EXHIBIT 1-A

DRAFT MINUTES

Regular Meeting

Board of Directors

Monterey Peninsula Water Management District

October 20, 2003

The meeting was called to order at 7 PM in the District conference room.

Directors present:

Alexander “Zan” Henson, Chair – Division 5

Judi Lehman, Vice Chair – Division 2

Alvin Edwards, Division 1

Molly Erickson, Division 3

Kris Lindstrom, Division 4 (Participated by telephone)

David Pendergrass, Mayoral Representative

David Potter, Monterey County Board of Supervisors

Directors absent: None

General Manager present: Fran Farina

District Counsel present: David C. Laredo

Special Counsel present: Carl Nelson

The assembly recited the Pledge of Allegiance.

The following comments were presented to the Board during Oral Communications. (1) Steve Leonard reported that 25 acre-feet of water from the Monterey Peninsula Water Resources System has been delivered to the Ryan Ranch Water Distribution System. A new well has been installed at Ryan Ranch and pumping should begin on October 21, 2003. (2) Lou Haddad, a resident of Monterey, urged the Board to defer approval of a contract with Fran Farina until after the November 4, 2003 election so that the Board members seated in December can participate in the decision.

On a motion by Director Lehman and second by Director Erickson, the Consent Calendar was approved on a vote of 5 – 1 – 1. Directors Erickson, Henson, Lehman, Lindstrom and Pendergrass voted in favor of the motion. Director Edwards voted against the motion. Director Potter abstained.

District Counsel Laredo reported that at the September 15, 2003 Closed Session, a report was given by District staff and the Board Chair. Direction was provided to District Counsel with respect to both Closed Session agenda items. Mr. Laredo reported that at the October 20, 2003 Closed Session, he and the Board Chair reported on the General Manager contract negotiations. A motion was proposed by Director Erickson and seconded by Director Pendergrass to authorize the Chair to negotiate a contract with Fran Farina. The motion was approved on a vote of 5 – 1 – 1.

Directors Erickson, Henson, Lehman, Lindstrom and Pendergrass voted in favor of the motion, Director Edwards was opposed. Director Potter abstained. Mr. Laredo announced that the Closed Session would resume at the close of the Board meeting to continue discussion of the item on pending litigation.

Motion 1 Director Potter proposed a motion to direct staff to modify the CEQA findings to include the following information: (1) explanation as to why the project improvements are needed and the performance criteria; (2) address issues related to Order 95-10; (3) habitat and recreational opportunities on the Carmel River; (4) over-pumping of the Carmel River and the Seaside aquifer; (5) acknowledgement of the existence of the Monterey County EIR and discussion of whether it is relevant or not relevant, (6) discuss how circumstances have changed since the EIR was written in 1989 such as listing of the steelhead and red-legged frog as endangered species; (7) clarify that on page 269 of the packet, the reference to the Reclamation Project EIR refers to the Final EIR; (8) page 277 of the packet refers to the development of 900 to 1,000 units, the document should state that the proposal will affect 140 vacant lots and 2,700 existing homes that could be remodeled; and (9) if the Board were to establish accountability for use of the 350 acre-feet of water, that should be included in the CEQA findings. Director Lehman seconded the motion. The motion was adopted unanimously on a vote of 7-0.

Motion 2 Director Potter proposed a motion to adopt first reading of Ordinance No. 109 and conduct the second reading on November 17, 2003. The ordinance would become effective on December 17, 2003. He proposed that the Board provide direction to District staff on modifications that should be made to the ordinance. In addition District Counsel should provide direction as to whether the ordinance could be modified and presented for second reading, or if the modified ordinance must again be presented for first reading. Director Pendergrass seconded the motion, which was deferred to the end of the meeting. The last action of the Board that evening was to adopt this motion unanimously on a vote of 7 – 0.

Motion 3 Director Potter proposed a motion to change the paragraph at the top of page 63 of the Board packet to indicate that there may be other sources of revenues, such as adding the words “except as otherwise provided herein” or “not exclusively limited to.” Director Edwards seconded the motion. No action was taken on the motion.

