Monterey Peninsula Regional Water Authority

MINUTES MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA) Regular Meeting 7:00 PM, Thursday, December 13, 2012 COUNCIL CHAMBER FEW MEMORIAL HALL OF RECORDS MONTEREY, CALIFORNIA Directors Present: Pendergrass, Rubio, Carmel Alternate Talmage, Della Sala Directors Absent: Kampe, Edelen Staff Present: Interim Executive Director, Legal Counsel, Clerk of the Authority ROLL CALL President Della Sala called the meeting to order at 7:04 p.m. indicating Director Edelen is absent due to a prior City commitment and Mr. Kampe is expected to arrive late. Director Burnett is represented by Alternate Director Ken Talmage. PLEDGE OF ALLEGIANCE REPORTS FROM BOARD DIRECTORS AND STAFF President Della Sala invited reports from Directors. Director Pendergrass reported on the major outcomes of the Monterey Peninsula Water Management District (MPWMD) meeting on December 10, 2012 to discuss and approve going forward with a secondary or back up desalination facility program. The MPWMD Council was unanimous supporting the motion to have an alternate project in the event the Monterey Peninsula Water Supply Project (MPWSP) project is not completed prior to the 2017 deadline, and to release a Request for Qualifications (RFQ). 1. Update from Ad Hoc Committee on Governance and Financing Regarding Discussions with California American Water Action: Received Update Carmel Alternate Director Ken Talmage gave an update on the California Public Utilities Commission Desalination cost workshop he and Director Burnett attended December 11, 12 & 13, 2012. He also reported a separate meeting took place December 11, 2012 with MPRWA and Cal Am representatives to discuss the capital costs of the proposed Cal Am desalination facility and the potential to substitute public funds for Cal Am’s equity. Cal Am representatives requested a written proposal from the MPRWA before they would consider alternatives. Cal Am also suggested the Water Management District prepare multiple strategies to support viable public funding options. President Della Sala acknowledged that this was only an update but for the sake of transparency and input, opened the item for public comment. Doug Wilhelm spoke against Cal Am’s $99 million surcharge, the risks associated with project failure and potential stranded costs. Mr. Wilhelm also spoke to Director Pendergrass’ update regarding the Water Management District’s meeting last week and encouraged information sharing as not to duplicate efforts. Nelson Vega encouraged the Authority to look at establishment of a water purchase agreement which would allow the Authority to sell the water to Cal Am and let Cal Am facilitate the desalination of the water. Having no further requests to speak President Della Sala closed public comment and moved on to the next agenda item.  MPRWA Minutes Thursday, December 13, 2012 Interim Director Meurer responded to the comments about the budget regarding future anticipated costs. The Authority agreed to agendize a budget update and possible request for additional funding at a future Authority meeting. 2. Update from California Public Utilities Commission Cost Workshop and Pre-Hearing Conference Action: Received Report Alt Director Talmage presented a report on the outcomes of the CPUC Cost workshop and noted changes to previously released information from Cal Am and indicated the below areas of concern that should be addressed in the future.  The size of the proposed facility: The proposal has no allocation for general plan buildout. The plant should be sized to meet maximum monthly demand and pipes must be sized to meet peak pipe demand.  Cal Am estimated water need was based on usage factors gathered in the last 5 years, which will not be representative of true need due to extraneous factors that have occurred in that time frame.  The completion schedule has slipped to October 2017 and this timeline does not include any flexibility for potential litigation.  