Monterey Peninsula Regional Water Authority

MINUTES MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA) AND TECHNICAL ADVISORY COMMITTEE (TAC) JOINT MEETING 7:00 PM, Thursday, August 11, 2016 COUNCIL CHAMBERS 580 PACIFIC STREET MONTEREY, CALIFORNIA Directors Present: Director Dallas, Director Edelen, Director Pendergrass, Director Roberson, Director Rubio, President Kampe Directors Absent: None TAC Members Present: Alternate Dick, Member Riedl, Member Riley, Member Sciuto, Member Stoldt, Member VanDerMaaten, Executive Director Cullem TAC Members Absent: Member Huss, Member Narigi Staff Present: Legal Counsel Freeman, Authority Clerk Romero CALL TO ORDER President Kampe called the Director’s meeting to order at 7:00pm. Executive Director Cullem called the TAC meeting to order at 7:02pm. ROLL CALL PLEDGE OF ALLEGIANCE REPORTS FROM BOARD DIRECTORS AND STAFF None PUBLIC COMMENTS  Charles Chech, Monterey resident, gave a short presentation on the Monterey Peninsula pipeline. He said that California American Water’s (Cal Am) Monterey Pipeline is going to be extremely costly to rate payers and proposed an alternate route. CONSENT AGENDA Executive Director Cullem requested to remove items 2 and 3, which were not ready. Director Roberson commented that the Monterey City Council is concerned about the Authority budget and the approval process for legal expenses, and requested discussion on the matter at a future meeting. PUBLIC COMMENTS None  MPRWA Minutes Thursday, August 11, 2016 On a motion by Director Pendergrass, seconded by Director Edelen, and carried by the following vote, the Monterey Peninsula Regional Water Authority Approved the Consent Agenda, with the exception of items 2 & 3 which were removed: AYES: 6 DIRECTORS: Dallas, Edelen, Pendergrass, Roberson, Rubio, Kampe NOES: 0 DIRECTORS: None ABSENT: 0 DIRECTORS: None ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None 1. Approve Minutes of Director's Meeting of July 14, 2016 Action: Approved 2. Approve and File Authority Checks Through July 31, 2016 Action: Removed 3. Receive Report on FY 2015-2016 Year-End Financial Status Action: Removed 4. Receive Report and Copies of the Motion to Strike and Comment Letters on the Marina Coast Water District Motion to Delay CPUC Hearings on the Return Water Agreement and the Brine Disposal Agreement Action: Approved 5. Receive Report on Decision of the State Water Resources Control Board (SWRCB) on the Cease and Desist Order (CDO) 2009-0060 Extension Application Action: Approved 6. Appoint Councilmember Bill Peake of Pacific Grove to the Technical Advisory Committee Action: Approved ***End of Consent Agenda*** AGENDA ITEMS 7. Receive a Report and Provide Direction on the Contract for the Executive Director Action: Received Report and Discussed; Authority will negotiate a new Executive Director Contract with Cullem Management Services, LLC Executive Director Cullem stated that the City of Monterey has elected to not renew his Executive Director Contract which expires August 15, 2016. He said that the Authority could contract with him directly, through Cullem Management Services, LLC. He gave other options for Executive Director (ED) services, including rotating ED duties between City Managers, obtain ED on a pro bono basis, contract for part time ED, or competitively advertise and award a contract for an ED. PUBLIC COMMENTS  Michael Warburton, Public Trust Alliance, questioned if the Executive Director position gives direction to the Authority to investigate alternate water supply projects besides Cal Am’s project. Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, August 11, 2016 2  MPRWA Minutes Thursday, August 11, 2016 Director Roberson clarified that the City of Monterey wanted to extend the contract for Mr. Cullem as Executive Director; however it is a California Public Employees’ Retirement System (CalPERS) issue that they cannot renew his contract. It was moved by Director Roberson, and seconded by Director Dallas, to negotiate a contract for Executive Director services with Cullem Management Services, LLC. Director Rubio suggested designating himself and President Kampe to negotiate a contract with Cullem Management Services, LLC in closed session and then bring it to the Authority. Director Roberson asked to amend his motion, seconded by Director Dallas, and carried by the following vote, the Monterey Peninsula Regional Water Authority designees will negotiate a contract for Executive Director Services for the Authority with Cullem Management Services, LLC: AYES: 6 DIRECTORS: Dallas, Edelen, Pendergrass, Roberson, Rubio, Kampe NOES: 0 DIRECTORS: None ABSENT: 0 DIRECTORS: None ABSTAIN: 0 DIRECTORS: None RECUSED: 0 DIRECTORS: None President Kampe noted that in the past the Authority tried to rotate the position of the ED between several people but it didn't work and there was a lack of continuity. 8. Receive an Update on the Summary Project Schedule for the Monterey Peninsula Water Supply Project (MPWSP) Action: Received Update Ian Crooks from California American Water (Cal Am) gave a presentation on the schedule for the Monterey Peninsula Water Supply Project (MPWSP) and the milestones that need to be reached: o The Environmental Impact Report (EIR/EIS) schedule has not changed since March 2016; it is still waiting for the California Public Utilities Commission (CPUC) final approval which is anticipated to be ready in November, 2017. o The test slant wells have been pumping for 275 days, and are successful at 92% salinity. o The Monterey Pipeline and Aquifer Storage Recovery (ASR) Pump Station are expected to deliver water by 2018. o The Desal plant is expected to start up in 2019 or 2020. PUBLIC COMMENTS  Ms. Rosenthal, a resident, questioned what 92% salinity refers to in Mr. Crooks’ update. Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, August 11, 2016 3  MPRWA Minutes Thursday, August 11, 2016  Tom Rowley, Monterey Peninsula Taxpayers Association (MPTA), questioned if the MPWSP schedule is temporary or long term.  Michael Warburton, Public Trust Alliance, questioned if the schedule allows the time to investigate other alternatives to the MPWSP.  Chuck Cech, asked for clarification from Cal Am if their test slant wells will be terminated. Ian Crooks, Cal Am, addressed the public comments. He explained that 92% salinity refers to the percentage of total dissolved solids (TDS) and the amount of the Monterey Bay ocean water being captured by the test slant wells. He said the test wells will not be terminated, they are still pumping it's just no longer on the schedule because it isn’t pertinent to the overall schedule. Director Roberson asked how the excess river water stored in Aquifer Storage Recovery (ASR) in the Seaside basin will be distributed. Mr. Crooks explained that the purpose of the new pipeline would reverse the way the water supply is carried, which the current system doesn’t allow. Mr. Crooks said the new pipeline would allow water from Seaside to be carried and distributed across the system. 9. Receive Presentation, Discuss, and Provide Staff Direction on the People's Desal Project Action: Received Presentation; Discussed (43 min) David Balch gave a presentation on the People's Desal Project. He gave a handout which outlined the following: o Project description: stand-alone desalination facility, capable of producing 13,404 acre feet per year of reverse osmosis water with proposed screened ocean intake o Estimated costs: $2,260 per acre foot, plus facility and pipeline costs o Project advantages: Site has existing pipeline running under property, existing infrastructure, zoned industrial, and was CPUC approved in 2002 for water desal project, o Project schedule: desal plant estimated to be operational and deliver water by February, 2020 Mr. Balch answered the questions that were asked by the Authority regarding approval for the project, overall project features, facilities layout, potential water purchasers, intake and outfall strategy, Environmental Impact Report (EIR) timeline, potential hurdles, status of state permits, financial status, and the overall schedule for delivery of water. Mr. Balch stated that there are issues with Cal Am's return Water Purchase Agreement (WPA) with Castroville because exporting groundwater is illegal and Cal Am will be facing a lawsuit. He questioned whether the Authority is ready to stand by a project with litigation risks. He explained that the People's Project already has a pipeline in place, but is lacking political support and funding. PUBLIC COMMENTS Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, August 11, 2016 4  MPRWA Minutes Thursday, August 11, 2016  Michael Warburton, Public Trust Alliance, said that there are better projects for the environment than the one Cal Am has proposed and other alternatives should be considered.  Ian Crooks, Cal Am, questioned when the 85 page report regarding intakes from the People’s Project consultant would be made available to the public. He also said he would like to see the public document that says the Marine Sanctuary is the lead agency. The Authority asked David Balch who is funding the People’s Project, and questioned how the funding fits into the timeline. Mr. Balch responded the local public agencies are waiting for the draft EIR to become certified before discussing the formation of a Joint Powers Agreement (JPA). He stating that financing would be obtained concurrently during the permitting period, either privately or publicly, and have looked into 40 year bond financing at 4.3%. Member Stoldt stated that a water purchasing agreement needs to be in place for financing. Director Edelen suggested that it would be beneficial for the People’s Project to find common ground with other desal projects and work together instead of competing against each other. Member Sciuto questioned if design for the desal project has begun and if it has been funded. Mr. Balch responded that the design is currently 15% complete pending the EIR, and completed design still needs to be funded. Mr. Balch addressed Mr. Crooks saying that he anticipates the Marine Sanctuary will be formally retained as the National Environment Policy Act (NEPA) lead agency in the next couple months. He also said that the 85 page report is a draft appendix to the EIR and it will be published for the public. Director Roberson questioned if Cal Am purchases the water from the People's Project, what the cost to the rate payers will be. Mr. Balch responded that Cal Am will charge the ratepayers a surcharge for delivery of water. Director Roberson requested a cost comparison between the cost to the rate payer between Cal Am and the People’s Project. President Kampe asked Don Freeman, Legal Counsel, to comment on the assertion that the Castroville WPA is illegal. Mr. Freeman responded that the Authority is not part of the lawsuit and should not comment or get involved. Director Rubio questioned if the pipeline costs have been included in the project cost estimate. Mr. Balch responded that the pipeline route is in the EIR, but the pipeline construction cost is an unknown. 