City Council - Regular Meeting

here we go everybody say what

Good afternoon. The time is now 2.03 p.m. on Wednesday, June 10, 2026, and the City of San Antonio B session is called to order. Madam Clerk, please call roll.

Councilmember Kaur. Councilmember McKee-Rodriguez.

Present.

Councilmember Villagran. Here. Councilmember Munguia. Here. Councilmember Castillo. Here. Councilmember Galvan.

Here.

Councilmember Alderete-Gavito. Here. Council Member Mesa-Gonzalez. Present. Council Member Speers. Here. Council Member White. Mayor Jones.

Here. Mayor, we have quorum. Great. Thanks, Madam Clerk. This is a meeting, a briefing on the SAWS rate request increase, which we're scheduled to take action on next week. So, Eric, over to you.

Thank you, Mayor. Good afternoon, Mayor and Council. So today's B session briefing will provide an overview of the city staff's review of the proposed four-year rate plan and rate adjustments as requested by the San Antonio Water System. As you all are aware, under the city charter, city staff has the responsibility to make recommendations to the council Regarding any proposal from a from one of our two city utilities to change rates Over the last several months of the public utility staff within the finance department have worked closely with saws To review the proposed rate adjustments and evaluate the impact on customers infrastructure needs and the utilities a long-term financial sustainability as a result of the review we are the staff is recommending several modifications to the original four-year rate plan as proposed by saws and and Troy's gonna walk through those We have had an opportunity to meet with mr. Puente and his team to discuss these recommendations and have reached mutual agreement on the adjustments that Troy will walk through with you today following today's briefing as you just alluded to mayor we are proposing that the rate ordinance be placed on the June 18th a session for next week and Certainly that that will be dependent on the conversation here today But that is the current plan and with that I will turn it over to Troy to go through the PowerPoint

