M I N U TE S

MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA)

Director's Meeting
7:00 PM, Thursday, April 13, 2017
COUNCIL CHAMBERS
580 PACIFIC STREET, MONTEREY
MONTEREY, CALIFORNIA

Directors Present: Director Dallas, Director Pendergrass, Director Roberson, Director Rubio,
President Kampe
Directors Absent: Director Edelen

Staff Present: Executive Director Cullem, Legal Counsel Freeman, Clerk Romero

CALL TO ORDER

President Kampe called the meeting to order at 7:05pm. He opened public comment for the
closed session, and receiving none adjourned meeting to closed session.

Adjourned to Closed Session

Adjourn to Regular Meeting

President Kampe reconvened to the regular meeting at 7:24pm, and stated there is nothing
reportable from the closed session evaluation of MPRWA contract employees Don Freeman
and Jim Cullem.

ROLL CALL

Director Edelen was absent. Director Roberson arrived at 7:40 pm.

PLEDGE OF ALLEGIANCE

REPORTS FROM BOARD DIRECTORS AND STAFF

None.

PRESENTATIONS

1. Presentation of Certificate of Appreciation to David Pendergrass for Outstanding Service to the

Community as a Founding Member of the Water Authority Kampe
Action: Presented certificate

President Kampe read the certificate of appreciation and presented it to Director Pendergrass
for his many years of support of the MPRWA. President Kampe also acknowledged that Mayor
Pendergrass is the longest serving Mayor in California, serving Sand City for 39 years.

Director Pendergrass said that the MPWRA was formed when the previous water supply project
failed. He has seen MPRWA succeed in many areas, including postponing the Cease and
Desist Order (CDO), the start of Ground Water Replenishment (GWR), and progress toward the
Desal project. He said he is proud of MPRWA for keeping a small staff and low operating
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budget, and that its been an interesting journey.

PUBLIC COMMENTS

David Beech, gave comment on water bills doubling for the Monterey taxpayers. He said
that he and many others in the community feel that the Authority should advocate for the
ratepayers. He suggested that the Mayors have their finance departments request
billing information from California American Water (Cal Am) to find out where the money
is going. He also questioned the Authoritys support of Cal Am and its project.

Vince Sooth, resident of Aguajito Oaks, said he is surprised to discover that the
Authoritys lack of involvement on behalf of the ratepayers. He said he and others
reduced water consumption as requested during drought, and yet his water bill has
doubled. He voiced frustrated that the Authority is supportive of Cal Am despite the
public outrage.

Chuck Check, resident, said he sent a letter to the editor of the newspaper about his
dismay in the increase in water rates. He said Cal Am recently submitted a request to
the CPUC to request an additional $15 million to collect from residents and businesses
for water they don't own and never delivered. He said he calculated that the cost of
water for Cal Am ratepayers will increase to $200 or more per month.

Michael Baer, resident, said that there is more outrage from the public about the high
cost of water in this area. He said that Monterey has some of the highest water bills in
the country.

Mary Kay Norsing, Aguajito Oaks Neighborhood President, said that she is speaking on
behalf of her neighborhood to say that everyone is very upset about the Cal Am water
bill increase and she would like to know what the MPRWA is going to do or not do about
it.

President Kampe explained that water rates are not in the jurisdiction of the MPRWA, but he
hears the concerns of the public. He said he recently met with the President of Cal Am as
public outrage started to erupt over water rate increases and discovered there are many factors
involved in the rate increase. He reported that residents can check their water bill and call Cal
Am if they are being billed for the wrong meter size and request to be billed based on the
residential rate. He continued that the California Public Utilities Commission (CPUC) is the
governing body that reviews public utility rates and those utilities whether owned publicly or
privately have the right to recover costs. He addressed public comment from Mr. Beech stating
that the Authority has had public discussions about the future role of the Authority, and clarified
that the Authority is not prohibited from speaking against Cal Am or other parties in the large
settlement agreement.

Director Roberson said that he will distribute the information for domestic use rates for
residents to all of the Monterey Neighborhood Associations. He concurred with President
Kampe that the CPUC makes the final decision on water rates.

