M I N U TE S MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA) Regular Meeting 7:00 PM, Thursday, July 11, 2013 CITY

COUNCIL CHAMBER 580 PACIFIC STREET MONTEREY, CALIFORNIA Directors Present: Directors Absent: Staff Present: ROLL CALL President Della Sala called the meeting to order at 7:00 p.m. PLEDGE OF ALLEGIANCE REPORTS FROM BOARD DIRECTORS AND STAFF President Della Sala invited reports from Directors and Staff. Executive Director Cullem reported about recent meetings to establish a Power Sales Agreement and indicated that both parties are moving effectively toward a Memorandum of Understanding. He noted that it could take up to a year for a proper needs analysis to be done to know if the requirements can be met. Mr. Cullem reported that no projected costs are available at this time and that any cost figure would be based on assumptions. He also reported that there is a pending tour scheduled to facilities in Sothern California and hopes that the attending Directors and staff will gain beneficial knowledge from the trip. Lastly he spoke to a recent meeting he attended at the Water Management District Public Outreach Committee for coordinating public outreach efforts to achieve economies of scale, and suggested the Authority should move forward with an independent consultant who will coordinate with WMD and PCA and Authority so the message of the authority is clear. Vice President Burnett reported that the successful operation of the test well is a critical path issue and spoke to a letter received from the Department of Fish and Wildlife. He noted in order for the test well to remain on schedule, there is very little time for issues or delay. Rich Svinland, Chief Engineer for Cal Am updated the Authority on the status of the test well. submitted applications and noted that the new proposed location on the active Semex mining area eliminated the need for many permits. He indicated that they are still restricted to building in the non nesting season but are currently on track. On parallel path, Cal Am has proposed a series of bore holes, which were requested by the State Water Resources Control Board and intervening parties. A total of 12 bore holes are proposed and will be used for creating a 3-d model of the underground aquatard. Some sites are controversial and are trying to work through the details. Vice President Burnett thanked Mr. Svinland for his report and his efforts. Burnett, Edelen, Kampe, Pendergrass, Rubio, Della Sala None Legal Counsel, Executive Director, Clerk

MPRWA Minutes PUBLIC COMMENTS

Thursday, July 11, 2013

President Della Sala open the floor to public comment. Tom Rowley, representing the Monterey Peninsula Taxpayers Association indicated inaccurate information was distributed by the Monterey Peninsula Water Management District regarding the water supply fee. He expressed concern that working with the District could impact the Authority's credibility and reputation. He then distributed a copy of an article published on July 5, 2013 in the Pacific Grove Times. Nelson Vega requested an update regarding the CPUC settlement agreement and requested opportunities for the public to remain involved. David Lifland expressed three major concerns 1) sizing of the plant 2) holding capacity if the plants go offline and 3) if the public has contributed over 75% equity in the plant he questioned why there will be no public ownership. Having no additional requests to speak, President Della Sala closed public comment. Vice President Burnett responded to Mr. Vega's question regarding the CPUC process and expressed due to CPUC rules cannot give detailed information, but negotiations have been going well. Second, the developed our policy position statement and his efforts are advocating for a settlement agreement that is consistent with the position statement. When the settlement is made public, the public and review and assess if he has been successful. He urged the public to pay close attention to the position statement and direction as tonight is the opportunity to give comments and engage as it is the guiding document in the settlement discussions. President Della Sala spoke to Mr. Liflands question regarding facility size and reiterated that the Authority is proposing a portfolio project approach and will not rely upon only one water solution project. He then said that the Authority has been working in good faith with Cal Am but it is not the Authority's position own the facility, but only to do what is necessary to deliver the lowest cost water possible. Rich Svinland, Director of Engineering for Cal Am responded to Mr. Liflands question regarding holding capacity and stated that there is 21 million gallons of water storage currently available, and Cal am has additional water tanks located around the peninsula in addition to the Seaside basin aquifer. He assured the public that there are several days of water in reserve in the event of power outage and could potentially supply water for up to a month if necessary. Director Rubio spoke to planning for a larger facility in the event of drought conditions, especially until the reliability of GWR is confirmed. He encouraged the physical plant to be sized to accommodate the 9,000 acre feet, even if its reduced later as other projects come online. President Della Sala shared that the Architectural students from Cal Poly provided the idea of expandable capacity of the facility in the future and Cal Am might be considering. APPROVAL OF MINUTES 1. June 13, 2013 Action: Approved On a motion by Director Kampe seconded by Director Burnett, and carried by the following vote, the Monterey Peninsula Regional Water Authority approved the minutes of June 13, 2013: AYES: NOES: ABSENT: ABSTAIN: RECUSED: 6 0 0 0 0 DIRECTORS: Burnett, Edelen, Kampe, Pendergrass, Rubio, Della Sala DIRECTORS: None DIRECTORS: None DIRECTORS: None DIRECTORS: None Monterey Peninsula Regional Water Authority Regular Meeting Minutes - Thursday, July 11, 2013 2

