EXHIBIT 3-A

MONTEREY PENINSULA WATER MANAGEMENT DISTRICT

MEMORANDUM

DATE: November 8, 2010

TO: Darby Fuerst, General Manager

FROM: Andrew M. Bell, District Engineer

SUBJECT: Progress Report on Desalination Project Potential at U.S. Navy Site and Sites within City of Sand City

SUMMARY

This memorandum reports progress since the October 1, 2010 meeting of the Water Supply Planning Committee.

U.S. NAVY SITE

On September 17, 2010, General Manager Fuerst and I met with Steven A. Quimby, Installation Planner for the Naval Postgraduate School (NPS) and two other NPS staff members to learn if there is potential to site seawater desalination project facilities at the abandoned Monterey wastewater treatment plant site across Del Monte Avenue from the NPS. This site is owned by the U.S. Navy. Mr. Quimby described current uses of the property and the fact that the City of Monterey had recently released a coastal land use plan that describes potential recreational opportunities in the vicinity of the NPS property. Mr. Bell subsequently contacted City of Monterey planning staff and learned that the document Mr. Quimby described is a Waterfront Master Plan, but that it is not expected to be released until late 2011.

Mr. Quimby stated that he believes NPS would be open to consideration of desalination project facilities at this site, but that more detailed information on project facilities, land area requirements, and project construction and operations is needed. Based on feedback received at this meeting, I am preparing information showing requirements for siting, constructing, and operating a desalination project at this site for review and consideration by the NPS staff and leadership. I anticipate providing this information to Mr. Quimby by November 24, 2010.

CITY OF SAND CITY SITES

The City of Sand City desalination project feed water intake(extraction wells) and brine discharge (concentrate injection well) facilities are located along the coast between Bay Street on the south and Tioga Avenue on the north, as can be seen in Attachment 1. The Water Supply Planning Committee directed that staff contact owners of the coastal properties in Sand City north of Tioga Avenue to learn if seawater desalination facilities could be sited on these properties. As is shown in Attachment 2, there are seven parcels along the coast of Sand City north of Tioga Avenue. Listed from north to south, they are as follows:

APN Owner

011-501-014 Security National Guaranty Inc.

011-501-013 Monterey Peninsula Regional Park District

011-501-010 Monterey Peninsula Regional Park District

011-501-016 City of Sand City

011-012-001 Sand City Redevelopment Agency

011-012-002 Sand City Redevelopment Agency

011-012-005 Oyster Point Inn II LLC

I did not contact the City of Sand City, as in my previous meetings with Sand City representatives I was told that city properties are not available for citing desalination facilities. Results of my contacts to learn if the property owners would be open to seawater desalination facilities on the other properties listed above are as follows:

Security National Guaranty Inc.

I contacted Ed Ghandour, owner/agent for Security National Guaranty. Mr. Ghandour had a number of questions and concerns regarding what facilities could be located on the property, what would be potential impacts on the Monterey Bay Shores project, and what impact there may be on Monterey Bay Shores’ application for a Coastal Development Permit from the California Coastal Commission. I agreed to provide Mr. Ghandour information showing the potential locations and property requirements for seawater desalination intake facilities on the property, and access requirements for operation and maintenance of such facilities.

Monterey Peninsula Regional Park District

I spoke with Tim Jensen, Planning and Conservation Manager for Monterey Peninsula Regional Park District (Regional Park District). Mr. Jensen stated that for various reasons, it would be very unlikely that the properties could be used for desalination facilities. First, Regional Pak District properties are not intended for non-open space projects or activities. Second, the parcels would need to be re-zoned to allow for desalination facilities, and the Regional Park District would oppose re-zoning. Third, the area is an abandoned landfill. There would presumably be water quality problems if any of the feedwater were obtained on or near the property, and there are stringent healthy and safety code requirements for construction on or in a former landfill.

Oyster Point Inn II LLC

I was unable to locate a telephone number contact for this property owner. I sent the letter attached as Attachment 3, and to date I have not received a response.

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