Thank you, Eric, and good afternoon, Mayor and Council. As Eric mentioned, today I'll be providing a review of the four-year rate plan as proposed by SAWS and also providing recommendations for your review and consideration in advance of the action and consideration on the 18th. I think, as Eric mentioned, also we have a large team here from SAWS, including the President and CEO, Robert Puente, as well as Cecilia Velasquez, the CFO, and a number of the members of the team. I'd like to start off just by thanking them for the time and the commitment they put in, the evenings and the weekends, to actually answer our questions and give us the information that we need in order to make an informed decision, conduct our review, and make a recommendation to counsel. Also, as Eric mentioned, we have a small, but I guess I'd say mighty public utilities team in our finance department. And with me today, I'd also like to take the opportunity to introduce two of our individuals. We have Jeff Pullen, who's the interim assistant finance director sitting up here in front. He has about 25 years of experience. He's done these utility rate reviews over the course of those 25 years. Additionally, with 20 years of experience, we have Morris Harris who's sitting behind him. He's our senior rate analyst, and he's been working on these items as well. So this team has been integral in conducting this review that we're going over today. This team is basically developed under the city charter. Just very quickly, under the city charter, as Eric mentioned, we have several responsibilities as a public utilities team to monitor the financial condition of public utilities and for any regulatory and policy issues impacting the city. We're also responsible for basically reviewing any and assembling the facts for which are essential to the proper determination of cost. The service and the fixing of reasonable rates and as part of that we're here today reporting the findings of our review and our recommendations to US City Council and I thought it would be valuable to go through the extensiveness or the comprehensive review that this team does. We looked at several items in tandem with SAWS. First of all, which is the rate model. It's a multi-year financial plan that brings all these components together in terms of their revenue requirements, in terms of their O&M, in terms of their debt service and their demands, the payment to the city, as well as their contributions to renewal and replacement funds. When we look at this rate model, we look at it in total through looking at historical versus the forecast. As I mentioned, pieces of that rate model include the sales forecast. This team takes that sales forecast, goes into detail looking at what has happened historically, what the assumptions are for the sales forecast in the future, conducting things like linear regression to make sure that we're comfortable and in line with the sales forecast as proposed. We look at the revenue requirements. You know, what does it take in terms of revenue or rate support to basically support their operations and their maintenance, their debt service and their capital program? their operations and maintenance budget. We spent a lot of time, we'll talk about this on a couple slides, is where we spent a lot of our review in terms of historically what's been the trends on their operations and maintenance budget. Where are the assumptions built into that operations and maintenance budget in terms of where they're looking over the course of the four year rate plan. We spent time discussing and talking to them about their capital plan. over the five-year CIP, how they intend to pay for that capital plan and the financing plan, what the key financial metrics they look at and how they are forecasting those financial metrics under this new rate model, and then also how those translate into credit considerations with the rating agencies. And we spend time going through those credit reports to make sure The plan that they're putting in place is consistent with what the rating agencies are looking at in terms of what could impact their credit and what can make their credit ratings worse. Then on the far right side, we look at their financial statements, cost of service. Then lastly, we look at the affordability programs, and then this all wraps up into a summary as far as what's the bill impact to our residents. And I'll show you that. And we'll go through a lot of these components here in a minute individually. In terms of key dates, just as a refresher, November 4th, SAWS Board approved their 2026 interim budget. On April 7th, SAWS Board had their first public hearing and amended 2026 budget and proposed rate plan. They came before the council on May 7th, provided a briefing to SAWS, I mean, provided a briefing to city council on the proposed rate plan. May 19th, the approval of the amended budget and a resolution in support of their proposed rate plan that's to be considered by city council. Then, of course, we're here today with the city staff review and recommendation with the anticipation of being on the June 18th council for approval of the rate request. Just a review of the original or summary of the original rate request as proposed by SAWS, their four-year rate plan. Three classes, the residential, general, and irrigation. We're going to focus mostly on residential from 26 through 29. 26, as originally proposed, was 7.9%. 2027, 7.6%. Those were firm rates. Their proposal was an up-to rate for 28 and 29, a 7.1% for 28, and 6.7% for 2029. I will point out that given where we are in their fiscal year 26, which is a calendar year, the initial rate of 26 of 7.9% would only be effective for a period of time July 1st forward, essentially providing revenue of five months. And just for context, the last SAWS rate adjustment was in 2020 with also a design change in 2023. What does that mean in terms of the average residential bill impact and the annual rate revenue? On the left two columns on the left of the table, these are the years and the rate increase I mentioned on the prior page or the prior slide. You can see the average residential bill impact based on those rate increases of $4.47 on average in the first year, increasing an additional $4.66 in the 2027, $4.65 in 28, and $4.73 in 2029. And you can see the associated revenue it throws off in terms of rate increase. As I mentioned early on or talked about, there is also a flow of funds. What this flow of funds is, it talks about how that revenue is going to be used and what's the priority of their use of that revenue. So under the flow of funds, any revenue coming into the model or into the system first goes to satisfy their operations and maintenance expenses. After that, secondarily, it goes to satisfying their debt service and reserve requirements. Then you have the city payment, the matching city payment to the repair and replacement fund. Then any balance after that goes to the repair and replacement fund as well. This next slide takes that and kind of puts it in a mathematical picture for you, comparing this flow of funds to the 2025 approved budget to the 2026 amended budget that was recently adopted by SAWS. You can see in the very top under the sources of funds, operating revenues, approved budget, 2025 of 892 million versus 930 million. That difference is 38 million. That is actually because that rate increase is only for a partial year. So about a 4.3% difference. Moving down the table to non-operating revenues, a slight difference of $2 million less. That's primarily going to be the impact. Just like we as the city, we're having an impact on our interest revenues due to lower interest rates. SAWS is not immune from that as well. Going to the uses of funds, as I mentioned, under the flow of funds, you have your operations and maintenance, and we'll spend a little bit of time on this line item in more detail on the upcoming slides. Compared to 2025, about $25.9 million in additional operations and maintenance expense, and we'll go through the assumptions in detail, about 4.8% increase. The debt service and expenses to basically maintain the capital program. and transferred to the city of San Antonio, as well as the difference on the restricted funds for the R&R, which is going to be basically their bond proceeds and their impact fees, and then the unrestricted funds in the bottom bucket. Mention also one of the things we look at are the key financial metrics and we spent some time going through this with Cecilia and her team as far as the day's cash on hand. As far as the day's cash on hand, of course the day's cash on hand basically is going to be the cash that's going to be available and how long that cash can last them over the calendar days. Currently based on 2024, and they have a target of 350 days. They're proceeded, projected to exceed the target from 40 to just over 50 days over the five-year plan. 2024, they do have conservative assumptions into the model, so they're always going to outperform it from a cash on hand and the debt service side, as we talk about. And you can see from 24 over through 2030, they're projected to maintain that cash on hand above the benchmark. In terms of the debt service coverage and what this is, basically this is their net revenue based on how that's covering their debt service every year. Debt service coverage for all bonded debt, they model it at 1.5 times coverage to allow for conservative financing assumptions. They typically outperform that based on these conservative financing assumptions too and they typically come in at 1.75. And you can see that on the right by 24 and 25. Although they had that target, they usually come in and outperform that with the higher debt service coverage. And based on their budgeted assumptions, we would expect the same for 26, 27 through 30. Based on their financial management, based on their debt service coverage, based on their days cashed on hand on the financial metrics we just mentioned, they have a very strong credit rating with Fitch at AA+. Moody's, AA1, and S&P at AA+, all three with stable outlook, meaning based on their financial condition, based on the rating agency's review of them, they really don't have any intention of changing that rating unless something substantial happens to influence their financial position. These are all top of the high grade scale in terms of marketing when they go to the market for their investors. As I mentioned, under the flow of funds, wanted to spend a little time talking about the operations and maintenance budget. Here, when our team goes through this, we go through it in some detail at even a more granular level than what we're sharing today on the slide. A lot of our focus was on the salaries and fringe, moving from what they had in the 2025 to 2026 amended budget, basically an increase of about 13.4 million or a 5.9% increase in their budget over 2025. We also looked at their contractual services. You can see how that budget is comparing to 2025 as well with a $6.7 million increase. Materials and supplies as well as their total O&M and then their capitalized costs. Capitalized costs are going down. This is with the completion of their AMI program. Historically those AMI positions have been capitalized and have been funded out of their bond program, capitalized as part of their projects. With that project being completed, it now converts back to the O&M side and you see a reduction in capitalized costs but an increase in their O&M. So for a total O&M increase over the 2025 budget to 2026, about $26 million. Taking a little different look at the O&M as far as what are those key O&M key drivers, the first three lines relate back to the personnel and fringe benefits I mentioned on the prior slide. As part of the 26 budget, they're looking at an addition of 37 positions throughout the organization, about an increase of $4.4 million. They have salary increase adjustments, 3%, and I'll talk more about this on the next slide, and then half a percent based on the CEO scorecard, plus a change to their entry wage, which results in about $4.9 million increase. Then associated retirement and benefits are 4.1. Then you can see the other major pieces of their O&M budget and where those increases are, and a lot of it's going to be due to inflation as well, for a total of increase of $25.9 million. So when we looked at their key drivers or their key assumptions, as I mentioned, they were adding 37 positions and support across various positions in the organization. As I mentioned before, they're looking at 3% pay increase for 2026 and all along each year of the rate model. In 2026, they also had a half percent increase on the CEO scorecard. That CEO scorecard is not embedded in the future years of 27, 28, and 29. We're also looking at a recommended living wage increase from $19 to $20 We also talked to them about utility cost increase, looked at they are experiencing some inflation or increase in utility costs. They also have an increased budget in there for the CPS rate increase, which I'll go into more detail in a minute. We sat down with them on a line-by-line basis on their major contracts to determine their inflationary impacts on a lot of their contracts like chemicals, water contracts. Based on those contracts, there's built-in adjustments in there, which we were able to have discussions and confirm those as well. Water contracts, depending on the water contract, a 3% to 7% increase annually depending on the contract itself. And I'll talk more about that. So based on our review, we had, as I mentioned, we had in-depth discussions with the SAWS and Cecilia and her team. Based on that review, we came to a mutual understanding or a mutual agreement, and we're going to be recommending adjustments to their operating and maintenance budget in three primary areas, personnel and positions, water contracts, and utility budgets. So in terms of personnel and positions, in 2023, based on their automated meter installations, they were brought in-house through some challenges on their existing contract. When they did that, there were 105 positions that were brought in-house, and there's an existing number of, I think, 49 positions that were meter readers in this well for a total of 154 positions. These positions are currently in their field operations group. They include positions such as field representatives, meter technicians, Cedar meter technicians, field service inspectors, customer service, and program data support. So with the conclusion of the AMI program, they had the 49 meter readers and they had the 105 people. We agree with SAWS that based on some of the metrics that we were able to review that there is a need to retain some of those positions due to the increase in non-routine service metrics. how they're responding to things. They also need to stabilize the AMI program. So there's going to need to be some level of support. But as we're going through that review, there are also 48 vacancies in that team as well. So what we're recommending until it stabilizes to reduce those 48 vacancies. There is an opportunity that we'll talk about in a minute in the latter two years of the rate to come back and have a possible adjustment based on how these things stabilize. So we're recommending the elimination of the current 48 vacancies and also gives them room to add the 37 positions as proposed. Two other areas we looked at and had conversations about is our water supply contracts. One is the water exploration company contract known as WECO. We're recommending a reduction in our O&M budget, about $6 million. Traditionally, this has been budgeted $8 million year over year, for example, for the last four years. But because of the drought conditions, that is a take and pay contract. It has not been producing the water out of that contract. It has historically been about less than $2 million. So we're recommending the right size of budget in that area. There is an opportunity for them to renegotiate this contract in July of 2027. Based on those negotiations, as I mentioned, on the O&M side, there will be an opportunity to have discussions based on our recommendation in the latter two years of the four-year rate. Also, under the utility expense budget, there's $1.2 million that was built in for an adjustment for CPS future rate increases. They are experiencing some increase above and beyond the current budgets, but there is also this rate increase built in of $1.2 million for CPS. You know, just like the city today, we don't budget SAWS increases, we don't budget CPS rate increases, so we'd recommend removing that and come back for future consideration in the event they need that. So we're recommending you turn to the O&M budget. Recommend approval of the four-year rate plan after consideration of these O&M proposed adjustments for a total of about $11 million. We also spent time with them going through their CIP. We looked at their CIP in terms of 26 and 27. We went through the individual projects with them. We confirmed those projects based on what the community took counsel, what were their goals. We also looked at how they were actually had discussions with them, how they were pricing those and turning those costs. The 26 and 27 CIP is very detailed, very well laid out. There is a change in process as you get to 28 and 29. We went through that change in process. We understand why they did it and how they did it, but in essence, in 28 and 29, there are programmatic pools or categories of money that will be available to directly address, for example, water loss. We sat down with them to get an understanding of how they develop those costs under those pools. We understand how they're developing and we agree with them in terms of how they identify those costs in terms of their predictive modeling, looking at the age of the infrastructure, the types of pipes, the soil conditions, and where those improvements are. So based on looking at their CIP for a total of $3.2 million, we are comfortable with the CIP as proposed or that five-year plan. The majority of the CIP has specific focus in terms of water delivery and wastewater, making up about $2.9 billion of that $3.2 billion program. Again, taking a different look at their CIP, looking at those major initiatives or major areas of focus, water main replacements, and I'm not going to go through all of them, but starting at the top, water main replacements, about $663 million. The Stephen M. Klaus Water Recycling Center, 566. Water main replacements and governmental mains, as well as the bottom. So you can kind of see how their CIP is being targeted in those specific areas. In addition to their CIP, as I mentioned, we looked at how they're going to pay for their CIP. What is their plan of finance? And what are the assumptions? As I mentioned very early on, they do utilize conservative assumptions, and there's a reason for that, because the intent of all is outperforming those assumptions so they can meet their debt service coverage levels. For example, they assume new debt issuances on January 1st of each year at 5%. They also assume senior level debt will be issued to fund the capital program. We have a couple of comments on that on the next slide. They assume their commercial paper program is fully utilized. Typically, like we do today, they may use a commercial paper program. That's interim funding, and they take that out long term with other debt as it's issued. As I mentioned previously, their financial model assumes debt service coverage benchmark of 1.5 times with a coverage target of 1.75. Historically, they've been able to hit that 1.75 times coverage based on the conservative assumptions that allow them to outperform their financial targets. These assumptions allow them for a strong credit position and are looked on favorably by their rating agencies. Excuse me. We do have a couple of recommendations. The first of which focuses on their senior level debt assumption. Historically, looking back, although they model a senior lien debt, they typically issue junior lien debt instead of the senior lien. They with the five percent interest rate assumption After discussions with them were recommending the saws they removed the senior lien assumption and associated reserve requirement which results in a reduction of approximately three point one million dollars in the revenue requirement and And the reason why we made this recommendation, because historically looking back, although their model assumes a senior lien assumption, historically they have not used that in recent history. They have issued the junior lien debt. The senior lien debt has a reserve requirement, which is very expensive from a modeling standpoint, because when you issue the debt to fund that reserve, you have to pay the annual debt service on that. And then annual debt services equal to about $3.1 million in revenue requirement. We also recommend, and SAWS does this on an annual basis anyway, but we recommend that they continue working with their financial advisors to evaluate options and strategies for future utilization of cash. How can we use that cash? How can we deploy it and put it into production above and beyond their days cash on hand metrics? enhancing their budget development practices to reduce some of the current conservatism, maybe build some of that certainty into it, striving to that 1.75 times coverage target in their financial model. The other area we looked at is their SAWs, their affordability programs. In terms of their uplift program, and their uplift program is an umbrella program over all their programs, in terms of the requirements, they're recommending that the uplift program similar to what we did last week I think with CPS, extending that program, moving from 125% of the federal poverty guidelines to 150%. The uplift customers typically see savings on their bill about $35 a month on average and provides roughly a 58% bill discount compared to non-uplift customers for those customers in need. At the top you can see from 25 to 26 based on the current program at 125 but also moving to 150% of the federal poverty guidelines. Look at adding about another 1,700 customers, a 3% increase combined. Outside of the uplift program from a discount standpoint, we're also looking at changes to Project Agua and Plumbers to People by putting investing an additional $200,000 into each of those programs, which is also consideration in the rate. In total saw projects spending about $3 million in 2026 on their affordability programs. So in summary, as we kind of get to the end of the presentation, on the left side have the three different tables. The first table at the top is the original four-year rate plan. as proposed by SAWS. Based on our recommendations, we're looking at reductions including the senior lien, about $14.1 million in 2026. That translates into about a 1% reduction going and focusing on the residential side from about 7.9% in 2026 to 6.9%. For 2027, those O and M reductions carry through the model as well as the senior lien assumption from 7.6 to 6.5. We did have discussions, and as I mentioned earlier on in the presentation, that there may be opportunities in terms of looking at the WECO contract, looking at potential CPS rate increase, looking at how stabilization and AMI works out, and also refining their CIP over time and how they're going to finance it. We worked with SAWS. We modeled a minimum rate at the very bottom for 2028. We would suggest it be a minimum guaranteed rate or a rate increase of 5.5%. But they would have the opportunity to come back between using 28, for example. If they have need above and beyond 5.5% and between 7%, they would come back to city staff. We would have certain accountability measures that I would go over in the next slide. They would prove the need for that rate increase. Based on that need, we would have the administrative ability approved by council to go up to 7%. And basically, we would do that due diligence and inform the council in the event that we were recommending increasing that above the 5.5, but below 7%. In the event they came back and asked for, in any of these years, asked for a rate increase above the maximum, it would require council approval. 2029 is the same way with a minimum guaranteed rate of 5% up to 6.6% based on providing us the support and the justification for the need increasing above the 5.5 or 5% in 2029. As I mentioned, for 28 and 29, in the event they need to exceed that guaranteed minimum rate, they would come back to me and my team and there would be certain accountability measures that we would include. We want to review the accuracies of the historical revenue projections as well as their projections going forward. We'd like to understand how their capital improvement plan or their CIP has progressed. Looking at how they financed that, if there were any efficiencies in place that we could take advantage of. Looking at the performance of the operations and maintenance as well. Are they performing as they had budgeted and as they intended? Comprehensive overall model evaluation. And then following up on the proposed recommendations that we made as part of this report. And of course any additional other information as required. So in summary, based on our staff recommendations, based on our review, this all kind of winds up into what is the impact of the residential bill. So on this slide, you have two rows. One is the original rate plan as proposed. The second item is the adjusted rate plan as proposed by city staff. For 2025, the average residential bill is about $56.68. Under the original rate plan, that would increase from $56.68 to $61.15, an increase of $4.47. Under the adjusted rate plan, it would go from $56.68 to $60.59, a total of 391. That's a reduction of 56 cents, but also keep in mind in 2026, this is a prorated for five months. as well. And then in 27 through 28 and 29, you can see the impact between the original proposed and the adjusted rate plan. And 28 and 29, these are based on the minimums. In the event that there was any increase granted above those minimum guaranteed rates, 28 and 29 would increase. With that, Mayor, Council, that concludes my presentation. We'd be happy to answer any questions you have.

