Monterey Peninsula Regional Water Authority

MINUTES MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA) Director's Meeting 7:00 PM, Thursday, March 10, 2016 COUNCIL CHAMBERS 580 PACIFIC STREET MONTEREY, CALIFORNIA ROLL CALL Directors Present: Director Rubio, Director Pendergrass, Director Kampe, President Burnett Directors Absent: Director Edelen, Director Downey Staff Present: Executive Director Cullem, Legal Counsel Freeman, Clerk Romero President Burnett called the meeting to order at 7:01pm. He requested that the Authority adjourn to Closed Session at the end of the meeting and the Directors agreed. PLEDGE OF ALLEGIANCE PUBLIC COMMENTS President Burnett opened public comments:  Tom Rowley said that the December 10th meeting was a critical meeting and opined that the votes on the items should be verified for correctness. APPROVAL OF MINUTES 1. Approval of Minutes from December 10, 2015 - Romero Action: Approved as amended Executive Director Cullem pointed out two typos in the minutes that say “MPRWA” instead of “MRWMD”. Clerk Romero confirmed that these typos will be corrected in the final version of the minutes. On a motion by Director Rubio, seconded by Director Kampe, and carried by the following vote, the Monterey Peninsula Regional Water Authority approved the December 10th minutes with correction to typographical errors: AYES: 4 DIRECTORS: Kampe, Pendergrass, Rubio, Burnett NOES: 0 DIRECTORS: None ABSENT: 2 DIRECTORS: Downey, Edelen ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, March 10, 2016 1  MPRWA Minutes Thursday, March 10, 2016 CONSENT ITEMS Executive Director Cullem requested that items #3 and #5 be removed from consent. On a motion by Director Rubio, seconded by Director Kampe, and carried by the following vote, the consent items, with the exception of items #3 and #5, were approved with the following vote: AYES: 4 DIRECTORS: Kampe, Pendergrass, Rubio, Burnett NOES: 0 DIRECTORS: None ABSENT: 2 DIRECTORS: Downey, Edelen ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None 2. Receive Letter from Sand City in Support of GWR – Cullem Action: Received letter 3. Approve and File Authority Checks Through March 10, 2016, Receive a Mid-year Budget Report, and Receive an Estimate of Requested FY 2016-2017 Member Contributions - Romero/Cullem Action: Removed from consent; Discussed; Approved as amended Executive Director Cullem stated that the mid-year budget report enclosed in the packet had incorrect numbers and gave the board and the public a copy of the corrected budget report. President Burnett opened public comments and, receiving none, closed public comments. On a motion by Director Pendergrass, seconded by Director Kampe, and carried by the following vote, the Monterey Peninsula Regional Water Authority received the mid-year budget report as amended and approved checks filed through March 10, 2016: AYES: 4 DIRECTORS: Kampe, Pendergrass, Rubio, Burnett NOES: 0 DIRECTORS: None ABSENT: 2 DIRECTORS: Downey, Edelen ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None 4. Adoption of Resolution 16-01, Approving Donald G. Freeman as Legal Counsel through June 30, 2017 and Authorizing the Authority President to Execute a contract extension with Perry Freeman at a Price not-to-exceed $36,000 - Cullem Action: Approved; Adopted Resolution 16-01 Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, March 10, 2016 2  MPRWA Minutes Thursday, March 10, 2016 5. Adoption of Resolution 16-02, Approving Brownstein Hyatt Farber Schreck as Special Legal Counsel through June 30, 2017 and Authorizing the Authority President to Execute a Contract Extension at a Price not-to-Exceed $100,000 - Cullem Action: Removed from consent; Discussed; Adopted Resolution 16-02 with the consideration that additional funds will be need to be approved Executive Director Cullem stated that the budget considerations listed in the staff report enclosed in the packet are incorrect and there are not sufficient funds for special legal counsel. He added that at the next meeting there will be an agenda item requesting that additional funds be moved from the reserve in order to cover the amount necessary for special legal counsel. President Burnett opened public comments, and receiving none, closed public comments. On a motion by Director Rubio, seconded by Director Kampe, and carried by the following vote, the Monterey Peninsula Regional Water Authority adopted Resolution 16-02 Approving Brownstein Hyatt Farber Schreck as Special Legal Counsel through June 30, 2017 and Authorizing the Authority President to Execute a Contract Extension at a Price not-to-Exceed $100,000: AYES: 4 DIRECTORS: Kampe, Pendergrass, Rubio, Burnett NOES: 0 DIRECTORS: None ABSENT: 2 DIRECTORS: Downey, Edelen ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None 6. Authorize The Authority President To Extend The Contract With The City Of Monterey