MPRWA Minutes AGENDA ITEMS 2.

Thursday, July 11, 2013

Receive Presentation, Discuss and Provide Direction to Staff Regarding the City of Salinas' Efforts to Bring Additional Waste Water to the Monterey Regional Pollution Control Agency for Use in the Ground Water Replenishment Project Action: Approved The City of Salinas staff presented to the Authority their efforts and future plans to collect additional waste water from various city locations for treatment at the Monterey Regional water Pollution Control Agency. Mayor Joe Gunter, Public Works Director Gary Peterson, and City Manager Ray Corpus all presented. Mayor Joe Gunter began the presentation by acknowledging that approximately 10, 000 residents of the City of Salinas work on the Monterey Peninsula and that a water shortage will impact the economic vitality of the peninsula which will also directly impact the City of Salinas so they are looking for ways to help. Mr. Peterson noted that all of the future plans for the City cannot come to fruition without water and that there up to a total of 9,950 acre feet of water available per year for GWR. He noted the following sources available for source water: Salinas Industrial waste water Blanco drain Storm water Reclamation ditch Secondary affluent

The City is rethinking how water moves through the community and what can be come of it. The new process can an help address storm water needs, improve the processing of waste water, create open space, remove chemicals from the environment and ultimately be able to put cleaner water back into the Salinas river. Additional projected benefits for the project: jobs protection and creation, revenue generation, reinvesting in facilities, keeping rates down for the produce producers, NPDS Permit has enormous amount of funding capital, good will, environmental stewardship, resource management and balanced relationships. City Manager Ray Corpus then spoke to a new project the City of Salinas has, in partnership with Deep Water Desal. The project would be water reuse, recycling and a new water supply. The project is estimated to generate upwards of 25,000 acre feet per year at a projected water cost below $2,000 per acre foot. The City is also partnering with DWD for a power supply option as DWD is also building data centers with a campus in Moss Landing regions which will require affordable power costs. President Della Sala thanked the City of Salinas for the presentation and restated that the Authority was formed to find a solution to the water supply, but also to form a cooperative body and that he welcomes th0e City of Salinas cooperative efforts. He said the projects appear to be a win-win solution and is excited for the opportunity to help the Peninsula as well as the Salinas valley.

