FINAL MINUTES Regular Meeting Board of Directors Monterey Peninsula Water Management District September 17, 2007

The meeting was called to order at 7 PM in the Conference Room of the Monterey Peninsula Water Management District offices. Directors Present: David Pendergrass, Chair – Mayoral Representative Alvin Edwards, Vice Chair – Division 1 Judi Lehman – Division 2 Kristi Markey – Division 3 Michelle Knight – Division 4 Larry Foy – Division 5 David Potter – Monterey County Board of Supervisors Directors Absent: None General Manager present: David A. Berger District Counsel present: David Laredo The assembly recited the Pledge of Allegiance The following comments were directed to the Board during Oral Communications. (1) Bob Brower introduced himself as a candidate for the November 6, 2007 election in Voter Division 5. (2) Lee Yarborough introduced himself as a candidate for the November 6, 2007 election in Voter Division 4. On a motion by Director Edwards and second by Director Foy, the Consent Calendar was adopted unanimously on a vote of 7 – 0. Approved. Approved. Approved. Approved. Approved. Approved. Approved. Approved. Approved. Keith Israel, General Manager of the Monterey Regional Water Pollution Control Agency (MRWPCA), gave a presentation on the recycled water component of the Regional Urban Water Augmentation Project (RUWA Project) proposed for Monterey Peninsula parks, golf courses, and other open spaces now irrigated with potable water. A summary of his report is available at the District office and on the District website. Mr. Israel responded to several questions from Board members on the cost and other aspects of the RUWA Project, including the fact that MRWPCA’s legislative advocates in Washington and Sacramento have been unable to identify available grant funds to reduce its cost impact on potential users. There was consensus among the Board members to refer this item to the Water Demand Committee, with input from the Policy Advisory and Technical Advisory committees, for development of a Subpotable Water Use Credit Ordinance for Board consideration to serve as an incentive to convert from potable to recycled and reclaimed water irrigation. The Committee should include in the proposed ordinance a transfer provision, and expand the scope of any new regulation beyond sub-potable water sources envisioned by MRWPCA to include other sub-potable water sources proposed as a replacement supply. The following comments were directed to the Board during the public comment period on this item. (1) Lee Yarborough suggested that grant funds might be available for the RUWA from programs to protect the Marine Sanctuary. He reasoned it could be shown that the RUWA Project would reduce stormwater and pollutants from running into the Monterey Bay. (2) John Bridges, expressed support for the establishment of an on-site water use credit for replacement of California American Water (CAW) production with another source, such as a new well. (3) Gary Bales, resident of Pacific Grove and member of the Calvary Chapel congregation, offered to work with the Board on development of rules that would allow establishment of an on-site water use credit for replacement of California American Water production with water from a new well on Calvary Chapel’s property. (4) John Aime, Assistant Director of Santa Catalina School, expressed support for establishment of an on-site water use credit for replacement of CAW production with water from new wells on school property. General Manager Berger presented an update on progress the District has made towards completion of the goals and objectives listed in the Strategic Plan. An outline of the presentation is on file at the District office and can be viewed at the District’s website. Henrietta Stern, Project Manager, gave a report on progress made on development of water supply project alternatives. An outline of the presentation is on file at the District office and can be viewed at the District’s website. Darby Fuerst, Water Resources Division Manager, presented the report. He stated that between October 1, 2006 and September 13, 2007, CAW production was 687 acre-feet below the limit established by State Water Resources Control Board Order 95-10. Production within the Seaside Groundwater Basin was 37 acre-feet higher than the limit established by the Seaside Groundwater Basin adjudication decision. He noted that the new Water Year would begin on October 1, 2007. A summary of his presentation is on file at the District office and on the District’s website. Catherine Bowie and Stephanie Pintar presented an update to the Board. An outline of the presentation is on file at the District office and can be viewed at the District’s website. District Counsel Laredo reported that the meeting was called to order at 5:30 PM. There being no comments from the public, the meeting was adjourned to closed session with all Directors present. Counsel provided the Board with a status report on all agenda items. The Board provided general direction to Counsel. No reportable action was taken. No comments were received from the Board members. On a motion by Director Foy and second by Director Knight, the October through December 2007 Quarterly Water Supply Strategy and Budget was unanimously adopted by the Board on a vote of 7 – 0. No comments were directed to the Board during the public hearing on this item. Director Potter left the meeting at 9 PM, prior to Board consideration of Item 18. On a motion by Director Edwards and second by Director Knight, the Board unanimously adopted the first reading version of Ordinance No. 130 on a role call vote of 5 – 0. Directors Edwards, Knight, Lehman, Markey and Pendergrass voted in favor of the motion. Directors Foy and Potter were not present for the vote. No comments were directed to the Board during the public hearing on this item. On a motion by Director Markey and second by Director Lehman, the Board received the Community Advisory Committee (CAC) report on a unanimous vote of 6 – 0. Director Edwards, Foy, Knight, Lehman, Markey and Pendergrass voted in favor of the motion. Director Potter was absent. The following comments were directed to the Board during the public comment period on this item. (1) Paul Bruno, a member of the CAC, thanked Director Foy for appointing him to the committee. He suggested that if in the future another committee such as the CAC were formed, the charge to the committee should offer a mechanism for removing any committee member that does not participate. (2) Robert Greenwood, a member of the CAC, stated that participation was a “waste of time” because: (a) members were not technically qualified to evaluate water supply projects; and (b) the committee was not asked to recommend a preferred project(s) or rate them by preference. On a motion by Director Markey and second by Director Edwards, the reclassification request was approved unanimously on a vote of 6 – 0. Directors Edwards, Foy, Knight, Lehman, Markey and Pendergrass voted in favor of the motion. Director Potter was absent. No comments were directed to the Board during the public comment period on this item. The item was continued to the October 15, 2007 meeting so that all Directors will be present for the discussion. There was no discussion of the Informational Items/Staff Reports. The meeting was adjourned at 9:50 PM.