Motion 4 Director Henson made a motion that was seconded by Director Erickson, to modify the fourth line in the first paragraph on page 63 of the Board packet by deleting the words “or any other Public Participant.” The motion was approved unanimously on a vote of 7 – 0.

Motion 5 Director Potter made a motion to delete the definition of “Emergency” from Ordinance No. 109 and the accompanying agreements because it had been replaced with the definition of “Interruption.” District Counsel was directed to add language to the ordinance that describes the concept of water shortage or water supply emergencies. The new section could be titled “Declared Emergency” or “Various Water Supply Emergencies.” Director Edwards seconded the motion. The motion was adopted unanimously on a vote of 7 – 0.

Motion 6 Director Henson proposed a motion to clarify that CAWD and PBCSD have a duty to repair the facilities in order to bring an end to any interruption. Director Henson later withdrew his motion.

Motion 7 Director Henson proposed a motion to modify Ordinance No. 109 to state that the amount of water purchased and applied to the benefited property shall be the limit on water consumption available to that property. The limit will be enforceable by deed restriction. Language should be inserted at the top of page 46 of the Board packet at the end of the first sentence, “Should enforcement of this deed restriction to limit water use to the entitlement amount become required, all costs of enforcement including reasonable attorneys fees shall be assessed to the prevailing party.” Director Erickson seconded the motion.

Director Erickson offered an amendment to the motion to specify that the District will have access to water use records of the benefited property in perpetuity. Director Henson seconded the amendment. The amended motion was adopted on a vote of 4 – 3. Directors Erickson, Henson, Lehman and Lindstrom. Directors Edwards, Pendergrass and Potter voted against the motion.

Motion 8 Director Erickson made a motion that a finding be developed that would describe Order 95-10 and the extraordinary nature of the entitlement water in that it is outside of Order 95-10, therefore it is necessary to hold it to higher standards. In addition, a new finding should be added that discusses the state mandate to protect the Carmel River and the Seaside aquifer from over-pumping, and the effects on endangered species habitat and recreation. Director Lindstrom seconded the motion. The motion was approved on a vote of 5 – 2. Directors Erickson, Henson, Lehman, Lindstrom and Potter voted in favor of the motion. Directors Edwards and Pendergrass voted against the motion.

Motion 9 Director Erickson offered a motion to add a clause to Ordinance No. 109 stating that “this ordinance shall be of no effect until all of the supporting documents are signed and approved by all parties and in effect.” The finding should make it clear that the Board’s intent is that “this is a package deal,” and that the ordinance and agreements are one complete document. Director Lindstrom seconded the motion. The motion was approved unanimously on a vote of 7 – 0.

Motion 10 Director Erickson offered a motion to delete from the ordinance any reference to treating purchasers of entitlement water in the same manner as other customers in the California-American Water Company service area. The change should be made wherever language conflicts with the earlier motion on limiting water use on those properties. Director Henson seconded the motion. The motion was adopted on a vote of 4 – 3. Directors Erickson, Henson, Lehman and Lindstrom voted in favor of the motion. Directors Edwards, Pendergrass and Potter voted in opposition to the motion.

Motion 11 Director Erickson offered a motion that Section 6 of the ordinance clearly identify understandable performance standards and a timeline for performance of the project, and clarify the obligation of the appropriate parties to construct a project and achieve completion as defined by the ordinance. Director Edwards seconded the motion. The motion was approved unanimously on a vote of 7 – 0.

Motion 12 Director Henson offered a motion to clarify that once Pebble Beach Company makes a financial commitment, all participating entities shall use their best efforts to have the facility completed within two years, as defined in the ordinance. This language could be included in Section 6 with the text of the previous motion. Director Erickson seconded the motion. The motion was approved on a vote of 6 – 1. Directors Edwards, Erickson, Henson, Lehman, Lindstrom and Potter voted in favor of the motion. Director Pendergrass voted in opposition to the motion.

