FINAL MINUTES Regular Meeting Board of Directors Monterey Peninsula Water Management District November 21, 2005

The meeting was called to order at 7:00 PM in the Boardroom of the offices of the Monterey Regional Water Pollution Control Agency. Board members present: Larry Foy, Chair – Division 5 Kristi Markey, Vice Chair – Division 3 (Arrived after the Pledge of Allegiance) Judi Lehman – Division 2 Alvin Edwards – Division 1 David Pendergrass – Mayoral Representative David Potter – Monterey County Board of Supervisors Board members absent: Michelle Knight – Division 4 General Manager present: David A. Berger District Counsel present: David C. Laredo The assembly recited the Pledge of Allegiance. The following comments were directed to the Board during Oral Communications. (1) Steven Leonard, California American Water (Cal Am), congratulated Judi Lehman and Alvin Edwards on their reelection to the Board of Directors. He announced that Cal Am’s parent company, RWE, has plans to divest itself of the water systems it owns. The Monterey system would not be sold as a separate entity. Cal Am will continue to pursue development of a water supply. Mr. Leonard stated that he was looking forward to increased cooperation between the District and Cal Am. (2) Roy Kaminski presented two charts which illustrated his assumption that there is no water shortage. He reasoned that adequate water is available because the Carmel River aquifer contains approximately 30,000 acre-feet of useable water, and about 26,000 acre-feet are in the aquifer at any given time of the year. (3) Lou Haddad asked if public comment would be received on agenda items 9, 10, 11 and 12. Chair Foy replied that those items are routine reports to the Board, and public comment is not usually received on them but the Board would receive Mr. Haddad’s comments. (4) George Riley, a resident of Monterey, stated that the defeat of Measure W could be interpreted as a message from the voters that development of a water supply project is a higher priority than public ownership of the water system. Mr. Riley identified the Pajaro/Sunny Mesa Community Services District (PSMCSD) proposal for a regional desalination project as the project that could be developed faster than any other alternative. (5) Paul Bruno stated that it would be a mistake to pursue development of the PSMCSD desalination project. He urged the Board to work with Cal Am on development of the Coastal Water Project. On a motion by Director Edwards and second by Director Pendergrass, the Consent Calendar was approved unanimously on a vote of 6 – 0. Director Knight was absent. Henrietta Stern, Project Manager, presented the report. A summary is on file at the District office. In response to a question from the Board, Ms. Stern advised that PSMCSD has not submitted updates on technical details of its proposed project that could be added to the Matrix of Water Supply Options. The District has received periodic reports from Mark Del Piero of PSMCSD on general news that is relevant to development of desalination projects. Darby Fuerst, Senior Hydrologist, reported that between October 1, 2005 and November 15, 2005 Cal Am production from the Carmel River was 1,191 acre-feet of water. Cal Am’s production from the Carmel River for Water Year 2006 was 52 acre-feet below the limit established by State Water Resources Control Board (SWRCB) Order 95-10. A detailed summary of his report is on file at the District office. In response to a question from the Board, Mr. Fuerst advised that Cal Am filed the only objection to the District’s application for a permit to divert water from the Carmel River for the Aquifer Storage and Recovery 2006 Test Program. The District has filed a response with the SWRCB. A permit could be issued by the SWRCB once they resolve the issues raised by Cal Am in their protest. District Counsel David Laredo reported that a status report was provided on Closed Session agenda items 3-A through 3-F. No reportable action was taken. He noted that Case No. M76435, Monterey Peninsula Taxpayers Association versus MPWMD, has been dismissed without prejudice. The District will not be responsible for payment of any fees or costs. Regarding Item 4, Conference with Labor Negotiators, on a motion by Director Markey and second by Directors Edwards, the Board approved Memorandums of Understanding with the District’s three bargaining units. The motion was approved on a vote of 4 – 0. Directors Edwards, Foy, Lehman and Pendergrass voted in favor of the motion. Directors Knight, Markey and Potter were not present for the vote. Each bargaining unit added a reimbursement for dependent coverage and payment of supplemental insurance premiums to the opt-out provision of their contracts. The amendments make it clear that the tool for reimbursement for spousal health plan premiums and payment of supplemental insurance for employees opting out of the District health plan could not exceed 75% of the health plan premiums for each unit. The amendments take effect on December 1, 2005. The union has withdrawn the grievance outlined in agenda item 14. Item 5, the evaluation of the General Manager, did occur but no reportable action was taken. Director Edwards requested that at the January 26 or February 23, 2006 meeting, the Board consider entering into a Memorandum of Understanding (MOU) or Joint Powers Agreement (JPA) with PSMCSD on a water supply project. District Counsel should meet with PSMCSD staff to develop an agreement that specifies development of a project that would provide enough water for lots of record within the District, and an additional 10,730 acre-feet of water that could be incorporated into an aquifer storage and recovery project. The MOU or JPA should quantify the final cost of water from the project, and set forth a penalty if the water is not delivered by a specific date. Chair Foy determined that this item would be placed on the December 12, 2005 Board meeting agenda for discussion. At that time, the Board could decide if it should pursue development of an MOU or JPA with the PSMCSD. On a motion by Director Edwards and second by Director Pendergrass, the Board voted to: approve the application for a variance to Rule 22; adopt Findings of Approval for Application No. 20050413SLC; approve Application No. 20050413SLC and authorize issuance of MPWMD Permit No. M05-04 with the Conditions of Approval. The motion was approved on a vote of 5 – 1. Directors Edwards, Foy, Lehman, Pendergrass and Potter voted in favor of the motion. Director Markey was opposed. The following comments were received during the public hearing on this item. (1) Denise Duffy, representing the Santa Lucia Community Services District (SLCSD), expressed agreement with the staff recommendation. According to Ms. Duffy there is no relationship between the Goodrich Line and Moore’s Lake, which is not part of the SLCSD water distribution system. In addition, the California Department of Fish and Game and the Department of Water Resources have established a protocol for operation of Moore’s Lake. (2) Robert Greenwood stated that “there could be issues” with wells located near Potrero Creek. There was no discussion of this item. The grievance had been withdrawn by Laborer’s International Union of North America Local 270. On a motion by Director Potter and second by Director Foy, the report was unanimously received by the Board of Directors on a vote of 6 – 0. Director Knight was absent. The following comments were received during the public comment period on this item. (1) Robert Greenwood, representing the Carmel Valley Association, stated that it is difficult for the rate payers to maintain confidence in Cal Am. He noted that Cal Am proposes to pump 5,100 acre-feet of water per year from the Seaside Basin, but the safe yield from the basin is 2,900 acre-feet per year. (2) John Fischer asked the Board if it was realistic to assume that the Seaside Basin Management Plan Committee could make a recommendation to the Board when so much is not known about the Seaside Basin. (3) Steven Leonard, Cal Am, described aquifer storage and recovery as a three-legged stool: treating water taken out of the Carmel River, identifying a location to store the water, and distribution of that water. He believes the water rights issues could be resolved. He noted that Cal Am has been working with NOAA Fisheries on a mitigation strategy. On a motion by Director Potter and second by Director Markey, a report from District staff was unanimously received by the Board of Directors on a vote of 6 – 0. Director Knight was absent. The Board agreed by consensus to approve the recommended meeting schedule. During the public comment period on this item, Robert Greenwood requested that the study sessions be conducted somewhere other than the Ryan Ranch area. The Board agreed by consensus to conduct a workshop on Aquifer Storage and Recovery in January 2006, and that the public hearing on the Draft EIR on the Phase 1 Aquifer Storage and Recovery Project should also be conducted that same evening. This schedule could result in extending the public comment period on the EIR by one week. There was no discussion of these items. The meeting was adjourned at 9:25 PM.

