RANCHO MURIETA, CA (MPG) - A potential lawsuit if the board approves a water moratorium and the board’s decision to seek an external review of the Integrated Water Master Plan were notable topics at the Rancho Murieta Community Services Board meeting on Oct. 16.

Additionally, district staff explained the delay in completing three overdue audits, and the board rejected a claim from a shooting victim at an equestrian center who sought to add the district to his lawsuit. The meeting also included updates from staff on finances, utilities, and IT, as well as the consideration of several significant infrastructure projects.

Water Moratorium

During public comments, Greg Dyer, a partner in the Jones & Dyer law firm and the new CEO of Rancho Murieta Properties, raised concerns about a potential lawsuit over a proposed water moratorium. Dyer, who has represented Carol Anderson Ward and the late John Sullivan for over 20 years, warned the board about the implications of the moratorium, which is being advocated by SOLOS (Save Our Lakes & Open Spaces), a local organization advocating for responsible development.

“I’m speaking because SOLOS is submitting a petition to stop any further water connections on our property,” Dyer said. He emphasized that Rancho Murieta Properties has contributed significantly to the community’s development, citing examples like the Bel Air Market and Starbucks. He also noted that Rancho Murieta Properties paid over $5.7 million to upgrade the community’s water treatment plants through a Facility Services Agreement (FSA) with the district.

“In exchange for that, we are entitled to 697 district water connections,” Dyer said. He claimed that John Merchant, a proponent of the moratorium, had voted to approve the FSA contract.

(Merchant later disputed this claim, stating, “I didn’t rejoin the board until 2017, and in no way was connected with executing, the signature, or the voting on the financial services agreement.”)

Dyer warned that any future attempt to declare a water shortage emergency to prevent development would violate state law and could lead to a lawsuit for breach of contract. He referenced a case from Mammoth Lakes, where a developer won a $30 million judgment in a similar situation.

The board did not respond to Dyer’s comments, as the Brown Act does not require responses to public comments on non-agenda items during meetings.

Following the board meeting in July, Merchant and SOLOS began circulating a petition demanding a development moratorium due to concerns about the community’s water supply. The petition has garnered more than 1,900 signatures. 

Merchant, who will assume an uncontested board seat in December, previously served on the district board before resigning in October 2022 to focus on SOLOS. His resignation followed a board meeting where John Sullivan accused him of “malfeasance” for allegedly attempting to derail the Rancho North project during discussions with Sacramento County planners.

Water Plan

General Manager Mimi Morris informed the board that after the consultants completed the draft of the Integrated Water Master Plan , she requested staff to post the 317-page document on the website for public review and add it to the board’s agenda for discussion on the next steps.

President Tim Maybee began the discussion  by opening the floor for public comments.

Tom Shewchuk, a resident of 33 years, expressed his belief that the health of the country club is the most pressing issue for the community, but he urged the board to approve the plan as soon as possible and to consider all aspects of increasing the water supply. He also suggested more water conservation efforts. 

Additionally, Shewchuk praised Rancho Murieta Properties for launching a new website, Buildinga

BetterRanchoMurieta.com, stating, "It’s great to see both sides of the issue."

Merchant expressed concern about allowing sufficient time for public comment on the plan and noted that SOLOS would be submitting a formal reply.

Merchant also raised several questions about the plan, particularly Chapter 4, authored by consultant Lisa Maddaus. “What I think is predominantly evident there are four recommended sources of mitigation in the report, and three of these are really not qualitative and are very assumptive in their posture,” he said.

Merchant outlined the three mitigation strategies: using Clementia Reservoir, irrigating the golf course with river water (which would free up 500-acre feet of recycled water for new development), and drilling augmentation wells.

Merchant expressed skepticism about relying on the wells and Clementia for water supply. With the report indicating a production of only 50 to 150 gallons per minute, the wells could serve only as an emergency resource. Even with the addition of 907 acre-feet from Clementia, the impact would be minimal.

