EXHIBIT 4-G

MPWMD Seawater Desalination Project in Sand City/Fort Ord Area

In the 2002-2004 period, the Monterey Peninsula Water Management District (MPWMD or District) investigated a desalination project located within its boundaries, comprised of a seawater desalination plant in the Sand City area, with new seawater intake and brine discharge facilities at Seaside State Beach, Sand City and/or the coastal areas of the former Fort Ord Military Base. The project design initially envisioned radial wells or offshore horizontal directionally drilled (HDD) wells for intake of raw seawater and discharge of concentrated brine. A radial well is similar to a standard vertical well drilled in the coastal dunes, except it has lateral screens emanating from it (like bicycle spokes) to maximize water movement. An offshore HDD well is akin to a standard well on its side; water can be extracted or discharged under the ocean floor several thousand feet away from the well entry point on the coastal dunes.

The basic yield goal was set at 8,409 acre-feet per year to meet local, near-term needs under current limits, including compliance with State Water Resources Control Board (SWRCB) Order 95-10; this assumes Cal-Am diversions from the Carmel River do not exceed 11,285 AFY and total Cal-Am production remains under 15,285 AFY. A preliminary assessment of an 11,000 AFY project was performed with the conclusion that a larger size might be possible if the engineering design was reconfigured and expanded, and if outcomes of future hydrogeologic and engineering investigations were favorable.

Additional scientific investigations, including drilling test wells and conducting sonic surveys, were completed in Spring 2004 to better understand the characteristics of the coastal and offshore hydrogeology. This information resulted in a new understanding of the geologic strata, and also led to the conclusion that certain intake/discharge technologies would likely not be feasible. Analysis of the geology of the Fort Ord coastal area suggested that, although there is ample coastline available for seawater intake, the existing Monterey Regional Water Pollution Control Agency (MRWPCA) outfall would be needed to discharge the large volumes of brine.

Based on engineering studies of various locations and facility components, a preliminary cost estimate (using year 2002 dollars) is $82-90 million as the baseline construction cost for an 8,400 AFY desalination plant, including pipelines, intake and brine disposal facilities. The total capital cost, including overhead, engineering, environmental review, legal, land acquisition, construction markups, and a 25% contingency, was estimated at $176-193 million. The annual operation and maintenance cost (O&M), including power, was estimated at $8.8-9.0 million per year. A total annual cost of $23-25 million per year was estimated, based on a capital cost payoff at 7% for 30 years, plus the O&M. A total cost per acre-foot of $2,700-2,900/AF was derived from the total annual cost divided by the 8,400 AFY yield.

Continued…

An administrative draft Environmental Impact Report (EIR) was submitted for review by the MPWMD Board in December 2003. Because the EIR was based on previous hydrogeologic information, the Board chose to delay publication until the 2004 hydrogeology studies were completed in Spring 2004. As noted above, these studies determined that certain technologies described in the EIR were not feasible; other replacement technologies were suggested instead. For example, onshore HDD, where the HDD well runs parallel along and under the beach, was suggested to replace the offshore HDD in the Sand City area. Based on the study results, as well as emerging interest in regional desalination at Moss Landing, and continued success with the MPWMD Aquifer Storage and Recovery (ASR) project, the Board determined in Fall 2004 to table the local desalination efforts sponsored by MPWMD. Instead, the MPWMD strategic direction is to focus efforts on ASR in the near-term along with pursuit of opportunities to collaborate on a regional water supply project to meet Peninsula water needs.

For more information, visit the MPWMD website and review the following items:

Oct. 18, 2004: www.mpwmd.dst.ca.us/asd/board/boardpacket/2004/20041018/19/item19.htm

Sept. 29, 2004: www.mpwmd.dst.ca.us/asd/board/boardpacket/2004/20040929/07/item07.htm

July 29, 2004: www.mpwmd.dst.ca.us/asd/board/boardpacket/2004/20040729/final0729.htm

June 21, 2004: www.mpwmd.dst.ca.us/asd/board/boardpacket/2004/20040621/22/item22.htm

Mar. 31, 2004: www.mpwmd.dst.ca.us/asd/board/boardpacket/2004/20040331/04/item04.htm

Dec. 15, 2003: http://www.mpwmd.dst.ca.us/boardpacket/20031215/18/item18.htm