The operating budget had the cost of power as more than 50% of total operating budget which calls into question the power cost estimates in the SPI Consultant’s report. Mr. Talmage additionally reported about the cost of project delay indicating for every 1% inflation the project will increase by $1.85 million for every six months for a total amount of 11 million dollars. He also noted Cal Am purchased 46 acres on Benson Road for a desalination facility, straight east from cement plant in City of Marina, adjacent to waste water plant, at 100 foot level past the 500 year flood plain. Mr. Talmage lastly reported that the Cal Am identified their financial model needs adjustments and wdill introduce two new model sizes and revise demand numbers around January 1, 2012He suggested the TAC discuss this model at their January 7, 2012 meeting. Pacific Grove City Manager Frutchey presented information about the third day of the workshop agreeing with all points made by Mr. Talmage and added emphasis that Cal Am’s savings estimates are due to the current economic situation which are very questionable assumptions and are unreliable. He also noted that with respect to schedule slippage, Cal Am did not indicate the cause was based on delay of test well or permitting, which generates more questions about further potential slippage. Russ McLaughlin communicated that Judge Weatherford and Andrew Barnsdale agreed to major alternatives will be considered to be analyzed at the same level and depth as the initial proposal and Cal Am acknowledge that their original proposal had serious risks. Judge Weatherford communicated six major issues that need resolution before he will make a decision: 1. Any changes in the project description of the applicant which causes problems for environmental analysis and political discussions. Three Changes: site acquisition, screening levels of the wells, and timeline 2. Suggested to shift the cost recovery issues to a separate phase of the project. 3. Status of the public agency participation proposals. 4. Environmental Review – NEPA/CEQA process 5. Protocols and procedures for the hearing: pushed for submission of joint testimony as Monterey Peninsula Regional Water Authority Regular Meeting Minutes - Thursday, December 13, 2012 2  MPRWA Minutes Thursday, December 13, 2012 unanimity was seen as important and helpful for achieving a decision. 6. Two motions have been filed: 1) Size of the plant based on the groundwater recharge – the motion requested plant sizing be based solely on objective criteria. 2) Argued that public input is also important and Cal Am needs to do a better job of providing a quarterly report to the public on project status and being up front with the community. George Riley spoke to Mr. Talmage remarks and added that he was pleased Cal Am was very forthright with data and commended them for their openness. He was concerned that Cal Am did not identify potential hazards, making many assumptions without addressing potential permitting or legal issues. PUBLIC COMMENTS President Della Sala invited public comments for items not on the agenda and with no requests to speak closed public comment. APPROVAL OF MINUTES 3. June 14, 2012 Action: Approved as Amended On a motion by Director Pendergrass, seconded by Alternate Director Talmage, and carried by the following vote, the Monterey Peninsula Regional Water Authority approved the minutes of June 14, 2012 as amended. AYES: 3 DIRECTORS: Pendergrass, Talmage, Della Sala NOES: 0 DIRECTORS: None ABSENT: 2 DIRECTORS: Edelen, Kampe ABSTAIN: 1 DIRECTORS: Rubio RECUSED: 0 DIRECTORS: None 4. Approval of Appointments to the Technical Advisory Committee Action: Approved Addition of Three New TAC Members President Della Sala introduced the item requesting the Authority appoint three individuals as members of the TAC. Alternate Director Talmage provided a verbal synopsis of each of the three recommended candidates. President Della Sala opened the item for questions from the Board. Director Pendergrass questioned the appointment of Mr. Bill Reichmuth while contending for the Executive Director position and staff indicated there was no conflict. Director Pendergrass also spoke in support of the appointment of Dale Haus indicating he might be able to be a key negotiator to the Salinas Valley Growers region. President Della Sala opened the item to public comment and having no requests to speak, closed public comment on the item. On a motion by President Della Sala, seconded by Director Rubio and carried by the following vote, the Monterey Peninsula Regional Water Authority approved the Appointments to the Technical Advisory Committee of Dale Haus, Bill Reichmuth and Robert Siegfried: AYES: 4 DIRECTORS: Rubio, Pendergrass, Talmage, Della Sala NOES: 0 DIRECTORS: None ABSENT: 2 DIRECTORS: Edelen, Kampe ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None Monterey Peninsula Regional Water Authority Regular Meeting Minutes - Thursday, December 13, 2012 3  MPRWA Minutes Thursday, December 13, 2012 5. Legal Counsel Discussion of Brown Act, Closed Session Conduct and Noticing Requirements for Public Agencies Action: Received Presentation and Discussed Legal Counsel Freeman presented the report explaining the purpose of the Ralph M. Brown Act is to ensure that public agency actions are transparent and responsive to the public, ensuring members do not make decisions outside of a public meeting. Closed session meetings have specific exceptions which are limited to specific categories, but likely outside of the scope of the MPRWA. Mr. Freeman discussed agenda noticing requirements and noted that in June of this year, the state of California waived the requirements of the Brown Act noticing, but acknowledged the MPRWA will still continue to comply with public noticing requirements as it is in the best interest of the public trust. President Della Sala opened the meeting to public comments. Pacific Grove resident Donald Murphy echoed working in the trust of the public and applauded the effort of the Authority. State law does allow closed session meetings but requested the Authority always consider the necessity of having closed sessions, and only schedule if the public could benefit from the results. Having no further requests to speak, President Della Sala closed public comment and proceeded to the next agenda item. 6. Discuss Outreach Strategy for Engaging the Public on the Role of the Water Authority and Provide Direction Action: Discussed and Continued to Future Meeting President Della Sala requested an update for video services for future Authority meetings. Interim Director Meurer reported he will request Monterey City Council fund the staff time to televise future Authority meetings. Director Pendergrass encouraged more interaction with the local media, specifically written publications to vocalize the Authority’s position with accurate information. Alternate Director Talmage requested continuing the item until a future meeting when all Directors are present. President Della Sala opened the item for public comment and having no requests to speak closed public comment and continued the item to an unspecified future meeting date. 7. Approval of MPRWA Meeting Dates for 2013 Action: Approved Scenario A Clerk to the Authority presented an update on future potential meetings for the Authority noting that the regularly scheduled meeting dates of the second and fourth Thursday of the month has potential facility conflicts. The Authority directors were presented with two scenarios of future meeting dates. President Della Sala opened the item for public comments and Pacific Grove City Manager Tom Frutchey offered the City of Pacific Grove facilities to host the Authority meetings on the alternate dates. With no future requests to speak President Della Sala closed public Monterey Peninsula Regional Water Authority Regular Meeting Minutes - Thursday, December 13, 2012 4  MPRWA Minutes Thursday, December 13, 2012 comment. On a motion by Director Rubio, seconded by Director Pendergrass and carried by the following vote, the Monterey Peninsula Regional Water Authority approved future meeting dates as presented in scenario A through March 31st, 2012: AYES: 4 DIRECTORS: Rubio, Pendergrass, Talmage, Della Sala NOES: 0 DIRECTORS: None ABSENT: 2 DIRECTORS: Edelen, Kampe ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None 8. Adopt Resolution Approving Legal Services Contract to the Firm of Perry and Freeman Action: Approved Contract and Adopted Resolution No. 2012-07 Legal Counsel Freeman introduced the item indicating consistency with the Request for Qualification the Authority released for legal services. He noted the contract included a previously approved 90 day review period and the contract would be fully executed as of December 15, 2012. President Della Sala opened the item for public comment and having no requests to speak, closed public comments and brought discussion back to the board. On a motion by Alternate Director Talmage, seconded by Director Pendergrass and carried by the following vote, the Monterey Peninsula Regional Water Authority approved the legal services contract for The Firm of Perry and Freeman as presented and adopted resolution number 2012-07. AYES: 4 DIRECTORS: Rubio, Pendergrass, Talmage, Della Sala NOES: 0 DIRECTORS: None ABSENT: 2 DIRECTORS: Edelen, Kampe ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None ADJOURNMENT With no further business to come before the Authority, President Della Sala adjourned the meeting at 8:23 p.m. ATTEST: Lesley Milton, Clerk of the Authority MPRWA President Monterey Peninsula Regional Water Authority Regular Meeting Minutes - Thursday, December 13, 2012 5