Meeting Date:           November 24, 2003                Budgeted: N/A

Program/Line Item No.: N/A

Staff Contact:             David Laredo                         Cost Estimate: N/A


Action on First Reading:  The Board passed Ordinance No. 109 on October 20, 2003 on First Reading by the unanimous vote of 7– 0 (Motion by Henson, Second by Edwards).

General Counsel Approval: Yes

Committee Recommendation:  The Administrative Committee reviewed this item on September 10, 2003 and October 14, 2003, but made no formal recommendation. 

CEQA Compliance: Reliance on Prior Certified EIR and CEQA Materials- Guideline § 15162

SUMMARY:  The public hearing on the second reading of Ordinance No. 109 – an ordinance that would enable upgrades to the Carmel Area Wastewater District (CAWD)/Pebble Beach Community Services District (PBCSD) Recycled Water Project – was convened on November 17, 2003.  At the second reading, staff and counsel made presentations and public testimony was thereafter received.  The hearing was closed, and Board discussion ensued.  The Board of Directors provided general direction as to language modifications to be made in Ordinance No. 109, and further consideration and final action on the Ordinance, including approval of related CEQA Findings, was continued to the meeting of November 24, 2003. 


The effect of Ordinance No. 109, as drafted, would enable water entitlements presently held by the Pebble Beach Company to be made available to properties throughout Del Monte Forest, rather than only to properties owned by the Pebble Beach Company (PBC) in order to finance the Project Expansion.    The Board approved the first reading version of this ordinance on October 20, 2003 by the unanimous vote of 7-0 (moved by Henson, second by Edwards).  The Board closed the Public Hearing on this item. 


The attached Exhibit 10-A is a red-lined version of Ordinance No. 109 that shows text changes as discussed by the Board on second reading, as compared to the first reading version presented to the Board in the meeting packet of November 17, 2003.


Draft CEQA Findings, modified to address issues raised by the Board, are attached as Exhibit 10-B. These findings support the Board’s determination that the criteria of CEQA Guideline Section 15162 enable the Board to rely on the prior EIR certified for the original recycled wastewater project.  The Board is required to review and approve the final set of CEQA before it takes its roll call vote on the second reading of Ordinance No. 109.


RECOMMENDATION:      Staff recommends that the Board take the following actions:


1.               Consider approval of the CEQA Findings (Exhibit 10-B) supporting enactment of Ordinance No. 109.  The Board may vote to adopt Ordinance No. 109 only after it approves the CEQA Findings.


2.               a.  Consider approval of the second reading of Ordinance No. 109 shown in Exhibit 10-A.  If Ordinance No. 109 is approved on second reading as presented – or without substantive change from the version presented – the ordinance would then take effect on December 17, 2003, subject to the execution of the related agreements; or in the alternative,


b.  Consider of approval the first reading of Ordinance No. 109, but with substantive modification to the version shown above.  Any version of Ordinance No. 109 that incorporates substantive change from the version approved on October 20, 2003 must be approved at first reading, followed by a second reading and public hearing.  The earliest date for the second reading to incorporate substantive changes from the version approved on October 20, 2003, absent a special meeting, would be on December 15, 2003.


3.               Direct staff and counsel to continue efforts to negotiate and modify the Supplemental Financing Agreement, Supplemental Construction and Operation Agreement, and Agreements for Sale of Recycled Water in order to implement Ordinance No. 109.  Staff should be directed to return these revised documents to the Board for review and approval.


BACKGROUND:   A more complete characterization of the CAWD/PBCSD Wastewater Reclamation Project issues is be found in the staff note for the November 17, 2003 Board packet.  


With respect to the Board’s consideration of Ordinance No. 109 at Second Reading, a key issue arises relating to whether or not changes are made that effect substantive differences from the draft ordinance approved on First Reading on October 20, 2003.  The Board may make non-substantive changes to this version, and enact the Ordinance on Second Reading at the meeting of November 24, 2003. 


In general, changed language in Ordinance No. 109 improve the accountability of the participants on the proposed Project Expansion, particularly with regard to the use of the proceeds expected to be received by PBC and the use of water pursuant to the Water Entitlement.  Most – but not all – of the proposed changes appear to be non-substantive in effect.

If the Board determines to make substantive changes to Ordinance No. 109 at this time, however, the Board is then legally required to give the Ordinance No. 109 – as substantively revised – another First Reading at the November 24, 2003 Board meeting, or thereafter.  Special Counsel and General Counsel agree that this procedure would be required, for example, if the Board determines to delete the phrase “through issuance of a Water Use Permit” from the provisions of Rule 23.5 A(5).  (A footnote set forth in the body of the draft Ordinance No. 109 highlights this issue.) 


The text shown in the proposed draft of Ordinance No. 109 does not include a substantive change, and therefore can be enacted on Second Reading at the November 24, 2003 Board meeting.  


Letters received after Board packet was produced.  1)  November 20, 2003 letter from LLoyd Lowrey and 2) November 21, 2003 letter from Mark Stilwell.