CALL TO ORDER/ROLL CALL PLEDGE OF ALLEGIANCE ORAL COMMUNICATIONS CONSENT CALENDAR 1. Consider Adoption of Minutes of the August 20, 2007 Regular Board Meeting 2. Consider Expenditure of Funds to Prepare Final Report on Evaluation of Seawater Desalination Projects Proposed for the Monterey Peninsula by GEI Consultants/Bookman-Edmonston 3. Consider Expenditure of Budgeted Funds to Enter into an Agreement with Urban Futures, Inc. to Provide Financial Advisory Services Related to Debt Financing for the Aquifer Storage and Recovery Project, Phase 1 4. Consider Approval of Amendments to the 1992 Agreements for Sale of Reclaimed Water and 2004 Agreements for Sale of Recycled Water 5. Consider Approval of Conservation Program Reimbursement Agreement with California American Water 6. Consider Expenditure of Funds for Purchase of Linen, Towel and Restaurant Water Conservation Display Cards 7. Consider Expenditure of Budgeted Funds for Purchase of Modular Workstations for Water Demand Division 8. Consider Approval of One-Time General Manager Compensation Adjustment for Performance Period 7/1/06—6/30/07 Pursuant to General Manager’s Employment Agreement 9. Consider Approval of Chair/Vice Chair Request to Direct Staff to Investigate and Report to the Board on the Feasibility of Cloud Seeding the Carmel River Watershed PRESENTATIONS 10. Presentation on the Proposed Regional Water Augmentation (RUWA) Project by Keith Israel, General Manager of the Monterey Regional Water Pollution Control Agency A. Discussion of Potential Incentives for RUWA Project, Including Water Use Credits 11. Strategic Plan Update 12. Water Supply Project Alternatives Update GENERAL MANAGER’S REPORT 13. Status Report on California American Water Compliance with State Water Resources Control Board Order 95-10 and Seaside Groundwater Basin Adjudication Decision 14. Update on Conservation Program from Catherine Bowie of California American Water and Stephanie Pintar of MPWMD ATTORNEY’S REPORT 15. Report on 5:30 PM Closed Session of the Board 3. Conference with Legal Counsel – Existing Litigation (Gov. Code 54956.9 (a)) A. Application of California American Water Company to the California Public Utilities Commission Application No. 04-09-019 – Coastal Water Project B. Application of California American Water Company to the California Public Utilities Commission -- Application No. 07-02-023 -- Allowance for Funds Used During Construction (AFUDC) for its San Clemente Dam Memorandum Account C. Application of California American Water Company to the Public Utilities Commission Application No. 07-__- ___ -- General Rate Case D. State Water Resources Control Board Permit No. 7130B E. State Water Resources Control Board Permit No. 20808 F. MPWMD v. Nick Marotta, Jr., Gerda Marotta, and Does 1-100 -- Monterey County Superior Court Case No. M83498 G. MPWMD v. Roy Woods, Woods 1995 Trust, and Does 1-100 -- Monterey County Superior Court Case No. M83499 DIRECTORS’ REPORTS (INCLUDING AB 1234 REPORTS ON TRIPS, CONFERENCE ATTENDANCE AND MEETINGS) 16. Oral Reports on Activities of County, Cities, Other Agencies/Committees/ Associations PUBLIC HEARINGS 17. Consider Adoption of October through December 2007 Quarterly Water Supply Strategy and Budget 18. Consider First Reading of Ordinance No. 130 – Establishing a Claim Process for Damages or Refund of Money ACTION ITEMS 19. Receive And Discuss Report from Community Advisory Committee re Projects Listed on Matrix of Water Supply Alternatives 20. Consider Approval of Water Conservation Technician Reclassification and Change to the District’s Organization Chart 21. Consider Report and Recommendation from Administrative Committee on Campaign Finance Reporting Regulations INFORMATIONAL ITEMS/STAFF REPORTS 22. Letters Received 23. Committee Reports 24. Carmel River Fishery Report 25. Water Conservation Program Report 26. Monthly Allocation Report 27. Monthly California American Water Production Report 28. Monthly Water Supply Status Report 29. Semi-Annual Financial Report on the CAWD/PBCSD Wastewater Reclamation Project ADJOURNMENT

____________________________________

David A. Berger, Secretary to the Board

\\fileh2o\udrive\Arlene\word\2007\BoardMeetings\Minutes\FINAL091707.doc