10. Receive Presentation, Discuss, and Provide Staff Direction on the Deep Water Desal Project Action: Received Presentation; Discussed Kim Adamson, Deep Water Desal General Manager, gave a presentation on the Deep Water Desal Project (DWD). Ms. Adamson gave an overview stating the following: o Project overview: DWD is a seawater reverse osmosis desalination plant. The project site location in Moss Landing includes an electrical substation and data center. o Deep water desalination benefits: low pre-treatment cost, cold water reduces energy costs, less impact on the environment. o The need for water: is affected by the Sustainable Groundwater Management Act, and surface water cutbacks. o Partnership structure and estimated costs: DWD is a “build, operate, transfer” model. A Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, August 11, 2016 5 MPRWA Minutes Thursday, August 11, 2016 private company would fund the project and a JPA would purchase the water and plant over 30 years and become owners. o Energy savings from the Data Center are passed on to water off-takers, resulting in lower cost per acre foot. o Estimated project finish date: March, 2018 o Estimated total cost of project: $320 million PUBLIC COMMENTS  Luke Colletti, Pacific Grove resident, said the improved efficiency of DWD relies on the inefficiency of the Data Center.  Andrew Bell, Monterey Peninsula resident, said he wants to know who would be the project owner of DWD. He requested that the presentations to be made available to the public.  Libby Downey, Monterey Councilmember, she suggested that the Authority evaluate DWD and the People's Projects more than once a year, and not only look at Cal Am's project.  Bill Peak, Pacific Grove Councilmember, asked what the cost per acre foot for the DWD water is.  Mr. Whitesman, a resident, asked what the cost per acre foot DWD water is, once it reaches Cal Am.  Tom Rowley, MPTA, said that the Authority has looked at all the different projects all along and the taxpayers are looking to the Authority to find solutions.  Michael Warburton, Public Trust Alliance, commented that the need for water needs to be presented and water use needs to be more efficient. He said these projects are very expensive and there are other less expensive alternatives.  Paul Michelle from the Marine Sanctuary, said the DWD schedule was given to him today, which says the earliest draft EIR for DWD will be available is in the Fall of 2017. He requested that that be clarified.  Rudy Fisher, Pacific Grove Councilmember, said we have to use less water from the Carmel River and Seaside Aquifer as the community continues to grow. He opined that the water projects go forward because the Peninsula needs it.  David Balch, People's Project, questioned if the DWD project is possible without the data center and if so what the cost of the project would be without it. He also asked if the data center is included in the EIR, and what the timeline is.  Ian Crooks, Cal Am, asked for clarification on the DWD project regarding the amount of coastline needed, the cost of project compared to others, and what happens if there is no data center. He said that Cal Am has proven that slant wells are feasible. Member Riley asked if Cal Am’s desal project fails if the taxpayers will have stranded costs. He stated that if other projects are funded privately ratepayers will not have stranded costs if they fail. Director Rubio requested clarification on the cost per acre foot for delivery of water from DWD. Ms. Adamson responded that that the cost per acre foot for water is under $2000, and DWD is Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, August 11, 2016 6 MPRWA Minutes Thursday, August 11, 2016 fine tuning the amount being offset by the data center. She clarified that DWD is able to be a standalone project without the data center, but both are being included in the EIR. She said that there would be a three way shared cost with Cal Am and Castroville for the Monterey Pipeline. Member Riedl asked how much of DWD is in the coastal zone, and Mr. Adamson responded that the entire project is in the coastal zone and requires Coastal Commission approval. Ms. Adamson said in response to earlier questions about the cost of water to the ratepayer that the CPUC controls the ratepayer cost of water regardless of the source. She stated that DWD is a regional project and is moving forward regardless if slant wells are proven to be feasible. President Kampe asked for clarification on the role of the JPA for DWD and what public ownership would mean. Ms. Adamson responded that the JPA would be the water off-taker and would be purchasing the plant, and it would be a public-private partnership. Director Rubio requested clarification on the DWD project start and finish. Ms. Adamson responded if permitting goes the way is it supposed to go, the project should start in about start in about 18 months and finish is 2020, similar to Cal Am's timeline. She responded to an earlier public comment that the need for water is not based on assumptions, it is based on science. She added that there is no more water conservation that can be done, that Monterey already has the lowest per capita rates of water consumption in the State. ADJOURNMENT Having no further discussion, President Kampe adjourned the Joint Meeting at 10:00pm. ATTEST: Nova Romero, Authority Clerk MPRWA President Monterey Peninsula Regional Water Authority Director's Meeting Minutes - Thursday, August 11, 2016 7