Agenda

Monterey Peninsula Regional Water Authority (MPRWA)

Regular Meeting

5:30 PM, Thursday, March 27, 2014
Seaside City Hall
440 Harcourt Ave
Seaside, California


ROLL CALL

PLEDGE OF ALLEGIANCE

REPORTS FROM BOARD DIRECTORS AND STAFF

PUBLIC COMMENTS
PUBLIC COMMENTS allows you, the public, to speak for a maximum of three minutes on any
subject which is within the jurisdiction of the MPRWA and which is not on the agenda. Any person
or group desiring to bring an item to the attention of the Authority may do so by addressing the
Authority during Public Comments or by addressing a letter of explanation to: MPRWA, Attn:
Monterey City Clerk, 580 Pacific St, Monterey, CA 93940. The appropriate staff person will contact
the sender concerning the details.

AGENDA ITEMS

1. Consider Taking A Position on Monterey Peninsula Water Management District Measure
"O" (Discussion/Action) - Staff

ADJOURNMENT




The Monterey Peninsula Regional Water Authority is committed to include the disabled in all of
its services, programs and activities. For disabled access, dial 711 to use the California Relay
Service (CRS) to speak to staff at the Monterey City Clerks Office, the Principal Office of the
Authority. CRS offers free text-to-speech, speech-to-speech, and Spanish-language services
24 hours a day, 7 days a week. If you require a hearing amplification device to attend a
meeting, dial 711 to use CRS to talk to staff at the Monterey City Clerks Office at
(831) 646-3935 to coordinate use of a device or for information on an agenda.

Agenda related writings or documents provided to the MPRWA are available for public
inspection during the meeting or may be requested from the Monterey City Clerks Office at 580
Pacific St, Room 6, Monterey, CA 93940. This agenda is posted in compliance with California
Government Code Section 54954.2(a) or Section 54956.


Monterey Peninsula Regional Water Authority
Agenda Report

Date: March 27, 2014
Item No: 1.



06/12
FROM: Executive Director Cullem


SUBJECT: Consider Taking A Position on Monterey Peninsula Water Management District
Measure "O" (Discussion/Action)

RECOMMENDATION:
It is recommended that the Monterey Peninsula Regional Water Authority (MPRWA) discuss,
revise and/or vote on Resolution 2014-02 which pertains to Measure O.


DISCUSSION:
At its meeting of March 13, 2014, the Water Authority discussed the subject of the acquisition of
Cal Am assets by a public agency, in particular, whether or not the Authority wanted to
commission a study of the issue in advance of a decision on taking a position on Measure O
(attached?????) which will be before the voters on June 3, 2014.
After much public testimony and discussion, the Water Authority concluded the issue to be
appropriate for its consideration in light of section 2.2 of the Joint Exercise of Powers
Agreement because of the measures potential impact upon the timely completion of the
Monterey Peninsula Water Supply Project (MPWSP). Furthermore, the Authority determined
that there was insufficient time to complete a study and that the members of the Authority had
sufficient knowledge of the issue to enable them to take a position on Measure O.
The Water Authority considers the MPWSP to be the best option available to satisfy State Water
Resources Control Board Cease and Desist Order CDO 2009-60, which requires Cal-Am to
reduce its water extraction from the Carmel River by two-thirds no later than December 31,
2016.
The Water Authority considered the two most pertinent arguments in favor of Measure O,
namely an assumed lower cost of water to ratepayers, and more responsive and transparent
governance expected with a publically owned water agency.
The Authority also considered the two most significant arguments against Measure O, namely,
now is not the time, and Cal Am has indicated its assets are not for sale.
During its discussions on March 3
rd
, the Authority noted that it is not opposed to the eventual
public ownership of Cal-Am assets, however now is a particularly bad time to force the issue.
MPRWA Meeting, 3/27/2014 , tem No. 1., tem Page 1, Packet Page 1