Great. Thank you, Troy. Thank you, Jeff. And as mentioned, Steve, much of the SAWS leadership team here, thank you for all the hard work that went into today's presentation. And it's reassuring to see that even with that scrub, this is not too far off from where SAWS originally came in. I am in particular what jumps out at me is that when we look at your at the 3.2 billion dollar capital improvement project not one of those projects came off of the list as recommended after the public utilities review so I think there's LARGE AGREEMENT THAT THOSE PROJECTS ARE NEEDED BASED ON COST, SCHEDULE, AND OF COURSE NEED. SO THANK YOU FOR THAT. LET ME ALSO JUST SAY, I KNOW THIS IS ALSO THE PROCESS THAT WAS UTILIZED LAST TIME THIS WAS REVIEWED, I.E., YOU KNOW, IF THERE'S CERTAINTY IN A COUPLE OF YEARS AND IF THERE'S A CHANGE LATER ON, YOU'LL COME BACK AND IF IT'S WITHIN A RANGE, THAT WILL BE REVIEWED BY STAFF. There was, I want to share something that was shared with the board, and I want to say this is also shared with the council, but what it does is really speak to why that flexibility is so important. This was from the SAWS capital program efficiency study, which was conducted by Williams Consulting Partners, and I think this may have been brought up in our last session, but I just want to reiterate it because it underscores why that flexibility is so important. So preliminary results, it says, SAWS, quote, maintains a sophisticated ability to identify and manage large-scale infrastructure projects underpinned by an exceptionally strong balance sheet, highly stable and technically competent workforce and integrated applications, end quote. However, right, goes on to say, SAAS operates in an increasingly complex and costly global economic environment. Aging infrastructure, regulatory and resilience requirements, workforce constraints, along with rising construction and operating costs, underscore the need for more flexible scenario-based capital planning and stronger risk management. So all to say that's why that flexibility, given the fluctuations we're not only seeing in the economy, but also what that means for the operations of our utilities is why it's important. And so I want to thank you again for the analysis that showed what is now the minimum that we can expect and folks can plan for in the out years, 28 and 29 in particular. Let me open it up to comments from my colleagues.

Councilman white Thanks mayor Just a question or two Troy why the change here from what saws originally asked for I Think based on conversation with saws.

I mean, I think when they were building their budget their The rationale makes sense. I think based on conversations. There's some opportunities to make some adjustments and

Why did we think what was originally presented wasn't right on?

I mean, for example, as I walk through the slides, why it wasn't right on, we think there's opportunities to take the WECO contract, for example. That is a take or pay contract.

So that one's really important. Can you spend maybe 20 seconds on explaining why that contract is important and what it allows for our community? Thanks.

to the extent that water is available, they have to take that water and they have to pay for it.

Troy, can you speak into the mic?

Oh, I'm sorry. So to the extent that water is available under that contract, they are required by contract to take that water and pay for it. But because of the drought conditions that we've had over the last four years, for example, Those wells have not been or that contract has not been producing the water, so they have not been required to take that water and pay for it. So under the contract, there is some exposure that in the event that continues to rain like it has, they will have to pay for it going up from that $2 million that we talked about up to $8 million. So our position as we talk to them is their contracts coming up in July of 2027. You're going to renegotiate that contract. Historically, you haven't needed that amount under that contract, so our recommendation is to reduce it. But then coupled with the outer two years, in the event you negotiate that contract under different terms, you can come back and recapture some of that if you need to. But for purposes of today, we are recommending reproducing it.

So you all looked at that, identified that contract, took that issue to SAWS, they agreed, and that's how that got stripped out.

Yes, sir. On all these items, we've had in-depth conversations with SAWS, and they've agreed to these.

Okay. So that's one good example. Anything else? What else led to you guys decreasing the number?

As I mentioned, embedded in their budget is the assumption for an increase for a CPS rate. and having conversations with them and Cecile has been very vocal that we're experiencing increased costs in our utilities, but they also had the CPS rate budget embedded in there as well for an rate increase. As I mentioned, similar from a budget practice as a city, we don't adopt a budget with rate increases embedded in there. And so basically holding them to the same measures that we hold ourselves to in translating that to their budgets.

Okay. All right. So we have the contract. We have CPS. Anything else?

Last two things, like I mentioned, are the senior lien debt. And then the last one also is the positions after the conclusion of the AMI program.

Explain that last one.

So under the AMI program, they had a contract to actually install those meters. There were some challenges with that contract and they brought those in-house. When they brought those installations in-house, they brought approximately 105 positions into their position complement. The program has been concluded and so once we talked to them, they were going to hold their vacancies to see how the program was going to stabilize. And we made the recommendation that you are keeping a large contingent of that. We looked at their performance metrics and we agreed there is a need for some of those positions. They're seeing increased in non-routine service calls because they have better data to analyze because they can see where leaks are happening. They can see where meters are failing. And so they have a lot of other non-routine calls that have escalated that they need to respond to. So we agree that there is a contingent of that staff that needs to be retained, but we also thought there was an opportunity with the 48 vacancies there to eliminate those vacancies and use those savings to fund the additional 37 positions.

Got it. And then last question, just to make sure I have this right. In those last two years, anything more than the minimum rates of the 5% require review by public utility staff and then just a briefing to council. But no vote of council is necessary to actually raise it to 7%.

That's correct. And we have done that in the past.

OK. Thanks. Thanks so much for the work.

Any other of my colleagues would like to provide comment? Councilman Spears.

Thank you, Mayor. Thank you, Troy, for the presentation. I just had a couple of questions myself. Can you help me understand if we're going to look at this in two years anyway, why aren't we just doing two years or one or something more where we can look at managed expectations?

Well, based on our review, we agree that based on their budget, I mean, they're going to continue to experience inflation. And at one budget, based on those increases that I've mentioned in the O&M budget, they're going to continue throughout the first two years and into the third and the fourth year. So there is going to be a need in that third and the fourth year for the rate support based on what they're adopting in 2026.

so are we i guess that's going into my next question are we building a sustainable financial model if you look at slide 20 you say look at enhancing your budget development practices and then we're we're looking at how we're going to build a sustainable financial model but is this based on recurring rate increases for future budgets or is this Help me understand why you're saying that there to look at how you're developing your budget. That makes me a little anxious.

And that's really specific to the plan of finance. So we're talking about, and as I mentioned, they have very conservative assumptions when they come to their debt management. When they are budgeting the issuance of their debt versus when they actually issuance that debt, because it impacts their debt service. Under the past CFO, which is a reasonable expectation to the way they manage their budget, they have that conservatism built in with the expectation that they always outperform it. So this specific recommendation is going back and saying, hey, work with your FAs, look at that conservatism. Is there a way to build that into the budget where you're not budging conservatism but, for example, and I don't even know if this is a viable option, but putting in a rolling debt service fund. That can be some certainty into their debt coverage. So this is specific to the plan of finance.

