ITEM:		CONSENT CALENDAR
4.	CONSIDER APPROVAL OF AMENDMENTS TO THE 1992 AGREEMENTS FOR SALE OF RECLAIMED WATER AND 2004 AGREEMENTS FOR SALE OF RECYCLED WATER
Meeting Date:			September 17, 2007	Budgeted:	N/A
From:			David C. Laredo,	Program/	N/A
			General Counsel	Line Item No.:
Reviewed By:			General Manager	Cost Estimate:	N/A
General Counsel Approval: Yes
Committee Recommendation: The Administrative Committee reviewed this item on September 11, 2007 and recommended approval.
CEQA Compliance: Class 1 exemption – Guideline section 15301

SUMMARY: A series of agreements set the price for recycled water delivered to golf courses and open space use under the Carmel Area Wastewater District/Pebble Beach Community Services District (CAWD/PBCSD) Recycled Water Project. The parties have mutually agreed to amend the price of recycled water, in accord with direction of the CPUC. A copy of a letter, dated June 6, 2007, which enumerates the terms of the agreement between the Pebble Beach Company and the Independent Reclaimed Water Users Group (IRWUG) is attached as Exhibit 4-A. The sample amendment agreements (attached as Exhibit 4-B and Exhibit 4-C), if approved, shall implement that settlement. The Board of Directors should review and consider approval of proposed amendments to the 1992 Agreement for Sale of Reclaimed Water and 2004 Agreement for Sale of Recycled Water. Parties to these agreements are the District and Pebble Beach Co., Monterey Peninsula Golf Course, Cypress Point, Poppy Holding, Inc., and Robert Louis Stevenson School.

RECOMMENDATION: The Board should approve amendment of the 1992 Agreement for Sale of Reclaimed Water and 2004 Agreement for Sale of Recycled Water for Pebble Beach Co., Monterey Peninsula Golf Course, Cypress Point, Poppy Holding, Inc., and Robert Louis Stevenson School.

BACKGROUND: As is described in greater detail in MPWMD Ordinance No. 109, effective in 1992, MPWMD entered into a series of interrelated agreements with various parties for the finance, design, construction, and operation of facilities comprising the Original CAWD/PBCSD Recycled Water Project. This Project allowed the production and use of recycled water in lieu of potable water for irrigation of vegetated areas within the Del Monte Forest area of the Monterey Peninsula. The Project has been constructed and is in operation pursuant the Amended and Restated Construction and Operation Agreement by and among MPWMD, CAWD, PBCSD, and PBC, dated as of December 15, 2004. That Agreement is not affected by this matter.

MPWMD facilitated sale of water from the Project under the various 1992 Agreements for Sale of Reclaimed Water. In 2004 the parties amended the 1992 Agreements for Sale of Reclaimed Water to facilitate expansion of that Project.

In 2006, IRWUG expressed concern to the CPUC regarding the impact that proposed CAW water rates would have on their cost of recycled water. Specifically, CAW water rates provide a benchmark for setting the price of recycled water from the CAWD/PBCSD Recycled Water Project, and IRWUG was concerned as to the resulting cost increase of recycled water delivered for use upon golf courses and open space use.

In lieu of a CPUC determination as to this effect, Pebble Beach Company and IRWUG have negotiated a resolution of this matter, as follows:

1. Golf courses within the Del Monte Forest that use reclaimed water for irrigation purposes shall be required to pay 33% of Surcharges 1 and 2 as part of the price of reclaimed water until (a), California American Water’s (“CAW”) Coastal Water Project is completed and operational, and Surcharges 1 and 2 are no longer in effect, or (b) until December 31, 2017, whichever occurs first;

2. Once the Coastal Water Project (“CWP”) is completed and operation, and Surcharges 1 and 2 are folded into the base rate for potable water, IRWUG shall pay such base rate as part of their reclaimed water without contesting or objecting; and

3. IRWUG reserves its right to contest any other surcharges that arise for design, development, construction, or operation of the CWP or any other project proposed and approved.

Additionally, the parties agreed to work together with the District to prepare any amendments or other documentation necessary to implement the terms of the above-mentioned conditions under the Recycled Water Sales Agreements the parties have entered into with the District. The proposed Amendments simply incorporate the conditions of the settlement agreement.

IMPACT ON STAFF/RESOURCES: As provided in the Water Purchase Agreement among MPWMD, CAWD and PBCSD, the obligation of the District to make disbursements is a special obligation of the District, payable solely from net operating revenues of the project, monies in the Revenue Fund, and other funds described in the Trust Agreement. In no event, will disbursements be payable out of any funds or properties of the District other than such sources. Therefore, the proposed amendment to the Sale of Recycled Water Agreements will have no financial impact on the District. District legal expense incurred in preparation of this report, and the proposed agreement amendments will be charged to the CAWD/PBCSD Project.

EXHIBITS

4-A Letter of Agreement dated June 6, 2007 between the Pebble Beach Co. and IRWUG

4-B Sample Amendments to the 1992 and 2004 Agreements for the Sale of Recycled Water

between MPWMD & Pebble Beach Co.; MPWMD & Monterey Peninsula Country Club;

MPWMD & Cypress Point; and MPWMD & Poppy Holding, Inc.

4-C Sample 2007 Amendment to the Agreement for Sale of Reclaimed Water between the

District and Robert Louis Stevenson School

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