II. PLEDGE OF ALLEGIANCE

The following comments were directed to the Board during Oral Communications. (1) Edwin Lee, resident of Carmel, recommended that the Board refrain from taking action to approve the General Manager employment contract. (2) John Fischer, resident of Pacific Grove, stated that he understood that it was necessary to offer a high salary to the General Manager candidate. His concern was that other staff members would request pay raises in order to maintain the current percentage of difference between their salaries. (3) Robert Greenwood, representing the Carmel Valley Property Owners Association, read a letter on file at the District office dated May 31, 2001. Mr. Greenwood advocated Board review of water credit transfer approvals and urged that public hearings be conducted on all approvals recommended by staff. (4) Fran Farina, representing Save Our Carmel River (SOCR), expressed agreement with the statement made by Robert Greenwood. (5) David Dilworth, representing Responsible Consumers of the Monterey Peninsula, repeated a request he made one year ago that the District update the 1990 Water Allocation Program EIR. Mr. Dilworth repeated another request he made one year ago, that the District provide Board packets at no charge to people that are representing public interests.

III. ORAL COMMUNICATIONS

General Manager Fuerst reviewed action taken by the Board at the 3 PM session.

IV PRESENTATIONS

• General Manager's Report

1. Update on Strategic Plan

District Counsel Laredo reported that the Directors engaged in extensive comments on the performance of District Counsel and reviewed progress on the General Manager recruitment process. No action was taken at the meeting. Mr. Laredo announced that the closed session had been continued and would reopen upon adjournment of the 7 PM workshop.

a. Proposal from Director Henson that the Board Review its Policies Concerning the Use of Fixtures for Determining Remodeling Proposals

Director Erickson requested that the full Board make a determination on Chair Potter's decision that water credit transfer applications would be processed by staff. She requested that until the full Board discussed the issue, any water credit transfer approved by staff should require that a deed restriction be placed on all properties associated with the water transfer. The deed restriction would require that water use be monitored. In addition, she requested that staff prepare a weekly report to the Board that lists all pending, approved and finalized water credit transfers. Chair Potter directed that this item be considered by the Administrative Committee and brought before the Board in an expedient manner for a policy decision.

b. Request from Director Erickson for Board Review of Water Credit Transfer Approval Procedure

Eric Zigas of EDAW, the consulting firm retained by the Public Utilities Commission to identify the long-term alternative water supply project referred to as Plan B, spoke on the progress to date. A summary of his presentation is on file at the District office.

Following the presentation, the Directors posed questions to Mr. Zigas. A summary of his responses is presented here. (1) The Plan B report does not address dredging of San Clemente Reservoir or retrofitting of the San Clemente Dam. The District could consider the additional yield from those projects as a possible future water augmentation project apart from Plan B. (2) Mr. Zigas could not provide an estimate of increased project costs due to the rise in energy prices. (3) The cost to increase the size of a desalination project from 3 million gallons per day (MGD) to 6 MGD should not exceed $40 million. (4) The engineering details related to Plan B should be provided to the public by August 2001. (5) The project yield of 10,730 acre-feet was established upon review of AB1182, the legislation that mandated preparation of Plan B.

