EXHIBIT 1-A
DRAFT MINUTES Regular Meeting Board of Directors Monterey Peninsula Water Management District November 15, 2004
The meeting was called to order at 7 PM in the Monterey City Council Chambers. Directors present: Chair: Alvin Edwards, Division 1 (Participated by telephone from Detroit, Michigan) Vice Chair: Larry Foy, Division 5 (Served as Acting Chair since Chair Edwards was participating by telephone.) Judi Lehman – Division 2 Kristi Markey – Division 3 Michelle Knight – Division 4 David Pendergrass – Mayoral Representative David Potter – Monterey County Board of Supervisors (arrived at 7:10 PM) Directors absent: none General Manager present: David A. Berger District Counsel present: David C. Laredo The assembly recited the Pledge of Allegiance. David Dilworth, representing Helping Our Peninsula’s Environment (HOPE), requested that the monthly Board packets be distributed one week in advance of the meeting to allow for a five-day public review period. On a motion by Director Pendergrass and second by Director Lehman, the Consent Calendar was approved on a vote of 6 – 0. Directors Edwards, Foy, Knight, Lehman, Markey, and Pendergrass voted in favor of the motion. Director Potter was absent. Approved. Approved. Approved. Approved. Approved. Director Potter arrived at 7:10 PM. Henrietta Stern, Project Manager, presented comments that are summarized in an outline on file at the District office. Curtis Weeks, General Manager of the Monterey County Water Resources Agency (MCWRA), addressed the Board. He announced that the MCWRA Board recommend to the Monterey County Board of Supervisors a three-pronged approach that entails working with local elected officials and senior management of local cities on development of a publicly-owned water supply project. The goal is to form a management group that will resolve issues such as project size and distribution of costs. There will be an opportunity for public participation through noticed meetings of the member agencies. In addition, informational town hall meetings will be scheduled as needed. It could take six months to one year to complete this phase of the project planning. Joe Oliver, Water Resources Manager, reported that through November 14, 2004, California American Water (Cal-Am) has produced 1,059 acre-feet of water from the Carmel River, which is 79 acre-feet under the State Water Resources Control Board (SWRCB) limit. It is anticipated that by November 30, 2004, Stage 3 of the Water Conservation and Standby Rationing Plan will be scaled back to Stage 1 because Cal-Am production will be below the monthly targets for two consecutive months. General Manager Berger invited the public to attend the District’s Holiday Open House on Thursday, December 9, 2004 from 4:30 PM to 6:30 PM in the District’s conference room. District Counsel Laredo reported that at the October 16, 2004 Closed Session he provided the Board with a status report and risk assessment on the items listed on the agenda. No action was taken. Director Foy was absent. At the November 15, 2004 Closed Session, Mr. Laredo provided a status report and risk assessment on items listed on the agenda. No action was taken. Director Potter was absent. Director Lehman encouraged District staff to distribute the Board packet on the Wednesday prior to the Monday Board meeting. Director Markey agreed that the packet should be distributed earlier, and supported the suggestion by David Dilworth to distribute the packet one week in advance of the monthly meeting. Director Foy announced that he served as moderator on a panel for the November 10, 2004 Leadership Monterey Peninsula forum on Regional Water Challenges. He noted that Steve Leonard of Cal-Am; Keith Israel of the Monterey Regional Water Pollution Control Agency; Curtis Weeks of the MCWRA, Michael Armstrong of the Marina Coast Water District; and David Berger also participated on the panel. Director Edwards congratulated Jerry Smith of Seaside for his election to the Monterey County Board of Supervisors. Director Edwards stated that he hopes David Potter will remain on the MPWMD Board. Mr. Potter responded that he intends to continue serving on the MPWMD Board. Director Knight made a motion that Action Item 12, Consider Approval of Agreements Related to the Carmel Area Wastewater District (CAWD)/Pebble Beach Community Services District (PBCSD) Recycled Water Project Expansion, be moved ahead of Action Item 10, Consider Request for Variance from District Rule 23-A Requiring Individual User Water Meters – 410 Alvarado Street, Monterey, APN 001-572-015 and 