The Community is currently seeking a two-year extension of the CDO deadline. Unfortunately,
Measure O may set up a costly and divisive confrontation between and amongst the various
private and governmental groups that labored last year to craft the two Settlement Agreements
now before the CPUC.
Unfortunately, the CPUC and the State Water Resources Control Agency, in light of their
sensitivity to any implication that public or political support for the MPWSP might be
fragmenting, could easily use Measure O as an excuse not to approve the CDO deadline
extension, arguing that the Peninsula still cannot come to agreement on a water solution.
The Authority also noted that a takeover of Cal Am assets, especially if contested, will take
years to accomplish. In the interim, a contested takeover is likely to negatively impact bond
funding in the commercial markets, significantly increasing the costs of financing the Desal
facilities.
Following its deliberations on March 3
rd
, the Water Authority expressed opposition to Measure
O, particularly because of its bad timing, and directed staff to return the issue for a Board
decision at its next meeting.
ATTACHMENT:
1. DRAFT Resolution 2014-02
2. Full Text of Measure O
3. Public Comment Received
MPRWA Meeting, 3/27/2014 , tem No. 1., tem Page 2, Packet Page 2
MPRWA RESOLUTION NO. 14-___

A RESOLUTION OF THE
MONTEREY PENINSULA REGIONAL WATER AUTHORITY
EXPRESSING OPPOSITION TO MEASURE O, THE MONTEREY PENINSULA
WATER SYSTEM LOCAL OWNERSHIP AND COST SAVINGS INITIATIVE

WHEREAS, the purpose of the Monterey Peninsula Regional Water Authority
(MPRWA) is to ensure the timely development, financing, construction, operation,
repair, and maintenance of one or more Water Projects and to ensure governance that
is directly accountable to the water users; and

WHEREAS, timely development means that a safe and reliable supply of water is
available to replace water supplies lost because of the Seaside Basin Decision, and due
to State Water Resources Control Board WR Order 2009-60 which requires California
American Water Company (Cal Am) to reduce its pumping from the Carmel River Basin
by approximately two thirds (2/3) by December 31, 2016; and

WHEREAS, the MPRWA has actively participated in crafting delicate
compromises in the settlement agreements between and amongst numerous
interveners in the California Public Utilities Commission (CPUC) consideration of Cal-
Am application A.12-04-019 which proposes to build a Monterey Peninsula Water
Supply Project (MPWSP) including a desalination plant (desal); and

WHEREAS, regulatory and legal restraints preclude the completion on the
MPWSP by December 31, 2016 necessitating an extension of the Cease and Desist
order (CDO) deadline in order to avoid devastating State-mandated water rationing that
is projected to result in the loss of approximately $1 billion in economic activity and 6000
jobs within Monterey County; and

WHEREAS, the State Water Resources Board staff has expressed its
unwillingness to support an extension unless the Monterey Peninsula community,
residents, businesses, agencies, and Cal Am remain united and committed to the
MPWSP since it is the best opportunity the community has ever had to secure timely
development of a water project; and

WHEREAS, Senate Bill (SB) 936, special legislation to greatly reduce costs to
the ratepayers by halving Cal Ams equity position in the desal plant and providing
public funding for the project, is sensitive to any indication that the community is
fragmenting in its support for the MPWSP; and

WHEREAS, unity of effort requires the Monterey Peninsula Water Management
District (MPWMD) and Cal Am to work closely together, especially through the
Governance Committee, to secure project approvals and funding, and to ensure
governance that is directly accountable to the ratepayers; and

MPRWA Meeting, 3/27/2014 , tem No. 1., tem Page 3, Packet Page 3
WHEREAS, Measure O provides no methodology for timely development of a
water project, provides no source of financing for a takeover of Cal Ams system,
speculates that a takeover is certain to result in less expensive water and fails to allow
ratepayers an opportunity to vote for or against a takeover once actual costs have been
established; and

WHEREAS, Measure Os timing could not have been worse as it is a divisive
issue that may disrupt the MPWSP settlement process and poses a high probability of
unraveling cooperation between the MPWMD and Cal Am, undermining the
Governance Committee, and dividing the community; and

WHEREAS, pursuit of a Cal Am takeover at this critical time is likely to further
convince the State Water Resources Control Board that the Peninsula Cities will never
be able to resolve their water problems making an extension of the December 31, 2016
CDO deadline ever more difficult to obtain; and

WHEREAS, the possible acquisition of Cal Am assets should be pursued in a
less confrontational manner than required by Measure O and initiated only after the
MPWSP is fully operational.

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors of the
MPRWA takes a position opposed to Measure O based upon the findings outlined
above.