Slide 21, can you help me understand the impact it will have when we are moving to the 150% poverty guideline for the uplift customers and then also raising rates?

So this is two different pieces. I may need some help from SAWS. But when you're looking at the uplift program, the uplift program is a program that sets the guidelines for the requirements to participate. There's also an uplift discount program. That uplift discount is actually provided through an administrative fee or a subsidy on the bill. And my understanding is that subsidy or that administrative fee is not going to change. They're going to use that to basically within that current volumetric fee structure to move from the 125 to the 150. Separately, Project Agua and the Plumbers to People with the increase of 200,000, that is built into their O&M, which is built into the rate support.

Would you mind going over the capitalized costs again for me?

Yes, ma'am. So, you know, like we as a city, when we have a project and we have our capital delivery team and they actually work on those projects, we charge the costs of their salaries to those projects. We capitalize them. Similarly, in this case, under the AMI program, they had those positions. They were working on the installation. They can actually capitalize those as part of the capital projects. But now once those projects are completed, then there's nothing to charge them to any longer. They become part of the operating budget. So that's why you see the transition between the two lines on their own budget.

So that was all just moving those those positions out of the capitalization of the project. Just those positions resulted in that. I believe so.

I think there was one hundred five positions that were the position complement dedicated to AMI in those move into the operating budget of which we're recommending 48 be eliminated.

If the projected revenues exceed the expectation, what are we going to do with the excess? Is there a way to commit that to somehow reducing The rate, I mean, what do we do if we exceed expectations?

The two things, and may need SAWS to actually step up here based on their plans, but as a, if the revenues are increased, as I mentioned, it flows through the flow of funds, and then it hits that bottom bucket. They can use that money to actually, for cash funding versus debt funding. that reduces their impact for future rate increases. Or when we come back in the second two years, that's something we can look at as well to see how they performed. And we'll take that into consideration as we consider any potential rate increases for those latter two years of the four-rate plan.

OK. And then on that note, on slide 23, the accountability measures. What is our enforceability or how do we, if they're not meeting expectations for some reason, what actionable items do we really have?

Under the city charter, we set rates and that based on the action that you take on the 18th, these accountability measures will be ingrained in the ordinance. And to the extent they're not met, we will use that to guide us in our evaluation. And to the extent they're not met, there would not be any rate increase above the guaranteed minimum.

Okay. So we can claw it back?

Maybe not claw it back because it's going to be a guaranteed minimum that was approved, but certainly an increase above that.

Okay. Okay, thank you. I appreciate it.

Mayor, Councilwoman, let me add a little bit to what Troy said. That minimum is important because of the capital plan that SAWS has. and part of the accountability of coming back to the city and then presentation of the council is that the the saws will have a better picture for what that capital look like In total in 20 and 29 about two-thirds of that capital budget right now in 20 and 29 are identified projects and and a whole bunch of them are over 30 million dollars and And so I would suspect that Mr. Puente and the SAWS staff, in advance of 28 and 29, will begin the programming and potentially design of those projects. So part of that is the nexus between setting a floor and a ceiling. To answer your question, if revenues is going like gangbusters for the first two years, Then then and and they've got to come back and show that to the public utilities staff Public utilities have got to present that to the council then it may mitigate a capital I'm sorry a debt issuance if they've got the cash but but the but the opposite could be true also and Maybe they were maybe unforeseen conditions affect revenue. They still have those large capital projects that are 30 million dollars and over that they have programmed in their capital budget But the check-in point with the city and ultimately to the council is a chance to regulate it. We're just setting a window frame and

Sorry, thank you. I have one more question. Since this is my understanding, this will address some deferred maintenance for about half of the needed projects around the city. Do we have any idea of a plan for the other half or numbers or anything? Okay.

We're here and I can answer. Okay.

This capital program will pay for half of...

It's my understanding that this handles about half of our deferred maintenance as it stands right now. This will address that.

No, this is a capital program. Maintenance is O&M.

But part of that's deferred maintenance, right?

Well, this is a four-year capital program. Capital program is to do as much work as we can do on these wastewater treatment plants, especially wastewater treatment plants. It's not deferred maintenance. It is an upgrade of the system, an upgrade of the treatment plans to make sure that they can treat the sewage that comes in there, that we don't violate the permit that we have, that we're able to expand them based on the growth that we're experiencing.

So we'll be completely upgraded. We won't need to come back and ask for another huge rate increase at the end of the four years? Is that sort of what you're representing?

No, no, not at all. This will address the specific projects that we have identified for the council through these four years. There's going to be other needs after that. Every year, things get older. And things need to be looked at and addressed.

I think what I'm getting at is can you forecast that now from what you're going to need in four years again?

We can forecast, but I wouldn't put a whole lot of emphasis on the numbers because they change so drastically four years out from now.

Okay, thank you. Thank you. Thank you. Council Member Alderta-Gavito.

Thanks for the presentation, Troy, and thanks for doing y'all's due diligence, and I think having these checks and balances in place important considering that we're making such a potentially big adjustment to residents bill you know I think it's no secret that I'm still struggling to justify a rate increase you know waters running down our street actually yesterday I was on my way home from H-E-B and just watching water run down Hildebrand so I you know I had mentioned it in a op-ed that's water, saws, inventory, and when a business hemorrhages its inventory at this scale, the answer cannot be to charge customers more. It needs to fix operations. And so earlier this week, there was a major water leak on Campman and Club, and there was back and forth, the usual back and forth that we see about this. First, saws blamed Public Works, saying Public Works didn't have the locates, and then public works confirmed that they did provide provide the locates and then I know we had board members calling my colleagues saying hey was a contractor. But I think we're missing the point because during my tenure, you know, I've only been on Council with 3, 3 years. Yeah, right around 3 years. There have been 4 massive water leaks around Jefferson high school. The first one happened December of 2020, 23, when a councilwoman, Rachel Garcia, was on council with me. And Wilson Boulevard was literally like a lake. It was massive. It was huge, a water lake, I mean, just water flooding the streets. And then in May 2025, I mean, I have the picture, an elderly man is driving his truck and falling into a sinkhole in the exact same location. And then at that point, you know, again, we go in the circle of, no, it's Oz, no, it's public works. And we go into this finger pointing. We saw the finger pointing on the St. Mary's strip. Then in January, 2025, we literally had to shut off water or you all had to shut off water to Jefferson high school in the middle of flu season. And then the blame is pointed to Google fiber. So I feel like we just need to take a step back and see what's going on. Is it truly an operations problem? or maybe it's a communication problem, like something is going on. And how do I explain to my residents that, yeah, it's okay, we've seen four massive water leaks around Jefferson High School and this is just what you gotta live with. I don't think that that's fair for any of us to have to say, to our residents. And I feel that there's a pattern here, and quite frankly, it's unacceptable. The significant loss of water does pour into residents' bills, and that's not okay. I'm having a hard time asking, are Ms. Martinez to pay more when they're seeing these water leaks literally flood their streets? It's just not okay. And we know that residents everywhere are figuring out how to budget in an unforgiving economy. This is a tough time for everyone. Everyone is feeling the squeeze at the gas pump. We're all feeling the squeeze at the grocery store. Again, I've gone on the record. I'm not against utilities coming and asking for what they need. approved the last CPS rate increase, because to me there was a plan that I was confident in. I'm not confident in this plan, especially when I'm seeing instances like I saw this week. I did have one question. If this rate adjustment, let's just say hypothetically this rate adjustment doesn't pass, what is SAW's plan to replace pipes in our area? And let me back up and say, I think as the mayor's team pointed out, 70% of the water pipe replacements will be in districts 1, 10, 2, 3, and 4. And to me, that is a slap in the face. Like, how come, you know, again, we're seeing these massive water leaks around Thomas Jefferson High School and we're looking the other way. So, go ahead.

And your question was what will we do if we don't get the rate increase? If we don't get this rate increase, we're going to be back here again in the fall asking for a rate increase for 27, 28, and 29. These are needs that have to be met, although it is very frustrating to see these breaks, water flowing down the street, to address them. we have to spend money to change out those pipelines. We have to spend money on a replacement project that helps us get ahead and identify those lines that need to be changed out. With all due respect to every council district here, we do not look at a council district and see if pipes in that council district need to be changed out. What we look at is the edge of the pipe, the material of the pipe, and the soil conditions around it. The woodlawn area happens to be one of those areas that does experience a lot of breaks because of the age of the pipes and the soil materials out there. This is a program, it's an initiative that we have to try to address these problems that we are experiencing. I'm very happy to report since the height of 2023, which was the worst year of the number of line breaks and the amount of water that we lost, we have a 19% reduction in those four short years because we hired more crews to go out into the streets and fix those breaks. Our response time went from a very abysmal 14 days, totally unacceptable, to if you report a leak today, we will be out there tomorrow fixing it. That has driven that number down. Our board has gave us a very aggressive goal to meet by 2035. We are well on our way to meeting that goal. We've been so successful in meeting that goal that even Troy and his team has said, well, maybe you don't need as much money because you're doing so good. We were able to convince them otherwise, so that's not part of this recommendation because of that need of the capital programs. So Councilwoman, I know there's a lot of frustration there. I know that there's issues there. We have to address them, and we feel that we can address them with this rate support.

