. Additional comments or we'll call for the question? Okay. Seeing none, Jennifer will call for the question.

Okay. Have a motion by Council Member Harris and a second by Council Member DuPont, mayor and council. Please cast your votes. And the motion passes with council member Zhang voting no.

All right. Thank you, Jennifer. Thank you, counsel, for the discussion. Thank you, Mr. Quintero. Thank you, Mr. Whippi and your agency and the authority for all the work getting us here.

Agenda item G, adjournment.

Is there a motion to adjourn? Motion. Is there

a second? Second.

DuPont and Harris.

Okay. I have a motion by council member DuPont and a second by council member Harris, mayor and council. Please cast your votes. And the motion passes unanimously.