Monterey Peninsula Regional Water Authority

MINUTES MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA) Director's Meeting 7:00 PM, Thursday, April 14, 2016 COUNCIL CHAMBERS 580 PACIFIC STREET MONTEREY, CALIFORNIA ROLL CALL Directors Present: Director Edelen, Director Kampe, Director Pendergrass, Director Rubio, President Burnett Directors Absent: Director Downey Staff Present: Councilmember Timothy Barrett, Executive Director Cullem, Legal Counsel Freeman, Carmel Mayor Elect Steve Dallas, City of Monterey Engineer Steve Wittry, Authority Clerk Romero President Burnett called the meeting to order at 5:03pm. PLEDGE OF ALLEGIANCE REPORTS FROM BOARD DIRECTORS AND STAFF President Burnett introduced Councilmember Timothy Barrett, who was present as a non-voting representative of the City of Monterey in the absence of Director Downey. He also announced that the Workshop item on the agenda will begin no earlier than 6:30pm, and that item #12 will be continued to a future meeting. Executive Director Cullem said it's been a very busy couple of months regarding the California Public Utilities Commission (CPUC) process. He announced that Mayors Burnett and Kampe and he will be going to San Francisco tomorrow to the CPUC with testimony, and said he believes progress is being made. President Burnett said he will represent the Monterey Peninsula Regional Water Authority (“Authority”) at the CPUC for testimony, and will introduce Mayor Kampe in the transition as he takes over as Chair of the Authority. President Burnett reported that legal counsel Russ McGlothlin has been at CPUC all week representing the Authority and that there was a prehearing conference on Monday to talk about the CPUC schedule. Commissioner Sandoval was present at the hearing and stated she recognizes that the delay in the CPUC schedule is on the State and Federal level and not the fault of the community. President Burnett added that there will be a motion submitted with a proposed schedule for the CPUC making a decision on the purchase agreement for Pure Water Monterey (PWM), the pipeline, and likely the pump station, which is an important step forward. PUBLIC COMMENTS President Burnett opened public comments and receiving no requests to speak closed public comments.  MPRWA Minutes Thursday, April 14, 2016 APPROVAL OF MINUTES On a motion by Director Pendergrass, seconded by Director Kampe, and carried by the following vote, the Monterey Peninsula Regional Water Authority approved the Minutes for January 14 and March 10, 2016: AYES: 5 DIRECTORS: Edelen, Kampe, Pendergrass, Rubio, Burnett NOES: 0 DIRECTORS: None ABSENT: 1 DIRECTORS: Downey ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None 1. January 14, 2016 and March 10, 2016 – Romero Action: Approved CONSENT ITEMS Executive Director Cullem requested that Items #7 and #5 be removed from Consent and discussed separately. On a motion by Director Rubio, seconded by Director Kampe, and carried by the following vote, the Monterey Peninsula Regional Water Authority Approved Consent Items #2, #3, #4 & #6: AYES: 5 DIRECTORS: Edelen, Kampe, Pendergrass, Rubio, Burnett NOES: 0 DIRECTORS: None ABSENT: 1 DIRECTORS: Downey ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None 2. Approve and File Authority Checks Through April 14, 2016 - Romero Action: Approved 3. Receive and Approve Disclosure on Potential Conflict of Interest for Brownstein Hyatt Farber Schreck, Authority Special Legal Counsel - Cullem Action: Approved 4. Receive Report, Authorize a Letter to NOAA, and Provide Staff Direction in Support of a Proposed Five (5) Year Extension of the NOAA Carmel River Mitigation Agreement - Cullem Action: Approved Letter to NOAA 5. Receive Report on Draft Settlement and Draft Water Purchase Agreements for Return Water from the Cal Am Desal Facility, and Authorize Sending a Letter of Support to the CPUC for the Draft Settlement Agreement and Water Purchase Agreements (WPAs) Including Support for Funding Assistance Subject to Reimbursement, for the Return Water Pipeline - Cullem Action: Authorized President Burnett and Legal Counsel to finalize and sign a Draft Settlement Agreement and Water Purchase Agreements (WPAs) Including Support for Funding Assistance Subject to Reimbursement, for the Return Water Pipeline Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, April 14, 2016 2 MPRWA Minutes Thursday, April 14, 2016 President Burnett briefly described the Agency Act which prohibits export of ground water, and any water that is pumped in the test wells from Salinas Valley must be returned to Salinas Valley, which is about 5% of the source water for the Monterey Peninsula Water Supply Project (MPWSP). He reported that Castroville has