Thank you. Thank you so much for that information. And I definitely agree with you. You know, it is going to have to take investment in order to fix the water pipes. But again, like I mentioned, you know, as the mayor's team pointed out, 70% of the funding to fix the water pipes are going to districts 1, 10, 2, 3, and 4. And so to me, it's just... mind-boggling how we know that the Woodlawn, Jefferson area, Monticello area is, again, we see these massive water leaks again and again and again, and it's not prioritized to be fixed. I also know that I joined my colleagues in Districts 9, Councilwoman Spears in District 10, Councilman Mark White, to ask for an audit. When is that audit supposed to be ready?

Well, the mayor referred to it. It was our... The committee that our board created to look over capital programs has looked at it. They've already discussed and addressed it. Our full board is going to look at it. So right after this next month's board meeting, it'll be fine when they accept it.

And so that would be when y'all's board accepts the audit, right?

They will they will look at it we will discuss it and it'll be officially given given to them and it's up to them to tell us what they think about it what more they may want out of it and Discuss the details of it.

Okay, that's good, you know So then why wouldn't we just hold off the rate increase conversation until after we had that audit information? I

Because the audit was not for the specific ideas of whether or not we need these projects. The need of those projects has been well documented that we need to rehabilitate these wastewater treatment plants, otherwise we face potential violations from TCEQ, from the EPA, and so the audit will not tell us whether or not those things need to happen. It will tell us whether or not we're doing it the right way.

I see. No, I mean, I definitely think that, yes, I know that the mounting pressures that SAWS is facing, and we want to be supportive of all the things that SAWS needs to do to be a well-run utility for the residents. But to me, it makes sense to be armed with the complete information that you would get from an audit before we make a decision that would dramatically impact residents' monthly bills. But those are all my comments. Thank you, Mayor.

Thank you. Council Member Mesa-Gonzalez.

Thank you, Mayor. Thank you for the presentation. And Troy, to your team for that comprehensive review. I think you squeezed every drop out of that limit over the last month or so. So I appreciate all of that work. And to the SOS team as well, thank you for working with our team to get here. I had a lot of rain to drain tours. I really made sure that I wanted to start with my residents, right? To better understand what our utility is. We kind of take that for granted, right? Living here, just like we take the river walk for granted, right? If we've lived here long enough, but I really wanted to start there. And so we had about 80 residents total come out to those two tours. And it was great because it was that firsthand experience of seeing the work that SAWS does for for our residents and for our city, but I think it also helped me realize the realities that SAWS faces with aging and inadequate infrastructure and the real costs I think that residents face, whether it's from leaks or floods, if we don't act quickly to make those improvements. And so I think this is an important conversation. A few questions. On slide 23, And my colleague might have asked this, I might be asking it again, but how often on these, where is it, 23, those accountability measures, how often do we expect follow-up from SAWS to assess whether they're meeting those goals?

So if they're moving into the two years, 28 and 29, they would probably be back in a year. It's hard to hear you, I'm sorry. They will be back in about a year in advance of 2028. And we would start that process of sitting down with them, reviewing in the event they come back for a rate increase above and beyond those minimum guarantees.

And then is there a performance review built into any of these measures?

performance review in terms of, we do a, it's going to be a mini rate review all over again, based on all those items I shared with you in the front of the presentation. But we don't just do this when a rate increase comes to us. We look at them when they adopt their annual budgets, when they have their financial audits. We don't just do this once in a blue moon. We do this continuously on a year-by-year basis. Okay.

And is that something you bring to council?

No, basically the public utilities team does that independently.

I had a question on the senior lien debt assumption. I think that was on slide 22. I guess what are the long-term consequences of removing that senior lien debt?

I mean, long-term, it can result in less flexibility for SAWS. But historically, we talked about, and I forgot how many years... I think going 12 years back, they have not issued senior lien debt. So historically, they haven't issued it, so we don't see it as a problem. But it would reduce flexibility in the future in the event they needed to use that senior lien debt.

OK, thank you. And on slide 18, I think there were, let me see, where is it? Slide 18. The $3.2 billion, I mean, that's kind of like double our bond package, right, that we do as a city. So is there a Michael Shannon-like person over there that's focused on these capital projects specifically?

There is. They have a whole team.

Is that a new team because of the size of this, or is that a standard?

I don't think it's a new team. Okay.

No, it's not a new team, and I will say that for the past five years, we had a $2.8 billion capital program, many more projects in this new five-year time period, less projects, but $3.2 billion, as you see there. Andrea, our COO, and her team have been responsible for that all during this time. And so we feel confident with our past and with this audit that we're talking about and with, and the chairwoman is here, her creation and the chair of that subcommittee, Ed Belmaris, creation of that subcommittee that is going to look and oversee our capital program. We're confident we'll get these projects done on time and on budget.

Okay, thank you. And I guess last on slide 22, Troy, obviously this comprehensive review came with these recommendations. Nowhere in here are you recommending not moving forward on a rate adjustment?

I am recommending moving forward with the rate adjustment as proposed on the bottom of the table. So for residential, moving forward with the rate adjustment for 2026 of 6.9%, 2027 6.5, then the minimums in 28 and 29.

Right, I guess I'm asking too if in this process you found that a rate adjustment is not necessary.

Oh, no, ma'am. Based on our review, a rate adjustment is necessary to support their plans.

Okay. Thank you. Those are all my questions right now. I think, you know, we all know this, that the services that SAWS provide are not optional. They're just, like, as important as our stop lights and our stop signs and our street lights. And so I think deferring this decision is not just going to delay but compound it. And I think... kicking the can down the road is not something that I know my residents voted for me to do. And these are hard decisions. If they were easy, I think a lot of us, there would be more seats here and a lot more people here. But these are tough choices that we have to make. And so I feel like I have done everything I can in my head and creatively Talking to my residents in any which way that I can whether it's town halls or tours And so again, thank you so much for your time and efforts to get us here. Thank you.

Those are all my questions Thank You council member Galvan Thank You mayor

Thank you, Troy, for the presentation, and thank you for our conversation yesterday. Gosh, it feels like already a million hours passed. Maybe it's just anticipation for the game. But I do want to say thank you for you and your team for doing this incredible work, not only this time, but every single time. But I mean, going to this level of detail is really incredible, frankly, especially with a small team of y'alls, to go through such a massive capital plan that I'm sure takes a lot of people in SAW's organization. So I appreciate the review. and the level of granularity with it. I only have one question for the recommendations proposed. On slide 15 with the personnel adjustments, what's the difference in the positions that you were looking at of recommending elimination versus the ones proposed to be added?

Sorry, can you repeat the question?

What's the difference in the positions that you're recommending to not have saws higher on versus having saws...

The 11 positions between the 48 and the 37?

Or different in the type of positions, I mean. Is there different roles that are being... Because I guess I'm wondering, you know, with the ones that are unfilled right now, are those not part of the 37 that are looking to be...

I can share with you... So these are the 37 positions that are being added. are proposed to be added by saws in the 2026 budget. Okay. And you can see here, I won't read through them, but these are the positions they're adding, these are the positions they removed, and then the positions that are being eliminated are typically going to be your field representatives.

Oh, I'm sorry. Okay. My understanding was that you were removing 40 vacancies or 40x vacancies that were completely different from these, but it's just a net decrease. That's correct. Okay. My mistake. My mistake. Thank you. I'm generally supportive of recommendations within this. I mean, I think it makes sense in terms of what we have proposed to us at the moment to bring as much as possible. You know, I still have my own level of discomfort with... With raising rates on anybody, I mean, it's a difficult sell. I think the same conversation we have with our own budget, right, talking about how do we provide the best quality of service to our community while also understanding that these times are just tougher for our residents, and particularly in our city, right? And so I think I appreciate SAWS, the organization, for getting back to me about the Uplift program and some of the detailed data there. Seeing, I mean, just out loud, right, having the current 2,100-plus people who are currently enrolled potentially... who are eligible to be enrolled in the Uplift program to then be expanded to an additional 5,300 people based on the expanded capacity of Uplift is really incredible to see. I know we're working on the more detailed information there, so I appreciate that as well. I'm hopeful to get that sooner than later, but I think it still speaks volumes right there. We're looking at ways to continue to reduce the impact and, frankly, provide no impact to our most vulnerable neighbors uh, in our community. I do have a couple quick questions on that. It might just be, yeah, just these big two. I know last time I asked, um, and put the answer about, uh, the capital enrollment for the program, right? If for some reason we see more folks, uh, at 150 percent AMI or below the poverty line, uh, compared to what we're projecting, are they able to still enroll? And the answer was yes. Is that still accurate given the structure of Uplift? Okay. Seeing a yes from Gavino. Appreciate that. Um, Does that include also, I know it's primarily for households, or it's based on households. Does that mean specifically only property owners, or is it also renters who would be impacted by this as well? Are they eligible to enroll in the Uplift program?

