Hello everyone. I'm going to wait a couple more minutes to see if board member Grable jumps on so we will get ready shortly. I believe board member Grable is trying to sign on now so we will wait another minute to see if he gets on. Okay it looks like we have all of the board members on. Director Burke do we have everyone from staff? Yes I believe we are ready to go from the staff side. Okay great thank you. So I'd like to call the meeting to order at 203. Secretary Athe if we could have a roll call. Yes. Chair Watts. Here. Member Grable. Here. One member Wright. Here. Thank you and just as a reminder for everyone to please mute their phones and microphones when you're not speaking that would be great. All right now I'd like to open it up for public comments. If anyone wishes to make a comment via Zoom please raise your hand. If you are dialing via telephone please dial star nine to raise your hand. Secretary Athe are there any live public comments or voicemails from public comments? No we have no public comments. Great thank you. So we will move to item 3.1. Director Burke if you could introduce this item. Thank you Chair Watts and members of the subcommittee. Our first item is our fiscal year 21-22 through fiscal year 24-25 proposed water and wastewater rate recommendation. Before I introduce staff I'd just like to very much thank the subcommittee for all the work that you have done. This has been a really long process at least for us and the staff side been about two years that we've been working on this so a lot of big effort on from staff and just really want to thank the subcommittee because I think we've been working with you for probably about six months now really appreciate your time and effort and work on this. So with that I'm going to hand it over to our deputy director of administration Kimberly Zanino she's going to lead it off for staff and also Mark Hildebrand with Hildebrand Consulting will be presenting on this item. Good afternoon. As director Burke said Mark Hildebrand will be doing the presentation for this portion of the items that are on your agenda today. I have to echo that this has been a lot of work over a very long period of time and it's very much appreciated all of the staff who has participated in this and developing the recommendation for you. I'm hoping that you all received your copy of the rate study update report that we sent out. It was quite long so I wanted to make sure that you got that in enough time so that you could review it at your convenience and that's the basis for the rate recommendation that we're bringing forward to you today and with that I'm going to turn it over to Mark to do the presentation. I will be sharing my screen Mark so that you can just tell me when to change for your slides. Okay, thank you. There we go. Well thank you for having me. I've met several of you in the past but I think there's a few new faces out there so as with introduction my name is Mark Hildebrand. I'm with Hildebrand Consulting. I'm working closely with Bob Reed of the Reed Group who's also on the call today. Bob has done quite a bit of work with the city of Santa Rosa over the past couple decades and he was the author of the last water and wastewater rate study. We did this study together and he'll be giving some of the presentations following this one today. So next slide. So what we'd like to cover today I'll be I'll be covering the first bullet here of the agenda speaking directly about the water and wastewater rates and then following that Bob will give a presentation on the Water Shortage Contingency Plan and your demand fees for developers. Next slide. Okay next slide. So as a way of introducing rate studies I know that some of you may not have been through an entire water wastewater rate study in the past so just by way of introduction there's three main steps that are followed when doing a rate study. The first we call revenue requirements. You could also call this a financial plan and this is where we simply look at all the revenues coming into a utility and all the expenses going out and so the majority of the revenue is going to be in the form of rate revenue which is paid by your rate payers on a monthly basis but there's also some other miscellaneous revenues that we look at and then your expenses will be in the form of operating expenses and capital spending and debt and so in the revenue requirements we're really looking at financial strategies whether you need to issue debt you know how to manage your reserves and ultimately how much you need to adjust your rate revenue in order to make the utility whole. Once we understand how much total revenue is required into the utility over the planning period we look to cost of service and cost of service is really identifying how your different customers drive your costs so looking for example on the water side you have your single family homes and your irrigation accounts and your commercial and they all use your water system differently and so we look at their behaviors the size of their accounts the way they use the water how much water they use and we allocate costs to them and this is really the cornerstone of what's called Proposition 218 which is the law in California that governs how you can charge rates and that law requires that your rates be proportionate to the cost of providing service and this is really where we really make sure that that's being done properly and then the last step rate design is once we know how much revenue we're going to collect from a certain customer class then we decide how we're going to recover it so that's really in the form of fixed revenue versus variable revenue so that fixed meter charge or the usage charge and then whether we're going to charge tiered rates or uniform rates and those types of decisions. Next slide. So some highlights from this study some you know we're going to go through and give you the final recommendations that we're making but we wanted to cover some of these major major details I guess I'll call them within the analysis. The first piece of news which is really good news for the city is that you just completed the issuance of your 2020 series A which is new money to pay for a UV project at the waste part to implant and the 2020 series B which is a refunding of a earlier 2012 bonds and the 2020 A series provided you with 70 million dollars for that project so and you got a really good rate for that it's a really good time to go out for debt at this time interest rates are really low and then the refunding of the 2012 bond is actually going to save your rate payers over 16 million dollars over the next 14 years so that was a big success. The other piece that was looked at very carefully over the last year has been reassessing the reserves the catastrophic reserves within each of the enterprises to make sure that the city is prepared for different natural disasters that may occur and this is a analysis that's been done by GHD engineering and you'll see that the reserves that they are required the cash reserves that they're recommending are significantly higher than what has historically been held by the city so we'll go over those in detail. We did update the what we call the cost of service analysis we're following the same methodology that was followed during the last study but by nature cost of service analysis take in specific data from your system financial data as well as user data and so we've updated all those numbers within that analysis we did keep the same general rate structures that you've had so it should be familiar to you for those of you who are already familiar with those rate structures and then the one probably other piece of big news is that we are recommending that you eliminate the automatic pass-through of the Sonoma Water rate changes so what you've done in the past is that you waited for Sonoma Water to announce what its rate increases were going to be for the next year and you built those those percent increases into your rates and pass those costs on to your customer. The reason that was done in the past the reason that you adopted the pass-through mechanism in other words waiting to hear what Sonoma Water announced before actually adopting the the rates was because Sonoma Water wasn't as good as communicating what it was planning to do with its rates it wasn't providing forecast and the the increases were a bit more volatile they've improved quite a bit in that regard and they're providing a lot more forecast information and at this point there's a pretty good understanding of what those rate increases will look like over the next five years so what we are recommending is that we simply forecast those costs just like we do with all other costs with a certain amount of understanding of what they'll be and going ahead and adopting the rates now with the risk that they might not be exactly what we forecast but we have a pretty high degree of certainty of what they will be and we don't expect it to be very different from that so that what the benefit of that is that you'll be able to adopt a rate schedule that's not going to change and so it provides a lot more transparency to your your customers they know exactly what they're going to be paying for the next five years next slide so here's some details on the cash traffic reserves and that within the water utility the that particular cash traffic reserve level is it's right the DHG is recommending that you increase it from almost 6 million million to 17 and a half million and the good news is that within the water utility currently you have enough undesignated reserves that you're able to meet that target almost immediately so you already have reserve cash reserves to position you to be able to meet that increased target and we'll show you the details of that cash flow analysis in a couple more slides on the wastewater side they're recommending to increase it from 6.8 to 21.5 and again you're able to meet those reserves through your cash balance and in this particular case one of the major reasons that you're able to do that is because of that favorable bond issue that we just described earlier so that really positioned you to be able to to meet these new reserve recommendations on the regional wastewater utility so again the regional wastewater utility refers to the treatment plants that shared with other regional member agencies we're assuming that it's 