CONSENT AGENDA

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On a motion by Director Rubio, seconded by Director Dallas, and carried by the following vote,
the Monterey Peninsula Regional Water Authority Approved the Consent Agenda:

AYES: 5 DIRECTORS: Dallas, Pendergrass, Roberson, Rubio, Kampe

NOES: 0 DIRECTORS: None
ABSENT: 1 DIRECTORS: Edelen
ABSTAIN: 0 DIRECTORS: None
RECUSED: 0 DIRECTORS: None

2. Approval of Minutes from March 9, 2017 - Romero

Action: Approved

3. Approve and File Authority Checks Through March 31, 2017 - Romero
Action: Approved

4. Adoption of Resolution 2017- 01, Approving an Extension of the Contract for Executive
Director Services with Cullem Management Services LLC at a Price Not-to-Exceed $90,000 for
the Period July 1, 2017 to June 30, 2018 - Cullem
Action: Adopted Resolution 2017-01

5. Adoption of Resolution 2017- 02, Approving Donald G. Freeman as Legal Counsel through
June 30, 2018 and Authorizing the Authority President to Execute a Contract Extension with
Perry Freeman at a Price Not-to-Exceed $30,000 - Cullem
Action: Adopted Resolution 2017-02

6. Receive 3rd Quarter FY 2016-2017 Financial Status Report - Cullem

Action: Received report

***End of Consent Agenda***

AGENDA ITEMS

7. Receive an Update on the Summary Project Schedule for the Monterey Peninsula Water
Supply Project (MPWSP) and the Status of Test Slant Well Operations - Crooks
Action: Received update

Executive Director Cullem reported that since the Cal Am could not be present tonight the most
recent schedule from Cal Am will be provided. He said that the overall schedule is unchanged,
and Cal Am is waiting for the certification of the Environmental Impact Report (EIR) which they
estimate will be approved in about 6 months.

PUBLIC COMMENT

Michael Baer, commented that Cal Am isn't here because they are defending their rate
increase to the CPUC right now. He said that the Cal Am pipe bridge will be more
expensive than originally thought and doesn't think $50 million will cover the cost.

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David Beech, said he is concerned about the cost of the pipe bridge construction over
the highway and that during an earthquake the bridge is a safety hazard. He added that
Cal Trans said they won't have a public hearing regarding the bridge, and that Cal Am is
trying to cut corners.

Director Dallas said he would like another update from Cal Am and Cal Trans regarding the
status of the pipe bridge and to find out if there will be a public hearing.

President Kampe said that there is a governance committee that meets about the cost
implications for the MPWSP and he will request that the pipe bridge costs be agendized at the
next meeting.

8. Receive Copy of Public Water Now (PWN) Letter to the Water Authority and Approve Response
by the Board President Cullem
Action: Created subcommittee to revise and submit letter in response to Public Water
Now

Executive Director Cullem said that the Authority received a letter from Public Water Now
(PWN) and that the Authority should respond to the letter. He also noted that the Directors have
a copy of the letter that Cal Am wrote in response to PWNs letter.

PUBLIC COMMENT

None

Director Roberson suggested changes to the response letter to PWN to make it sound less like
political opinion and concentrate on the facts. President Kampe suggested revising the letter to
say that the slant wells have been operating for over a year instead of 2 years.

Executive Director Cullem pointed out that the issues regarding the DEIR brought up by PWN
would be more appropriate to be addressed the CPUC. President Kampe agreed, and said he
wants to make sure the response to PWN represents factual information in hopes of halting the
spread of misinformation.

Director Roberson made a motion to approve the letter with the revisions suggested.

Director Rubio said that from PWNs perspective they believe that their information is factual,
and suggested changing the wording to get the message across that any efforts, not only
PWNs efforts, to delay the project are detrimental for the community. President Kampe said it
is important to comment on the effort to delay the MPWSP and that it is appropriate for the
Authority to have a political opinion. He expressed concern that the CPUC may grow tired of
the continual delay in securing a water supply project and consequentially may implement
severe water rationing. He added this action may prompt people to stop obstructing the
MPWSP.

President Kampe suggested that he and Director Roberson create a subcommittee to revise
the response letter with the suggestions made and submit to PWN.