CALL TO ORDER/ROLL CALL PLEDGE OF ALLEGIANCE ORAL COMMUNICATIONS CONSENT CALENDAR 1. Consider Adoption of Minutes of the October 17, 2005 Regular Board Meeting 2. Adopt Board Meeting Schedule for 2006 3. Authorize Expenditure of Budgeted Funds to Conduct Water Year 2006 Seaside Basin Aquifer Storage and Recovery Testing Program 4. Consider Adoption of Amendment to MPWMD Meeting Rule No. 6 – Board Spokesperson 5. Consider Appointment of Director Lehman as Voting Delegate to November 2005 Conference of the Association of California Water Agencies 6. Consider Approval of First Quarter FY 2005-06 Investment Report 7. Consider Adoption of Treasurer’s Report for July 2005 8. Consider Adoption of Treasurer’s Report for August 2005 PRESENTATIONS 9. Water Supply project Alternatives Update GENERAL MANAGER’S REPORT 10. Status Report on California-American Water Compliance with State Water Resources Control Board Order 95-10 ATTORNEY’S REPORT 11. Report on 5:30 PM Closed Session of the Board DIRECTORS’ REPORTS 12. Oral Reports on Activities of County, Cities, Other Agencies/Committees/ Associations PUBLIC HEARINGS 13. Consider Application to Amend Goodrich Line Water Distribution System (Potrero Subdivision) and Application for Variance to Rule 22; Application No. 20050413SLC; APN 239-102-001 and 003 ACTION ITEMS 14. Consider Hearing Officer’s Findings and Recommendations on Grievance Appeal by Laborers’ International Union of North America Local 270 15. Receive Update on Agreement with California American Water Regarding Management and Operation of Seaside Basin Aquifer Storage and Recovery Facilities 16. Discuss Board Options in the Event Agreement is not Reached with California American Water on the Aquifer Storage and Recovery Project Memorandum of Agreement, Including Becoming a Licensed Water Distributor 17. Approve Meeting Schedule and Expenditure of Funds to Conduct Board Workshops on: Governance Structure for Regional urban Water Supply Project; Aquifer Storage and Recovery; Water Needs Analysis – Existing Setting and Demand; Water Needs Analysis – Future Demand at Buildout; Water Augmentation Alternatives; Water Project Cost and Timeline Analysis 18. Consider Holding Hearing to Receive Oral Public Comments on the Draft EIR on the Phase 1 Aquifer Storage and Recovery Project and Determine Whether or Not to Conduct a Workshop INFORMATIONAL ITEMS/STAFF REPORTS 19. Letters Received 20. Committee Reports 21. Strategic Planning Initiatives Progress Report 22. Carmel River Fishery Report 23. Water Conservation Program Report 24. Monthly Allocation Report 25. Monthly California-American Water Production Report 26. Monthly Water Supply Status Report ADJOURNMENT IN MEMORY OF FORMER DIRECTOR WILLIAM “WOODY” WOODWORTH

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David A. Berger, Secretary to the Board

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