10 million dollars it's going from 1.7 to 10 million ghd has not completed the analysis yet and so we have a placeholder for 10 million dollars they have recommended that your geysers recommend reserve increase from 1.25 to 3.3 so other policy updates within those reserves is that we are recommending that you change the language to be a bit broader it used to refer specifically to earthquakes and now we're suggesting that include events such as fires floods pandemics droughts etc that gives you a lot more flexibility to be able to react to those types of events we are recommending that you modify the policy level over time so in other words as appropriate maybe increase the levels with inflation in order to keep up with cost inflation and right so that's that's the final bullet that was that particular side was was quite a bit should i pause here jennifer kimberley and take questions or do you want me to keep going chair watts it's it's up to you but i would suggest we could probably keep going and if the board members have any questions throughout feel free to stop us at any time yeah yeah that's fine with me yeah i should have mentioned at the beginning anytime you want to jump in i i'm happy to take a pause okay next slide so here's a graph with quite a bit of information so i'll walk through this slowly but this is a cash flow analysis of your water utility over the next 10 years and what you see here at the top in the foreground are some blue columns and that represents your your expenses and so the light blue would be your operating expenses operating the maintenance the hashed in the center here is your existing your debt expense and the dark blue at the top would be your uh capital spending cash financed capital spending in the background you see the green which represents your revenue so the dark green at the bottom is your miscellaneous revenue the darker green in the middle is your existing rate revenue from your existing rates and then the light green at the top would be the additional rate revenue that you would be collecting if you were to adopt the rate increases which are shown down here at the bottom so in this particular scenario we're recommending that a four-year schedule of rate increases of two percent three percent three percent four percent the years beyond that show slightly higher rate increases this is a bit atypical uh for us to show lower rate increases followed by higher rate increases the reason that we're making this recommendation is one to recognize the economic situation that we're currently in with COVID and Bob and I have seen quite a bit of engagement by ratepayers and we have a pretty strong understanding of the amount of difficulty that they're going through and by staff's direction and in our agreement we think that we should try to keep rates as as low as possible over the next coming years the the other reason is that you are meeting your reserve targets so there's really no big drive to increase rates over the next four years you can see this jump here so this next graph in the middle describes your reserve levels and you can see your existing targets are down near 10 million dollars here and they jump up to over 20 million dollars with that increase in the catastrophic reserve target that I mentioned and then the blue line represents your actual reserve so you can see that you're already positioned to nearly meet those reserve those increased reserve targets almost immediately and so you really don't need a larger rates than this in order to be able to meet your reserve targets but out here in the future the reason that your rates will jump a bit as you can see your debt service increases in 2026 this is as a result of some debt that you've issued in the past that doesn't start to be charged until 2026 you have a jump in your reserve schedule that occurs out here and that's because that's the main driver for why rates need to increase a bit after 2026 the last piece of information on here is at the bottom your debt coverage ratio these numbers are extremely healthy the minimum level that we recommend is 1.5 and you're well in excess of that so your debt coverage ratio which is a measure of how easily you can afford your debt is not driving the rates at all this is here is a point of interest but it's really not affecting our recommendations at all okay next slide so this next slide is the same general picture but for the wastewater side and you can see the same general schematic at the top with the revenues and the expenses really balancing each other out here where the expense whenever the expenses and the revenues are at the same level you're essentially in a balanced budget for that year and you can see that your reserve levels aren't changing much the reserve targets are increasing slightly over time with inflation and your reserve levels are staying pretty flat and so eventually by about 2028 you'll be right at your reserve targets you can see the rate increases over the next four years are very modest as a general rule of thumb we recommend whenever possible to always adjust your rates by some amount it's considered a best practice within the industry to always make some sort of adjustment to your rates in order to recognize that cost inflation is occurring where you want to avoid situations where you don't have rate increases for a few years and then all of a sudden you have to spike it spike the rates by 10 percent and then go back to zero and go up and down like that it's much more sustainable and much easier to manage the utility when you implement modest rate increases that keep up with inflation which is what you're seeing here so kudos to your staff for positioning the utility to be able to absorb these reserve these increases to the reserves without a big shock to your ratepayers and we do list the capital spending here that cip is the capital improvement plan this is the capital spending that will occur for the local wastewater system which is your collection system essentially next slide so here's just a summary slide with the rate increases that we just mentioned just as a easy point of reference again these are quite modest and hopefully will especially for the first year will be recognized as not too much of a burden on your ratepayers next slide so let's switch gears here that was the financial plan talking about the general adjustment to your overall revenue now we're going to switch gears into cost of service and rate design and so when we when we look at rate design in particular these are the objectives that we follow we first we want to make sure that they're financially sufficient and sustainable and so that's what we just covered with the financial plan and then as we look to design your rates and to levy those rates on your customers we first and foremost want to make sure that they're legally compliant and by that i mean that we comply with proposition 218 which i mentioned earlier which simply says that you can't charge any customer more than the cost of providing the service to them and so the analysis that you'll see coming up follows those principles and ensures that we're we're compliant with those requirements we're also looking to promote water conservation have a stable source of revenue that's predictable and easy to manage for for staff and easy financially to manage your utility we look to minimize your rate increases whenever possible we try to structure rates to maximize affordability and we also try to avoid complexity that makes it hard for the public to understand next slide so as we allocate costs to your different customers here are some of the principles that we follow so there's some costs that we call customer costs that we assign to each account regardless of the size so that would be costs associated with sending bills out or customer service or that type of thing which is really a cost that is incurred regardless of the size of the amount of water that's used by a customer next we look at capacity costs which is the size of your system so irrespective of how much water or wastewater is actually traveling through it we look at the size of your pipes and your pump stations and we allocate those costs to your customers based on the size of their meter because your meter is an indication of how much capacity is required to serve you regardless of whether you're using that meter or not the system needs to be behind it in order to to be able to service that meter because the next person might need to use the entire meter so we assign those capacity costs to customers on that basis commodity costs are assigned to each customer based on how much they use so in other words how much water they use or how much wastewater they produce and these are costs that are really variable that that follow the trends of usage we look at the cost of water supply and the cost of your water conservation in order to justify your tiered rates and we'll show that in more detail in another slide and then on the wastewater side the usage rates are also tiered in the sense that we charge more for low strength versus high strength and that again is tied to the cost of treatment and chemicals and and the like to treat different strength sewage next slide so here's a graphic that explains how your tiered rates are justified and what you can see is that all customers pay the same amount within their tiered rates for general costs the water supply is incrementally higher for tier two and the reason is because you have two sources of supply one is your groundwater which is a very limited limited amount of water but it's also significantly cheaper than your other source of water which is water that's purchased from Sonoma water so we're giving the benefit of that cheap groundwater to tier one users so you can see that the unit cost of tier one water is a little bit less than tier one tier two and that's simply because the benefit of that cheaper water is built into tier one and not into tier two tier two is purely Sonoma water purchased water from Sonoma water and then the last piece that adds additional cost to tier two is the cost of your water conservation program which we're going to collect that revenue from your tier customers tier two customers because if you didn't have higher water users you wouldn't need that program so that's the justification next slide so here's a table with quite a few numbers that your tier