FINAL Minutes Regular Meeting of the Board of Directors Monterey Peninsula Water Management District October 15, 2007

The meeting was called to order at 7 PM in the conference room of the Monterey Peninsula Water Management District office. Directors Present: David Pendergrass, Chair – Mayoral Representative Alvin Edwards, Vice Chair – Division 1 (arrived at 7:04 PM) Judi Lehman – Division 2 Kristi Markey – Division 3 Michelle Knight – Division 4 Larry Foy – Division 5 David Potter – Monterey County Board of Supervisors (arrived at 7:08 PM) Directors Absent: None General Manager present: David A. Berger District Counsel present: David Laredo The assembly recited the Pledge of Allegiance The following comments were directed to the Board during Oral Communications. (1) Robert Greenwood identified himself as a member of the Community Advisory Committee, and an attendee of most District Board meetings prior to the implementation of State Water Resources Control Board Order 95-10 that required replacement of Carmel River water. He urged the District to select one of five viable water supply projects studied by the District, which combined with Aquifer Storage and Recovery would provide the replacement water required in Order 95-10. (2) Roy Thomas, Carmel River Steelhead Association, stated that water flowing from the San Clemente Reservoir contains hydrogen sulfide, and since flows are so low due to dry weather conditions, the water is toxic to fish in the Carmel River. He requested that the District develop a plan to correct this situation. On a motion by Director Edwards and second by Director Knight, the Consent Calendar was approved, with the exception of items 6 and 7 that were pulled for separate consideration. The motion was approved on a vote of 6 – 0. Directors Edwards, Foy, Knight, Lehman, Markey and Pendergrass voted in favor. Director Potter was absent for the vote. Approved. Approved. Approved. Approved. Approved. On a motion by Director Markey and second by Director Lehman, the Board approved an expenditure of funds to contract with DHDettman for a not-to-exceed amount of $22,065. The motion was approved on a vote of 6 – 1. Directors Edwards, Knight, Lehman, Markey, Pendergrass and Potter voted in favor of the motion. Director Foy was opposed. On a motion by Director Lehman and second by Director Edwards, the Board approved an expenditure of $13,485 ($1,250 to be reimbursed through a donation by the Carmel River Watershed Conservancy) for computer hardware and software. The motion was approved unanimously on a vote of 7 – 0. Approved. Approved. Chair Pendergrass presented certificates of appreciation to Greg Pickens, Bob McKenzie, Sheryl McKenzie, Roy Thomas and Robert Greenwood. Members of the committee who were not present to receive their certificates were: Ron Chesshire, Paul Bruno, David Dilworth, Dewey Baird, Tom Rowley, Bruce Crist, Manuel Fiero, Janet Brennan and Pete Dausen. Cynthia Schmidlin, Human Resources Specialist, presented the award to Chair Pendergrass and the Board of Directors. General Manager Berger presented an update on progress the District has made towards completion of the goals and objectives listed in the Strategic Plan. An outline of the presentation is on file at the District office and can be viewed at the District’s website. Mr. Berger explained that the objective “Present to the Board for direction the amendment of Rule 23 to reflect new metering technology” is listed as complete because District Counsel and staff have determined that District rules should not be amended to authorize installation of in-line water meters. CAW installs the in-line meters and monitors water use through those meters. District rules speak to the CAW “meter”, so there is no need to further define the type of meter. Henrietta Stern, Project Manager, gave a report on progress made on development of water supply project alternatives. An outline of the presentation is on file at the District office and can be viewed at the District’s website. Darby Fuerst, Water Resources Division Manager, presented the report. An outline of the presentation is on file at the District office and can be viewed at the District’s website. Mr. Fuerst reported that in Water Year 2006 (October 1, 2006 and September 30, 2007) CAW production from the Carmel River was 841 acre-feet (AF) under the SWRCB Limit of 11,285 AF. CAW production from the Coastal subareas of the Seaside Basin was 122 AF over the CAW adjudication limit of 3,504 AF. Mr. Fuerst explained that CAW has a carryover credit from the previous water year that can be applied toward the over-pumping. CAW is also authorized to enter into agreements with other pumpers to keep production under the limit. Water Year 2007 began on October 1, 2007. Between October 1, 2007 and October 14, 2007, CAW production from the Carmel River was 40 AF under the limit for that time period established as a result of Order 95-10. CAW production from the Coastal Subareas of the Seaside Basin was 12 AF under the adjudication limit for that time period of 203 AF. Catherine Bowie and Stephanie Pintar presented an update to the Board. An outline of the presentation is on file at the District office and can be viewed at the District’s website. Director Lehman asked that the District and CAW make information available to the public regarding the potential for water waste in relation to aerial spraying for the Light Brown Apple Moth. She expressed concern about people washing down outside surfaces unnecessarily. Water users need to know if the chemical is water soluble. They should also be aware of when spraying will occur, so they aren’t washing down outside surfaces when spraying was rumored to have occurred. The Board did not meet in Closed Session, so no report was provided. Director Foy thanked General Manager Berger and District staff for the support given to him during his term on the Board. He thanked the Board members for their cooperation and professionalism. Director Pendergrass noted that the he attended the September 26, 2007 meeting of the Monterey Regional Water Supply Reliability Collaboration, sponsored by the Division of Ratepayer Advocates, and that the group has identified a combination of water supply projects to address the water shortage in Monterey County. On a motion by Director Knight and second by Director Potter, the Board adopted the second reading version of Ordinance No. 130 unanimously on a vote of 7 – 0. No comments were directed to the Board during the public hearing on this item. On a motion by Director Potter and second by Director Edwards, Ordinance No. 131 was referred to the Rules and Regulations Committee for review and revision based on comments made by the Board during their discussion of the draft ordinance. First reading of Ordinance No. 131 would be continued to a future meeting date. The motion was approved unanimously on a vote of 7 – 0. During the public hearing on this item, Patricia Bernardi, a resident of Carmel Valley, recommended that Board members serve as hearing officers. She asked for