It's not just property owners, but renters of single-family homes. They have to be our customers to be able to help them. Now, I am working on we are working on a program to try to help apartment dwellers in those same situations. But the problem is that they have one meter. Right. And we can't have a we don't have a direct relationship with them. But we're trying to work on on some some program like that to see if we can help them.

okay i mean that'd be great too to see what that what that work will entail in the next several years whether it's you know full detailed plan or just kind of like here's a list of stakeholder meetings or whatever it may be because i do think about that a lot of the senior living homes we have along 151 in particular and even in the inner west side of my district too um a lot of folks are just stretching their income as much as possible there right um and so i would be interested in seeing what that looks like in the future sure yes so i appreciate that um I think one of the other things I had, this is something that you all sent to me back in February when we had the first conversation about this, about conservation programs. I appreciated the detailed information there as well. I'm still interested in seeing, you know, are there any plans within, well, I know this is more capital maintenance, but overall in SAWS, in your long-term plans looking at how to get more of our folks enrolled in conservation programs, particularly the general class customers. I know based on the data you sent me yesterday, You didn't have it fully breaking down by account type, but I'm wondering if there's any way that we can do that more detailed analysis on conservation programs about, you know, is it 70% of people who are enrolling in conservation programs are residential versus general class? And by then, any distance or differences within that?

Well, our customer base is overwhelmingly residential, so that number is going to be skewed. But we do have programs for the General Crafts commercial customers, and it's very unique. In other words, if they have an idea on how to save water, we will customize a program just for that business. Got it. And there has to be a return on investment for them because they're going to – invest in it and we're gonna invest in it too. And so if we can come to an agreement on a good rate of return, we will customize a program for them. And we have a history of doing that. So it's not necessarily a new program. We know exactly what to do.

Is that more primarily waiting for the company to come to you or the business to come to you?

No, we specifically have an individual that he is charged with communicating with businesses and encouraging them to come to us to see what programs that we may have.

And these AMI meters that we have are tremendous. They tell us a whole lot of information. And just because you're a big water user doesn't mean that you're a water waster.

Like HEB, one of our biggest users, but they work with us very closely on water conservation programs.

yeah and i mean same with us right where city is also one of the biggest water users and you know and i think understanding what ways we of course we being the city but also beyond that larger uh larger users as well can uh what that plan is similar to the kind of rental program that we're talking about what that kind of long-range plan is there that way i think for a lot of residents right the question always comes back to okay well i'm doing everything i can right so as much water as possible we all know most residential customers in our city

are using just the minimum that they need to use um and so they're always wondering okay what about some of these larger entities that we're seeing water spill out or whatever it may be how are we trying to get them to conserve and be more water efficient we have active communications with your parks department active communications with your facilities department to try to make sure that your usage the city's usage is also has a conservation bent with it

Got it. One last question I had, too, was about the general class customers. When I was looking at the summary you provided, I'm not going to go too much into detail of it, but would you say it's fair to... Is it a correct understanding that based on the meter sizes of some of the businesses that are smaller businesses, whether they're like the taquerias or the laundromats or et cetera, well, laundromats would be different because they're more intensive businesses, But are using less water or have a different rate than some of the larger general class customers?

Yes. A lot of the rates are based on the meter size. Right. And so if you have a huge facility, you have a very large pipe going in, very large meter. Right. So a lot of these smaller restaurants have a smaller meter and therefore they're not charged as much.

Okay, and may I just review the last presentation in a little bit more detail? Maybe I can look at this one while we're going to the second round of folks, too. Do we have the direct impact of what that is for out of its per meter, or if it's only like a flat rate for all the general class customers for the rate increase?

It is a rate increase for all general class customers. It's a little flat, okay. Yes.

Got it. Okay, I think those are all my questions for now, so thank you, Robert, and thank you, Troy, as well. Thank you, Mayor.

Thank you. Council Member Villagran.

Thank you, Mayor. Thank you for the presentation, Troy. Thank you, Robert, and all of you from SAWS that are here to represent and the work of the board. I really appreciate it as we move forward in this. As you know, water is key to the growth of the city of San Antonio, not only just because it's necessary, but as we grow economically, we need to have a reliable water source. And one of the things that we've seen or that I've heard is part of some industries and businesses coming here is because of our utilities and because we have been so responsible with them. But as some of my council members have mentioned, we do know we have an aging infrastructure in parts of the city. And part of that is because we had the original city of San Antonio and we knew what we had and then we had a whole bunch annexed in and we're still annexing portions of the area into the city of San Antonio and in there we don't know, sometimes we don't know what we've got. So as we move forward, and I'll always bring up Bear Med because a lot of my constituents in areas were customers of Bear Med, is we still have that issue when we go in and we do some projects there. So as the climate change continues, as we get droughts, as we continue and educate ourselves on what what happens to aging pipes from the 1920s and the 40s and the 60s because that's a lot of my uh housing in district three we see what we what we kind of need and we have to adjust accordingly so i understand where these recommendations come in I think I was here years ago, I don't even know how many years ago it was, when Robert and the team came and talked about the rate adjustment we would need to do for the bigger businesses and the industries as we move forward. that this day was going to come and what it would look like. The one thing that I'm proud of and why I call it a rate adjustment, and people can call it a rate increase, but a rate adjustment is because the customer has the power to keep their bill the same if they conserve. And if they take a really good look at where they're using water and how they're using water. And I appreciate Councilman Galvan's questions about conservation because what we've learned is if you decide to put a certain grass in your yard and that's what you want to keep alive and try and keep alive, it's going to cost you more money. If you Xercescape or do what I did and let your grass just die and let nature take over, It is going to be a lot less expensive. But you have to make these hard decisions of what you're going to prioritize and what your budget has. So I think for me, I think the opportunity is going to be talking to my constituents about their budget and how much their water bill costs right now, what they can do to... What if they do exactly what they're doing right now, how that's going to increase if they if they make some changes, how it's going to stay the same. And then if they can even if they're a bit of a water waster, how they can lower that bill. So the one thing I wanted to do is I wanted to start with slide 22. Troy, thank you for the adjustments and the recommendations you meet you made. I'm just going to state right now I I am I am comfortable with the max of 7% and 6.6 and 28 and 29, but I'm stating to you now here in front of this group is I would like us to stay at the lower end as possible. So the sooner you can tell us, and Robert and the team at SAWS can tell us, hey, we don't have enough businesses coming in, we're not getting enough customers, it's going to lean towards that seven. Please let us know so that we as a city can continue to try and move to increase that customer base, whether it's with more businesses or more retail, more events or and different types of housing we want to see more people come in and and build and be Be responsible water users here because we don't want to waste water either I then I want to move on because I have some questions regarding 21 on the uplift program and uh... for the plumbers to people and project on life as soon as we can do we have any details on how that's going to change in terms of uh... because we're gonna we're going to add uh... we're moving from one twenty five to one fifty and then you know maybe you can answer this i do want people who have not invested in their homes but possibly their homes, are we going to ask them to put some kind of skin in the game as we look at making sure that they take care of their infrastructure in and around their house that leads to the main water lines?

Well, if they have a plumbing problem, and it's leaky faucets, whatever the situation is, and they qualify for these programs, we will send a plumber there at our cost to repair that issue. So it saves them on their water bill. It saves us because we don't have to supply as much water.

And so I guess, Gavina, as we move forward, what I'd like to see is if we can get something as a rebate, if you are being preventative and you go in and you use maybe someone from the Plumbers to People list to take care of it because we know you have a leak. And I know Saws is great about sending out the alert that you have a leak at your house. And they do that in a timely manner that we kind of look at either rebates. I know we help them if they had a leak and it moved there. But also looking at that preventative piece. And they know the pipes are getting old or they know it's draining not as well. And I'm thinking specifically for the aging homes in in the southern sector of San Antonio. So if we could work on that, I'd appreciate it. And then let's move on to a slide. I want to talk about the slide 15 and the personnel and the positions. So is this, and Robert, are these full-time positions, part-time positions, full-time positions? Okay. And we feel like this is enough to meet the needs of the way the city is growing, or I just don't, you know, I'm always going to look at the laborer, and I don't want us to be giving, like, They have two jobs. Yes, we're hiring them on, but because we asked for 37 and there were 48 vacancies, are they going to be doing the job that they've assigned to or are they going to be doing twice the work?

So what's been proposed today, we agree that this is the right personnel complement. But for the next two years and the latter two years of the four-year rate plan, in the event that it's not, they do have the ability to come back to us with justification to go above and beyond that minimum rate guarantee. Okay. So they have the flexibility in the event they need more to come back and support it.

Yeah, and I'm not going to – I'm leaving that to the board to talk about wage and salaries and things like that because that is your job. But I just want to make sure when – I love the idea of hiring people and keeping people in positions and not putting holds. But I want to make sure that they are getting paid for the work that they're doing and continue to – advocate that we have they're not overburdened and we're seeing high turnover than in in saws because they feel like they're doing two people's jobs so that's the one question I had from there you know I think district 3 is on that list and thank you mayor for providing it we and I knew we would be on that list but I just want to make sure that we kind of move forward and set our expectations for the residents as they move forward. And again, I'll be working to make sure they look at their budget and see what their water costs come. But utility costs are essential to live, and they're essential for the city to continue to grow if we want to bring businesses. So thank you for the presentation, and I look forward to moving this forward. Thank you. Thank you. Council Member Kaur.

Thank you, Mayor.

