EXHIBIT 1-B

DRAFT MINUTES REGULAR MEETING BOARD OF DIRECTORS MONTEREY PENINSULA WATER MANAGEMENT DISTRICT February 23, 2006

The meeting was called to order at 7:00 PM in the Boardroom of the Monterey Regional Water Pollution Control Agency Board members present: Michelle Knight, Chair – Division 4 Judi Lehman, Vice Chair – Division 2 Alvin Edwards – Division 1 Kristi Markey – Division 3 Larry Foy – Division 5 David Pendergrass – Mayoral Representative David Potter – Monterey County Board of Supervisors Board members absent: None General Manager present: David A. Berger District Counsel present: David C. Laredo The assembly recited the Pledge of Allegiance. No comments were directed to the Board during Oral Communications. On a motion by Director Pendergrass and second by Director Edwards, the Consent Calendar items were approved unanimously on a vote of 7 – 0. Adopted. Approved. Approved. Approved. Adopted. Adopted. Approved. Adopted. Henrietta Stern, Project Manager, addressed the Board. A summary of her presentation is on file at the District office. Darby Fuerst, Senior Hydrologist, presented the item. He reported that California American Water (Cal-Am) production from the Carmel River between October 1, 2005 and February 21, 2006 is 25 acre-feet under the limit established in response to Order 95-10. Production from the Coastal Subarea of the Seaside Groundwater Basin is 252 acre feet below the production target. The Board requested that General Manager Berger contact Cal Am and encourage the company to publish advertisements promoting the water conservation message. The Directors expressed concern about the rise in water demand during a time of year when water production is usually low. Stephanie Pintar, Water Demand Manager, told the Board that Cal Am would be sending out a mailer that promotes the District’s rebate program. District Counsel Laredo stated that he provided status reports to the Board on items listed on the Closed Session agenda. Direction was given to the General Manager and District Counsel. No reportable action was taken at the meeting. Chair Knight presented Director Foy with a plaque in recognition of his service as Chair of the Board in 2005. On a motion by Director Foy and second by Director Potter, the Board approved the staff recommendation to: (1) adopt the Negative Declaration, (2) grant the appeal; (3) adopt the Findings of Fact to Support Approval; and (4) direct staff to add a footnote to Rule 24, Table H indicating that dormitory water use is residential in nature. The motion was approved unanimously on a vote of 7 – 0. During the public hearing on this item, Thomas Jamison, legal counsel for the applicant, addressed the Board. He expressed support for the staff recommendation and urged the Board to grant the appeal. He noted that food preparation facilities on the campus are considered a commercial use. Director Edwards made a motion that was seconded by Director Potter to approve the Fiscal Year 2005-2006 Mid-Year Budget Adjustment. No action was taken on the motion. Director Markey offered a substitute motion to approve the Fiscal Year 2005-2006 Mid-Year Budget Adjustment, with the understanding that action taken on remaining agenda items could cancel associated expenditures included in the adjusted budget. The motion was seconded by Director Potter and approved unanimously on a vote of 7 – 0. During the public comment period on this item, John Fischer, a resident of Pacific Grove addressed the Board. He warned the Board that the public might be critical of the additional $394,000 included in the budget for legal services. Director Edwards proposed a motion to adopt the revised Management and Operations Agreement between Cal Am and the MPWMD as submitted for Board review that evening, and adopt the revised language for the Santa Margarita Test Injection Well Aquifer Storage and Recovery (ASR) System Operation and Maintenance Manual also submitted for Board review that evening. The motion was seconded by Director Foy. Director Edwards offered an amendment to the motion that was seconded by Director Foy, that a letter be sent to Cal Am asking for an acknowledgment that any reference to “future ASR” in the Management and Operations Agreement refers to the District’s Phase 1 ASR Project. The amended motion was approved on a vote of 5 – 2. Directors Edwards, Foy, Knight, Pendergrass and Potter voted in favor of the motion. Directors Lehman and Markey were opposed. No comments were directed to the Board during the public comment period on this item. Director Edwards proposed a motion authorizing the District to contract with Bookman-Edmonston/GEI Consultants to perform the scope of work described in the staff report at a total cost not to exceed $60,000. The motion was seconded by Director Knight and approved on a vote of 4 – 3. Directors Edwards, Knight, Lehman, and Markey voted in favor of the motion. Directors Foy, Pendergrass and Potter were opposed. The following persons addressed the Board during the public comment period on this item. (1) John Fischer, a resident of Pacific Grove, spoke in support of the contract because the resulting study would evaluate whether or not the projects are environmentally benign and if they are properly sited. (2) Robert Greenwood, representing the Carmel Valley Association, spoke in opposition to the contract. He stated that the Monterey Bay Regional Water Authority should be responsible to conduct this comparison of project costs. Also the District should focus its resources on completing studies of the proposed 7.5 million gallons per day Sand City desalination project. Director Foy made a motion to appoint the Board Chair to serve as representative to the Watermaster and that the Vice Chair should be appointed to serve as alternate. The Board Chair’s term on the Watermaster will end when that person’s term as Chair expires. The subsequent Chair will take over as representative to the Watermaster. In addition, a proposal should be submitted to provide District technical and other support services to the Watermaster, and a draft service agreement be negotiated for Board consideration. Director Potter seconded the motion. The motion was approved unanimously on a vote of 7 – 0. Director Markey offered a substitute motion to appoint Director Edwards as representative to the Watermaster. Director Lehman seconded the motion. Director Markey later withdrew her motion. During the public comment period on this item, Robert Greenwood, representing the Carmel Valley Association, noted that the staff note on this item states that Cal-Am, Seaside and two private entities will fund a Seaside Basin monitoring and management plan. He asked staff to identify the two private entities. Director Edwards made a motion to adopt the staff recommendation to: (1) begin CEQA review on Concept Ordinance No. AA; (2) consider first reading of the ordinance at a future meeting; and (3) direct staff to initiate discussions with Marina Coast Water District, Monterey County Water Resources Agency, Seaside Municipal Water Company and Cal Am re an emergency intertie. The motion was approved unanimously on a vote of 7 – 0. No comments were directed to the Board during the public comment period on this item. Director Lehman proposed a motion to adopt the staff recommendation to reject the bid from Active Matrix Networks, Inc. and authorize staff to negotiate a reduced amount with the sole bidder. The Board authorized an expenditure of up to $50,000 for the conference room upgrade that will include installation and design of video equipment as well as funding the purchase of risers and new chairs for the Board and staff tables. If negotiations with the current bidder are not successful, staff will issue a new Call for Bids. The motion was seconded by Director Edwards and approved on a vote of 6 – 1. Directors Edwards, Knight, Lehman, Markey, Pendergrass and Potter voted in favor of the motion. Director Foy was opposed. No discussion of the Informational Items/Staff Reports occurred at the meeting. The meeting was adjourned at 9:55 PM.