offered to pay for the return water from the test wells in Salinas Valley, and any leftover water would go to the Castroville Seawater Intrusion Project (CSIP). The draft term sheet would turn into a water purchase settlement agreement if this is approved. He added there has been concern about cost of the pipeline to deliver the water to Castroville, and the solution is to have the same pipeline for both Castroville and CSIP, saving a substantial amount of money. Rich Svindland from California American Water (Cal Am) gave background on this item and said that they received bids to build a pipeline much lower than expected, Castroville had money set aside for a water supply project already, and Cal Am had 1.3 million invested in a pipeline. He continued that Castroville will buy the water from Cal Am that they need, and the excess water would go into the CSIP system. He also said that Castroville would pay for the cost of treating the water from the test wells if it has 100% salinity. Councilmember Barrett asked for clarification on who is paying for the desalination of the slant well water. Rich responded saying Castroville will pay Cal Am the same price for the slant well water in lieu of paying to pump their own groundwater, and CSIP will pay for the excess water, because they are saving on not pumping from wells. He added that in the agreement Castroville will pay for the cost of the desalination of the water. Mr. Barrett asked what the cost differential is between the price of the water and what it is being sold to Castroville for. President Burnett responded that although the cost of desalinating water is very high, the Agency Act prohibits the export of ground water, so the choices are very limited and thus making some money back is better than having the water go to waste. President Burnett opened public comments on this item:  Michael Bear, Monterey resident, voiced concern about the current progress Cal Am’s desal project. Receiving no further requests to speak, President Burnett closed public comments. President Burnett suggested that the action for this item would be to let legal counsel continue to draft a settlement agreement and water purchase agreements (WPAs) including support for funding assistance subject to reimbursement, for the return water pipeline. On a motion by Director Kampe, seconded by Director Edelen, and carried by the following vote, the Monterey Peninsula Regional Water Authority Authorized President Burnett and Legal Counsel to finalize and sign a Draft Settlement Agreement and Water Purchase Agreements (WPAs) Including Support for Funding Assistance Subject to Reimbursement, for the Return Water Pipeline: AYES: 5 DIRECTORS: Edelen, Kampe, Pendergrass, Rubio, Burnett NOES: 0 DIRECTORS: None ABSENT: 1 DIRECTORS: Downey ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, April 14, 2016 3  MPRWA Minutes Thursday, April 14, 2016 6. Receive a Budget Update, and Approve a Transfer of $70,000 from the Reserve Fund for Preparation of the Amicus Briefing and Additional Legal and Expert Witness Expenses Related to CPUC Proceedings - Cullem Action: Approved 7. Receive an Update on the Summary Project Schedule for the Monterey Peninsula Water Supply Project (MPWSP) and the Status of Test Slant Well Operations - Crooks Action: Received update Ian Crooks from Cal Am gave a brief presentation on the status of the test slant well operation and MPWSP schedule. He stated the as soon as it’s approved the broken pipe will be fixed and up and running soon thereafter. President Burnett opened public comments:  Michael Bear, resident, voiced his concerns about erosion and the King tides. He said the beach needs to be built back up, and the test wells should run for 190 days instead of 170 days.  Tom Rowley, representing Monterey Peninsula Taxpayers Association (MPTA), voiced concern about the pipeline being replaced for the future desal plant. Receiving no further requests to speak, President Burnett closed public comments. President Burnett said Ed Thornton recently provided advice to the MPRWA on coastal erosion. Executive Director Cullem referenced the MPWSP Schedule currently shows an 8 month time period for EIR to be approved by the CPUC. PRESENTATIONS 8. Certificate for Departing Water Authority President Jason Burnett - Kampe Action: Presented Certificate of Appreciation to President Burnett Director Kampe presented award of appreciation for outstanding service to President Burnett from the Monterey Peninsula Regional Water Authority. President Burnett gave thanks to the Board and said it has been an honor to serve on the Board and the opportunity to play a role in helping the community. AGENDA ITEMS 9. Receive Report from the