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On a motion by Director Roberson, seconded by Director Rubio, and carried by the following
vote, the Monterey Peninsula Regional Water Authority will create a Subcommittee of President
Kampe and Director Roberson to Revise and Submit a Letter in Response to Public Water
Now:

AYES: 5 DIRECTORS: Dallas, Pendergrass, Roberson, Rubio, Kampe

NOES: 0 DIRECTORS: None
ABSENT: 1 DIRECTORS: Edelen
ABSTAIN: 0 DIRECTORS: None
RECUSED: 0 DIRECTORS: None

9. Receive Report, Discuss, and Provide Staff Direction on Scope of Future Work for the Authority
Special Counsel, Adopt Resolution 2017-03, Approve Brownstein Hyatt Farber Schreck as
Special Legal Counsel through June 30, 2018, and Authorize the Authority President to Execute
a Contract Extension at a Price Not-to-Exceed $100,000 - Cullem
Action: Adopted Resolution 201-03

PUBLIC COMMENT

None

Executive Director Cullem reported that in the last 9 months Brownstein Hyatt Farber Schreck
(Russ McGlothlin) has only spent about 1/3 of the Special Legal Counsel (SLC) budget due to
their judicious use of time. He clarified that approving a not to exceed amount of $100, 000 per
year for SLC does not mean the Authority will spend that amount.

President Kampe said that Russ McGlothlin has had a great relationship with MPRWA and
continually goes above and beyond by looking ahead and giving advice on how to proactively
approach issues. He voiced appreciation for Mr. McGlothlins ability to collaborate and work
through the very complicated aspects of the MPWSP. Director Rubio added that Mr. McGlothlin
has navigated the MPRWA through the complex CPUC process.

Executive Director Cullem said that Mr. McGlothlin has been instrumental in steering the large
settling parties to a compromised agreement, from litigating against each other, and moving
forward together despite differences. Don agreed that Mr. McGlothlin is skilled in keeping all the
parties together and staying on track. He added that Mr. McGlothlins fees are a bargain for the
expertise he provides and his leadership role.

Director Roberson asked how the Authority decides when SLC is needed. Executive Director
Cullem responded that the decision is made between himself and the President when it is
important to have his expertise or SLC presence at certain meetings. He added that reviews the
invoices from SLC as they come in, then the amounts are approved by the Authority before
they are paid. Don affirmed that Mr. McGlothlin will be the first to let the Authority know when
his presence isnt needed at meetings and only goes when he and the President feel it's
absolutely necessary.

Director Roberson said he appreciates the estimated budget, and wants to know when legal
expertise is needed versus just planning, and why 90% of the SLC budget is spent on meetings
with the settling parties. Executive Director Cullem responded that legal counsel is needed in
decision making regarding the CPUC, and said that Mr. McGlothlin puts a substantial amount of
preparation into the settlement party meetings and is invaluable in keeping the parties on track.

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President Kampe responded with examples of matters that were settled with the 16 involved
parties with the guidance and expertise of SLC, such as desal plant sizing, federal
requirements for brine discharge, permits, and return water agreements.

On a motion by Director Rubio, seconded by Director Pendergrass, and carried by the following
vote, the Monterey Peninsula Regional Water Authority Adopted Resolution 2017-03, Approving
Brownstein Hyatt Farber Schreck as Special Legal Counsel through June 30, 2018, and
Authorized the Authority President to Execute a Contract Extension at a Price Not-to-Exceed
$100,000:

AYES: 5 DIRECTORS: Dallas, Pendergrass, Roberson, Rubio, Kampe

NOES: 0 DIRECTORS: None
ABSENT: 1 DIRECTORS: Edelen
ABSTAIN: 0 DIRECTORS: None
RECUSED: 0 DIRECTORS: None

10. Receive Report, Discuss, Approve a $10,000 Change Order for SPI, and Provide Staff Direction
on Comments Received on the MPWSP DEIR/DEIS- Cullem
Action: Approved $10,000 change order for SPI; (3-2-1, Dallas and Roberson voting no)

Executive Director Cullem recommended that the Authority approve a change order with SPI
(Separation Processes, Inc) and its sub-consultant Geosyntec to provide the Authority with its
analysis of key portions of the DEIR comments, in order to have an objective perspective from
an independent private consultant. He added that there is enough money in the existing budget
to approve the $10,000 change order for the independent review.

