ITEM:		ACTION ITEMS
17.	PROVIDE DIRECTION ON A PROPOSED MEMORANDUM OF UNDERSTANDING (MOU) WITH THE PAJARO/SUNNY MESA COMMUNITY SERVICES DISTRICT (P/SMCSD) FOR INVESTIGATIONS INTO DEVELOMENT OF A DESALINATIN PROJECT IN MOSS LANDING
Meeting Date:			August 16, 2004		Budgeted:	N/A
From:			David A. Berger,		Program/	N/A
			General Manager		Line Item No.:
Prepared By:			David C. Laredo		Cost Estimate:	N/A
			District Counsel
General Counsel Approval:				Prepared staff note and proposed MOU
Committee Recommendation:				N/A
CEQA Compliance:				N/A

SUMMARY: The Board will consider whether or not to approve or amend a proposed Memorandum of Understanding (MOU) between MPWMD and Pajaro/Sunny Mesa Community Services District (P/SMCSD) involving investigation of a possible desalination plant in Moss Landing.  The draft MOU is provided as Exhibit 17-A. On March 16, 2004 the County of Monterey approved a similar Letter of Intent pertaining its contemplated working relationship with California American Water (Cal-Am) for the alternate concept proposed as the Coastal Water Project. That County Letter of Intent is provided for comparison as Exhibit 17-B. Public comment will be received on this item.

Legal Counsel for MPWMD and P/SMCSD jointly prepared the draft MOU between the two agencies. This effort was initiated at the direction of the District Chair following the water project workshop of July 29, 2004. The draft MOU is intended to clarify areas of shared understanding, to provide a template for future discussions that might facilitate development of water resources from a Moss Landing Desalination Project, and to avoid piecemeal development or management of public water resources.

The P/SMCSD Board plans to review and consider this MOU on Thursday, August 19, 2004.

The proposed MOU is an initial, non-binding step of the two public agencies that acknowledges their mutual desire to cooperate, and coordinate efforts such as the conduct of meetings and the sharing of information and data. This effort calls for development of a conceptual governance structure, such as a joint powers agency or some or acceptable alternative, to facilitate implementation and development of a publicly owned water supply.

The proposed MOU expressly does not limit, and is intended to facilitate by way of open communications, independent and ongoing discussions between MPWMD and the following entities: California American Water, Monterey County, Monterey County Water Resources Agency, Monterey Regional Water Pollution Control Agency, Marina Coast Water District, and/or Fort Ord Reuse Authority (FORA).

The MOU also acknowledges that MPWMD shall continue its independent efforts to plan, test, design, and implement ASR activities and programs in the Seaside Groundwater Basin.

The MOU is non-binding, and either Party may terminate this it by providing written notice to the other.

RECOMMENDATION: Counsel recommends that the Board consider whether or not to approve or amend the draft Memorandum of Understanding (MOU) between MPWMD and Pajaro/Sunny Mesa Community Services District (P/SMCSD), and provide appropriate direction to staff.

BACKGROUND: The Monterey Peninsula area has both a physical shortage of water, and a limited quantity of water for which legal rights have been secured. During periods of normal to wet hydrological conditions, sufficient water supplies are available to meet the hydrologic needs of the area. However, during periods of drought, not enough water is available to satisfy the needs of both environmental and municipal water requirements. In addition to physical limitations affecting the Monterey Peninsula water supply, the State Water Resources Control Board (SWRCB) imposed additional limits in 1995 (SWRCB Order WR 95-10, as revised by Orders WR 98-04 and 2002-02). The SWRCB determined that Cal-Am’s Carmel River water diversions were largely without valid legal right, and that its water use adversely impacted environmental and public trust values.

The SWRCB directed Cal-Am to cease and desist diverting water from the Carmel River in excess of 11,285 acre-feet-per-annum (AFA), beginning in 1997. The effect of SWRCB Order WR 95-10 is that, since the issuance of Order WR 95-10, Cal-Am has diverted annually about 10,730 AFA from the Carmel River or its underflow without a valid basis of right, and Cal-Am has not developed new water resources to replace it’s dependence upon that Carmel River source.