clarification of how the enforcement process would be applied to absentee property owners. Chair Pendergrass made the following ex parte declaration prior to the staff presentation on this item. “As Mayor of Sand City I have been involved for many years with my fellow council members in reviewing proposals for a city water project, to include the one before this Board tonight. I consult with staff on these matters and they likewise with me. Any other mayor that would be here in my stead would be doing the same. Early on, under my own volition, I told our general manager that it would not by my intent to influence him or any other District staff member either prior to or upon receipt of the city’s and CAW application for the desal plant distribution permit. Neither have I made any attempts to violate the Brown Act rules in the matter. It has always been my understanding from District counsel that because I have no financial interest in this project nor any other conflicts, that I may participate in the discussion and voting on these matters tonight, in which I will do.” Motion 1: Director Foy made a motion that was seconded by Director Knight to adopt the staff recommendation to approve item 20.A -- Application numbers 20070803SAN; and item 20.B -- 20070829CAW. Motion 2: Director Lehman offered a substitute motion to take no action on the water distribution system applications at the October 15, 2007 meeting, but instead to schedule a workshop to discuss the applications and proposed ordinance. The motion was seconded by Director Markey. Motion 3: Director Markey offered an amendment to substitute Motion 2. She proposed that this item be deferred to the November 19, 2007 Board meeting. The Rules and Regulations Review Committee should be charged to review and consider modifications to the ordinance and refer it back to the Board for action at the November 19, 2007 meeting. The amendment was accepted by Director Lehman. The amended substitute motion failed on a vote of 3 – 4. Directors Markey, Edwards and Lehman voted in favor of the motion. Directors Foy, Knight, Pendergrass and Potter were opposed. Motion 1: The motion was approved on a vote of 5 – 2. Directors Edwards, Foy, Knight, Pendergrass and Potter voted in favor of the motion. Directors Lehman and Markey were opposed. Chair Pendergrass referred the concept ordinance to the Rules and Regulations Review Committee for consideration and subsequent referral to the Board of Directors at a future meeting date. The following comments were directed to the Board during the public comment period on this item. (1) Kelly Morgan, City Administrator for the City of Sand City, stated the project would allow the City to carry out the objectives of its development plan. In addition, it would benefit the entire CAW system by providing a more reliable and safe water supply. Mr. Morgan explained that the SWRCB determined that the project is exempt from Order 95-10. In addition, the City has received a 2.5 million dollar Proposition 50 grant from the State of California. He asked the Board to approve Application Nos. 20070808SAN and 20070829CAW. In response to a question from the Board, Mr. Morgan stated that the City of Sand City has paid all project expenses to date of approximately 2 million dollars. The construction 10 million dollar construction cost would be recovered through revenues received per the lease agreement with CAW. (2) Steve Matarazzo, Planning Director for the City of Sand City, narrated a PowerPoint presentation describing the project that is on file at the District office and can be viewed on the District’s website. Mr. Matarazzo explained that the project would deliver 300 AF of water into the CAW system that can be used by CAW in the interim period until Sand City draws down that amount for its development purposes. He has been in communication with the California Coastal Commission about the need to amend the existing permit for a desalination project. (3) Stanley Coleco, former engineer for the City of Sand City, described the engineering aspects of the project. He told the Board that the brine discharge from the desalination plan will contain approximately 35,000 parts per million of total dissolved solids, which is similar to seawater. He asked that the Board approve issuance of the requested permits. (4) Kent Turner, President of California American Water Company, explained that CAW supports the project and the concept of leasing the project from the City of Sand City. The annexation of a portion of the project area into the CAW water distribution system will not be completed until approved by the PUC. In response to a question from the Board, Mr. Turner estimated that based on the 10 million dollar construction cost, the price of water from the project would be 2,000 to 3,000 dollars per acre-feet. (5) Martin Feeney, responded to questions posed by the Directors regarding the intake and discharge wells. He stated that the brackish intake water from the Aromas Sands formation is comprised of naturally occurring recharge that contains approximately 70% seawater and 30% fresh water. (6) Jim Heisinger, attorney for the City of Sand City, stated that there is no requirement that CAW reduce pumping in the Carmel River or Seaside Basin in order to accommodate the additional 300 AF of water that the desalination project will provide. (7) Roy Thomas stated that this project will not benefit the Carmel River. He expressed concern that the high cost of desalinated water will serve as an incentive to continue illegal pumping from the Carmel River. (8) Patricia Bernardi, speaking for herself and on behalf of Save Our Carmel River, stated that several questions should be answered about the project before the Board makes a decision. Issues to be explored include: long-term demand for the 300 AF throughout the CAW system, and concerns regarding the Monterey Bay Shores Project. (9) Lee Yarborough, resident of Pacific Grove, stated that the proposed project would be one small step towards solving the water situation on the Monterey Peninsula, and would provide insurance against water shortages caused by drought. (10) Carol Dawson, representing Ralph Rubio Mayor of the City of Seaside, expressed support for the desalination project because it is a near-term source of water that is exempt from SWRCB Order 95-10, and would reduce pumping from the Carmel River and Seaside Groundwater Basin without causing adverse environmental impacts. (11) Tim Miller, Corporate Counsel for CAW, requested that language be amended in Condition #3 of the permits by striking the word “fully” from the phrase “fully operational.” On a motion by Director Foy and second by Director Edwards, the committee recommendation to not move ahead on development of a campaign finance ordinance at this time was adopted on a vote of 6 – 1. Directors Edwards, Foy, Knight, Lehman, Pendergrass and Potter voted in favor of the motion. Director Markey was opposed. There was no discussion of the Informational Items/Staff Reports. The meeting was adjourned at 10:40 PM.