For Executive Director Services for a Price of $5000 for the Period July 1, 2016 to June 30, 2017, and To Request The City Of Monterey To Extend Its Contract With James M. Cullem For That Position - Cullem Action: Approved; Authorized President to Extend Contract 7. Adoption of Resolution 16-03 Approving an Extension of the Agreement with the City of Monterey for Clerk of the Board, Clerical, and Financial Support Services, and Authorizing the Authority President to Execute a Contract with the City of Monterey for a Price of $30,000 for the Period July 1, 2016 to June 30, 2017 - Cullem Action: Approved; Adopted Resolution 16-03 8. Authorize the Utilization of $10,000 from Contingency Funds to Pay for Preparation of a Technical Report as a Part of the Water Authority's Rebuttal Testimony on The Testimony of Curtis Hopkins, Hydrogeologist for the Marina Coast Water District - Cullem Action: Approved; Authorized use of contingency funds Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, March 10, 2016 3  MPRWA Minutes Thursday, March 10, 2016 AGENDA ITEMS 9. Receive and Discuss Recommendations from the Technical Advisory Committee (TAC) and from Staff on CPUC Testimony Submitted on January 22, 2016 and Provide Direction – Cullem Action: Discussed; Authorized Authority to submit rebuttal testimony to the CPUC later this month Executive Director Cullem reported that Monterey Peninsula Regional Water Authority (MPRWA) Technical Advisory Committee (“TAC”) took up the issue of consideration for the Authority to make rebuttal to the California Public Utilities Commission (CPUC) for testimony that was already submitted on January 22, 2016. He said that legal counsel pointed out some factual errors in testimonies by the Marina Coast Water District and Thomas Moore that should be addressed in the rebuttal which is due by March 22nd. He continued that the Authority has authorized $10,000 from contingency funds to pay for preparation of a technical report as part of the Water Authority's rebuttal testimony on the testimony of Curtis Hopkins, Hydrogeologist for the Marina Coast Water District. He asked that the Authority make a decision whether to move forward and have the technical studies put into a draft testimony to be submitted as a rebuttal to the CPUC. President Burnett summarized that outside counsel Russ-McGloughlin recommends that the MPRWA use expert Gordon Thrupp’s research and submit it as a rebuttal testimony. He added that the MPRWA is an objective third party applicant on the issue of source water and thus will be perceived differently. He added that Marina Coast made estimate amounts that are significantly different than what the test well has been producing, and Gordon Thrupp’s research shows that the range being estimated is in the 4-7% range as well as other issues which should be included for the record. Director Kampe echoed that there were items in the testimony by the Marina Coast that could be detrimental to the Water Supply Project and that it’s important to submit rebuttal testimony. He specified that the wells are separate from the Salinas Valley aquifer, and that the Authority should provide a more factual review of the situation for the record. Director Pendergrass questioned if the TAC majority favored submitting rebuttal testimony. Executive Director Cullem responded that the TAC voted 5-2 to not submit rebuttal testimony. President Burnett opened public comment:  Tom Rowley, representing Monterey Peninsula Taxpayer Association (MPTA), said he was at the TAC meeting on Monday and said that the board (TAC) should have approved the rebuttal testimony. He opined that the Mayors make the decisions and the testimony should be challenged if it’s incorrect.  George Riley, TAC member, said that he, not the Marina Coast Water District member, made the motion regarding submitting rebuttal testimony. He said that the MPRWA does not want to have legal exposure, but as a political body and not a technical body, the different testimonies should be sorted out at the PUC level. Receiving no further request to speak, President Burnett closed public comment. Director Rubio said he would like clarification on the Marina Coast Water District (MCWD) not being an initiator of the testimony. President Burnett responded that at the TAC meeting the MCWD did not initiate the action to suggest that rebuttal testimony not be submitted. Director Kampe said that the Authority takes the technical aspects into consideration. He said Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, March 10, 2016 4 MPRWA Minutes Thursday, March 10, 2016 that the water situation is a long crisis and the Authority cannot stand by and do nothing. He acknowledged that the MPRWA’s absence would not advance the process. President Burnett said the recommended action would be to have an expert submit rebuttal testimony. On a motion by Director Kampe, seconded by Director Pendergrass, and carried by the following vote, the Monterey Peninsula Regional Water Authority authorized submitting rebuttal testimony to the CPUC: AYES: 4 DIRECTORS: Kampe, Pendergrass, Rubio, Burnett NOES: 0 DIRECTORS: None ABSENT: 2 DIRECTORS: Downey, Edelen ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None President Burnett said that submitting rebuttal testimony by an independent hydrologist will be beneficial to the process and should be heard. Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, March 10, 2016 5  MPRWA Minutes Thursday, March 10, 2016 10. Receive and Discuss Recommendations from the Technical Advisory Committee (TAC) on the Water Authority Policy Position Statement and Provide Direction - Cullem Action: Discussed; Continued item to April 14, 2016 Directors Meeting President Burnett summarized that three years ago the Authority and the TAC adopted a Policy Position Statement that included 8 conditions that California American Water (Cal Am) needed to meet in order to earn support. He said that the TAC was asked to weigh in on the Policy and see if anything needs to be updated. Executive Director Cullem said that the TAC feels it’s worthwhile to take a closer look and will move forward with an ad-hoc committee and at the appropriate time will bring the policy back to the Authority with any recommended updates. President Burnett summarized that the TAC recommends the Authority to give them time to review the policy and make recommendations to update it. Director Pendergrass opined that the Policy Position Statement should include Ground Water Replenishment (GWR) and the Environmental Impact Report (EIR). President Burnett opened public comment:  Tom Rowley, representing MPTA, said he is in favor of updating the policy to make it more specific. He added that an update every meeting on the status of the three prongs of the Water Supply Project would be beneficial to the public. Director Pendergrass said an email was sent from Brent Constance from the Deep Water Desal recently, and it included a detailed summary of the process. Director Kampe said that he agrees with updating the Policy Position Statement every couple of years, but that financial considerations should also be updated. He said that some of the conditions that Cal Am needs to meet should be updated, as well as water allocation and contingency planning. He added that the Deep Water Desal email was brief on what had been accomplished so far. President Burnett offered to review the policy and bring this item back in April, and then ask the TAC to review it. Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, March 10, 2016 6 11. Discuss City of Monterey Request to Include a Response to the Cal Am Rate Increase Proposal into the Mission and Work Plan of the Water Authority and Provide Staff Direction - Cullem Action: Discussed; no action taken President Burnett questioned whether this item should be continued because it was added at the request of the City of Monterey and their representative is not present. He suggested that each City take on responding to the Cal Am rate increase individually and offered to distribute a draft letter to Cities to submit. Director Kampe suggested initiating the discussion about whether Cities should respond to Cal Am’s rate increase and allow Monterey to bring the topic back if they want the Authority to take specific action. Executive Director Cullem clarified that at the Monterey City Council meeting the Council wanted the Authority to take a stance on the Cal Am rate increase, but the question is whether taking it on is part of the JPA mission. President Burnett suggested that the Authority take action tonight, and if Monterey wants to bring back the topic then it can be brought up again at a future meeting. Director Rubio said that it should be left up to the individual Cities to decide how they want to respond to the rate increase and take action or not. Director Kampe said that the Authority should have a brief discussion on the topic so that the public may make comment, and discuss whether this item is in scope of the Authority’s mission statement. Director Pendergrass said there is not enough evidence of the proposed rate increase by Cal Am and therefore it makes more sense for each City to respond on its own. President Burnett opened public comment:  Tom Rowley, resident of Monterey, thanked Jim Cullem for giving a thorough presentation to the Monterey City Council on the water issues. He said that when the desal plant comes online, water bills will double for the ratepayer. He opined that the Authority’s focus should be on the Water Supply Project and EIR.  