PASSED AND ADOPTED BY THE MONTEREY PENINSULA REGIONAL
WATER AUTHORITY this ____day of ____ 2014, by the following vote:


AYES: 0 DIRECTORS:
NOES: 0 DIRECTORS:
ABSENT: 0 DIRECTORS:
ABSTAIN: 0 DIRECTORS:

APPROVED:


ATTEST:




Chuck Della Sala, President



Clerk to the Authority


MPRWA Meeting, 3/27/2014 , tem No. 1., tem Page 4, Packet Page 4
DISCLAIMER: THIS IS THE TEXT SUBMITTED BY PUBLIC WATER NOW TO
THE MONTEREY COUNTY ELECTIONS DEPARTMENT AND DOWNLOADED
FROM THE PUBLIC WATER NOW WEBSITE.
TITLE: THE MONTEREY PENINSULA WATER
SERVICE LOCAL OWNERSHIP AND COST
SAVINGS INITIATIVE
To the Board of Directors of the Monterey Peninsula Water
Management District:
We, the undersigned, registered and qualified voters of the Monterey
Peninsula Water Management District (District), present to the Board
of Directors this petition and request that the following proposed
Ordinance (Measure) be submitted to the registered and qualified
voters of the District for their adoption or rejection at the earliest regular
or special election for which it qualifies pursuant to Section 1405 of the
California Elections Code. The full text of the Measure is as follows:
The people of the Monterey Peninsula Water Management District do
ordain as follows:
Title: The Monterey Peninsula Water System Local Ownership and
Cost Savings Initiative
Section IName
This Measure shall be designated as the Monterey Peninsula Water
System Local Ownership and Cost Savings Initiative.
Section IIPurpose
MPRWA Meeting, 3/27/2014 , tem No. 1., tem Page 5, Packet Page 5
The purpose of the Measure is to ensure the long-term sustainability,
reliability, cost-effectiveness and quality of water service within the
Monterey Peninsula Water Management District as a whole, to lower
the cost of monthly service to rate-payers, to promote sound water
management measures, and to establish public ownership of water
system assets, by establishing regulations requiring the District to take
affirmative action, to the extent financially feasible, to acquire the water
system assets owned and operated by the California American Water
Company that currently provide water service to the District and its
ratepayers.
Section IIIFindings
1. Water service in the Monterey Peninsula is currently supplied by
the California American Water Company (Cal Am), a private, investor-
owned utility that acquired the current water system beginning in 1966.
2. Due in substantial part to Cal Ams long history of failure in
responsibly developing and competently managing the water resources
under its control, the Monterey Peninsula currently suffers from an
insufficient and unreliable supply of potable water. In 1995, for
example, the State Water Resources Control Board ordered Cal Am to
cease diverting water from the Carmel River after years of irresponsible
over-pumping and unlawful diversions. Likewise, in 2007 a State
Superior Court ordered Cal Am to restrict its pumping from the Seaside
Groundwater Basin in an effort to protect the aquifer from over-drafting
by Cal Am. Moreover, under Cal Ams ownership and management, the
San Clemente Dam water storage facility has deteriorated to the extent
that it is now useless and will be removed at the ratepayers expense.
3. Cal Am has initiated three new water supply projects since the
1990s, all of which have failed, most recently in 2011. As a result,
stranded costs in excess of $35 million have been incurred and
approved by the California Public Utilities Commission (CPUC) to be
MPRWA Meeting, 3/27/2014 , tem No. 1., tem Page 6, Packet Page 6
passed on to current ratepayers. None of these stranded costs have
been assumed by Cal Am or its investors.
4. Cal Am ratepayers have historically endured paying rates for
water service that far exceed the state average. In fact, Cal Ams rates
are among the highest in the state for service populations of
comparable size. They are also extremely unpredictable: from mid-
2010 to mid-2013 Cal Am added new water charges over 25 times, an
average of once every 45 days. Over the same period, Tier 2 and Tier
3 residential rates increased 117 percent, or about 35 percent each
year. Rapidly changing and increasing rates alarm ratepayers, with no
relief in sight.
5. As a result of CPUC regulatory practices, Cal Am can only
increase its profits based on how much money it invests. This
investment return-based model inherently shortchanges ratepayers by
giving Cal Am little or no incentive to pursue viable non-revenue
generating alternatives to develop or enhance water supply in Monterey
Peninsula.
6. Approximately 85 percent of the nations water service
consumers receive their water from public water providers. According
to a national survey conducted by Food and Water Watch, customers of
for-profit water companies pay on average 33 percent higher rates for
service than customers of public providers.
7. The ratepayers overriding urgent need for new reliable and
affordable water sources is best met through the Monterey Peninsula
Water Management District (District), whose primary duty is to benefit
the citizens of the District, and not the profitability each project
represents to the investors of a for-profit water monopoly.
8. The District was established in 1977 by the Monterey Peninsula
Water Management District Law (District Law), which charges the
District with the integrated management of the ground and surface
MPRWA Meeting, 3/27/2014 , tem No. 1., tem Page 7, Packet Page 7
water resources in the Monterey Peninsula area. The District retains
broad powers under the District Law to do any and every lawful act
necessary in order that sufficient water may be available for the present
or future beneficial use or uses of the lands or inhabitants within the
district.
9. The District Law likewise grants the District broad powers to
acquire public or private water systems necessary or proper to carry out
the purposes of the Law, and expressly grants the District the power of
eminent domain to do so.
10. The voters of the District assert that the District should, as soon
as practicable and to the extent permitted by law, pursue the acquisition
of Cal Ams water system assets and infrastructure in order to deliver
maximum value to ratepayers in perpetuity. Such public ownership of
the water system not only will remove Cal Ams current for-profit,
investor-driven bias, but will also eliminate the excessive fees, costly