schedule or you're sorry your water rate schedule is got a lot of components to it so I'm not going to go through every single number obviously but it's here for your reference this shows all the usage rates at the top for single family multifamily irrigation potable irrigation recycle water tier one and two your multifamily commercial industrial and institutional they all pay a uniform rate so in other words they pay a single rate and that's because it's it's hard to come up with a break point for how much tier one water to give to those types of customers versus tier two so we keep it simple by charging them a uniform rate which is really a weighted average it's the it's the product it's if you think the weighted average of the tier one versus tier two water sold to the other customers you'd come up with this number so it's it's quite equitable in that regard you can see the change in dollars and percent over in the right column and you can see that those percentages are all quite small there's a little bit of a difference in how much is being allocated to your usage rates compared to your monthly service charges now at the bottom there's a little bit more being charged to your monthly service charges and that's simply it's not a change in policy that simply a product of a change in the cost that your utility is incurring largely it's because of a an increase in capital spending that is recovered from your monthly service charges and so that part of your charge is going up incrementally a bit more than your usage rates okay next slide this one's for your wastewater and same idea here where we have the usage rates at the top monthly service charges down below which are charged by a meter size as I mentioned earlier the usage rates for commercial are charged low standard medium and high strength and again these are justified based on assumptions about the strength of the sewage in terms of what we call BOD which is biological biochemical oxygen oxygen demand which is really a measure of how much oxygen or or which translates into energy or electricity that's needed to pump oxygen into the water to treat it and then there's also a TSS which is your suspended solids basically the the solids in there and that takes a certain amount of energy and chemicals to extract that's the solids and so we charge more to your high strength customers next slide so this next slide helps put things into perspective what this is it's a there's again there's a lot of numbers and I won't go through all of them but you do have this in your packet for a more careful review at your leisure but this is showing what we call a billion impact analysis which is how different types of customers are going to be affected by these changes so what we try to do is identify a representative cross section of your different types of customers for example for single family residential we looked at low medium high and very high water users all with the same meter size you can see we made some assumptions about the amount of water that they use in thousands of gallons per month and wastewater produced and it shows what their bill would be with their current rates and the first group of numbers there and then what their bill would do with the proposed rates and proposed and the change to the total bill both in dollars and percent in the last columns so again you can see that the impact to the different types of customers is pretty even all the way across the total impact covers between 1% and 2% for most of your customers and that's a indication that we didn't make any big changes to the cost of service analysis as I mentioned sometimes when we come in and make big changes to cost of service you'll see you know one group have a drop in their bill and others see a 10% increase but in this case it's it's quite even across all your customers so there's no big losers so to speak next slide this is another view of the same same idea giving a bit more of a breakdown for your average residential bill you have these different components for the total bill between the sewer bill and the water bill and provides it in a bit more detail and it also shows how much their bill that bill will increase over the next four years with the increases that are being proposed and this next slide Kimberly did you want to speak to this one I wasn't really going to say a lot but we wanted to make sure that this stayed in the slide deck so that you were continued to be reminded that we are working on this value of water campaign we should be seeing a second video fairly soon and that will be shared with the full board also but just that we are making all efforts in this very different time to try to reach out to our customers to let them know that we are working on this and that we are and will be coming forward with a rate increase schedule and that these are the reasons for that so we're just really trying to make sure that everybody continues to be aware of the communication piece and the communication tools that are going on even during this very different kind of a time for outreach thank you and then next slide is my last slide it's just a summary slide talks about our overall recommendation here is to adopt the proposed water and wastewater rate increases in the schedules as will be described in detail in our report which will be submitted in next coming month or so we don't have a final timeline on that report but it is largely completed Jennifer or Kimberly did you have anything to add at the conclusion of that before we I guess take questions or move on to the water contingency plan presentation thank you mark and chair Watson members of the subcommittee I just want to again thank you for the work and the work of staff I think we took to heart really the feedback and input that we received from the board and council members really trying to find a rate recommendation that was reasonable and took into account everything that we are facing as well as our customers are facing related to COVID and so what you have here before you we are recommending that the subcommittee consider this four-year rate recommendation and if you support it we'd like you to recommend this to the board of public utilities so we're actually looking for a formal recommendation from the committee and with that you have a lot of staff that's available including myself and the right consultants that can answer any questions that hopefully hopefully can answer any questions that the committee may have great thank you board members do you have any questions about the presentation so far seeing none I do want to acknowledge that this is I know how hard this has been especially with the changing numbers and trying to predict how COVID and the and the you know recession is going to be impacting our repairs so thank you so much for working to keep our rate increases as low as as they are that is really something that you guys should be proud of and something that we should be proud of as a board to be able to present this to you know to council as recommendation for you know moving forward for our rate payers I just had one kind of comment that I know the the staff does such a you know a wide job of educating our our rate payers and the city is a whole just around every type of program that we have including when we are you know the prop 218 requirements for the rate structure and I was just hoping that we can also bring in somehow in the education around water conservation also saves um saves dollars for for households so I know you guys do that in a lot of your programming I just want to make sure I remind us of that because I think that that's also important to recognize especially with the tier two having the water conservation programs being part of that tier two and and that fits perfectly where it should be but just reminding our rate payers that if we save my um save water we save money too so not just good for our our environment but for the pockets as well so um I guess we'll open this up for a public comment then so uh if the for item 3.1 if you wish to make a comment via zoom please raise your hand um if you're a dialing in via telephone please dial star nine to raise your hand uh secretary aether do we have any live or pre-recorded public comments at this time there are no public comments okay great thank you so with that I'll entertain a a motion to recommend um uh and I don't want to read the whole thing so I recommend I move that we recommend the rate increase and the whole program I don't have in front of me either to do that I will second that great so we will waive the further reading um so can we please get a uh roll call vote on that share us yes our member grable hi board member right yes great thank you so we will move that recommendation to the full board and we'll move on to item 3.2 uh director Burke if you want to reintroduce for the second thank you chair lots and members of the subcommittee so item 3.2 is going to be um uh information on our urban water shortage contingency plan and our proposed water shortage charges recommendation and uh we have a number of staff who are available uh to answer questions but I am actually going to turn this directly over to our rate consultant and Bob Reed with the regroup will be making this presentation uh good afternoon um chair watson uh and other members of the subcommittee um uh pleasure to be with you this afternoon we're going to talk about the water shortage contingency plan here and the water shortage rates that are associated with that the general rate recommendations that mark talked about are for uh normal periods where we have normal water supplies and normal water usage and and the plan there is to cover the next four years with general rate adjustments um the water shortage contingency plan the water shortage rates deal with situations where we get into an extended drought or other water shortage situation that we have a way to make sure the utilities stay financially whole so cumberl if you could move ahead a slide um this is a separate component of of the rates now the water shortage contingency plan is a component of your urban water management plan and that is a document that's prepared every five years um in accordance with uh state statutes water shortage contingency plan is a part of of that document it's one of the appendices um this state has recently prescribed um different water shortage stages