So there's three things that I want to focus on for my comments today. The first is the uplift program. Thank you, Robert and Gavino, for sending over that data for District 1 uplift. So there are 1770 families that are on uplift in District 1. And now with the change, there's going to be over 10,000 families that are eligible. Can someone share what the plan is to get those folks on uplift? And what is put in the budget for finances on the max amount of families that can be added to that? Because I was told there is no upper boundary of how many families that could be added.

Unfortunately, that is true. And I say unfortunately because that means that we have a city with a lot of people in need. But yes, we can help them. The way we have set up that separate rate, it's separate from the rates that we charge everybody else, is that that uplift program can grow without having to go back to council for more money or anything like that. It will always be within our budgeted amount how we do business. So that can grow. So if this... going from 125 to 150% of poverty will allow us to almost double overall citywide the amount of families we can help.

So you're estimating only double? Because there's got to be a limit. You have to have a certain amount budgeted, right?

The limit, go ahead.

There is no limit to the number of participants we can have. And so I think that was one of the questions was because I know other areas have a max of how many participants you can have. So for uplift, if we find an additional 40,000 families, 40,000 families will go on to the program. There's no limit.

Where is the money for that?

That's part of our budget. That's part of what the non-Uplift customers pay. On the bill through our rate advisory committee about four years ago, they wanted more transparency on behalf of SALS. So if you'll notice on your bill, it has uplift fee. So I believe, Cecilia, it's like 32 cents for every thousand gallons of water that's used goes toward uplift.

And does that increase the more people that get on uplift?

That would be a finance question.

So it acts as a pass-through. So these last four years, as Gavino said, since we implemented this pass-through of Uplift Assistance Program, we actually saw a slight decrease. Every year there's a difference when people have to recertify. So we've seen a slight decrease. So we've actually been able to decrease that uplift assistance fee for both water and sewer over the last four years we are anticipating as troy said a three percent increase again we're not sure what uh to assume in 2027 we're assuming a three percent increase however we true up that amount every year and we recalculate that fee at the end of every year for the for the for the next year so we will do that just like we do our eaa fee and our tceq fee so it's a pass-through fee

So if you have 10% increase, that'll just be passed through to everyone else?

Yes, and as Gavino said, it's roughly $0.15, and I think now it's even $0.12 for water and $0.14 for sewer on an average bill. So that includes the 6,275 gallons. So it's even lower.

Yes. And what's the plan? This is probably not a you question, but what's the plan to increase the folks that are accepting or getting on the plan?

Well, we're going to continue to attend the various events. We attended over nearly 600 events last year. And each council person just about has led us into their office once a week so that we can then help additional customers. We've used your newsletters on different events that we're going out to. We've been knocking on doors in areas that we expect to be big participants. We hold block walks where Mr. Puente and different council members have joined us to knock on the doors to get residents, and we sign them up right then and there. So we're going to continue to direct mail. It has been very, very successful. And so what we try to do within our own organization is using census track data, identify the areas that would be most qualified, and then we try to focus on those areas. And so we're going to continue to go out and knock on the doors of the folks that we feel should be part of this program.

So I guess what I'm saying is I'd like to see that 20% number increase. And I'd like to see the history of how much it's increased over the last couple of years. Have we been able to get more customers on uplift and at what rate? And I'd like to see a target set for what you guys can accomplish and how many more members can be on uplift in the next four years in tandem to this rate increase. If that's 20% right now, it'll be 30% next year or whatever it is that you guys think is actual and feasible. If you want a different result, you have to do something different.

And so part of what we've seen here recently, you'll see through the numbers we provide you, has been a small decline only because we've gone away from just having people sign up for the program. We're asking for some verification now. And so right now, for the past... three to four years we went through a recertification process. So now we're working with the current members that are on, and we're having them come in and bring in some documentation to show they're on the program. And so some folks have just decided not to respond, while others are coming out in droves as well. And so there's gonna be some ups and downs while we go through this process, but we're gonna continue to try to find everybody that we can that should be on the program.

I like that, because that doesn't sound like what we want to hear.

We want to go in the opposite direction. Agreed.

Okay Councilwoman brought up the notion of construction and no one knows saws challenges with constructions better and we saw that on several projects and just this week I realized that our Hildebrand project is also now going to be about a year delayed because the qualifications did not come back to meet what you all were requesting. So I'm curious, if you are saying we're going to be able to do capital projects on time and on budget, what are you going to do differently to make sure that that is the case?

In this situation, I believe we did the right thing. The bids that came in did not meet our standards for what we would want in that corridor, that busy kind of street. And as you know, that part of Hildebrand has no sidewalks, very little right of way, and a lot of traffic going through there. So we didn't feel confident in the bids that we received. The change that we're making is that we're going to choose the contractor based on a best value. In other words, we're going to not base it on a low bid, on the cheapest that they can do it. It's the best that can do it. Get in there, get out, talk to the neighbors, do a good job, and get the street traffic flowing again. So it'll get done.

quickly i'd like to promise you i'd like to see the difference in qualifications and what's coming back so we can get an actual timeline for construction sure we'll provide that to you okay and then the last thing is on the impact water fees thank you for sharing the data with me um when i did the math the difference in cost is actually higher for the multi-family with 20 units versus 75 units so as we talk about missing middle housing I'd like for us to think about how we do saws impact fees a little differently for our smaller projects that can't bear more of the cost.

Yes, that cycle is coming up. We do that every five years. That initial cycle is coming up next year where we can start working on those kinds of issues. I do want to remind council that each one of you has an appointee or can have an appointee to that committee. And it's actually a city committee that we staff. So you will have direct representation on there.

OK, thank you. We're going to take a 10 minute recess. Would anyone else like to speak on the first round? Okay, we have one of our colleagues on the second round, Councilman Galvan.

Thank you, Mayor. A couple last quick questions I forgot to ask in the first round. A little bit more on the Uplift program. I think we talked a little bit about it, you know, you mentioned about the kind of proactive outreach we're doing currently with folks, and I think Councilor Kaur mentioned a lot of it about how do we get to this larger next step, but I also think, you know, In a similar vein, like conservation efforts or things of that nature, how can we reach folks who are just outside that limit? I mean, I hear a lot of that in District 6 specifically, right, where a lot of folks who are just outside that edge of some kind of assistance program of some kind, and so trying to figure out a way, do we do target outreach to folks who are just outside the limit of the federal poverty line, who don't call for uplift but could get some benefit from the conservation programs to help reduce their bill?

Part of it is by just your historical knowledge of San Antonio and your neighborhoods. We know where certain people live. And then a more sophisticated way of looking at census data. That takes a little bit more time. That takes a little bit more energy. But we do both.

Yeah. Is there any way to do it on SAWS' back end in terms of looking? Well, I guess you have to get the verification of their income, right? In some way before we even get there.

Yes. Verification of income, especially to go from 125 to 150.

Yeah. I guess I'm interested in even looking at, I know last time we talked, too, about automatic enrollment in some kind into the Uplift program. That's, of course, a longer process to get there, but I'd be interested in seeing, are there ways that we can, that you all can get that information? That way there can be that productive outreach. I think it's, you know, it's a bit of a cat and mouse, right, when we're trying to get folks who are just outside the income range to reach out and know these programs exist, for one, and then to figure out, can they then get these, what these programs could fully do? impact them with in terms of reducing their rate in some way, or reducing their cost, not their rate, their cost in some way.

Yes, we use multiple ideas and ways to get more families involved in this program, and some of them are very sophisticated ways that we look at, and leading industry methods to try to increase your pool of applicants. But ultimately, I think it is a commitment by our team, led by Gavino, that that he knows that this is very important to SAWS, it's very important to Council, and as Councilwoman said in District 1, she wants the numbers to go up. We all want the numbers to go up. So we know what the goal is, we know what the standard is, what y'all want us to do, and that's a big driver to make sure we find these families.

And that'd be interesting to see, too, right? Maybe it's, again, the kind of long-term view. In partnership with us, right, how can we kind of set those meetings up or whatever it may be that needs to take place so we can see what...

Yes, because we attend a lot of your back-to-school fairs, all kinds of community meetings that you have, town halls. We set up a table there with our computers and we can sign people up there. We utilize your newsletters when you allow us to, to do some outreach. And so those traditional ways we use, untraditional ways, I myself have gone block walking with council members, with staff, with their computers. They can sign people right then and there.

And I do appreciate that. So I think it's just continuing to work through that with our teams as well, right, to figure out what things can be working there. Yeah, just kind of reach those folks who maybe are a bit more difficult to reach. One of the things I was going to ask was, I think on the construction conversation too, right, I mean, we see it in all different kinds of forms and fonts. I don't know what's the best way to kind of lay this out, but I'm interested in seeing what the kind of, again, next 10 years, next five-year plan is to have us better aligned. I know we did some work already, your team, or your organization, along with the city of San Antonio on some of our bond projects, but looking at even how we can better align with CPS as well to address some of these issues. Those are ongoing conversations. We're interested in seeing how we can continue to build upon that work that we've done. so we can avoid any kind of, you know, I'm looking at some of the pipes that you're mentioning, District 6, that'll be impacted. It's a few, and I'm appreciative of it. But we're wondering, too, how many of those had recent IMP, our side, of street improvements or sidewalk improvements. So then our residents, of course, don't always distinguish the three different entities from each other, saying, you're tearing up the street again, despite the fact that we just opened this up for this other case. So, again, trying to figure out how do we get to that full alignment there, so we do one project at a time, hopefully within a certain time frame.

