SAM Board Advances Budgets as Montara Force Main Costs Loom, Expired Easement Threatens Solar Plans

The Sewer Authority Mid-Coastside (SAM) board unanimously sent two budgets to its member agencies Monday night — a collection services budget up 20% and a general operations budget up 15% — while confronting a pair of surprises: the consent-decree-mandated Montara sewer force main could cost three to four times what's currently budgeted, and a 40-year-old easement granting SAM the right to operate on its own plant site quietly expired in 2022.

• Two budgets advance to member agencies with combined increases driven by new Local 39 union contract — collection services up 20% (~$913K) and general operations up 15%

• Montara force main could reach $12.5–$15M as Middle East conflict pushes petroleum costs above $112/barrel; contractor pricing won't arrive until May or June

• Expired 1982 easement discovered on SAM's treatment plant site, blocking a solar power purchase agreement and electrical building project ahead of a July 4–5 tax credit deadline

• Harbor District waives $130K in staging fees for force main construction on the contested Burnham Strip, drawing community pushback

Budget Tightens: Collection Services Budget Rises 20%, Driven Primarily by Personnel Costs

Why it matters: The roughly $150,000 increase in SAM's collection services budget will be allocated among Half Moon Bay, Granada Community Services District, and Montara Water & Sanitary District. Staff said the main driver is the Local 39 memorandum of understanding and related personnel-cost increases, though a prior-year collections deficit and some non-personnel cost increases also factor into the overall agency assessments.

Where things stand: General Manager Kishen Prathivadi presented a $912,935 collection services budget for FY 2026–27, covering four full-time employees — three maintenance workers and one mechanic. Personnel costs and benefits account for 91% of the total. Staff said wages and benefits together rise by about $128,000, including about $79,527 in wage increases tied to the Local 39 memorandum of understanding agreed to last year, roughly $25,375 in health-benefit increases, and about $14,300 in retirement contributions. Non-personnel costs also rose somewhat, from increases to insurance, supplies and training.

Cost allocation among the three member agencies shifted slightly: Montara Water & Sanitary District drops to 37% (from 38%), because one lift station no longer required maintenance coverage in the calculation, Half Moon Bay rises to 34.5% from 34%, and Granada Community Services District is now at 28.5% from 28%.

A board member also raised concern about future equipment replacement. Staff said the large truck, which cost about $750,000 ten years ago, could cost roughly $1.4 million now and may need replacement in three to four years. Staff said member-agency managers had discussed the issue previously but deferred action.

Decisions: The board voted 6-0 by roll call to authorize the general manager to submit the budget to member agencies for approval. (For: Slater-Carter, Marsh, Boyd, Ruddock, Dye, Nagengast.)

The Big Number: Montara Force Main Could Hit $15M — And the Board Isn't Ready to Say So

The basics: SAM is under a consent decree requiring completion of the Montara Force Main by June 30, 2027. The five-year capital improvement plan adopted in 2024 set aside $3.5 million for FY 2026–27, but staff now estimates the project could cost $12.5–$13 million for the fiscal year — and potentially $14–$15 million or more, depending on global commodity prices.

Why it matters: The gap between what's budgeted ($3.5M) and what's anticipated ($12.5M+) is the single largest financial uncertainty facing SAM and the ratepayers of all three member districts. If the contractor's guaranteed maximum price comes in high, the board may need to approve a mid-year budget adjustment of $9–$12 million — or consider scrapping the design-build approach entirely and rebidding competitively, which would threaten the consent decree deadline.

Where things stand: General Manager Prathivadi told the board the design-build contractor is still completing the 60% for design. Construction management services, estimated at roughly 10% of project cost (~$1 million), are going out for an RFP in March or April.

"The guaranteed maximum price is going to be given by the contractor only in the month of May or June," General Manager Prathivadi said. He added bluntly: "We have a consent decree. We have to go by June 2027."

The other side: Vice Chair Nancy Marsh, representing Granada Community Services District, argued the board should budget the full anticipated amount now rather than plan a large mid-year surprise.

"Instead of $3.5 million, use $12.5 million, which would bring the overall infrastructure budget up to $13.1 million," Vice Chair Marsh said. "It just makes for more realistic planning and for communications to the ratepayers and community of stakeholders."

She pressed the point on fiduciary grounds: "The JPA only requires that the member agencies have enough in their individual budgets to cover the cost we anticipate. So if we say at this point we anticipate it's going to be $10 to $15 million, we should be planning that in our budget so that we have the reserve to cover it."

Board Member Deborah Ruddock sided with Marsh on the principle: "I actually like your idea, frankly. We know with the current climate in the Middle East that costs could go way up very fast. I like the idea of budgeting up front."

But Chair Kathryn Slater-Carter and General Manager Prathivadi opposed the change, arguing that inserting a number without contractor confirmation would itself be misleading. Chair Slater-Carter favored sending the budget as presented and adjusting when hard numbers arrive, potentially before the July 1 fiscal year start.