Technical Advisory Committee (TAC), and Questions Raised by the CPUC on April 8, 2016, and Support the Expedited Approval and Construction of the 36-inch Transfer Pipeline to Accommodate Ground Water Replenishment (GWR) Water Should the PWM/GWR Project Come on Line Before Cal Am's Desal Facility - Cullem Action: Received report; Approved the Expedited Approval and Construction of the 36- inch Transfer Pipeline to Accommodate GWR Including Participation in a Joint Motion to the CPUC Ian Crooks from Cal Am gave a presentation on the proposed 36 inch transfer pipeline. He Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, April 14, 2016 4 MPRWA Minutes Thursday, April 14, 2016 explained that Cal Am's current pipeline system cannot distribute any significant amount of water, including GWR water, in a north-south direction due to a "hydraulic trough" along Del Monte Ave in the vicinity of Lake El Estero. A dedicated 36 inch transfer pipeline that is currently scheduled to be built as part of the desal project would have addressed this problem. Its cost of approximately $41 million is not a new or additional project cost. It is already included as a part Cal Am's contracts for conveyance facilities which were awarded earlier this year following Governance Committee approval. The Board questioned if the construction of the pipeline will cause the City of Monterey to tear up the streets twice. Executive Director Cullem responded saying he's spoken to Monterey’s Assistant City Manager who is coordinating the installation of the pipeline with other street paving projects. The Board discussed Cal Am not signing on with GWR even though they are building the conveyance for GWR and questioned who will own the pipeline. It was clarified that GWR and pipeline would move forward together, and the proposal is that the CPUC approve GWR and the expedited construction of the transfer pipeline. Director Kampe reported that there were bids for 7 sections of the pipeline and several bidders won the project, resulting in significant savings. Executive Director Cullem added that the Technical Advisory Committee (“TAC”) discussed this issue at its meeting of April 4, and recommends that the Authority support a request to the CPUC to authorize the expedited construction of the transfer pipeline, with a construction start date no later than this summer. This action is possible because the transfer pipeline was included in the GWR EIR which has already been certified. President Burnett opened public comments.  Tom Rowley, representing MPTA, said his organization supports a large desal plant with GWR as backup, and is concerned about the impact to the ratepayers for the cost of this pipeline.  Micheal Bear requested information on the path of the proposed pipeline through the City of Monterey. Receiving no further requests to speak, President Burnett closed public comments. Ian Crooks from Cal Am responded to Mr. Bear that he will get detailed pipeline route posted online for the public. President Burnett responded to Mr. Rowley saying that the cost of the pipeline will be divided over a period of time. A scheduled future Surcharge II on ratepayer water bills is intended to help finance the transfer pipeline as well a means to reduce the overall cost of financing the desal project. The CPUC has delayed Surcharge II pending issuance of the CPCN, since it has directed that the surcharge funds be limited to construction activities. Should the CPUC approve expedited construction of the transfer pipeline, staff agrees with most of the other settling parties that an earlier implementation of Surcharge II would be the least costly way to pay for it. A major advantage to the ratepayer of an early start to Surcharge II is that, by collecting it over a longer period of time, it could be kept lower (perhaps at the 25% level) than the 40% currently projected if it starts after the CPCN is issued. Following discussion, the Board voiced support of the TAC’s recommendation to expedite the Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, April 14, 2016 5  MPRWA Minutes Thursday, April 14, 2016 construction of the 36 inch pipeline. On a motion by Director Pendergrass, seconded by Director Kampe, and carried by the following vote, the Monterey Peninsula Regional Water Authority Supports the Expedited Approval and Construction of the 36-inch Transfer Pipeline, Including Filing of a Joint Motion to the CPUC, to Accommodate Ground Water Replenishment (GWR) Water Should the PWM/GWR Project Come on Line Before Cal Am's Desal Facility: AYES: 5 DIRECTORS: Edelen, Kampe, Pendergrass, Rubio, Burnett NOES: 0 DIRECTORS: None ABSENT: 1 DIRECTORS: Downey ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None President Burnett requested that item #10 be moved after the workshop and the Board agreed. The meeting adjourned at 6:33pm for a 10 minute break. 