“You are not going to be able to support 697 houses with what is in that report,” Merchant said.

When Maybee opened the floor to the board for discussion, Director Stephen Booth reminded everyone that the board had committed months ago to provide the community with 45 days to review the plan. There was general agreement to begin the review period immediately, which would extend until the end of November.

Booth also brought up the idea of a technical review of the study, and Morris mentioned that she had already lined up an expert from Wagner & Bonsignore, an engineering firm. However, both Merchant and Booth opposed this suggestion because of dissatisfaction with a water rights consultant from the same firm who contributed to the plan. 

Directors Randy Jenco and Pohl, both engineers, also rejected Booth’s idea to use the district’s contract engineer, Joe Domenichelli, for the technical review.

Director Pohl emphasized the need for an expert well-versed in preparing master water plans and suggested staff revisit the long list of engineering firms that had initially been invited to bid on the plan. (Only a joint proposal from Maddaus and Adkins engineering firms was submitted.) 

Maybee pointed out that the district would likely receive more responses this time, as the task would be to review the plan, not prepare it. “Let’s see who is available and start whittling it down,” he said.

The conversation shifted to how the community would provide feedback on the plan. Morris explained that the district’s website includes an online receptacle for resident comments, which could later be compiled into a report for the board and the technical consultant. The link is  at https://www.ranchomurietacsd.com/complaint-compliment-or-question.

Booth expressed support for the online inbox but cautioned that it should not be the only method for submitting comments. “I wouldn’t want to prevent other methods of sharing comments with us and thereby disenfranchise any individual or groups of individuals,” he said.

Maybee added that he wanted to involve all the homeowners associations (HOAs) in the community in the process.

Overdue audits

After General Manager Mimi Morris mentioned in her report that staff were still on track to complete the three outstanding audits by spring 2025, Director Stephen Booth asked why there was a delay, noting that the 2021/22 audit had been slated for completion this month.

Morris explained that a cleanup of faulty accounting records had to be completed before the audit could proceed and asked Finance Director Mark Matulich to provide more detail. Matulich explained that when he ran a trial balance for 2021/22, “Not one of the funds was in balance individually, and the district’s books as a whole were out of balance, which is impossible.”

Rather than spending months trying to untangle the transactions, Matulich opted to set up a new General Ledger and a system for "big data analytics so we can review the data, clean up, and reload it into all the years,” he said. “It was a huge undertaking with 22,500 lines of data, but it goes for 21/22, 22/23, 23/24, and through September of 24/25.”

In addition to the audit cleanup, Matulich discovered that "a lot of real accounting wasn’t happening at the district" when he arrived in January. As a result, he and accountant Chris Funakoshi had to establish full accounting processes and train the staff.

Matulich also had to address numerous urgent issues, such as faulty utility billing. For example, a landlord at the meeting complained that he had never been notified about a tenant's unpaid water bill of approximately $6,500, which prevented his new tenant from receiving water service.

“The schedule (to complete the audits) that we put out before wasn’t disingenuous,” Matulich told Booth. “We just didn’t know how bad it was, so we had to make the decision to pivot.”

Booth expressed appreciation for the clarity provided by Matulich and Morris, saying, "Unlike the previous staff, you are able to answer our questions. They were simply out of their element and made up stuff."

In his finance report, Matulich noted that the district’s revenues for the first quarter had exceeded the budget by $350,000 due to increased water usage during the hot weather. He also reported that the district had earned nearly $200,000 in interest in the first quarter, thanks to the board’s approval to move the district’s investments to different entities.

Additionally, Matulich proposed increasing the barcode fees. The current one-time fee of $10, which has been in place for the past 20 years, would be raised to $25 with an annual renewal. He estimated this change could generate about $200,000 to enhance security. Booth supported the idea but suggested a lower renewal fee to make it more acceptable to residents.