um and your update of the water shortage contingency plan is consistent with that it's actually a little bit more more detailed in that regard with having different stages of shortage with water use reduction goals uh each step along the way um and within within that um different stages we have both water shortage charges and excess use penalties that come into play depending on the severity and the specific conditions during uh shortage conditions that that i'll describe uh next slide this this slide summarizes the eight stages that are being defined and incorporated in the water shortage contingency plan beyond normal water supply and demand condition stage one is a is a voluntary um uh condition where up to 10 um reduction in water use is is being encouraged uh by customers and then beyond that we moved into mandatory uh water shortage stages and at each stage there are different restrictions on water use and and so on depending on the severity and conditions at that time um the water shortage surcharges are really focused on um uh what happens during the more severe stages where we have mandatory conditions so we don't do anything in stage one which is purely voluntary but we do look at imposing a water shortage charge at stage two and going all the way through stage eight and they change with each stage um and then also in the more severe stages starting in stage five we have an excess use penalty um which is something that all customers couldn't avoid if if they meet uh water use restrictions um but is is there to provide a greater incentive to uh to meet those use reduction goals in the more severe stages so if we move to the next slide um we take a an approach that considers uh a three-prong approach to a financial strategy to bridge a financial gap that is created when we are in um uh selling less water due to a water shortage. First of all we look at using a portion of our available financial reserves these might be some of your undesignated reserves and or your catastrophic reserves depending on what's available to you at the at the time of our shortage we look at implementing that water shortage charge that I that I mentioned and we'll talk more about in a moment and then also in the more severe stages we can look at the fear deferring a portion of the capital improvement program and your capital spending as a way of preserving cash so our three-prong approach is to use available cash reach into our pockets to generate additional cash through the shortage surcharge or to preserve cash by deferring some of the capital program and we look at all three of these things to help manage the the financial deficit and to limit the the strain that's put on the utility from a financial perspective. Moving to the next slide this graph shows the financial deficit that is created as we reduce water use at the various stages of water shortage this is without any actions being taken what would happen as as we sell less water we generate less revenue because we're selling less water. Some of our costs decline because we're not buying as much water when we're not selling that water and so some of the costs decline but expenses generally continue on and so what happens is our revenues fall more than our expenses do and so it creates a gap between revenue and expenses and that's what we're looking at at bridging through this financial strategy. If we move to the next slide looking at that financial gap we use that three-prong approach to bridge that gap so the bars in this graph are basically that gap between revenues and expenses and at all stages we look at using our available reserves and that's kind of the brownish bottom part of the the stack bars here. It's stage one since it's entirely a voluntary program we're going to rely on financial reserves either undesignated or catastrophic reserves to bridge that financial gap over a year long period that could be you know approaching two million dollars and then as we move into the mandatory stages we can implement that water shortage charge and generate some additional revenue and then beyond that we can even start deferring a part of our capital program and preserve some of the cash so you can see particularly in the later stages we're using all three of those approaches to bridge that that financial gap and limit the financial risk placed on the utility. So with the next slide here this shows and again a lot of numbers here but it shows the water shortage surcharges as well as the excess use penalties and how they would be applied. These would generally come into play during the mandatory stages of water shortage. They apply to the water usage rates of your normal rate structure not to the service charges so the service charges would remain in place and would not change would not increase during the shortage but then instead we would initially impose a water shortage charge and this is basically an increase in the water usage rates in stage two as you can see at the top of this table stage two that would be five percent increased to those water usage rates stage three seven and a half percent and so on as you go across the top there all the way to a 45 rate increase if we got to a stage eight situation which is more than a 50 reduction in water usage being required and you can see in the middle part of this slide the way the rates would change. So for example the single family tier structure what's being proposed for the upcoming year is $597 for tier one and $676 for tier two. If we were in a stage two condition those would increase to $627 and $710 with that five percent water shortage charge and the other rates are calculated similarly. Things change when we get to stage five and this is where we start to get into more stringent use reductions as well as allocations to customers as to how much water they can use and with that we institute a different rate structure that includes the excess use penalty. This becomes a three-tier structure for all customers where the water use up to your water allocation for each customer is at tier one and then if we go above that customers would then experience first that tier two excess use penalty and then if they go over 150 percent of their water allocation would get into a third tier which is an even greater penalty. The water shortage charges would still apply in these rates but the excess use penalty would also kick in for tier two and tier three and those rates are shown on this table for stages five six seven and eight so you can see they become fairly significant. I would like to say that while the water shortage charges are intended to generate some additional revenue and will and they apply to all water use from stage two on up and would generate additional revenue the excess use penalties are something that all customers will be able to avoid entirely simply by staying within the water allocation that's been assigned to them. For that reason we're not expecting or anticipating revenue to be generated from those penalties but to the extent that any revenue does come in from those penalties those would be applied to cover the costs associated with the shortage conditions or to replenish reserves that are being depleted to help meet the needs of the utility during the shortage conditions but they're not planned to to occur because they are completely avoidable by customers. If we go to the next slide one of the aspects of taking this three-tier approach is is that customers that meet the water use reduction goals during any of these shortage conditions will have lower water bills than they would have with the normal water rates under standard normal water usage conditions but customers that don't meet those reduction goals or ignore them completely will have higher water bills as a result and the top half of this table shows what happens for a typical single family customer that is meeting those use reduction goals. You can see here on this that even though that water shortage charge starts to occur and be part of the water bill in stage two and on up so even though they're paying a little bit that way because they're using less water their total bill goes down somewhat and so they can they can see smaller water bills as a result of meeting the water use reduction goals. The bottom half of this table shows that those customers that do not meet the water use reduction goals will not only pay that water shortage charge but could also pay that access use penalty and could see some significant increases in their bill. Of course what actually happens with any individual customer will depend on their situation and how much water they're using and how much water they're not using but this illustrates that general concept that if you meet these reduction goals you will save a little bit of money and if you don't that there will be higher costs associated with continuing to get that higher level of water service. So if we move on to the next slide this is our recommendation or staff's recommendation related to the water shortage rates and that is that the budget subcommittee recommend to the Board of Public Utilities that the proposed water shortage rates and structure be included in the water shortage contingency plan. This this set of rates is being developed in conjunction with that water shortage contingency plan rather than the separate rate rate study report. However both of these both the general water rates, water and wastewater rates that Mark talked about as well as these water shortage rates will need to be adapted through the Prop 218 process and so both of the elements will be included in the notice that goes out to customers and in fact I think on our next slide here those rate setting steps as we would you know finalize the recommendations present that information to the BPU next month and then presentation of the City Council in March at that point we would be looking for direction to send notices out to all customers under the requirements of Prop 218 which requires a 45-day notice period before the hearing and then the public hearing to adopt both the water and wastewater rates as well as the water shortage charges would be considered for adoption at a public hearing in May of 2021 and I think at this point I will pause for questions and comments related to this segment of our presentation. Thank you. Thank you very much. Are there any committee member questions or comments? All right. Seeing or hearing none I will entertain a motion for this recommendation. I'll move that we adopt the- Oh wait sorry I forgot to interrupt them.  