ITEM:		ACTION ITEM
11.	CONSIDER APPROVAL OF ADDITIONAL BUDGET FOR LEGAL SERVICES FROM SHUTE MIHALY & WEINBERGER
Meeting Date:			December 15, 2025	Budgeted:	No
From:			David J. Stoldt,	Program/	N/A
			General Manager	Line Item:
Prepared By:			David J. Stoldt	Cost Estimate:	$100,000
General Counsel Review: N/A
Committee Recommendation: N/A
CEQA Compliance: This action does not constitute a project as defined by the California Environmental Quality Act Guidelines Section 15378.

SUMMARY: On December 23, 2020 in connection with California American Water (Cal-Am) Company’s challenge to the environmental review of the potential acquisition of the Monterey Water System, Monterey County Superior Court Case No. 20CV003201 the District hired Shute Mihaly & Weinberger for representation with a budget up to $25,000. That environmental review was in support of the District’s Local Agency Formation Commission (LAFCO) application.

On January 5, 2022 the District signed an engagement letter with the firm for services related to litigation over LAFCO’s decision rejecting the activation of latent powers of the District to sell water retail. The budget was set at $125,000. That engagement resulted in a lawsuit: MPWMD v. Local Agency Formation Commission (LAFCO) & Cal-Am, 22CV000925. The District brought this lawsuit to challenge LAFCO’s conduct and administrative decisions regarding exercise of District powers to acquire Cal-Am water system facilities in accord with the voter mandate in Measure J. On December 7, 2023 Judge Thomas Wills ruled in favor of the District, and against LAFCO. The matter is now on appeal before the Sixth District Court of Appeal (H051849.)

In March 2025, the District Board authorized an additional $100,000 for work by Shute Mihaly & Weinberger related to the separate eminent domain lawsuit, both in filing a Motion for Summary Adjudication, as well as combatting Cal-Am’s Motion for Summary Judgement.

The budget for Shute Mihaly & Weinberger has been exhausted. However, the District believes that the firm continues to add value in both the appeal of the LAFCO decision, as well as “latent power” issues in the eminent domain proceeding, as co-counsel.

Estimating the level of legal activity is difficult, but the District is entering a complex and very active part of the bench trial – also referred to as the “Right to Take” trial. It is recommended that an additional authorization of $100,000 for the remainder of the fiscal year be approved. Such amount will be reflected in any mid-year budget revisions.

RECOMMENDATION: It is recommended the Board approves an additional budget for Shute Mihaly & Weinberger of $100,000 under its existing contract.

EXHIBITS

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