You get there by continuously doing the right thing and by doing something on top of that. And on top of that, what I'm talking about is our Chief Operating Officer, Andrea Beamer, she has a regular meeting with Mike Shannon and Art as to what the projects are, what issues are out there between our two departments. Same thing with CPS, we meet with them also regularly. we have now a minimum of understanding with the city right as to what our duties are what the city's duties are something as simple as both of us having a contractual relationship with the contractor where we both can put pressure on the contractor and work with each other to make sure that the project moves forward now I do want to say that It's very rare that these projects come to your attention because they usually get resolved by our staffs our respective staffs So you see and hear those problems, but we do need to address them.

Yeah, I appreciate that. Thank you.

Thank you Any other comments from my colleagues, okay The Councilwoman from District 7 mentioned a chart and a map, so I want to make sure for the public's benefit that they are aware of what we're discussing. This is a map that was provided by SAWS that shows the density of work orders um between the years 2020 and 2025 a total of 14 591 work projects were completed throughout the city you can see again the purple areas are where they're most dense um as the as the ceo robert puente mentioned the the pipes and the leaks don't you know follow exactly along district lines which is why you can see a little bit of uh some concentration there between five and and five and seven So this though is reflective of the work that has been done between the years 2020 to 2025. What's a little bit harder to see is the legend underneath, but actually the projects that are either going to be in design or construction beginning with 26 moving out to to 29, those are all concentrated in, again, the exact same area. So if you look, and we'll just take District 7, many of those projects are in that creek bed between Woodlawn and Elmendorf Lake, right? You can also see as the chart, the other chart that I mentioned, talks about the water main repairs that need to be done. As mentioned, yes, 70% of those are just in five districts. The district receiving the most of that work would be District 1, 15.8 miles for a total of 60 million. The second district would be District 10. You can see the concentration not only of the work that has been needed over the last five years, but of course the work that remains. That is, again, the second highest in terms of overall investment. and district 10 that's nine miles and 33 million dollars worth of work that needs to be completed so i wanted clarity not only is it helpful to understand the work that has been done but as frankly mr point they just mentioned uh there's the good work that has been done and then the need to build on that which i would argue this capital uh investment plan does thank you for highlighting that Thank you to the SAWS team, the SAWS board members that took the time to be here, and of course our city staff that have combed through these projects, these numbers, and the risk associated with not doing these projects. There are things out of our control that are driving up costs in our community. A war in the Middle East. Supply shortages, short-sighted immigration policies, driving up labor costs. And I think we all understand that. But that doesn't make the need for these water projects any less important or any less urgent to address. It doesn't change the fact that we have 100-year-old pipes in our community. It doesn't change the fact that climate change and prolonged droughts have impacted the life cycle of our infrastructure. And it doesn't change that we have a wastewater treatment facility plant that was built in 1965 and is in desperate need of upgrades. This is a budget rate request increase that addresses risk and in many ways is cheaper than continuing to maintain costly infrastructure. It is in fact sometimes just cheaper to get the 2026 Corolla than to try to continue to put band-aids on the 1988 version. As was mentioned, and I really want to foot stomp this, this helps us avoid costly fines. We don't want to be in a predicament where not only is the infrastructure not performing what it needs to do, it is now a public health risk, it is now a public safety risk, but our federal overseers or state overseers have now applied then very costly fines, some to the tune of $100,000 a day. So we don't need to be in that type of situation when something inevitably fails to meet code due to lack of investment and maintenance. I also appreciate the SAWS team's willingness to attend town halls and answer questions. Mr. Puente has been to several of mine and answer questions on literally everything from leaks to, yes, his pay bonus to conservation. The public's questions are fair. and they have every right to ask we also owe it to them to explain what we are and are not doing to ensure they have safe drinking water and that their toilet can flush very basic things we don't have the luxury of hypothesizing on this we need to act and we need to act as one san antonio as many of you described during the budget goal setting session It's a water system for a reason, and when something breaks, only because we fail to meet the need, then we will all feel it, and we will all answer for it. We should not take for granted our bond rating and the message we would send to the rating agencies if we ignored the advice and recommendations of our municipally owned water utility and the city's public utility staff, both of which have validated the need, cost, and schedule of these necessary water infrastructure projects. Looking just down the street, Corpus Christi reminds us where our inaction could lead. Quote, given the system's heightened risk profile, including concerns related to management and governance, anticipated performance is more consistent with an A minus rating level, Fitch Ratings said. This was on Monday, June 1st when Fitch Ratings downgraded Corpus Christi's credit outlook. We can and must avoid something similar happening here in San Antonio. We need to pass this rate increase, and I hope my colleagues will join me in ensuring the city of San Antonio has the water she needs. On the first round. Okay, Councilman Castillo, your comments.

Thank you, and thank you, Troy, for the presentation, of course, to the SALS team for your work on this proposed rate adjustment. As Mr. Puentes mentioned during the first presentation, the costs associated with essentially patchwork and maintenance can sometimes exceed the cost of full reconstruction of a potential project. And I think it's important to highlight that while we talk about and have this conversation, um, you know, when we talk about nice to have like baseball and basketball and the financial argument is everyone has a newer arena, but when we're talking about all the old and aging infrastructures to improve water quality and access, you know, we ask for audits, we ask for so much more than we do when we're talking about the nice-to-haves. In fact, we say, here's the credit card, here's the public funding, no questions asked. So I just wanted to highlight, right, that we know whether it's housing, we know this with our briefings with the public works team, capital improvements, that if we fail to invest in infrastructure, it is going to cost the public more in the long run. And we know that studies show that reactive fixes can cost five to 20 times more than the proactive replacement. And if we delay investment today, then we're only compounding public health risk and raise long-term costs. Broken water lines can lower pressure and allow outside contaminants to enter the system, putting water quality at risk. And without proper investment, there is a higher risk of environmental and permanent violations that can harm water quality and public health. potentially impacting the entire river system due to pollutants like bacteria and excess nutrients building up. And I'm reminded of how important water and public health was when we were having the Guadalupe conversation. And my hope and expectation is that this council will continue to hold this as a high priority as we have this rate adjustment conversation every dollar invested now present prevents rather costly failures later every 1 million invested in water infrastructure generates 2.5 million in economic output 10 jobs generated 1.4 million in gdp and so much more and i think for the sake of the conversation and since we're in the playoff seasons If you Google Wimby and water, water is really important to Wimby in that he asked questions in terms of water infiltration systems, right? So in honor of the playoffs and the work of Wimby, right, we should be prioritizing our water quality, and it's the important questions that our MVP is asking as well. But again, we know that we're here having this conversation because federal investments were once the backbone of water infrastructure, but that funding has steadily declined from covering more than half of the costs in the 1970s to about 7% today. And like most of us during COVID and since then, SAWS has been, has seen rather price increases due to supply chain interruptions, inflation, labor costs. And they also, you all, SAWS also dealt with winter storm Yuri mandates made by the EPA, modernization and the worst drought since the 1950s, and a $2.6 billion bill to comply with the consent decree. All of these conditions have significantly increased the cost for SAWS, yet SAWS was still able to keep the ship afloat and lowered rates by 12% in 2022. And I think it's unrealistic for us to expect SAWS to do more with less. And again, as I've mentioned, I'm extremely grateful for the SAWS team, particularly Teresa Castillo, no relation, who's in District 5, connecting our residents to resources, answering questions, again, being present at our town hall, so on and so forth. And as I've mentioned during the last conversation, when we had our District 5 saws town hall to discuss the rate adjustment, what we heard from District 5 residents is they understood that we have a responsibility to protect our water quality, and a responsibility to invest in infrastructure that protects our water. Again, having lapsed with our constituents to be sure to say, did I hear you all correctly, that you all know that it's worth investing in public health and water quality. As the district that's home to 78207 zip code, I'm grateful to see the recommendations in terms of the uplift program and the benefit that District 5 residents would see in terms of the support as, like many families, navigate this economic instability. So at the same time, SAWS, again, grateful that you're expanding the Uplift program and just, again, the community outreach always being there for District 5 residents. So just wanted to commend you all for navigating these difficult times, and I believe we have a responsibility to protect the public health and safety of San Antonio residents, and this isn't a conversation that I take lightly because of the impacts. And like my Southside Council members, we lack basic infrastructure. Many of our families lack lateral access, are still on septic tanks, and what you are proposing here is modernizing that infrastructure for District 5 and Southside residents that have been long left behind. Thank you.

Would anyone else like to speak? I'm asking for the second time. Anyone else? No? Okay. Robert, thank you again for all the hard work. Thank you, Cecilia. Thank you, Andrea, everybody, Gavino, all the folks that do such good work. I want to thank, again, also the board members that took the time to be here. I want to recognize the SAWS board chair, who does a great job really going through those with a fine-tooth comb, doesn't she, Robert? But you know what? That's what the community deserves, right? And I'm thankful for that work. Of course, thanks, Troy, Jeff, as well, for ensuring that our lens is applied to those. And we're questioning those assumptions. That's what the people deserve. So thank you. And we look forward to a good discussion on this next week. Thank you. The time is 3.57. The meeting is adjourned.

Yeah, yeah.