No no this uh this is probably my fault I'm sorry I think we have a little are you going to do the motion then open up for public comment? That's what I forgot to do so let's go back. Yeah sorry about that so yes you need to do public comment first. Well now we will take public comment for item 3.2 if you wish to make a comment via zoom please raise your hand if you are dialing in via telephone please dial star nine to raise your hand. And Secretary Aitha do we have any live or prerecorded public comments on item 3.2? There are no public comments. Great thank you. Now I will entertain a motion for this recommendation. Okay I move that we uh adopt the urban water shortage contingency plan as presented today. Do I have a second? Second. Great thank you. Apologies I sorry I think for clarification we're only asking for the water shortage charges not the entire plan. Oh I'm sorry. Just the water shortage charges please. So corrected. Great thank you Board Member Grable do you second that amended motion? Yes. Great thank you uh Secretary Aitha if we can get a vote on that that would be great. Chair Watts. Aye. Board Member Grable. Aye. Board Member Wright. Aye. Thank you and thank you for your patience of my misstep. We will now move to item 3.3. Director Burke if you could introduce this item. Thank you Chair Watson and members of the committee and this item is just presented for your review and direction. So item 3.3 will be an update on the water and wastewater demand fee study and again we have staff available to answer questions but I'm going to turn this directly over to Bob Reed to present this item. Great thank you and Kimberly there you go so and you can go to the next slide the the third major task of the work that we've been doing for the city is related to demand fees for the water and wastewater utilities and these are the fees paid by new development for new connections to the water system or in some cases if somebody is upsizing the size of their water meter or making other change in use to the utility services sometimes an additional fee is applied but these are generally you know one-time fees associated with establishing that service. The legal standard here is something spelled out in the government code which requires that these fees not exceed the estimated reasonable costs of providing the service and so it's a pretty broad and in general requirement for this type of fee. And if we go to the next slide the way that we approach the fee calculation for the city's water and wastewater utilities is with what's commonly referred to as a system buy-in methodology and here we're looking at the present value of water and wastewater system assets and facilities. We consider the age and useful life of the assets with their historical cost has been including costs associated with financing of those facilities their step financing and we come up with a current dollar value current point in time dollar value of those facilities and we divide that by units of development or units of demand to come up with a unit unit fee. So this is a fairly common methodology it's really best applied in areas that are largely built out where infrastructure is in place and capacity is available for new development or sometimes where if expansion is needed that the cost to expand is consistent similar to what the historical cost has been. We are looking at the cost of existing facilities and the historical cost information and fixed asset records so we're not relying on plans or studies or future estimates of what might be in the future but we're looking at actual cost history and expenditure and financing history and because of this approach we don't need to rely on capacity analyses or assessment of future needs that each new connection is buying into the system on par with existing customers that have made investment in the system. So this is a pretty standard methodology there are other methodologies out in the industry but your current fees are based on this approach and it is appropriate for the city in its sort of broad life cycle of development within the city and its infrastructure. So moving on to the next slide this very briefly summarizes the water and wastewater demand fee calculation at the top of this we've got a summary of the fixed asset valuation of all the facilities this is information coming from your fixed asset records part of the financial accounting system. We take the historical original cost to acquire facilities and on an asset by asset basis we escalate those to a current dollar value and then we also reflect the depreciation that is occurring based on the accounting service life of the asset. So there's an escalation that brings the value up and then a depreciation that brings the value down somewhat to reflect the fact that the assets in the ground are no longer brand new. So you can see pretty significant investment in the utilities that you have here. The wastewater system we are breaking separately the local wastewater basically the collection system component separate from the sub regional or the regional water reuse facilities that are used more broadly than just the city by some of your neighboring communities. Beyond that valuation of the assets themselves we make some adjustments to this valuation. We add in the present value of past debt issuance costs as well as past interest costs the cost to finance the facilities are part of the acquisition cost so we add those in there to the extent that there is outstanding principle on your long-term debt we subtract that out that reflects the fact that you haven't yet acquired all of those facilities that you're still paying for them through the financing mechanism. The water system and the wastewater collection system have very limited amount of debt but you can see there's a pretty significant debt associated with the sub regional system. I would add that we're we looked at the fixed asset valuation and this analysis at the end of last fiscal year or June of 2019 which is when we had the fixed asset records and the valuation so this does not yet include the new debt issue associated with the 2020 financing because we're looking at fixed asset records that existed prior to that point in time. Once we come up with a full value we also add in any capital reserves these are monies that are set aside and designated for capital spending so not your operating reserve or your undesignated reserves but to the extent you've got demand fee revenues that have already been collected or money that have been budgeted and set aside or appropriated for capital projects we add that in there that dollar in the bank is going to be a piece of pipe in the ground and so we add that to the value. We then to take the total system valuation we divide by the current system demands to come up with unit demand fees and these are expressed on a dollar per thousand gallon per month basis so that's an increment of either water use or wastewater flow generation thousand TGM thousand gallons per month to come up with our demand fees and at that point we also combine the local wastewater and the regional reuse system together into a single fee. These basic unit fee amounts are increasing fairly significant increase on the on the water side and an increase on the on the wastewater side as well although more more moderate but these increases are being offset and really more than offset by changes in the water use or sewer flow generation characteristics. If we move to the next slide one of the things that we did with this update was to look at recent water use and sewer flow data and this slide shows the water use factors used for the demand fee study for different types of residential water use single family we have broken down between large medium and small lot sizes this is consistent with your current fee approach. We are making a change here with some of your other residential categories we're breaking duplexes we're breaking out duplexes and triplexes from other multifamily units they show somewhat different use characteristics and generally duplexes and triplexes aren't required to have separate irrigation meters for water service whereas when we get into four plexes or larger apartment complexes condominiums mobile homes in most cases they're required to have a separate irrigation meter and they exhibit different water use characteristics for that reason. We also have a separate category for some of the smaller residential units these include the large accessory dwelling units single resident occupancy units senior housing and the city is starting to see some high density small apartment units that are limited in size and so we're creating a new category for those sort of special situations. So all of these water use factors were generated by looking at water use data from the last four calendar years so 2016 through 2019 did a pretty detailed analysis of water use records for these different types of residential development and those are depicted here for your non-residential development commercial industrial irrigation usage the demand fees are based on an actual estimate of what their water use will be on a case by case basis so rather than a standard factor per dwelling unit that applies to residential for the non-residential it's based on a calculation that's made for each proposed development project. If you go to the next slide this summarizes the proposed current and proposed water demand fees for different types of residential development and then that base fee for the non-residential development. You can see here fairly well the the largest lot size the fee goes up slightly not quite by $200 and the smaller lots goes up slightly but the medium size residential lot goes down somewhat and so a variety of changes here and we've got another slide that kind of summarizes on a dollar percentage basis of the total fee amount but this is the result of applying those water use factors to the higher fee amount. We go through the same process on the wastewater charges so if we look at wastewater use factors again we were looking at winter water use in the sewer cap from 2016 through 2019 to go through a similar analysis to come up with the wastewater flow factors for different types of residential