ITEM:		ACTION ITEM
33.	CONSIDER AUTHORIZATION OF FUNDS TO MONTEREY ONE WATER FOR THE PURE WATER MONTEREY PROJECT
Meeting Date:			June 18, 2018	Budgeted:	No
From:			David J. Stoldt	Program/
			General Manager	Line Item No.:	N/A
Prepared By:			Suresh Prasad	Cost Estimate:	$2,000,000
General Counsel Approval: N/A
Committee Recommendation: The Administrative Committee reviewed this item on June 11, 2018 and recommended approval.
CEQA Compliance: This action does not constitute a project as defined by the California Environmental Quality Act Guidelines Section 15378.

SUMMARY: In May 2013, the District entered into a Cost-Sharing Agreement with the Monterey Regional Water Pollution Control Agency (now Monterey One Water) to fund the Groundwater Replenishment (now Pure Water Monterey) Project planning and development costs. In July 2016, the District entered into Amendment 1 to the Cost Sharing Agreement. In September 2017, District entered into Amendment 2 to the Agreement.

Monterey One Water (M1W) will exhaust all of its 4% contingency set aside for the project and estimates it will need of an additional $8 million towards the contingency part of the project. This additional $8 million will set the total contingency level at around 10% of the total project cost.

Monterey One Water is in the process of increasing the amount of the State Revolving Fund loan by an additional $12 million. $6 million of the loan proceeds will go towards the contingency line item, while the other $6 million will go towards the reimbursement of pre-construction costs incurred by both M1W and MPWMD. Based on the reimbursement sharing formula stated in Amendment No. 2 of the Agreement, M1W will get $1,321,609 and MPWMD will get $4,678,391 of the $6 million proceeds.

In order to keep the water cost down, M1W has asked the District to potentially contribute an additional $2 million from its share of the $4.7 million reimbursement proceeds to help increase the contingency line item of the project, if needed. The District will ensure that the following contingencies are met:

· Additional $2 million will come from the proceeds of second reimbursement from the SRF loan. If the reimbursement does not happen, the District will not be obligated to fund the $2 million.

· The District’s $2 million proceeds will be disbursed to Monterey One Water towards the end of the project which would determine if proceeds are needed to either meet project expenses or reduce the cost of the water by reducing the loan amount.

RECOMMENDATION: Staff requests that the Board approve authorization of $2 million from reimbursement of preconstruction costs to be reserved as contingency for Monterey One Water to be used towards the Pure Water Monterey Project.

FISCAL IMPACT: Funding an additional $2 million towards the PWM project will come from the proceeds received from SRF loan toward reimbursement of planning and development costs.

EXHIBIT

None

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