ITEM:		ACTION ITEM
17.	CONSIDER A REQUEST TO PLACE A MEASURE ON THE NOVEMBER 8, 2005 BALLOT REGARDING PUBLIC ACQUISITION OF THE CALIFORNIA AMERICAN WATER DISTRIBUTION SYSTEM, COASTAL DIVISION, MONTEREY
Meeting Date:			June 20, 2005	Budgeted:	No
From:			David A. Berger,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Henrietta Stern	Cost Estimate:	N/A
General Counsel Approval: Yes.
Committee Recommendation: N/A
CEQA Compliance: N/A

SUMMARY: The Board will determine whether or not to place a measure on the November 8, 2005 ballot regarding public acquisition of the California American Water (Cal-Am) water distribution system, specifically Cal-Am’s Coastal Division, Monterey District. At the request of Director Alvin Edwards, District Counsel has prepared two potential ballot measures, shown in Exhibit 17-A, that direct the Monterey Peninsula Water Management District (MPWMD or District) to investigate the cost and process to publicly acquire the Cal-Am system. Neither measure would cause the immediate acquisition of the Cal-Am system. Instead, each measure requires an investigation into the cost and process that would lead to public acquisition of the water utility. Neither measure is an advisory measure.

Option 1, if approved by a majority of voters, will require MPWMD to investigate public acquisition of Cal-Am. A second effect of Option 1 would be to require MPWMD to impose a surcharge on Cal-Am water bills to collect costs of this investigation. Option 2, if approved by a majority, will require MPWMD to investigate public acquisition of Cal-Am, but not require imposition of a MPWMD surcharge to collect costs of this investigation. The manner and extent to which those costs would be collected would remain a matter of discretion for the MPWMD Board of Directors.

These two options, as drafted, apply to the entire Monterey District of the Cal-Am system, including Cal-Am subunits such as Bishop, Hidden Hills and Ryan Ranch. The Board could amend these measures to limit the area to be acquired to that portion of the Cal-Am system that derives its supply from the Carmel River Basin and Seaside Groundwater Basin Coastal Subareas (sometimes referred to as the “main” Cal-Am system).

The Board may wish to discuss the two proposed ballot measures in Exhibit 17-A or develop alternative ballot measure language for consideration.

At the April 18, 2005 meeting, Director Alvin Edwards requested that the Board address the concept of an advisory vote to acquire the Cal-Am system at the May 16, 2005 meeting. On May 16, the Board (with one member absent) heard public comment and offered individual opinions about an advisory vote. The Board agreed that this topic should be considered on June 20, 2005, when all seven Board members will be present. The two options presented in this staff note are refinements of proposed ballot language suggested by Director Edwards following the May 16, 2005 meeting.

According to Tony Anchundo, Monterey County Registrar of Voters, the next scheduled election for special districts, school districts and State propositions is November 8, 2005. Mail-in voting is not likely to occur. The deadline for a measure to be placed on the ballot is July 28, 2005. The measure must be accompanied by a formal MPWMD Board Resolution setting the ballot measure. Thus, the meeting of July 18, 2005 is the last regularly scheduled Board meeting to accomplish this task.

The ballot measure must be worded to afford a “yes” or “no” answer; there are no “multiple-choice” measures allowed. More than one yes/no measure may be placed on the ballot. The cost to the District is based on the number of measures placed on the ballot, and the proportion of printing space as compared to other measures and issues that are on the ballot. Key dates are as follows:

July 28, 2005: Last day to submit MPWMD Ballot Measure to Registrar

August 8, 2005: Last day for proponents/opponents to submit arguments for and against measure(s) to Registrar

September 29, 2005: Registrar begins mailing ballot materials

November 8, 2005: Election Day

RECOMMENDATION: District staff does not have a recommendation on whether or not to approve this item, or on which ballot option to choose, as this issue is a Director-requested policy issue. However, staff suggests that the Board address the following questions in its deliberations on June 20, 2005:

Ø Should the District set a ballot measure on the public acquisition of the California American Water system for the November 8, 2005 election?

Ø If “yes,” specify the text of the ballot measure. If presently unknown, determine who shall prepare the ballot measure language, and by when.

Ø Confirm whether or not the ballot measure shall apply to the entire Monterey District of the Cal-Am system, including Cal-Am subunits such as Bishop, Hidden Hills and Ryan Ranch, or be limited to that portion of the Cal-Am system that derives its supply from the Carmel River Basin and Seaside Groundwater Basin Coastal Subareas.

Ø Should rebuttal arguments be allowed in the election materials? The inclusion of rebuttals is optional; they would provide more opportunity to communicate pros and cons of the issue, but would increase the cost.

Ø Does the District Board wish to take a position and/or submit ballot arguments pertaining to the measure? If the Board determines that it will place a measure on the November 8, 2005 ballot, District Counsel will provide advise as to the role and limits that apply to MPWMD Board member and staff activities for this election.

DISCUSSION: District General Counsel is responsible for preparing the independent analysis of the ballot measure. The two proposals shown in Exhibit 17-A are binding votes. As an alternative, the Board has the right to place a non-binding advisory measure that does not commit the District to a specific course of action.

The first ballot measure (Option 1) shown in Exhibit 17-A reads:

“Shall the Monterey Peninsula Water Management District (MPWMD) be directed to investigate the cost and process to publicly acquire the private water utility system presently owned by the Monterey District of California American Water (Cal-Am), and directed to recover costs of the investigation as a surcharge upon Cal-Am’s water bills?

If approved by a majority of those electors casting ballots, a surcharge will be imposed by the District on the Cal-Am bill to pay for costs of this measure, including the retention of experts to help District staff and counsel assess the cost, process and timeline for a public entity to acquire Cal-Am, and the cost of the election. These services may include experts in water utility appraisals, public utility acquisition, bond counsel, etc. The cost of these services is unknown at this time. For reference, a surcharge fee on the Cal-Am water bill of one percent (1%) for 12 months would raise $275,000.

The second ballot measure (Option 2) shown in Exhibit 17-A reads:

“Shall the Monterey Peninsula Water Management District (MPWMD) be directed to investigate the cost and process to publicly acquire the private water utility system presently owned by the Monterey District of California American Water (Cal-Am)?

Similar to the first ballot measure described above, if approved by a majority of voters, the District will be required to investigate public acquisition of Cal-Am, but will not be required to impose a surcharge on the Cal-Am bill to collect costs of this investigation. The manner and extent to which those costs would be collected would remain a matter of discretion for the District Board of Directors. The Board could choose to impose a surcharge on the Cal-Am bill.

IMPACT TO STAFF AND FISCAL RESOURCES: The Registrar of Voters indicated that the cost of the ballot measure could be in the $50,000 range for a district-wide ballot. This amount is not included in the Fiscal Year 2005-06 proposed budget. If ballot Option 1 is selected and approved by the electorate, a surcharge would be placed on the Cal-Am bill to fund the necessary studies to evaluate the acquisition of Cal-Am and the costs of the election. The fiscal impact of Option 2 or any other measure approved by the electorate would depend on the funding decisions made by the District Board.

EXHIBITS

17-A Ballot Measure Text Proposals

U:\staff\word\boardpacket\2005\2005boardpackets\20050620\ActionItems\17\item17.doc

“FINAL” -- 6/3/05 based on DAB review