ITEM:		ACTION ITEMS
17.	CONSIDER APPROVAL OF RESOLUTION 2005-07 CALLING FOR A DISTRICT-WIDE ELECTION REGARDING INVESTIGATION OF PUBLIC ACQUISITION OF THE CALIFORNIA AMERICAN WATER DISTRIBUTION SYSTEM, COASTAL DIVISION, MONTEREY DISTRICT
Meeting Date:			July 18, 2005	Budgeted:	No
From:			David A. Berger,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			Henrietta Stern	Cost Estimate:	Up to $50,000
General Counsel Approval: Yes.
Committee Recommendation: N/A
CEQA Compliance: N/A

SUMMARY: The Board will consider Resolution 2005-07, shown as Exhibit 17-A, which directs the Monterey County Registrar of Voters to place a Ballot Measure for consideration by voters within the Monterey Peninsula Water Management District (MPWMD) boundaries on November 8, 2005. The text of the Ballot Measure 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 and operated by the Monterey District of California American Water (Cal-Am), and be directed to recover costs of the investigation as a surcharge upon Cal-Am’s water bills? [YES or NO]

If approved, this means a user fee will be imposed by the District on Cal-Am customer bills to pay for expert consultants to help the District assess the cost, process and timeline for a public entity (not necessarily the District) to acquire Cal-Am. These services may include experts in water utility appraisals, public utility acquisition, bond counsel, etc. The costs of these services are unknown at present, and would not be known prior to the election because an accurate cost estimate would be the outcome of a formal consultant proposal process if the measure is approved. The basic philosophical question posed to voters by this Ballot Measure is whether investigation of public ownership of the local water system warrants expenditure of funds in the near-term to provide a comprehensive overview of the process and cost. This information, in turn, could allow voters in a future election to make a fully informed decision on the question of whether or not a specified public entity should actually acquire Cal-Am. Please see the “Discussion” section below for more information.

RECOMMENDATIONS: At its June 20, 2005 meeting, the Board voted 5-2 (Directors Foy and Pendergrass dissenting) to place a measure on the November 8, 2005 ballot regarding public acquisition of the Cal-Am water distribution system. Based on this direction, staff developed Resolution 2005-07, with assistance by the Monterey County Registrar of Voters and District Counsel. The Board should adopt Resolution 2005-07 and direct staff to take the appropriate follow-up action with the Registrar of Voters.

At its June 20, 2005 meeting, the Board briefly discussed, but deferred action on whether or not to submit arguments in favor of the Ballot Measure. Staff recommends that the District Board decide which Directors, if any, should be authorized to prepare and submit an argument in favor of the measure explaining the rationale for placing it on the ballot. Ballot arguments are limited to five signatures and may not exceed 300 words.

DISCUSSION: At its June 20, 2005 meeting, the Board voted 5-2 to place a measure on the November 8, 2005 ballot regarding public acquisition of the Cal-Am water distribution system, including all of the Cal-Am Coastal Division, Monterey District that lies within MPWMD boundaries. This includes the Bishop, Hidden Hills and Ryan Ranch Units. The Board clarified that the public entity to acquire Cal-Am is not limited to MPWMD, and could be another existing public entity or a new public entity created in the future for this purpose. The Board further noted that it would allow rebuttal arguments on the ballot materials as well as the standard arguments in favor and against the measure. Resolution 2005-07 reflects this Board direction.

The Ballot Measure does not ask voters to acquire the Cal-Am system. The Ballot Measure focuses on investigating the cost and process to publicly acquire the Cal-Am system. District action would be mandatory if the voters approve the measure by a simple majority.

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 (300-word limit); last day for District General Counsel to submit independent analysis of the ballot measure (500-word limit).

August 16, 2005: Last day for qualified entities to submit rebuttal arguments (250-word limit).

September 29, 2005: Registrar begins mailing ballot materials

November 8, 2005: Election Day

IMPACT TO STAFF AND FISCAL RESOURCES: 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. The Monterey County Elections Department has estimated that the District's expense would be in the $50,000 range for consolidating this measure with the November statewide special election.  The Fiscal Year 2005-06 District budget does not include a line item to cover this expense, so a supplemental appropriation from the general operating reserve is required.  Because the District's cost for this consolidated measure will not be known until after the November 8, 2005 election, staff proposes that it be included with the Mid-Year Budget Adjustment action item on the Board agenda in February 2006.

EXHIBITS

17-A MPWMD Resolution 2005-07 Calling for Placement of a District-Wide Ballot Measure on November 8, 2005 to Investigate Process and Cost of Public Acquisition of the California American Water (Cal-Am) System

U:\staff\word\boardpacket\2005\2005boardpackets\20050718\ActionItems\17\item17.doc