Other factors also adversely influence the present and future availability of water to the Cal-Am system from the Carmel River. These include the recent listing of threatened species (i.e., California Red Legged Frog and Steelhead Trout) and associated regulatory limits which are or may be imposed under the federal Endangered Species Act by the U.S. Fish and Wildlife Service and NOAA Fisheries Service.

Addressing the physical shortage of water, and the regulatory constraints on those supplies, the District Board has determined it is necessary to investigate and pursue additional potable water supplies to meet the water needs of its residents, property owners, and constituents.

On July 29, 2004, the District received presentations on a four (4) different water supply alternatives, including the District proposed concept of a Sand City desalination project, the District proposed concept of a Aquifer Storage and Recovery (ASR) project, the Coastal Water Project concept offered by Cal-Am and Monterey County, and the Moss Landing Desalination Project concept offered by P/SMCSD. Each of these concepts appears to offer a viable alternative water supply option, which may either offer a stand-alone solution to regional water solutions, or that may form a component part of a multi-faceted water supply project. Each of these four proposals is in the concept stage, needed further review and refinement before a single project, or set of projects, will be ready for approval and implementation.

On October 21, 2003 the Monterey County Water Resources Agency (MCWRA) Board of Supervisors directed its General Manager, Curtis Weeks, to enter into contractual negotiations with Cal-Am for the purpose of defining the institutional relationship that could be created between Cal-Am and MCWRA relating to Cal-Am’s proposed Coastal Water Project. The Board of Supervisors staff note for its meeting of March 16, 2004 (Agenda Item S-24) recommends that the Board of Supervisors approve the Letter of Intent (Exhibit 17-B) to provide “the guidelines for the proposed partnership between Cal-Am and the MCWRA and establishes the principles that will form the proposed agreement to develop the Monterey County Water Supply Project” which is characterized above at the Coastal Water Project concept. The Letter of Intent does not commit either party to approve or implement that conceptual project, and also does not limit investigation of alternatives, but instead it is intended to facilitate and expedite cooperative investigation into that alternative.

The draft MOU between MPWMD and Pajaro/Sunny Mesa Community Services District (P/SMCSD) (Exhibit 17-A) addresses investigation of the Moss Landing desalination plant concept, and is conceived as a document that more or less parallels the Letter of Intent authorized by Monterey County to provide guidelines for its proposed partnership with Cal-Am.

Pajaro-Sunny Mesa Community Services District is a public, not-for-profit governmental agency that provides governmental services, including public potable water service and delivery, to the areas of Pajaro, Sunny Mesa, and North Monterey County. Its service area also includes the communities of Moss Landing and Prunedale, and other areas formerly served by the ALCO Water Company, whose assets were transferred to P/SMCSD by order of the Judge Jeremy Fogel in United States v. Alisal Water Corporation (Case No. C97-20099 JF), were granted and assumed responsibility for five additional water systems located in

The P/SMCSD Board has determined that its constituents will best be served by a publicly owned site and desalination facility to address water supply needs, shortages and contamination problems experienced by the communities of North Monterey County, and desires to pursue the Moss Landing Desalination Project alternative.

The proposed MOU is non-binding. It acknowledges that P/SMCSD and MPWMD will cooperate and share information. The MOU calls for development of a governance concept such as a joint powers agency or other alternative to facilitate a publicly owned water supply.

The MOU does not limit investigations into other water supply alternatives. Other parties such as Cal-Am, Monterey County, Monterey County Water Resources Agency, Monterey Regional Water Pollution Control Agency, Marina Coast Water District, and Fort Ord Reuse Authority (FORA) are expressly named to facilitate ongoing discussions designed to identify the single best alternative, or set of alternatives. The MOU acknowledges that MPWMD shall continue its efforts pertaining to ASR and programs in the Seaside Groundwater Basin.

The P/SMCSD Board plans to review and consider this MOU at its regular board meeting set for Thursday, August 19, 2004.

LIST OF EXHIBITS:

17-A Draft MOU between MPWMD and Pajaro/Sunny Mesa Community Services District (P/SMCSD)

17-B Monterey County Letter of Intent

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