016. The motion was seconded by Director Lehman and approved unanimously on a vote of 7 – 0. On a motion by Director Pendergrass and second by Director Potter, the Board voted to approve the variance from District Rule 23-A. In addition, page 68 of the staff report and Finding No. 12 of the Findings of Approval would be amended as follows: (1) specify that the in-line meters will be read monthly and the tenants billed for their water use; and (2) add a new fifth condition specifying that the conditions will be imposed as a deed restriction on the property. The motion was approved on a vote of 6 – 0. Directors Foy, Knight, Lehman, Markey, Pendergrass and Potter voted in favor of the motion. Director Edwards was absent. During the public hearing on this item, the following comments were directed to the Board. (1) Paul Davis, representing the applicant, explained that it would be very difficult and therefore costly to separately meter each of the 18 apartments in the mixed-use, affordable housing project. It would be more cost effective to install in-line meters. Water use for each apartment will me measured monthly and the tenant billed for that water use. Lease agreements could define water use restrictions to be imposed during a drought. The applicant has an agreement with the District and the City of Monterey to keep water use on the site within the historic limits. Mr. Davis consented to modifying the Findings of Approval to require that the tenants be billed for their water use and that the conditions of approval would be imposed as a deed restriction on the property. (2) David Dilworth, representing HOPE, requested that this item be deferred until more information is made available to the Board such as: (a) what is the cost to separately meter each apartment, and (b) how long will the project be set aside as affordable housing. (3) John Fischer expressed support for the variance process. He also stated that the City of Monterey must explain to its residents the criteria it has established for granting a project affordable housing status. Director Markey offered a motion to adopt the first reading of Ordinance No. 118 and the associated Findings of Approval. In addition, staff should develop language that defines the concept of “existing facilities and systems,” and review the suggestions proposed by David Dilworth to determine if they are appropriate for inclusion in the second reading of the ordinance. Director Potter seconded the motion. The motion was approved unanimously on a vote of 6 – 0. Directors Foy, Lehman, Knight, Markey, Pendergrass and Potter voted in favor of the motion. Director Edwards was absent. David Dilworth, representing HOPE, addressed the Board during the public hearing on this item. He suggested that the following changes should be made to the ordinance. (a) Rule 21.A.9, sentence 2 – remove the words “as determined by the District” and replace with the word “hydrogeologist.” (b) Section Five, D. 2 – replace the words “average number of connections” with the words “maximum number of connections.” (c) Section Seven, definition of Pro Rata Expansion Capacity – clarify the quantitative criteria used to determine the “system capacity” and specify who makes the decision on the system capacity. Director Edwards offered a motion to approve all six agreements presented in the Board packet. The motion was seconded by Director Knight and approved on a vote of 6 – 1. Directors Edwards, Foy, Knight, Lehman, Pendergrass and Potter voted in favor of the motion. Director Markey was opposed. The following comments were received during the public comment period on this item. (1) Lloyd Lowrey, representing the Independent Reclaimed Water Users Group (IRWUG), noted that under the new agreements IRWUG and Pebble Beach Company will be guarantors for financing and IRWUG will also become a voting member of the Manager’s Committee. He stated that the governing boards of thee IRWUG members have approved the agreements. (2) Ray von Dohren, General Manager of the Carmel Area Wastewater District, explained that the upgraded water treatment system would reduce sodium levels and total solids to such a degree that solids must be added back into the treated water. In most years, there will be excess water produced by the project. (3) Rob Wellington, CAWD/PBCSD legal counsel, stated that under the new agreements, CAWD and PBCSD are responsible for the quality and quantity of the reclaimed water. Excess water from the project can be supplied to the Carmel River Lagoon. (4) Mark Stilwell, Executive Vice President of Pebble