Motion 13 Director Henson made a motion that District staff should submit to the Board at second reading a proposal on how to account for expanded uses such as remodels, as opposed to new uses. Director Erickson seconded the motion. The motion was approved on a vote of 4 – 3. Directors Erickson, Henson, Lehman and Lindstrom voted in favor of the motion. Directors Edwards, Pendergrass and Potter were opposed.

Motion 14 Director Erickson proposed a motion to amend the definition of “supplemental financial commitment,” and in Sections Three D, and Three I to be consistent with the amended definition of “supplemental financial commitment,” and with the description in Section Three J. The motion was adopted unanimously on a vote of 7 – 0.

Motion 15 Director Erickson offered a motion to make Ordinance No. 109 consistent in regards to the discussion of aggregate water entitlement versus specific one-lot entitlement beginning on page 47 and continuing throughout Rule 23.5 beginning on page 48 of the Board packet. In addition, the term “water usage” on page 49 of the Board packet, section A.(4)(c), should be replaced with the words “projected water usage.” Director Lehman seconded the motion. It was adopted unanimously on a vote of 7 – 0.

A motion was offered by Director Erickson to continue the meeting past 11 PM. Director Lehman seconded the motion. The motion was adopted unanimously.

Motion 16 Director Erickson requested that in the final paragraph of Section Four A on pages 49 and 50 of the Board packet, the phrase “preceding two sub paragraphs” should be specific about which paragraphs the text refers to, as shown on page 4 of the Errata sheet, Item III A. The Board took no formal action on this request.

Motion 17 Director Erickson offered a motion to amend the second sentence of the second paragraph of Section 6, on page 31 of the Board packet, to read as follows: “In the event that the Fiscal Sponsor or Public Participants request to issue refunding bonds or other obligations in order to refinance any portion of the Capital Cost of the Project, MPWMD shall work with such Fiscal Sponsor or Public Participants in providing for the issuance of such obligations provided they are financially beneficial to MPWMD.” Director Lindstrom seconded the motion. The motion was adopted on a unanimous vote of 7 – 0.

Motion 18 Director Erickson made a motion to delete the words “Poppy Hills tank,” as shown on page 5 of the Errata sheet, Item III B. Director Lehman seconded the motion. The motion was approved unanimously on a vote of 7 – 0.

Motion 19 Director Erickson made a motion to amend page 23 of the Board packet as follows: Section F.2. should state “if potable water usage continues longer than 14 days within a 30-day period.” Section F.3 should state “14 days written notice for such hearing.” The motion was seconded by Director Henson. The motion was approved on a vote of 4 - 3. Directors Erickson, Henson, Lehman and Lindstrom voted in favor of the motion. Directors Edwards, Pendergrass and Potter were opposed.

Motion 20 Director Henson proposed a motion to adopt the Errata sheet, except as revised during the Board discussion. Director Edwards seconded the motion. The motion was adopted unanimously on a vote of 7 – 0.