10. Receive, Discuss, and Provide Direction on a "To-Do" List including Possible Additions and Modifications to the Water Authority Policy Position Statement Currently Under Review by the Technical Advisory Committee (TAC) - Cullem Action: Continued Item to a future meeting Director Rubio requested that this item be moved to a future meeting so that there is time to discuss it, and the Board agreed. See item #11 11. Conduct a Workshop with Staff of the California Public Utilities Commission (CPUC) on the Proposed Delay in the Monterey Peninsula Water Supply Project (MPWSP) EIR/EIS Schedule - Cullem Action: No action taken; held workshop with CPUC Staff President Burnett called the meeting back to order at 6:44pm for the Workshop item. He introduced the members of the CPUC staff present and thanked them for coming: Rami Kahlon, Director of Water & Audit Division, Jason Reiger, Assistant General Counsel, and Mary Jo Borak, Supervisor, CEQA Section. President Burnett said for background, on or about March 11, 2016, the CPUC Energy Division sent out a "Notice to All Parties" that the schedule for completion the EIR/EIS would be delayed until November 2017. The MPRWA believes this is unacceptable for reasons discussed at the March 24 Special Meeting of the Water Authority, and joined other settling parties in filing a Motion for an All Parties Meeting. The Authority invited CPUC Staff to participate in a workshop to explain the reasons for the proposed delay and to explore whatever assistance the community might be provide to restore the EIR/EIR schedule. President Burnett addressed the CPUC Staff saying that the primary request of the Authority is to tighten up the CPUC schedule and lessen delays. The portion of the EIR already had a peer review and passed, and the Authority questions why 18 more months is needed for the CPUC to re-review it. He asked what can be done to put the EIR back on track, and expressed concern about getting the cease and desist order (CDO) extended for the sake of the Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, April 14, 2016 6 MPRWA Minutes Thursday, April 14, 2016 community. Rami Kahlon, Director of Water and Audit Division CPUC, said that he wanted to hear from the community and address concerns. He added that he understands the frustration in the CPUC process causing a delay. He reported that a lot of time has been spent trying to compress the schedule, and the draft EIR will be available in 2017. He reported that the CPUC will be supporting the application to extend the CDO deadline. The Board thanked the CPUC Staff for coming in person to answer questions. They voiced collective frustration at the continuous roadblocks and requested that simultaneous actions be done concurrently to help shorten the timeline between milestones. The Board also asked that the CPUC acknowledge that the delays are out of the public’s control and not the fault of the community. Jason Reiger, Assistant General Counsel, stated on behalf of the CPUC, that the delay in the EIR is not the fault of the community in any way, and he will say this to the water control board. He said the delay is due to the CPUC schedule. He added that the way the community has come together on this issue is impressive. President Burnett opened public comment with a firm 3 minute rule:  Tom Rowley, representing MPTA, said Monterey County has a small amount of customers. In the past the water district was unsuccessful so the Authority was formed to advocate for the community.  Rene Bosco, Marriott, said the community has been trying to solve the drought issue for years. She stated that hotels have reduced water consumption. She requested that the CPUC expedite the EIR and to tell the State Water Board it's not the communities fault.  Paul Bruno, Seaside Groundwater Basin, he said he is disappointed that the EIR approval schedule cannot been tightened. He moved here in 1977 during a drought and 30 years later there is still no resolution in sight.  John Narigi, representing the Peninsula Coalition of Businesses, referenced a letter he gave to the CPUC. He expressed the Coalition’s disappointment in the delays, and stated that ratepayers have paid millions for the EIR review.  Doug, on behalf of the Monterey Chamber of Commerce, thanked the MPRWA for it’s perseverance. He said Monterey is a model for water conservation and questioned why the community is being penalized. He added that it does note give incentive to others to conserve water.  