Beach Company, explained that this project would provide golf courses with a secure, long-term irrigation source. The goal is to rely completely on reclaimed water for golf course irrigation. The golf courses will be allowed to use potable water for irrigation only if there is a serious breakdown in the reclamation production system, or if the Forest Lake Reservoir is dry. (5) Mike Niccum, PBCSD, announced that the State Division of Safety of Dams has reviewed the application to operate the Forest Lake Reservoir and has approved the retrofit design. CAWD has filed a Negative Declaration on the project. Contracts for upgrading the reservoir could be awarded in February 2005. (6) John Fischer, a resident of Pacific Grove, spoke in support of the project. He asked what would happen if a desalination project were opened in 2010 and local water needs were met. Would the reclamation project agreements remain in effect? (7) Robert Greenwood, representing the Carmel Valley Association, asked if any consideration had been given to planting salt-tolerant grasses on the golf courses, as an alternative to investing in costly advanced water treatment facilities. Mark Stilwell stated that the use of salt-tolerant grasses has been considered, but salt-tolerant grasses do not grow well in the local coastal climate. (8) David Dilworth, representing HOPE, asked that this item be continued to a future meeting to allow more time for public review. He stated that the golf courses should voluntarily agree to irrigate without the use of potable water. At approximately 9:40 PM the deliberations on Item 12 concluded and Director Edwards excused himself from the meeting. A recess was called and the meeting reconvened at 9:50 PM. At that time the Board considered items 10 and 11, and 13 through 25. There was no discussion of the Informational Items/Staff Reports. The meeting adjourned at 10:50 PM.	CALL TO ORDER/ROLL CALL PLEDGE OF ALLEGIANCE CONSENT CALENDAR 1. Consider Adoption of Minutes of the October 18, 2004 Regular Board Meeting 2. Authorize Expenditure of Budgeted Funds for Production of 2004 MPWMD Annual Report 3. Authorize Expenditure of Budgeted Funds for Water Year 2005 Seaside Basin Aquifer Storage and Recovery Testing Program 4. Consider Approval of Treasurer’s Report for August 2004 5. Consider Approval of Treasurer’s Report for September 2004 PRESENTATIONS 6. Water Supply Project Alternatives Update GENERAL MANAGER’S REPORT 7. Status Report on California-American Water Compliance with State Water Resources Control Board Order 95-10 ATTORNEY’S REPORT 8. Report on Closed Sessions of October 18 and November 15, 2004 DIRECTORS’ REPORTS 9. Oral Reports on Activities of County, Cities, Other Agencies/Committees/Association PUBLIC HEARINGS 10. Consider Request for Variance from District Rule 23-A Requiring Individual User Water Meters – 410 Alvarado Street, Monterey, APN 001-572-15 and 016 11. Consider First Reading of Ordinance No. 118 re Refining the Water Distribution System Permit Process, Setting Fees, and Authorizing Enforcement ACTION ITEMS 12. Consider Approval of Agreements Related to the Carmel Area Wastewater District (CAWD)/Pebble Beach Community Services District (PBCSD) Recycled Water Project Expansion 1. Supplemental Financing Agreement (between MPWMD and Pebble Beach Company) 2. Agreements for Sale of Recycled Water (five agreements, each between MPWMD and one of the five recycled water users) 3. Amended and Restated Construction and Operation Agreement (among MPWMD, CAWD, PBCSD, and Pebble Beach Company) 4. First Amendment to Water Purchase Agreement (among MPWMD, CAWD, and PBCSD) 5. First Amendment to Financing Implementation Agreement (between MPWMD and Pebble Beach Company) 6. First Amendment to Trust Agreement (between MPWMD and U.S. Bank National Association) INFORMATIONAL ITEMS/STAFF REPORTS 13. Letters Received 14. Committee Reports 15. Strategic Planning Initiatives Progress Report 16. Carmel River Fishery Report 17. Water Conservation Program Report for September 18. Water Conservation Program Report for October 19. Monthly Allocation Report 20. Quarterly Cal-Am Sales Report 21. Quarterly Water Use Credit Transfer Status Report 22. Monthly California American Water Production Report 23. Production Report – CAWD/PBCSD Wastewater Reclamation Project 24. Report on First Quarter Financial Activity for Fiscal Year 2004-2005 25. Monthly Water Supply Status Report ADJOURN

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David A. Berger, Secretary to the Board

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