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MPRWA Minutes

Thursday, July 11, 2013

Director Rubio indicated that all were opportunities to be explored. Director Edelen thanked the presenters for their cooperative spirit. Director Pendergrass said it was great that all were proposing working together ,welcomes their vision and is in support of the proposed plan. He requested Authority to encourage their efforts. Director Burnett commended the exploration and particularly the storm water efforts, as it is a high priority from the State level. He suggested that the Authority follow Salinas lead on storm water and make it a higher priority. Director Kampe spoke to the presentation and talked to the water reclamation and the urban environmental accords to be held in San Antonio, TX. President Della Sala opened the item to public comment. Nelson Vega questioned how the State Water Resources Control Board would regulate the reclaimed water and requested the City of Salinas to allow the Peninsula to keep the 10 af of water that it provides to the Salinas region. Having no additional requests to speak, public comment was closed. Public Works Director Peterson responded by discussing the SESIP project, which takes processed affluent and uses for irrigation as well as to keep salt water out of the basin. He said that the growers are in control of that water and Salinas thinks they can help offset that shortage of water that is due the growers. We need to make water available for that. Don't have 10K acre feet of water. The affluent is only processed in one location at the MRWPCA, which is very costly. 3. Election of Officers for Fiscal Year 2013-14 Action: Approved Director Pendergrass nominated Director Della for the position of President and was seconded by Director Burnett. On motion and carried by the following vote, the Monterey Peninsula Regional Water Authority elected Director Della Sala to Be President for Fiscal Year 2013-14 : AYES: NOES: ABSENT: ABSTAIN: RECUSED: 6 0 0 0 0 DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: Burnett, Edelen, Kampe, Pendergrass, Rubio, Della Sala None None None None

Director Della Sala nominated Director Burnett for the position of Vice President and TAC Chair and was seconded by Directors Kampe and Pendergrass. On motion and carried by the following vote, the Monterey Peninsula Regional Water Authority elected Director Burnett to be Vice President for Fiscal Year 2013-14 : AYES: NOES: ABSENT: ABSTAIN: RECUSED: 6 0 0 0 0 DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: Burnett, Edelen, Kampe, Pendergrass, Rubio, Della Sala None None None None

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MPRWA Minutes

Thursday, July 11, 2013

Director Rubio nominated Director Edelen for the position of Treasurer and was seconded by Director Kampe. On motion and carried by the following vote, the Monterey Peninsula Regional Water Authority elected Director Edelen to be Treasurer for Fiscal Year 2013-14 : AYES: NOES: ABSENT: ABSTAIN: RECUSED: 6 0 0 0 0 DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: Burnett, Edelen, Kampe, Pendergrass, Rubio, Della Sala None None None None

Director Pendergrass nominated Director Rubio for the position of Secretary and was seconded by Director Burnett. On motion and carried by the following vote, the Monterey Peninsula Regional Water Authority elected Director Rubio to be Secretary for Fiscal Year 2013-14 : AYES: NOES: ABSENT: ABSTAIN: RECUSED: 4. 6 0 0 0 0 DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: Burnett, Edelen, Kampe, Pendergrass, Rubio, Della Sala None None None None

Receive, Discuss, and Approve Revised Authority Position Statement and Provide Directions to Staff on Outreach Opportunities for the Position Statement Action: Approved Executive Director Cullem spoke to the changes in the position statement and VP Burnett also mentioned the reorganization of the reordering of the conditions into three categories as described in the copy provided in the packet. President Della Sala suggested minor edits, including one formatting issue. Director Rubio requested that the statement from the last page which reads, "The position is adopted in advance of the EIR. The authority has requested that the EIR evaluate a full range of plant sizes up to and include the size necessary for full general plant build out." be moved to the first page of the document. Suggested by Legal Counsel Freeman, Director Rubio then requested a second amendment that Cal Ams condition of support #1 to insert the words Based on current information before the size of the facility is listed. President Della Sala opened the item to public comment. Tom Rowley indicated that the document is a great piece of work and will be useful in communicating the Authoritys position, when many of the communities are un informed. He noted that there is confusion among the general population about the current issues and requested that this document be reviewed periodically. He then spoke concerning the EIR process and expressed concern moving forward without a finalized EIR and urged the Directors to remain focused on the lowest cost project. and indicated that it must be communicated to the public that the Authority is actively putting constrains on Cal am to reduce the cost to the rate payers. Nelson Vega suggested that the other two projects be eliminated from the document because they are no longer active in the process. He also encouraged the Authority to indicate support for the larger size facility unless another project can provide water at a reduced cost. Monterey Peninsula Regional Water Authority Regular Meeting Minutes - Thursday, July 11, 2013 5

