ITEM:		CONSENT CALENDAR
3.	CONSIDER AUTHORIZATION TO INCREASE BUDGET FOR GROUNDWATER REPLENISHMENT PROJECT (GWR)
Meeting Date:			February 13, 2014	Budgeted:	No
From:			David J. Stoldt,	Program/	Groundwater Replenishment Project
			General Manager	Line Item No.:	1-5-1
Prepared By:			Suresh Prasad	Cost Estimate:	$1,118,781 (75% of budget increase)
General Counsel Approval: N/A
Committee Recommendation: The Administrative Committee reviewed this item on January 21, 2014 and recommended moving this item to be considered by the Board of Directors. The Water Supply Committee reviewed this item on February 4, 2014 and recommended approval 3-0, subject to certain considerations discussed below.
CEQA Compliance: N/A

SUMMARY: At its June 17, 2013 meeting, MPWMD Board adopted Fiscal Year (FY) 2013-2014 budget which included $2,717,500 for GWR. This budgeted amount represented 75% of the total GWR expenditure for FY 2013-2014. The other 25% of the project cost is funded by Monterey Regional Water Pollution Control Agency (MRWPCA). Grants are also used to fund a portion of the project.

Based on recommendations made by the project’s Independent Advisory Panel, expansion in scope of project components, and the acceleration of certain project activities, new mid-year budget estimates were developed by MRWPCA, resulting in a need to increase the GWR FY 2013-2014 budget by an additional $1,557,714. This increase includes estimates from MRWPCA attached as Exhibit 3-A.

This budget adjustment was approved by the MRWPCA Board on January 27^th. It was recommended for approval by the District’s Water Supply Planning Committee 3-0 at its meeting February 5^th. The Water Supply Planning Committee approval was conditioned on expected reductions in the “Internal Labor” and “Public Outreach” budgets, as well as the expectation that certain expenditures for Public Outreach would be deferred until source water contract negotiations make demonstrable progress. MRWPCA has since made recommended reductions and increases, for a net reduction from the approved amount, to a new amount of $1,389,714 as shown in Exhibit 3-B.

The District’s share of this revised increase based on the Cost Sharing Agreement with MRWPCA will be $1,118,781 ($1,042,286 or 75% of the increased budget, plus an additional $76,495 for differential between MPWMD and MRWPCA originally adopted budgets). The funding for this increase will come from Aquifer Storage Recovery Phase I and Alternate Desalination Project. Most of the project costs for these two projects have been deferred to FY 2014-2015. This budget increase will be included in the District’s mid-year budget adjustment slated for February-March Board meeting.

This mid-year adjustment includes costs for outreach activities, water rights related services, and externalities analysis all based on MPWMD recommendations.

Attached as Exhibit 3-C to this staff report is Amendment 1 to the Cost Sharing Agreement between MPWMD and MRWPCA. This proposed Amendment addresses MPWMD’s concerns about Monterey Peninsula ratepayers paying for services and benefits to entities outside Cal Am’s Monterey District. If in the future GWR facilities funded under the Cost Sharing Agreement provide benefits or services to entities outside Cal Am’s Service area, MPWMD would be reimbursed by MRWPCA for such costs.

RECOMMENDATION: The Water Supply Planning Committee recommends that the Board authorize the increase in budget for Groundwater Replenishment Project of $1,118,781 for Fiscal Year 2013-2014 and approve Amendment 1 to the Cost Sharing Agreement.

EXHIBITS

3-A Mid-Year GWR Budget Adjustment - MRWPCA Summary

3-B Line Item Summary of Budget Adjustments

3-C Amendment 1 to GWR Cost Sharing Agreement

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