The following comments were directed to the Board during the public hearing on this item. (1) Mark Stilwell, Executive Vice President, Pebble Beach Company – Expressed concern re the issue of measuring water use on lots that will receive water from the project. He stated that water use should be calculated using the fixture-unit method that has been established for all residential projects in the District, and that applicants for use of entitlement water should be treated in exactly the same way as other water users within the California-American Water Company system. He noted that the fixture-unit method should also be used for calculating water use associated with the purchase of incremental amounts of water for remodel projects. He asked how the District would measure the increment of new water use that would be added to historic use on the property, if another method of determining water use were implemented. He suggested that a new fixture unit methodology could be developed that accounts for the additional amount of water used by vary large residential lots, such as a 75 or 100 percent factor for irrigation. (2) Lloyd Lowrey, representing the Independent Reclaimed Water Users Group (IRWUG), stated that IRWUG members anticipate that their obligation to take the water will begin when the project is completed as defined on page 20 of the ordinance. He requested that language on page 17 of the ordinance in sections F.2 and F.3 be modified to state that “if after 30 days of potable water use MPWMD determines to hold a public hearing pursuant to section F.3, MPWMD shall give a 30 day notice.” (3) Dick Andrews, General Manager of the Pebble Beach Community Services District, stated that the PBCSD Board of Directors supports the ordinance, subject to nominal changes. He noted that it was important for the Board to act quickly on adoption of the ordinance so that supplemental agreements can be finalized. The ensuing construction period would last 18 to 24 months. (4) Michael Niccum, District Engineer, Pebble Beach Community Services District, presented a chart titled “Annual Water Usage, Carmel River Basin/Reclamation Project” on file at the District office. Mr. Niccum stated that since 1996, California-American Water Company has met the water production limit set by the State Water Resources Control Board every year except 1997. According to Mr. Niccum, the water limit would have been exceeded every year except 1998 and 1999 without the Reclamation Project. (5) Jim Nero reaffirmed the Del Monte Forest Property Owners’ Association support for the project. He stated later in the evening that proceeds from the sale of potable and reclaimed water will not benefit Pebble Beach Company, but will be spent to upgrade public facilities. (6) Robert Wellington, Legal Counsel to the Carmel Area Wastewater District and the Pebble Beach Community Services District, requested that the following changes be made to Ordinance No. 109. (1) Page 1 of the Errata sheet, section 1.A., modify language to state that reports will be submitted monthly, and when there is an interruption of service reports will be submitted weekly. (2) Page 40 of the Board packet, Finding 14, after the words “will likely be necessary, if at all” insert the phrase “only in exceptional circumstances including but not limited to” then cite the four circumstances that would constitute an interruption in service. (3) Page 54 of the Board packet, section F, paragraph 2, line 1, should reference a 60 or 90-day period. (4) Page 57 of the Board packet, delete the definition of Emergency. (5) Page 58 of the Board packet, definition of Interruption, delete the reference to a specific time period. (6) Page 63 of the Board packet, line 7, delete the sentence, or after the words “shall be the revenues” insert the phrase “except as otherwise provided therein.” (7) Joyce Stevens, President of Carmel Area Wastewater District, advised the Board that Phase 2 project improvements will virtually eliminate discharges into the Monterey Bay. She expressed hope that surplus water from this project could be utilized for Carmel River Lagoon management. She urged the Board to adopt Ordinance No. 109. (8) David Dilworth, Helping Our Peninsula’s Environment (HOPE), described the financing plan as a “water profiteering scheme” that only provides water for the Del Monte Forest area. He stated that the Findings ignore all environmental effects that have occurred since the EIR on the recycled water project was written. Mr. Dilworth stated that an interruption in service or emergency should only be established by a regulatory agency. According to Mr. Dilworth, it would be irresponsible for the Board to adopt Ordinance No. 109.

At 9:30 PM the Board interrupted the discussion on item 2 and adjourned to Closed Session. At 9:45 PM the open session reconvened and discussion of item 2 was reopened. The meeting was adjourned at 11:20 PM.

CALL TO ORDER/ROLL CALL

PLEDGE OF ALLEGIANCE

ORAL COMMUNICATIONS

CONSENT CALENDAR

Consider Approval of Contract with Fran Farina

PUBLIC HEARINGS

2. Consider First Reading of Ordinance No. 109 – Revising Rule 23.5 and Adopting Additional Provisions to Facilitate the Financing and Expansion of the Carmel Area Wastewater District (CAWD)/Pebble Beach Community Services District (PBCSD) Recycled Water Project

PUBLIC HEARINGS

ADJOURNMENT

____________________________________

Fran Farina, Secretary to the Board

U:\staff\word\boardpacket\2003\2003boardpacket\20031117\ConsentCalendar\1\item1_exh1a.doc

A. Tavani, 10/20/03 Board Mtng, 8 pages, 11/30/03