The following comments were directed to the Board during the public comment period on this item. (1) Fred Keeley, Speaker Pro Tem of the California State Assembly, stated that the State Water Resources Control Board is receptive to the District's proposal to utilize water rights previously granted in SWRCB Decision 1632. That policy change allows modifications to Plan B which make it more economical. The community has the flexibility to utilize a combination of desalination, aquifer storage and/or an expansion of water rights. Assemblyman Keeley noted that desalination is problematic in many ways, but it should not be abandoned due to concerns about energy costs. According to Speaker Pro Tem Keeley, energy prices are on a downward curve. Approximately 5,000 megawatts of electricity will be produced by power generation facilities currently under construction, and facilities able to produce another 5,000 megawatts of electricity will be under construct within a year. Within 18 months there will be a surplus of energy supplies within California. In addition, the cost of natural gas is projected to come down in the future. And the new, more efficient power generation facilities will require less natural gas to operate. Speaker Pro Tem Keeley responded to questions raised by the Directors. A summary of his comments is presented here. (A) The 10,730 acre-foot project yield was based on development of a plan that would compare on an equal level with the operational upper limit of Cal-Am's proposed Carmel River Dam and Reservoir Project. If the community chose not to approve construction of a dam, a legitimate, viable option to the dam would be available. (B) Originally, the Department of Finance recommended that residents of the District fund the entire cost of the Plan B studies. Eventually, it was decided that some money will be available from a fund established by the State to assist communities that are dealing with water supply issues. Mr. Keeley explained that every California water rate payer contributes to this state-wide fund, so rate payers throughout California will contribute to funding the Plan B study. (2) Edwin Lee proposed that any water supply project selected should create streamflow down the Carmel River during the summer months at rates recorded in 1960. He opined that the SWRCB should not grant the District additional water rights unless they require that streamflow in the Carmel River is maintained at 1960 levels. Mr. Lee stated that the Board has an obligation to set an election soon that offers the voters the choice of selecting either a dam or Plan B. (3) John Fischer, resident of Pacific Grove, suggested that the stormwater system could be connected to the sewer system to provide additional water for reclamation. He also proposed that collecting stormwater on Fort Ord could increase water storage. Mr. Fischer asked who would be investigating the possibilities of dredging, since it is not in the MPWMD budget nor planned for extensive review in the Plan B study. (4) Tex Irwin spoke in support of storing water on Fort Ord depression areas. He noted that if Cal-Am pumps and transmission lines were adequate, more water could be pumped from the Carmel Valley during high flow periods, stored in depression areas, then treated and injected into the Seaside Basin. (5) Jim Hughes, representing Water For Us, reminded the Board that jurisdictions within the District estimated that their future water needs through the year 2020 would be approximately 3,500 acre-feet, which is 100 acre-feet more than the New Los Padres Dam project would have provided. He advised that when the Santa Barbara desalination plant was operational, it was the largest power user in Santa Barbara County. Mr. Hughes suggested that the District reconsider off-stream storage such as the Cañada Reservoir project. (6) Robert McKenzie, resident of the District, described Plan B as a "cruel hoax" that will condemn the Monterey Peninsula to years of "third world consumption levels" because it does not provide water for lots of record or any future needs. He stated that the Carmel River Dam project that yields 10,730 acre-feet could be augmented by desalination or injection and recovery. However, Plan B is limited because it has subsumed the alternative water supply options. (7) William Woodworth urged the Board to be aware that the Plan B options will affect beach environments on the Monterey Peninsula, which are critical to the economy of our region. He warned the Board to cease consideration of desalination and to focus on development of stormwater reclamation projects. (8) Lou Haddad, representing the Alliance of Citizens with Water Alternatives that consists of about five dozen members. Mr. Haddad read a letter dated May 31, 2001 that is on file at the District office. The letter contained a proposal for an alternative to Plan B that he described as Plan C. Mr. Haddad's proposal includes 4,400 acre-feet of water that might be obtained from a Pueblo water rights claim. (9) Fran Farina, representing SOCR, requested that the Board provide a clear explanation of its petition to the SWRCB for a change order of SWRCB Decision 1632. She explained that the public needed more information on the increased water rights component of Plan B if comments were to be submitted by June 15, 2001. Ms. Farina described the proposal as "smoke and mirrors" because the 3,376 acre-feet that Cal-Am has a legal right to produce, plus the 7,909 acre-feet of additional water rights is equal to 11,285 acre-feet of water. District Counsel Laredo stated that the Board provided direction to staff on preparation of a change petition, but no application has been filed. (10) James Bajari asked for clarification of the term "no project alternatives" that was mentioned in a notice sent out by the PUC advertising the workshop. (11) David Dilworth, representing Helping Our Peninsula's Environment, stated that the list of alternatives under consideration in Plan B is too narrow. The list should include a plan to repair leaks in the Cal-Am system, dredge reservoirs on the Carmel River, and preparation of a project level analysis of the desalination proposal. He cautioned the Board that storing water on Fort Ord could be problematic because of groundwater pollution in that area. Mr. Dilworth asked for an estimate of desalination project costs based on the recent increase in energy prices. He requested that the PUC notify him of any future meetings regarding Plan B.

V. PRESENTATION BY CALIFORNIA PUBLIC UTILITIES COMMISSION CONSULTANT, EDAW, INC. ON PLAN B LONG-TERM WATER SUPPLY ALTERNATIVE

V. PRESENTATION BY CALIFORNIA PUBLIC UTILITIES COMMISSION CONSULTANT, EDAW, INC. ON PLAN B LONG-TERM WATER SUPPLY ALTERNATIVE

V. PRESENTATION BY CALIFORNIA PUBLIC UTILITIES COMMISSION CONSULTANT, EDAW, INC. ON PLAN B LONG-TERM WATER SUPPLY ALTERNATIVE

V. PRESENTATION BY CALIFORNIA PUBLIC UTILITIES COMMISSION CONSULTANT, EDAW, INC. ON PLAN B LONG-TERM WATER SUPPLY ALTERNATIVE

The meeting was adjourned to Closed Session at 9:05 PM. The Closed Session adjourned at approximately 10:00 PM.

VI. ADJOURNMENT