procedures, and burdensome jurisdictional control of the CPUC over
water service on the Monterey Peninsula.
Section IV An Ordinance of the Monterey Peninsula Water
Management District.
The following Rule 19.8 shall be added to the Monterey Peninsula
Water Management District, Rules and Regulations, Regulation I,
General Provisions:
Rule 19.8. Policy of Pursuing Public Ownership of Monterey Peninsula
Water System
A. It shall be the policy of the District to establish and maintain
public ownership of all water delivery system assets and infrastructure
within its territory, and therefore to acquire, if economically feasible,
preferably through negotiation but through eminent domain if necessary,
all assets of Cal Am, or any successor in interest to Cal Am, within the
MPRWA Meeting, 3/27/2014 , tem No. 1., tem Page 8, Packet Page 8
Districts territory, as soon as reasonably practicable for the benefit of
the District as a whole.
B. In furtherance of this policy the General Manager shall, within
nine (9) months of the effective date of this Rule 19.8, complete and
submit to the Board of Directors for acceptance, a Feasibility Analysis
and Acquisition Plan for the acquisition, long-term ownership, and
management by the Monterey Peninsula Water Management District of
Cal Ams assets that provide water service within the District that
together develop, store, transmit and deliver potable water to all users
within District, including but not limited to the following assets: extraction
wells; injection wells; pump stations; piping; storage tanks and
reservoirs; meters and other connections; administrative offices and
support buildings; rolling vehicle stock; maintenance and operational
equipment (hereafter collectively referred to as the Water System
Assets).
The Feasibility Analysis and Acquisition Plan shall include, but
not necessarily be limited to, the following components.
i. An estimate of the costs of acquisition of the Water
System Assets based on an appraisal of their fair market value, together
with any associated legal and administrative costs.
ii. A projection of the annual capital and operating costs,
revenues, and savings to ratepayers that would result from the Districts
ownership and management of the Water System Assets.
iii. An identification of all potential sources of funds
sufficient to acquire the Water System Assets at the estimated
acquisition cost, including revenue bonds, notes, levies, fees, taxes, and
any other source that the District is authorized by law to procure.
iv. A statement, based on findings of fact set forth in the
body of the Feasibility Analysis and Acquisition Plan, of whether the
MPRWA Meeting, 3/27/2014 , tem No. 1., tem Page 9, Packet Page 9
ratepayers within the District as a whole will realize a long-term net
benefit from the Districts acquisition of the Water System Assets, both
in terms of cost-effectiveness and in terms of long term service
reliability.
v. A determination, based on the appraised fair market
value of the Water System Assets reported in the Feasibility Analysis
and Acquisition Plan, of the total amount that would constitute just
compensation for the Water System Assets if acquired by the District.
vi. A list of tasks or steps that the District, acting through its
Board, the General Manager or other staff or consultants, would be
required by law to take in order to acquire the Water Systems Assets
through the exercise of its eminent domain power or otherwise, together
with an estimate of the amount of time required to carry out each task or
step, as well as the associated administrative costs associated with the
carrying out each task or step.
C. If the final accepted Feasibility Analysis and Acquisition Plan
concludes that the acquisition and long-term management of the Water
System Assets by the Monterey Peninsula Water Management District
is both feasible and beneficial to ratepayers within the District as a
whole, then the Board shall, as soon as practicable, take all necessary
and proper actions consistent with its powers under the District Law, the
Eminent Domain Law, and any other applicable law or regulation, for the
Monterey Peninsula Water Management District to acquire the Water
System Assets through a negotiated purchase and sale agreement if
possible, or otherwise through eminent domain.
Section V Modification Only By Vote of the People
No provision of this Measure shall be changed, amended, or repealed
except by a vote of the People.
Section VI Effective Date; Application.
MPRWA Meeting, 3/27/2014 , tem No. 1., tem Page 10, Packet Page 10
The provisions of this Measure shall take effect immediately upon
certification of its passage by the appropriate Election Official. Pending
actions or proposals otherwise governed by this Initiative that have been
initiated by the Board of Directors of the District, but that are not yet final
as of the effective date, or that are the subject of pending legal
challenge, shall be subject to the provisions of this Measure.
Section VII Severability
This Measure shall be broadly construed in order to achieve the
purposes stated in this Measure. If any section, sub-section, sentence,
clause, phrase, part, or portion of this Measure is held to be invalid or
unconstitutional by a final judgment of a court of competent jurisdiction,
such decision shall not affect the validity of the remaining portions of the
Measure. The voters of the Monterey Peninsula Water Management
District hereby declare that this Measure, and each section, sub-section,
sentence, clause, phrase, part, or portion thereof would have been
adopted or passed even if one or more sections, sub-sections,
sentences, clauses, phrases, parts, or portions are declared invalid or
unconstitutional. If any provision of this Measure is held invalid as
applied to any person or circumstance, such invalidity shall not affect
any application of this Measure that can be given effect without the
invalid application.
Section VIII Conflicting Ballot Measures
In the event that this Measure and another measure or measures
relating to the same or similar subject matter shall appear on the same
election ballot, the provisions of the other measures shall be deemed in
conflict with this measure. In the event that this Measure shall receive a
greater number of affirmative votes, the provisions of this Measure shall
prevail in their entirety, and the provisions of the other measure or
measures shall be null and void.