"I think it's a good discussion to start both at the finance committee and bring it to the board," Chair Slater-Carter said. "But I'd like to see this budget passed and moved on to the member agencies so we have the time to discuss it too."

Board Member Paul Nagengast emphasized the need for candor with ratepayers regardless of approach: "I think if we're open and transparent and just letting our ratepayers know — hey, and it's during a war."

Decisions: The board voted 6-0 by roll call to send the general operations budget as presented, with $3.5 million for the Montara Force Main. (For: Slater-Carter, Marsh, Boyd, Ruddock, Dye, Nagengast.) The board acknowledged a mid-year adjustment is likely once the contractor's guaranteed maximum price is known.

What's next: The contractor's guaranteed maximum price is expected in May or June. If the number comes in far above estimates, the board retains the option to reject it and go out for competitive bid — though that would cause significant delays against the June 2027 consent decree deadline. Board members flagged crude oil prices above $112–$120/barrel and the closure of the Strait of Hormuz as cost escalation risks.

Also in the general operations budget: a new $404,259 non-project capital equipment line item in the treatment section. General Manager Prathivadi explained the change addresses years of muddled accounting: "Until this fiscal year, we've not budgeted separately for non-project capital expenses. At the end of the year, we capitalize items which are more than $5,000." The finance committee recommended the separation to keep infrastructure budgets clean by breaking out routine pump, electrical panel, and diffuser replacements from large capital projects.

Surprise Discovery: SAM's 40-Year Easement Expired Three Years Ago

Why it matters: Without clear legal rights to operate on Half Moon Bay–owned land, SAM cannot enter a power purchase agreement for solar panels at its treatment plant, cannot build a planned electrical facility, and cannot leverage federal tax credits that expire July 4–5. The clock is ticking.

Where things stand: While performing due diligence for a potential solar battery storage power purchase agreement, General Manager Prathivadi and Legal Counsel Jeremy Jungreis discovered that the easement granting SAM rights to operate its treatment plant — originally executed in 1982 by the former Half Moon Bay Sanitary District for a 40-year term — expired in 2022. SAM owns the plant, but the City of Half Moon Bay, as successor to the Sanitary District, owns the underlying land.

"You have a basis for continuing in place because the purpose of the easement still has not been completed," Legal Counsel Jungreis told the board. "Basically there's an implied holdover, but we need to come up with a resolution that allows us to be able to do projects going forward."

Adding to the mystery, Jungreis noted the 1982 agreement was only recorded with the county in 2009: "I don't know why it was recorded in 2009. I don't have any contemporaneous documents that tell me that."

Board Member Deborah Ruddock indicated she would consult with the Half Moon Bay city attorney. Half Moon Bay City Manager Matthew Chidester, attending via Zoom, agreed that staff-to-staff engagement is the right starting point.

Chair Slater-Carter stressed urgency: "It seems like something we've got to get ironed out before we can make any major changes here. And I'd like to see us be able to get this electrical building problem taken care of as soon as possible because that's the big kahuna."

What's next: Legal Counsel proposed noticing a public hearing for the solar PPA at the March 23 meeting, with the option to continue it if the easement isn't resolved by then: "If in two weeks we have the public hearing noticed and we find that we need more time, we could just continue the public hearing because we would have already complied with the notice requirements."

Burnham Strip Staging Reignites Community Tensions

Why it matters: The Burnham Strip — the same parcel that generated more than 1,000 petition signatures opposing a parking lot last year — is now the staging ground for SAM's force main construction. Residents worry the arrangement sets a precedent for non-conforming uses on sensitive open space.

Where things stand: Public commenter Susie Perkins told the board that the Harbor District approved at a special meeting in late February allowing SAM to store equipment, vehicles, and trailers on the Burnham Strip. She made four specific requests: agendize the staging for a future SAM meeting with alternatives and timelines; ensure zoning compliance; limit equipment and duration to what is strictly necessary; and ensure any zoning variances are project-specific to prevent precedent.

During the general manager's report, the General Manager thanked the Harbor District for providing the staging area at no cost — saving SAM approximately $130,000 versus the $10,000-per-month contractor alternative: "It was going to cost about $130,000 for a 12-month period and they were kind enough to give it to" SAM free of charge.

Vice Chair Marsh called the public commenter's requests "extremely reasonable," specifically endorsing limited duration and full cleanup afterward. Board Member Barbara Dye asked for a public-facing write-up of the staging plans: "Do we have a write-up that really describes what it — when and where exactly it will be and what will be happening? Because I would like to see the public have that information."

Chair Slater-Carter noted she had recused herself from the Harbor District vote on this matter. The general manager said project details including staging sites are published on SAM's website and were included in the initial study/mitigated negative declaration published in January.

Minor Items

• Consent calendar approved with minutes from Jan. 26 and Feb. 23 meetings. Board Member Paul Nagengast abstained from the Jan. 26 minutes due to absence from that meeting. (Voice vote: 5 yes, 1 abstain.)