CALL TO ORDER/ROLL CALL PLEDGE OF ALLEGIANCE ORAL COMMUNICATIONS CONSENT CALENDAR 1. Consider Adoption of Minutes from January 25, 2006 Board Workshop and January 26, 2006 Regular Board Meeting 2. Consider Response to 2005 Monterey County Grand Jury Report 3. Consider Approval of Second Quarter Fiscal Year 2005-06 Investment Report 4. Review and Accept Independent Audit Report for Fiscal Year 2004-2005 5. Consider Adoption of Memorandum of Understanding between the MPWMD and the California Urban Water Conservation Council 6. Consider Amendment to General Manager Employment Agreement 7. Consider Expenditure of Budgeted Funds for 2005 MPWMD Annual Report 8. Consider Adoption of Treasurer’s Report for December 2005 PRESENTATIONS 9. Water Supply Project Alternatives Update GENERAL MANAGER’S REPORT 10. Status Report on California-American Water Compliance with State Water Resources Control Board Order 95-10 ATTORNEY’S REPORT 11. Report on 5:30 PM Closed Session of the Board DIRECTORS’ REPORTS 12. Oral Reports on Activities of County, Cities, Other Agencies/Committees/ Associations PUBLIC HEARINGS 13. Consider Appeal of Staff Decision Regarding Classification of Dormitory Water Use – Robert Louis Stevenson School (APN 008-022-003, 008-022-012, 008-022-020; 008-022-021, 008-022-023, 008-022-033, 008-031-002, 003-031-013, 008-532-008, 008-532-009, 008-532-010) 14. Consider Adoption of Fiscal Year 2005-2006 Mid-Year Budget Adjustment ACTION ITEMS 15. Consider Approval of Aquifer Storage and Recovery Management and Operations Agreement between MPWMD and California American Water 16. Consider Supplemental Appropriation and Authorization to Contract with Bookman-Edmonston/GEI Consultants to Prepare Comparison of Desalination Project Costs and Timelines 17. Designation of MPWMD Representative to Seaside Groundwater Basin Watermaster; Authorization to Submit MPWMD Proposal for Technical, Administrative and Financial Management Support Services to Watermaster 18. Consider Concept Ordinance that Changes District Rule 20-C to Exempt that Portion of Former Fort Ord within the MPWMD Boundary from Water Distribution System Permit Requirements, and Consider Need for Emergency Intertie Between Cal Am and Other Systems 19. Consider Rejection of Sole Bid and Authorization for Staff to Negotiate with Bidder for Design and Installation of Audio and Video Equipment in the District’s Conference Room INFORMATIONAL ITEMS/STAFF REPORTS 20. Letters Received 21. Committee Reports 22. Strategic Planning Initiatives Progress Report 23. Carmel River Fishery Report 24. Water Conservation Program Report 25. Monthly Allocation Report 26. Monthly California American Water Production Report 27. Monthly Water Supply Status Report 28. Semi-Annual Financial Report on the CAWD/PBCSD Wastewater Reclamation Project 29. Semi-Annual Groundwater Quality Monitoring Report ADJOURNMENT

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David A. Berger, Secretary to the Board

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A. Tavani/3-9006/Feb 23, 2006 Board Minutes/6 pages