development and those are summarized here we don't have the irrigation connections but we do have a that same breakout of duplexes and triplexes separate from other multifamily housing here even though they're from the wastewater perspective the use factors are the same but we being consistent with the water side have that shown as a separate category here and then the fee amounts for the wastewater demand fees with the next slide you can see here that applying these new use factors that in all cases the residential wastewater demand fees are going down even though the fee amount the base unit fee amount is going up somewhat the smaller demand factors are resulting in lower demand fees across all residential development and again for your non-residential development it'll be a function of of the actual use characteristics associated with each proposed development project we can summarize all of this for both water and wastewater on the next slide this shows combined water and wastewater demand fees under the current fee structure versus the proposed fee structure you can see across the the spectrum of residential development types it's a reduction there is a reduction in the amount of combined water and wastewater demand fees and then for the non-residential again it'll depend on the specific usage characteristics associated with each plan development project so so this was a pretty comprehensive update of your water and wastewater demand fees using current financial information and then updating with these new usage factors that are reflecting kind of shifts in demand patterns that have resulted in the last number of years due to the recent recession and then and then drought conditions that have resulted in lower demands that seem to have created a new a new normal and so those are being reflected here i will add that that consistent with past practice and we're also recommending that the demand fees be adjusted each year on an annual basis to reflect changes in the construction cost index as published by the engineering news record and that will make sure that your fee amounts stay keep pace with inflation and that you update the fee calculation every three to five years or so so if we move to the next slide here the next step with respect to the demand fees is to staff is currently reviewing our draft fee report and then we would finalize those recommendations and then come back for final review with the subcommittee and then go on to the bpu and city council for adoption these fees do not need to go through a prop 218 process but there is still an adoption approval process that needs to be followed so with that i'll turn things back over to to you chair watz thank you very much thank you very much do we have any board member questions regarding this presentation board member right yeah i just have a sort of related question so when we charge the developer owner of the property these demand fees uh do we charge them at the permanent time or at the final map time or when do they get charged when is the basis of the charge in other words i can see that if we're adjusting it every year there's going to be a big rush to get your get your demand fees in that particular year so how do we handle that there are i'll take that one there are um tip there are some different ways now because there have been some new opportunities opened up for developers there are times when people can defer fees there are payment plans available for some developments in the downtown area but typically they need to pay those fees prior to having a meter set they almost always do unless obviously there's a deferral and the payment plans they have to make their first payment first but they're set at the time that that payment plan goes into effect so they wouldn't get increased based on the yearly increases if they go into a payment plan with us they make payments based on what it was when they had this meter set so there are varying times when people pay them they can pay them though ahead of time as well so if they are ready to pull a permit and their permit is at a place where they're allowed to pay fees they could pay those fees prior to actually asking for their meters to be set so there are various times and we do see when there are significant changes that people can kind of rush to come and make payments on properties that they have but they do have to be somewhere in the process they couldn't just come into the office and say three years down the road I'm going to build this I want to pay to man fees based on that they have to be they have to have at least an application submitted and be in the process of deciding what they're going to be developing and have that actual actually be moving forward and if I could add on we do send a letter every year to sort of developers development community to let them know that the increase base the annual increase is going into effect this year we added language letting them know that we are up in the process of updating our demand fee studies so we want to make sure that they're aware and then Kimberly is working on putting together a plan for how we're going to outreach to the various associations as well so that we can make sure that they're informed of the fee study and what we're doing and get any feedback or input from those groups before we bring this forward to the BPU and the council thank you I would think that developers would want to delay their demand fees based on this information now a good presentation thank you board member Grable yeah I just have a couple questions on the demand fees one is are we still doing the deferrals we passed a policy cash it was probably 2018 based on incentivizing you know higher density and more affordable housing and I think it was just the downtown area or the downtown station area and I don't know if that was part of that plan update I want to say it was sort of independent but we did you know we did pass something regarding at least fee deferrals on those units and then I know we did another similar policy on ADUs and I can't remember the exact specifics of it but I guess I was wondering if we are if and how we're determining when we're to grant fee deferrals in the future as part of this and then also what's the nexus like in terms of where our demand fees are compared to other jurisdictions especially on the the smaller and denser units like ADUs and affordable housing the you know the dense apartment complexes those kinds of things that obviously we're trying to incentivize as well as a city so I can answer questions on deferrals yes there are still deferrals allowed in the downtown area I think they may have even expanded that in planning and economic development a little bit but I'm not sure about that because it's it's a combination of many fees that they are allowed to defer but it is for the higher density units the higher density buildings as far as ADUs go we still based on state the intent of state law are not charging fees for units up to 750 square feet that are ADUs over that which is why we call out the large ADU in the fee schedule those will be charged at that rate that you see listed there I think Bob may have more information about neighboring communities but for us this is really based on the valuation of our system and also our characteristics of you know our actual users as well because many as we started to do a little bit of research around the very high density type developments found that in many places they are still charging by meter size or frontage footage of a property so so methodologies aren't all necessarily the same and I don't know I'll ask Bob if he has any additional information about other communities or neighboring communities yeah we as part of this work we did not do a survey of what other communities are charging in terms of demand fees in the past when we've done that I mean it's fairly easy to look at a typical residential type development and do a comparison that way but as soon as you start looking into situations of of either you know how do you handle the ADU or you know particular type of development or particularly non-residential development then it's all over the map and it's really hard to do an apples an apples comparison without really getting into the weeds I would say that that I am not familiar with communities really looking at although it may be going on with really incentivizing you know the the smaller type development and encouraging you know trying to encourage particular types of development the whole ADU issue is one that's been evolving over the last five years or so and and we'll probably continue to evolve but how individual communities respond and react to those changing statutory requirements and guidelines is something that's fairly fluid so that's probably not a very satisfactory answer I'm sorry to say but that's you know sort of what what what our experiences has been lately. Okay and I yeah I appreciate that we we definitely have some specific you know we both for our Prop 218 and and sort of fiscal responsible and and our fiduciary duty to our citizens I know that we have to do a specific rate study that is specific to our users I just in cases of overall impact fee studies and nexus studies you know at a certain point you got to compare something and you got it it's it's helpful at least to see where we lie in in those nexus studies even if it's just a snapshot and isn't meant to say well all things being equal because we know they're not right but it would it would definitely be helpful for me and I I don't know if that's something that that could be done for the full board or the council at some point whenever this goes to a final approval but you know I know that there are others that that feel the same way just because you know on on on one hand right we we have to do what's right for our system so that we're capturing our costs adequately on on the other hand you know are we are we too low in some cases for certain types of development are we too high for other types considering that we also want to make sure that we are compared to other jurisdictions that were you know that we're not an outlier right and and also I would say that we the same reason in other departments and this is coming from kind of my policy world of overall development policy and looking at these similar to any other fee structure that that is levy like inclusionary