MPRWA Minutes

Thursday, July 11, 2013

David Lifland requested the document to reference the total amount of water that is needed from all the projects. Having no further requests to speak, public comment was closed. President Della Sala responded to comments about lowest cost and indicated that cost are going to continue to change and the Authority needs to ensure they are moving on all fronts to achieve the timeline. Director Kampe indicated that it is a good workable draft, but had three concerns. 1) It should be expressed that if in sometime in the future another project proves to be viable, then we are willing to address and support the second 2) Future needs: the statement that we have for future needs are truly not adequate fo our future needs. Locally produced growth models and these plans do not account for those plans. This moment is transitory and language should be used that is straight forward for future growth needs as they are determined for state planning purposes. 3) The pricing - would like to make decisions based on the most economic outcome however cost comparisons are not known because outcomes are not known , therefore the Authority should chose the project that has the best probability of supplying for the needs of the community. Director Burnett responded to comments about adequate sizing of the facility and indicated that within the document, requesting approximately 1700 acre foot of water above and beyond the current demand 500 acre foot for economic rebound and 1200 acre foot for lots of record, almost a 10% increase from the current supply. Director Pendergrass spoke in support of the progress and choices the Authority has made indicating the importance of having a project to show the State Water Resources Control Board. Direct Rubio spoke again to the general policy statement. Suggested to ask the TAC or a subcommittee to see which items are transferable to other projects and requested they be more generic. Director Burnett concluded by indicating this is a working document and by the end of the month there will be more clarify after the settlement is finalized and, if necessary, we can take up the item again. On a Motion by Director Kampe, and Seconded by Director Rubio, and carried by the following vote, the Monterey Peninsula Regional Water Authority adopted the Policy Statement as amended to include the following two substantial changes: 1) Move the statement from the last page which reads, "The position is adopted in advance of the EIR. The authority has requested that the EIR evaluate a full range of plant sizes up to and include the size necessary for full general plant build out." to the first page of the document. 2) Under Cal Ams condition of support #1, insert the words Based on current information before the size of the facility is listed. The Directors Discuss the motion. Director Pendergrass noted that this document is not final and could again be revised. He is concerned that if too many conditions are imposed the project might fail. Motion carries unanimously. Monterey Peninsula Regional Water Authority Regular Meeting Minutes - Thursday, July 11, 2013 6

MPRWA Minutes AYES: NOES: ABSENT: ABSTAIN: RECUSED: 6 0 0 0 0 DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS:

Thursday, July 11, 2013 Burnett, Edelen, Kampe, Pendergrass Rubio, Della Sala None None None None

The Directors then discussed outreach opportunities for this document and ways it could be modified for distribution to the public. Director Burnett suggested drafting opinion editorials to the locally circulated newspapers to communicate the Authoritys position and progress made. He suggested the creation of four opinion editorials; 1) 2) 3) 4) Overview that outlines in general what we are trying Financial considerations Governance Permitting and contingency plans

President Della Sala recommended publication after the settlement talks are solidified. Director Burnett offered to draft and bring back to the Authority at the July 25th meeting. President Della Sala opened the item on public outreach for public comment. Sue McCloud indicated that the public would not be able to understand the position statement as is and should be simplified. Suggested making a report card of what the Authority has accomplished, but also include what the impacts will be to the average citizen and rate payer. It will be a way to focus thoughts and to engage on what you are doing for them. Differentiate between the different categories of rate payers. She also suggested having the Mayor of Salinas endorsement as well as the Authoritys. Tom Rowley indicated that any effort to clarify to the rate payers and tax payers what the Authority is trying to do would be beneficial. He also encouraged incorporating how much rides on the environmental process. This may be needed to be repeated in a variety of ways, and it will pay dividends down the road. David Lifland suggested waiting until after the CPUC settlement is completed, but come out with a statement so the public knows where you have brought us. Having no further requests to speak, public comment was closed. The Authority Directors provided direction to staff to draft opinion editorials to include a focus on what it will mean to the rate payer and decisions on how it will be disseminated and bring back on the July 25, 2013 agenda. Director Kampe followed up by saying that he likes the proposal and to be cautious with the message. There is always a temptation to tell people everything we know, but it should provide that which is most directly relevant to the reader. Do not make it a single guest editorial, but a series and pick out the most critical points, elaborate all details in a simple way, then follow up as necessary.