MPRWA Meeting, 3/27/2014 , tem No. 1., tem Page 11, Packet Page 11
Page 1 of 1
Lesley Milton - Public Water Now
From: Sherna Stewart <shernalstewart@gmail.com>
To: <lmilton@ci.seaside.ca.us>
Date: 3/17/2014 10:47 PM
Subject: Public Water Now
bear Lesley Milton.
I was unable to attend the recent Regional Water authority meeting, but I
want to speak for the Public Water Now initiative. I think it is in the best long
term interest of the citizens of Monterey County. Mayors may have a short
term goal that is not really in the best interests of all their constituents.
Though I don't question their sincerity, I'm not sure of their information
sources. Thank you.
Sherna Stewart, Monterey
City Clerk's Office
M A R 2 1
2 0 1 4
Received
file://CADocuments and Settings\lmilton\Local Settings\TempAPoTowise\53277B9BC0SI... 3/24/2014
MPRWA Meeting, 3/27/2014 , tem No. 1., tem Page 12, Packet Page 12
From:

Florence Roberts <floshie95@gmail.com >

To:

<Imilton@ci.seaside.ca.us >
Date:

3/21/2014 1:26 PM
Subject:

GOOD CONSCIENCE
Dear Mayor Pendergrass,
I want to just let you know that I received a water bill of $9000.00 last Sept. Can YOU imagine getting a
bill like that? I live in a small home by myself. It took me 6 months to get this figured out. How can you
NOT support Measure 0 in good conscience? You were elected BY the public. I fought to get this bill
figured out. This caused me so much stress. I ask you again, What would YOU do and what SHOULD
you do if you got a bill like that? I WONDER HOW STRESSED OUT YOU WOULD BE!
City Clerk's Office
M A R 2 1 2 0 1 4
Received
MPRWA Meeting, 3/27/2014 , tem No. 1., tem Page 13, Packet Page 13