housing fees capital fees parks fees school fees all these things it you take into account at some point what types of development you're incentivizing right and what what are your gradated sort of fee schedules what what are they trying to accomplish what's the reason for because otherwise it would just be the same fee for everybody right there's obviously something there that is partly the nature of the users but it's also partly you know the the type of development it is or the type of property it is so for me it definitely be helpful just to see where we where we lie there because we also want in the long run in the in the long term we want to not we don't want to take incentives away where we could be giving them it where where we have the ability and the legal authority to do it incentives for more you know healthy development walkable cities these kinds of things that also create more users and and the more users we have also the more I think resilient our overall system is at a time when California is you know is is losing people so just in that long term realm of not having population nutrition and or not building the types of housing that that might retain and keep our overall holistic system of city government solvent in our in our water system too it's just one of those things that I that I think about in that in that real long term from that long term perspective which again the the overall sort of housing policy wonk in me looks at all of these different fees and wonders what the you know just where we're at compared to other jurisdictions and why would someone choose to build an apartment complex in downtown santa rosa when they can do it for half as much an impact fees in rona park that's I'm not saying that's true but you know that's the that's where I'm going is it what's the where you know where are we at in regard to that so that we're not either creating too much incentive for one type of development or not enough for another without knowing where we're at compared to those other areas if if that makes sense so thank you board member grable you know this is the kind of information that we're looking for from the subcommittee what additional information you'd like to see we're not asking for a decision at this point in time this is the initial share of the information so we can definitely take this back and look at sort of neighboring communities and see if we can get a comparison for our recommendation on the demand fees from a a whole fee impact perspective I'll see what we can do there that's really we may need to work with pet and see if we can bring them in because we're really only looking at the water and wastewater demand fees but we'll we'll check in with the planning and economic development department and see if there's additional information they have and could potentially provide from that perspective and then we'll definitely get the specific updates and information on the deferrals as Kimberly mentioned none of those policy deferral have changed from the council so they're still in place and they may have actually increased and to your point about kind of where the the council's housing policy is and what they're looking for you know part of the reason why we're doing this demand fee update was really to ensure that we have the correct information about ad use as well as looking at that sort of new high rise development that we haven't seen previously we wanted to make sure that we had data and information and have a fee that's specific for that because we haven't seen that in the past so really taking into account where the council is going and what they're prioritizing that's part of the reason why this demand fee update is coming forward thank you and yeah I was just so I'm not thank you director Burke yeah that definitely clarifies it for me and also yeah I definitely wasn't asking staff to do a larger impact fee next is I know that that's that's daunting and I know that Clara Hartman and others are working on those things constantly but yeah just in terms of our wheelhouse the the water and sewer and where we fit in the overall impact fee structure and then the nexus more broadly between jurisdictions just on those water and sewer fees for different types of development be it large single family homes smaller homes large ad use high density apartments and even deed restricted affordable housing and low income housing are other jurisdictions doing something different is there another tool that we might look at because we have this you know kind of opportunity to look some things before we're bringing it an official recommendation so I know you have a lot on your plate so I hesitate to ask these things but if not if not now then when when we have a little bit of an opportunity to just look at what those what those possibilities are yes thank you well we'll definitely take that back and we'll bring that to a future subcommittee meeting great thank you yeah I think that would be interesting to just kind of see where we fit into the to the larger picture of of some of the council's goals and so forth as well I think that's important when we're making decisions like this and recommendations and I appreciate all the work going into this this portion and I think we will look forward to more information coming back to the subcommittee before we make a formal recommendation so at this time I'd like to take any public comments on item 3.3 so if you wish to make a comment via zoom please raise your hand if you are dialing in via telephone please dial star nine to raise your hand secretary either do we have any live or prerecorded public comments at this time there are no public comments great with that I believe that concludes our meeting for today so we will look forward to our next subcommittee meeting see you all on Thursday and we will adjourn thank you thank you thanks everyone


ns to various committees, et cetera. Yeah, it's an idea. And I think I put in a manager's report and we could talk about it at the next meeting if you want. That's fine. I was just, it came up with regard to me and the. Planning commission. Planning commission and Linley and Paul, isn't it to the dump or the transfer station? Yeah. Yeah, her and Dave are going to take on that. Is she and Dave? Okay. Until we find somebody, which reminds me, I need to put that ad in the paper as well. Thank you very much. All right. So I just want to make sure that hits the agenda standpoint. Yeah. And Paul does two rivers. So Paul's in. I'll put it on for next week or two weeks agenda discussion. Okay. I'll make sure I put that on. Thanks, Jean. And as the chair, you get everything else. So one week, it might be deputy health commissioner. Next week it might be. Yeah. For what you asked for. Yeah. I know. Paul, are you thinking what I'm thinking? Christian. Shelter. Yeah. Oh boy. I'm telling you, my, my time's really getting filled. So speaking of that, I'm going to get some kids in the showers and get to bed. So. Hope she'll do a job. Second. Okay. Thank you all. Have a good evening. Good evening. Thank you. Good night, guys.


Neurocystocircosis is the infection of the human central nervous system by pork tapeworm larvae. Little baby pork tapeworms invading one's brain has become an increasingly important emerging infection in the United States, and it is the number one cause of epilepsy in the world. It's the most common parasitic disease of the human brain, and used to be only found throughout the developing world, with the exception of Muslim countries, of course. But that all changed about 30 years ago, and now it's increasingly found throughout North America. Besides seizures, the pork parasites may actually trigger brain tumors, cause an aneurysm, or psychiatric manifestations like depression, but who wouldn't be depressed having worms in their brain? It can also result in dementia, but the good news is, with deworming drugs that's often reversible, only rarely do you have to open one's skull and extract the larvae surgically.  I've talked about pork tapeworms before, but what's new is that we now know that they may present as chronic headaches, either migraines or so-called tension headaches, even when the worms in your head are dead. What they think is happening is that our body tries to chip away at their calcified bodies, and it may release bits of them into the rest of the brain, causing inflammation that could be contributing to headaches. Now it's still rare, and even if you live in an endemic area, you can avoid getting infested with an adult tapeworm in the first place by cooking pork thoroughly, but what does that mean exactly? Well, first of all, it's found in some parts of pig carcasses more than others, and you can freeze the little suckers to death, no matter how infested the muscles are by storing pork cut up into small pieces for a month at subzero temperatures and cook the meat for more than two hours. That is one well-done pork chop. The New England Journal of Medicine recently featured a case of some guy who must have had thousands of pork tapeworm larvae wriggling through his muscles. See all those little white streaks? Each one is a baby tapeworm. But that's why you can get infected by pork since they get into the muscles, so cannibals might want to cook for two hours, too. Not all parasites are associated with meat, though, an anxious but healthy 32-year-old physician presented to the family medicine clinic with a sample of suspected parasites from his stools, which had been retrieved from the toilet that same day. And here they are. It looked to be about an inch long. He had previously traveled to India, had Chinese food the night before. Who knows what they were, and maybe it was hookworms? The sample was sent to the microbiology laboratory for analysis. Later that day, the microbiology physician called to report positive identification, a vigneratiata, previously known as faziolus aureus, in the stool sample, or in common parlance, a bean sprout. They were bean sprouts! The patient was called and gently but firmly informed of the diagnosis. Given the nature of the identified specimen, the information was presented in a non-judgmental, respectful manner, so as to not offend the sensibilities or sensitivities of the patient. Parting advice to fellow physicians in cases of this nature would be as follows. As comical as the findings might seem, try not to laugh.