President Kampe asked for clarification that the ground water modeling issues are the most
important to have reviewed. Executive Director Cullem confirmed this and mentioned that SPI
may need to look at other aspects of the DEIR comments as well.

President Kampe explained that the Authority must decide what issues in the DEIR are the
most important to address, and also said he encourages the public to respond with their
concerns about the DEIR they want the Authority to address.

PUBLIC COMMENT

Michael Baer, says he encourages the Authority to keep open eyes and open ears to
the possibility of a different water project. He said that Cal Ams response letter to PWN
states that the slant wells are great and yet have only been operating and pumping
about 65% of the time over the past 2 years. He questioned the reliability of Cal Ams
claims. He said he feels the Authority did not get their money worth from the previous
SPI evaluation.

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David Beech, said that Cal Am isn't putting their own money into their project. He stated
that he submitted comments on the DEIR, and he gave the CPUC an alternate water
supply, which is Aquifer Storage Recovery (ASR) from the Salinas River. He opined that
the present Cal Am project should be terminated soon and taxpayer money will become
stranded costs.

Director Rubio responded to Mr. Beech saying that the suggestion of taking water from the
Salinas River and putting in Seaside Aquifer is prohibited, and the idea would not sit well with
the farmers in the community and it is prohibited, which is why the idea hasnt be considered.

Director Roberson questioned what advantage the Authority has to pay to analyze the
comments on the DEIR, and pointed out that the CPUC should be paying to analyze the DEIR
comments. Executive Director Cullem said the Authority must decide how much technical input
they want to have on the MPWSP. President Kampe reiterated that the CPUC will hire their
own experts to analyze all the comments, but emphasized that there is a need for the Authority
to engage Marina Coast Water District in dialogue regarding their objection to slant wells, as
well as to establish common ground. He added that analyzing the DEIR comments is important
in order to address the publics concern about the slant well feasibility, water quality, plant
sizing, as well as evaluating other sources of water aside from the desal plant. Further,
President Kampe stated that the Authority should evaluate the DEIR comments is to consider
whether the MPWSP should continue to be supported, if it is financeable, if there are potential
lawsuits over water rights, and to stay on top of the progress of the project.

Director Rubio said that Marina Coast Water District believes that the desal plant sizing is too
large, however he envisions a water supply solution that will last for future generations and so
far there are no other viable alternatives to the MPWSP. He added that the Authority should
take a technical look at the DEIR comments in order to remain informed on the MPWSP and
continue to respond to the public and to Cal Am. He said the analysis by SPI is needed to
understand the issues that Marina Coast has with the MPWSP, and if nothing else will provide
information to the public.

Director Dallas said he would like to hear Marina Coast Water Districts evaluation of the DEIR
instead of continuing to spend money to review the comments, and Director Roberson agreed.
Director Pendergrass said the mission of the Authority is to have a diversified portfolio
approach to the water supply, and already two out of three water projects have been
successful: Ground Water Replenishment and Aquifer Storage Recovery. He reiterated that it's
important to make sure the third project, the desal plant, is successful and not let it fail as
projects have in the past.

Director Roberson remarked that spending money on a SPI analysis will have no effect on the
CPUCs decision. He also commented that Peoples Moss Landing Project and Deep Water
Desal would need to use Cal Ams infrastructure for their projects to be successful.

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On a motion by Director Rubio, seconded by Director Pendergrass, and carried by the following
vote, the Monterey Peninsula Regional Water Authority Approved a $10,000 Change Order for
SPI to Provide Analysis of Comments Received on the MPWSP DEIR/DEIS:

AYES: 3 DIRECTORS: Pendergrass, Rubio, Kampe

NOES: 2 DIRECTORS: Dallas, Roberson
ABSENT: 1 DIRECTORS: Edelen
ABSTAIN: 0 DIRECTORS: None
RECUSED: 0 DIRECTORS: None

ADJOURNMENT

President Kampe adjourned the meeting at 9:17pm.

ATTEST:

Nova Romero, Clerk of the Authority MPRWA President

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