Catherine Stedman, representing California American Water, said she would be happy to share any information needed or give a presentation on the Cal Am rate design. Receiving no further requests to speak President Burnett closed public comments. President Burnett noted that the Authority has done a lot of work reducing the cost of water associated by the Water Supply Project, and outlined several examples of the Authority taking steps to reduce about $100 million in Water Supply Project costs at the benefit of the ratepayers. He recommended that the Authority not take up the issue of increased rates by Cal Am that are not associated with the cost of the Water Supply Project, and instead let individual Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, March 10, 2016 7  MPRWA Minutes Thursday, March 10, 2016 Cities respond. Director Rubio voiced his agreement with this suggestion and also mentioned that the Authority does not have a big enough budget to take on this issue. Director Kampe asked for clarification on what the JPA says regarding going beyond the scope of securing a water supply. Don Freeman responded and said the JPA is designed to focus solely on the water supply issue. Director Kampe acknowledged President Burnett’s many efforts to reduce costs associated with the cost of the Water Supply Project. He also echoed the idea that the Authority not get involved in non-water supply related rate increases, and if Monterey wishes to discuss opening up the JPA mission statement to include this they may do so at a future meeting. Director Pendergrass said he also agrees with President Burnett’s suggestion to not take action on this item. 12. Receive an Update on the Summary Project Schedule for the Monterey Peninsula Water Supply Project (MPWSP) and the Status of Test Slant Well Operations - Cullem Action: Received update; discussed Ian Crooks gave a presentation on the Monterey Peninsula Water Supply Project (MPWSP) and the Status of Test Slant Well Operations. He showed slides showing erosion caused by a storm and the exposure of the pipe on the beach. He added that the test well was turned off and the valve to the manhole closed in anticipation of storms on March 4th, and a few days later the exposed pipe was broken by the ocean. He said that the pipe and valve were closed and capped afterward. He also said that at the time the pipe was built it was at least 10 feet below the sand and far away from the ocean, and this shows how much erosion has occurred along the coast. He continued that the next step is to work with the Coastal Commission and the Marine Wildlife Sanctuary, to get the pipe buried and connect back to the valve. President Burnett asked how much of this erosion is seasonal, due to El Niño, or permanent coastal erosion and will Cal Am be addressing the erosion and return water. Mr. Crooks responded that the Monterey Regional Water Pollution Control Agency (“PCA”) said that the last time they saw something like this was in 1997, and he said that replacing the pipe and burying it 4 ft. underground should be a solution that lasts a while. Mr. Crook’s showed a presentation on the MPWSP Anticipated Schedule. President Burnett said that he met with the CPUC Executive Director Tim Sullivan on the importance of the EIR, and steps have been taken to assure that the highest staff at the CPUC is also aware of its importance. President Burnett opened public comment:  Tom Rowley, representing MPTA, said it would be nice to have the Ground Water Replenishment (“GWR”) schedule noted at the meetings. He also said that erosion is a very technical issue that should be addressed in the EIR by an expert.  George Riley, TAC member, spoke about the importance of preparing for potential litigation. He said that Cal Am has contingency plans and MPWMD has a plan B, and there should be a conversation about the risks going forward. Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, March 10, 2016 8 MPRWA Minutes Thursday, March 10, 2016 Receiving no further requests to speak, President Burnett closed public comment. Ian Crooks continued his presentation and clarified that the capped off pipe on the beach is not needed for the full scale wells. He also said that after 170 days of pumping and the data for the EIR and the groundwater model has been gleaned and will not stop the EIR. President Burnett opened public comment on the Closed Session item, and receiving none adjourned to closed session at 8:32 pm. ANNOUNCEMENTS FROM CLOSED SESSION President Burnett announced that MPRWA met in closed session and discussed the performance of Executive Director Jim Cullem and Legal Counsel Don Freeman, and reported that the Authority looks forward to continuing to work with them. He announced that an ad-hoc committee consisting of Directors Rubio and Kampe will be formed to discuss goals for the upcoming year and the goals will be used at next year’s evaluation. ADJOURNMENT Meeting was adjourned at 9:01 pm. ATTEST: Nova Romero, Authority Clerk MPRWA President Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, March 10, 2016 9