CALL TO ORDER/ROLL CALL PLEDGE OF ALLEGIANCE ORAL COMMUNICATIONS CONSENT CALENDAR 1. Consider Adoption of Minutes of the September 17, 2007 Regular Board Meeting 2. Receive Draft Report on Construction of New Phase 1 ASR Well No. 2 3. Consider Expenditure of Budgeted Funds for Purchase of Injection Equipment for the Phase 1 ASR Project 4. Consider Expenditure of Budgeted Funds to Contract for Construction of Initial Appurtenant Facilities for Phase 1 ASR Project 5. Consider Expenditure of Funds for Contracting with Certified Landscape Irrigation Auditors 6. Consider Expenditure of Budgeted Funds to Contract with DHDettman to Complete the Rescue and Rearing Management Plan for the Sleepy Hollow Steelhead Rearing Facility and Other Facility Support Tasks 7. Consider Expenditure of Budgeted Funds to Purchase Computer Software and Hardware for the Video Surveillance System at the San Clemente Dam 8. Receive and File Report on Fourth Quarter Financial Activity for Fiscal Year 2006-07 9. Adopt Treasurer’s Report for June 2007 PRESENTATIONS 10. Presentation of Certificates of Appreciation to Members of the Community Advisory Committee on Water Supply Alternatives 11. Present to Board of Directors the Earl F. Sayre Excellence in Safety Award for 2007 that was awarded to the MPWMD by the Special Districts Risk Management Authority 12. Strategic Plan Update 13. Water Supply Project Alternatives Update GENERAL MANAGER’S REPORT 14. Status Report on California American Water Compliance with State Water Resources Control Board Order 95-10 and Seaside Groundwater Basin Adjudication Decision 15. Update on Conservation Program from Catherine Bowie of California American Water and Stephanie Pintar of MPWMD ATTORNEY’S REPORT 16. Report on 5:30 PM Closed Session of the Board DIRECTORS’ REPORTS (INCLUDING AB 1234 REPORTS ON TRIPS, CONFERENCE ATTENDANCE AND MEETINGS) 17. Oral Reports on Activities of County, Cities, Other Agencies/Committees/ Associations PUBLIC HEARINGS 18. Consider Second Reading and Adoption of Ordinance No. 130 – Establishing a Claims Process for Damages or Refund of Money 19. Consider First Reading of Ordinance No. 131 – Amend Process by which the District Enforces its Rules and Regulations 20. Consider Approval of Applications Submitted by City of Sand City and California American Water for Two Water Distribution System Permits, and a Concept Ordinance, for Sand City Water Supply Project A. Consider Approval of MPWMD Application #20070803SAN to Create Water Distribution System for Sand City Water Supply Project (All parcels in City) B. Consider MPWMD Application #20070829CAW to Amend California American Water Distribution System to Receive New Source of Supply and Add One Parcel to Service Area C. Consider MPWMD Concept Ordinance Adding Rule 23.6 to Establish a Water Entitlement for Sand City and Amending Rules 11, 21 and 23.1 to Reflect the Process for Issuing Water Use Permits ACTION ITEMS 21. Consider Report and Recommendation from Administrative Committee on Campaign Finance Reporting Regulations INFORMATIONAL ITEMS/STAFF REPORTS 22. Letters Received 23. Committee Reports 24. Carmel River Fishery Report 25. Water Conservation Program Report 26. Monthly Allocation Report 27. Monthly California American Water Production Report 28. Monthly Water Supply Status Report 29. Quarterly Irrigation Program and Riparian Projects Report 30. Quarterly Carmel River Erosion Protection and Restoration Projects Report 31. Quarterly Water Use Credit Transfer Status Report ADJOURNMENT

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David A. Berger, Secretary to the Board

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