Meeting Date:

January 24, 2008





David A. Berger,




General Manager

Line Item No.:


Prepared By:


Cost Estimate:



General Counsel Reviewed:  Yes

Committee Recommendation:  During its November 8 and December 3, 2007 meetings the Administrative Committee reviewed this item and recommended consideration by the Board be deferred until certain tax liability issues raised at recent Watermaster meetings were clarified.  Watermaster CEO Dewey Evans has provided evidence that all earnings have been reported and he states required taxes have been paid, based upon “non-employee” compensation to Mr. Evans, for calendar year 2006. The Administrative Committee considered this item on January 15 and recommended the Board approve the concept of an MPWMD payment of voluntary assessment for Seaside Basin Watermaster Administrative Costs but that the dollar amount be discussed and determined by the full Board.  Additionally, the committee recommended that the dollar amount that the District may determine for this year not set a precedent for future voluntary payments.      

CEQA Compliance:  N/A


SUMMARY:  The purpose of this item is for the MPWMD Board of Directors to consider making a voluntary payment toward Seaside Basin Watermaster administrative costs in 2008, at the request of the Watermaster Board.  This payment differs from the administrative assessment formula set by the Superior Court in the basin adjudication Decision.  The 2006 decision assesses three entities, California American Water (83%), the cities of Sand City (2.6%) and Seaside (14.4%), for Watermaster administrative costs.  To the extent voluntary contributions are made, the amounts required from those three entities pursuant to the court formula would be reduced on a pro rata basis.  General Counsel Laredo has identified some questions and concerns regarding the legality of this voluntary assessment, which the Board should address if this voluntary payment is to be approved (Exhibit 23-A).  For the Board’s information, Sec. 6.2.1 (Contributions to Budget) of the Watermaster Rules and Regulations in its entirety provides as follows:  “The Watermaster Board may accept contributions of money, goods or services in furtherance of its purposes.”  Judge Randall received and accepted these Rules and Regulations following adoption by the Watermaster Board on June 7, 2006.   The Watermaster CEO advised District staff that the payment of the voluntary administrative assessment has been approved by city of Monterey; payment is expected from the Coastal Subarea landowners and not from the Laguna Seca Subarea landowners or city of Del Rey Oaks; and no response has been received to date from Monterey County/Monterey County Water Resources Agency. 


RECOMMENDATION:  It is recommended that the Board consider approval of this Voluntary Assessment contribution toward a share of the Seaside Basin Watermaster 2008 proposed administrative fund assessment, provided a legally sufficient basis for its approval is determined.    


IMPACTS TO STAFF/RESOURCES:  As described in the October 17, 2007 report from the Watermaster Chief Executive Officer, Dewey Evans, the payment formula in the Voluntary Financial Assessment Policy is based on the number of weighted votes of each entity comprising the Watermaster Board (Exhibit 23-B).  Since the MPWMD has two votes on the Watermaster Board, the requested voluntary payment amount would be $13,384, which equals 2/13 of the $87,000 proposed administrative fund assessment for calendar 2008 approved by the Watermaster on October 17, 2007 (Exhibits 23-C and 23-D).  (The Watermaster staff report does not address whether this amount would be adjusted depending on its actual administrative cost incurred during 2008.)  Since this Watermaster Voluntary Financial Assessment Policy was only recently proposed, there is no line item in the District’s fiscal year 2007-8 adopted budget to cover its cost.  This $13,384 expense represents only 0.16% of the District’s total expenditure budget, and is an amount that would not significantly reduce the District’s general reserves or adversely affect its overall financial condition.  If approved, this payment to the Watermaster would be reflected in the Board’s mid-year budget adjustment action anticipated for February or March 2008.  Finally, for information, to date the District has executed $71,172 in technical service contracts with the Watermaster to provide hydro geological and other technical services; and at its December 5, 2007 meeting the Watermaster approved a $115,000 MPWMD technical service contract for 2008.  If the Board approves the 2008 voluntary assessment payment, it can be anticipated that the payment formula in the Voluntary Financial Assessment Policy could be used as a precedent to fund future administrative assessments.              


BACKGROUND:  This proposal was initially considered by the Watermaster board at its September 5, 2007 meeting, and was referred to the Watermaster finance/budget advisory committee for review.   Minutes of that Watermaster meeting describe the policy rationale and intended purpose of the proposed Voluntary Financial Assessment, as expressed by Seaside City Manager Ray Corpuz, who chairs that committee (Exhibit 23-E).  At its October 17 meeting, following objection stated by the Laguna Seca landowner representative, the Watermaster board unanimously approved the Voluntary Financial Assessment Policy.      



23-A    General Counsel Laredo memo dated November 1, 2007

23-B    Watermaster CEO Evans staff report dated October 17, 2007

23-C    Watermaster CEO Evans memo dated October 22, 2007

23-D    Watermaster 2008 Proposed Administrative Fund Budget        

23-E    Excerpt from Watermaster Board September 5, 2007 meeting minutes