Rick Aldigner, from the Big Sur Inn, said the community has made many sacrifices for years in order to conserve water. He expressed disappointment in the CPUC’s delays.  Tom McMann, a Monterey Bay Laundry business owner, says his business has been affected by water conversation, and it is hurting the community.  Theo Balesteri, Monterey resident, said the Monterey Peninsula Hospitality industry has led the community in water conservation. He asked that the Authority and CPUC do Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, April 14, 2016 7 MPRWA Minutes Thursday, April 14, 2016 whatever is needed to expedite this permitting process.  Gary Cursio, representing Government Affairs, expressed concern about the community and the threat of the CDO.  Frank Emerson, said that Steelhead in the Carmel River have been affected, and if an alternate water supply was available this wouldn’t have happened.  Michael Bear, requested that the CPUC help encourage extension of CDO.  George Riley, TAC Member, said that part of the reason for the EIR delays is due to Cal Am. He added that slant well data analysis is still to come, and the MPRWA should look at alternative projects in Moss Landing.  Dan Lamstand, from Community Hospital, said that the CDO is affecting the Hospital’s patient services. He requested that the CPUC repackage and reprioritize the schedule and help get the extension on the CDO.  A member of the public said that a 1 year delay on the EIR schedule is unacceptable. She requested that the CPUC outsource to get the process done faster. Receiving no further requests to speak, President Burnett closed public comments. Rami Kahlon, CPUC, addressed the public saying that he understands the frustrations of the community. He will go back to his staff to try to expedite the EIR schedule. Mary Jo, CPUC, said that they will continue to look for ways to shorten the time frame for the EIR. She said the CPUC has asked for more resources and staff to work on this. Jason Reiger said CPUC attorneys are already working with the State Water Board on getting the 5 year extension on the CDO. The Board asked the CPUC questions about the draft EIR:  Why does it take 1.5 yrs to address the EIR? Jason Reiger responded that water modeling is very extensive to address the public comments, and the National Environmental Policy Act (NEPA) has a process as well. He said the CPUC trying to coordinate with Federal Government agencies on this.  Shouldn’t there be a melding between the NEPA and the CEQA? Jason Reiger responded that there is a consultant working on melding the two. Mary Jo said it will be one combined document not two separate. PUC does a lot of combined documents.  Why are there 8 months in between the draft EIR and the final EIR? Jason Reiger responded that the timeframe is driven by the public asking questions and having to provide answers. He said there is a team working on several aspects of the questions, and they want to make sure they are answered correctly.  What can the Authority do to help expedite the CPUC’s schedule? GWR already has broad support, a pipeline, and an EIR. Jason Reiger responded that they will have an open dialogue and communication with the Authority and will request assistance whenever it is needed. Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, April 14, 2016 8  MPRWA Minutes Thursday, April 14, 2016 The Directors of the Authority voiced concerns about the schedule model and asked the CPUC what can be done to speed up the process. The Board also questioned whether there is a funding or staff shortage on the CPUC level. Mary Jo responded that the modeling requires a lot of computer power to run the models and there are few people who have the expertise to analyze the data, and they've hired all the experts. She stated that the CPUC is working on getting more staff. The Board expressed their thanks to the CPUC to come to the workshop and listen to the concerns of the community and give hope. The Board collectively told the CPUC that they are willing to help in any way possible to expedite the process and requested updates on the progress and EIR schedule whenever possible. Mr. Reiger said he would give the Authority frequent updates. 12. Receive Report, Discuss, Provide Staff Direction, and Authorize Preparation of a Letter to the State Water Resources Control Board (SWRCB) on Proposed Modifications to the Previously Submitted CDO Extension Application so as to Incorporate the CPUC EIR/EIS Schedule Delay - Cullem Action: Continued to a future meeting The Board agreed to continue this item to a future meeting. ADJOURNMENT The meeting was adjourned at 9:00pm. ATTEST: Nova Romero, Clerk of the Authority MPRWA President Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, April 14, 2016 9