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MPRWA Minutes 5.

Thursday, July 11, 2013

Review, Discuss and Consider Execution of Legal Conflict Waiver Letter to Allow MPRWAs Water Counsel, Brownstein Hyatt Farber Shcreck, LLP, to Represent the City of Carmel-by-theSea with Respect to the Citys Efforts to Acquire Table 13 Water Rights (As Described in SWRCB D. 1632 and Related Subsequent SWRCB Orders) from the Odello Ranch Action: Approved Della Sala introduced the item. Burnett gave a quick background, Mr. Eastwood owns in a trust in Odello Ranch, and have legal rights to 200 acre feet of water and is proposing to make 85 feet of water available to users in the Carmel River Water Shed and noted that water rights can usually be moved within the water shed. Mr. Eastwood had approached Carmel by the Sea for usage but it is a complicated legal process, but the benefit would be that it would potentially make water available before the desal project available, and the water provide would be lower cost water than desal. The water rights themselves could only be used for new usages within that boundary line. City of Carmel recognizes the opportunity, and has sought out Russ McGlothlin, as an expert on water rights, to retain for services to solidify this project. Mr. McGlothlin also works for the City of Seaside and would need waivers from all agencies that he represents. He identified potential areas of conflict, but no conflict actually arises at this time. If one did arise, he would bring it to the agency, depending on the nature of the conflict itself. Mr. Freeman noted that this is not unusual and that only a few legal counsels are specialist in water rights and he is also familiar with regional issues. President Della Sala opened the item to public comment. Tom Rowley spoke about a past opportunity that the City of Monterey had to drill for water. Public comment was then closed. On a motion by Director Edelen, seconded by Director Kampe and carried by the following vote, the Monterey Peninsula Regional Water Authority authorized the Executive Director Jim Cullem sign the waiver of conflict of interest for Russ McGlothlin. Discussion of the motion. Director Rubio indicated that it would not be good to begrudge Carmel the opportunity for water. He spoke in support of the item and in support of Mr. McGlothlins capabilities. Motion passed unanimously AYES: NOES: ABSENT: ABSTAIN: RECUSED: 6 0 0 0 0 DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: Burnett, Edelen, Kampe, Pendergrass Rubio, Della Sala None None None None

6.

Adopt Resolution Memorializing the Approved Fiscal Year 2013-14 Operating Budget Action: Approved President Della Sala opened the item to the public and no requests to speak.

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MPRWA Minutes

Thursday, July 11, 2013

On a motion by Director Kampe, seconded by Director Rubio, and carried by the following vote, the Monterey Peninsula Regional Water Authority adopted Resolution 13-008 memorializing the approved Fiscal Year 2013-14 operating budget: AYES: NOES: ABSENT: ABSTAIN: RECUSED: 6 0 0 0 0 DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: Burnett, Edelen, Kampe, Pendergrass Rubio, Della Sala None None None None

ADJOURN TO CLOSED SESSION 7. Conference with Legal Counsel Existing Litigation, Gov. Code, section 54956.9 California Public Utilities Commission, In the Matter of Application of California-American Water Company (U210W) for Approval of the Monterey Peninsula Water Supply Project and Authorization to Recover All Present and Future Costs in Rates, A.12.04.019, Filed April 23, 2012 Action: Provided Direction to Staff The Authority Directors met in closed session, provided direction to staff and took no action. ADJOURNMENT

ATTEST:

Lesley Milton, Clerk of the Authority

Chuck Della Sala, President

Monterey Peninsula Regional Water Authority Regular Meeting Minutes - Thursday, July 11, 2013 9