is here springtime in Southern California flowers are blooming the sun is sending down its glorious rays while the birds are singing in the trees let us fly to Jack Benny's home in Beverly Hills at the moment Rochester is dusting the living room this room and I clean this room and before you know it is dusty again seems like I'm in here every month Oh well don't dust the table I've got a couple of phone numbers written on it yes one in particular Gloria bagel quiz very good friend of mine oh I just wiped out a beautiful friendship why did you have to clean the table anyway but boss I didn't know it was a table till I got through dusting it now that's silly didn't you see those Duncan five legs uh-huh but what do you think it was Gloria bagel quiz stop being funny go on with your cleaning I'll be in the library okay mr.   Who did it? Are you kidding? I expect to get my bathing suit. I better call Butterfly again. You don't have to, Mary. My girlfriend, Gladys Obisco, left her suit here. You can wear that. Jack, her suit would be much too big for me. Oh, wait a minute, Mary. Gladys isn't so fat. She just brought across the hips. I know, but her hips run clear up to her shoulders.  Well, I'm gonna phone Butterfly and get my own suit. Okay. Thanks. This is Miss Livingston. I've been trying to get you, but the line's been busy. Oh, yes. The boyfriend Jerome called and he wanted to take me to a movie. I certainly, Butterfly. Any time Jerome comes in from camp, it's perfectly all right. Thank you. He's taking me to see Madame Curie. Madame Curie? Butterfly, I thought you saw that picture last night. I did, but I didn't understand it. Well, do you think you'll understand it tonight? Who cares? I'll be with Jerome. Mary, hurry up. Tell her to bring your bathing suit. Okay. Well, look, Butterfly. The reason I called is that I want you to bring my bathing suit over to Mr. Benny's house. Oh, hasn't he got one of his own? Butterfly, I'm gonna wear it. It's in the bottom dresser drawer on the right-hand side. Yes, ma'am, but Miss Livingston, I don't know how to get to Mr. Benny's house. Oh, well, look, first you go to the corner of Lexington. Just a minute, Miss Livingston. I'll get the fountain pen and write it down. All right. I'm ready. Good. Now, first you go to the corner of Lexington. Just a minute, Miss Livingston. I'll get some paper to write it down. First you go to the corner of Lexington and Camden. Just a minute, Miss Livingston. I'm stuck. You're stuck? Yes. I sat down on the fountain pen. The corner of Lexington and Camden. Catch the bus there. And get off at Mr. Benny's house. The bus goes right past it. Yes, ma'am. But how will I know which is Mr. Benny's house?  It's a big sign. But, Miss Livingston, I broke my glasses, and I can't read. Well, that's all right. You'll see Mr. Benny out there eating his hat. Bye, Butterfly. That wasn't a bit funny.  Imagine putting a sign on the lawn that you're a better actor than Paul Lucas. Mary Rochester wrote that sign out there. Well, why don't you make him take it down? Freedom of the press. That's why, Mary. The reason I... Boss! Processor, what's happened? What's the matter? Boss, you just have to get rid of that camel. Get rid of my camel? Why? What'd she do? Nothing. But if you get rid of your camel, you'll get rid of that hairline. He wants to kill me. The Arab? What did you do to him? Nothing. Boss, I was just... Never mind. Here he comes. I'll ask him. Mustafa. Mustafa.  Get out of there, Rochester. I don't want to leave your house. Mustafa. What did Rochester do to you? You'll get rid of that camel. Take all my money. Get out of there! Rochester. I'm going to get to the bottom of this. Mustafa. Now calm down and tell me. What did Rochester do to you?  Come, seven. Baby needs new shoes. Rochester, when that Arab came here, he warned you not to get him into a dice game. But boss, it was my fault. I was teaching him English and we dripped it into cubicle arithmetic. And give him back his turban. It looked silly on you. Now, Musi... Musi, go take care of my camel like you're supposed to. The love letter. Well, I'm rooming back home. Mustafa, control yourself. Rochester, back down. This is crazier than a radio program. Say, Jack, I won't wait for butterfly to bring my bathing suit. I'll go in the other room and put on glasses. Okay. Come in. Hi, you fellas. Say, how come the three of you all got here at the same time? Oh, we got a carpool. A carpool? Yeah, yes, sir. We sure have. Well, who are you? Herman Peabody. Herman Peabody? Oh, it's all right, Jack. Keep blowing straws. Share the ride club. Oh, say, I go downtown a lot. Maybe I could get in your carpool, too. No, I'm sorry, Jackson. We haven't got enough room.  Not only that, but two of them never get out. Never get out? Yeah, some sailor in these girls. That girl with the sailor is mine.  Me, too. Okay, you two, Herman. I really shouldn't stay. I ought to be working. I'm an insurance salesman. But it's so beautiful out, Herman. Why don't you take the day off? Well, okay. Now, let's get into our bathing suits. Oh, I just thought of something. What, Herman? Maybe I shouldn't take the day off. Maybe if I work today, I'd sell somebody an insurance policy. Well, you can sell it to him tomorrow. Yeah, I guess you're right. Well, fellas, let's... But something might happen to him today. Who? That man that won't be here tomorrow to buy the policy I should have sold him today. May he rest in peace. What are you talking about? Think of his poor wife and children.  I guess you're right.  Ah, boy. Get into our bathing suits. Dennis, you're supposed to take your clothes off first. You ought to know that. Oh, thank you, Benny. I don't think I ought to stay. Why not? That poor widow and her two children. I can't get them out of my mind.  Okay, I will. Say, Jackson, how do I look in my bathing suit? Phil, only girls are supposed to wear bare midriffs. As long as you've got it on wearer. Mr. Belly, I decided to stay. Good. Oh, man! We'll wait for you, but hurry up. We want to get in as much swimming as we can before we go to rehearsal. Oh, by the way, Dennis, what are you going to sing today? On the program? Yeah. Well, I don't know the name of it, but it goes like this. Dennis, that song will be swell for the program. And the name of it is, I'll Get By. Oh, thanks. You're welcome. Hey, Mary, we're waiting. Aren't you ready yet? Say, Jackson, before I go in, I'm going to use your telephone. Okay, go ahead. Well, that's a fine way to treat me. You let Phil use the phone for nothing. Never mind. Say, Mary, you thought Gladys Abisco's bathing suit would be too big for you, didn't you? Well? It's snug.  Well, Jack, I've got a surprise for you. What? I'm only wearing the pants. I'm wearing a shirt. It looks real, uh, it looks real nice on you, Herman. I'm in here, too. Say, John, John, you must have been out in the sun a lot. You're as brown as a berry. Oh, Jack. All right, you're as barred. Brown is a grape nut. Are you satisfied? No. I'm all yours, grape nut. Well... A munchy-crunchy one? With milk and sugar? I'll pronounce you man and wife. Now, here comes Mr. Harris. Say, Phil, did you make your phone call? Yeah. Here, Jackson, you can punch my ticket. Chief, now I've seen everything. No, you're after the kitchen and take that turban off. If you know what I mean, Roger, jump in the pool. Okay. I shall hope the water isn't too cold.  Is it cold? No. If you don't believe us, stick your foot in the sea. Okay. It is warm. Mr. Benny, take the foot out of my mouth. Hey, Jackson, the best way is to get up on the dive and board and then jump right in. Okay, get out of the way, everybody. Jackson's hurt. Mr. Benny, aren't you coming in? Can't you see he's unconscious? When he comes through, will you tell him I decided to go?  I've got his feet. I've got his head. Hey, look at me. I'm Monnie Woolly. I'm Monnie Woolly.  Look at poor Jack. Yeah. I wonder what to do now. I know. Oh, Rochester. Yes, Mr. Harris. Rochester, there's been an accident. Bring some whiskey and some spirits of ammonia. Yes, sir. Gee, I better cover Jack up with his robe. There.  Yeah, let's turn him over so he's facing us. Here comes Rochester with the whiskey and the spirits of ammonia. Here you are, Mr. Harris. Okay. Now give Mr. Benny the spirits of ammonia. Here, Jack. Here. It's no use, fellas. He's still groggy. I know how to revive him. Let's take him up and throw him in the pool. Yeah, that'll do it. All right, fellas. Lift him up. Oh, no, you don't. Trouble to keep out of the pool. I'm going to stay out. What? It wasn't easy to land back on that diving board. Herman. Where'd everybody go? Oh, they had to go to rehearsal. Gee, that's too bad. Just when I decided to stay. Now I'll be lonesome. Well, if you want, I'll talk to you. Please do. Now, look, Herman. When you start out in the morning to sell your insurance, don't just rush out of the house. First eat a good breakfast. You'll do a better job and feature multi-rich grape nuts. You fascinate me. Tell me more. Now, Herman, no matter what your job is, you'll do it better if you start off with a nourishing breakfast.  Herman, grape nuts are crisp and crunchy with the sweetest of nut flavor that makes them swell eating every time. So, Herman, if you want to be a good insurance salesman, eat a good breakfast, do a better job, and include delicious nourishing grape nuts. You're nice. Well, thanks, Herman. But I have to run along now to rehearsal. You have to go? Yes, yes, I do, Herman. But when you leave, don't forget to turn out the lights, will you? Okay. Bye. We're a little late. Good night, folks.