EXHIBIT 20-E

MONTEREY PENINSULA WATER MANAGEMENT DISTRICT

DRAFT -- 10/9/07

FINDINGS of APPROVAL

CONSIDER APPLICATION TO CREATE

SAND CITY WATER SUPPLY PROJECT WATER DISTRIBUTION SYSTEM

Application #20070803SAN, Permit #M07-02-L4

Adopted by MPWMD Board on October __, 2007

Unless noted otherwise, all cited documents and materials are available for review at the MPWMD Office, 5 Harris Court, Building G, Monterey (Ryan Ranch).

It is hereby found and determined as follows:

1. FINDING: The City of Sand City (City) and/or the Sand City Redevelopment Agency are identified as the owner of facilities and/or properties associated with the Sand City Water Supply Project Water Distribution System (SCWDS). The proposed SCWDS is comprised of extraction wells, pumps, 300 acre-feet per year (AFY) reverse osmosis desalination plant, water mixing equipment and a horizontal brine injection well. Brackish water extracted by beach wells west of Highway One will be conveyed to the desalination facility at the 0.8-acre “Campos” property east of Highway One (west of Catalina Street bounded by Elder and Shasta Avenues). The fresh water produced at the desalination plant will be adjusted for pH and disinfected, and mixed with water from the California American Water (CAW) system to reduce the potential for corrosion in existing CAW pipelines. Water will then be conveyed through an 8-inch pipeline roughly 900 feet along Catalina Avenue, where it will directly enter the CAW system at a 14-inch main at Roberts and Olympia Avenues in Seaside. The “reject” water from the desalination plant will conveyed by 6-inch pipeline back toward the beach, diluted as needed with brackish water to attain a concentration similar to full seawater, and will be injected via a horizontal injection well along Vista Del Mar Drive into the naturally-occurring seawater wedge to eventually flow subsurface towards Monterey Bay. Pipelines associated with the Project will be placed in City right-of-ways in existing streets or other streets identified on subdivision maps, or via an encroachment permit issued by Cal-Trans.

All of the 300 AFY produced by the desalination plant will eventually be used within the City boundary to facilitate new construction and redevelopment projects in compliance with the City’s approved General Plan. A separate MPWMD Entitlement Ordinance is the anticipated vehicle to ensure 206 AFY of new or intensified CAW water service to parcels within Sand City; the 206 AFY represents the difference between the 300 AFY desalination plant production and 94 AF of CAW water consumption in the City in Water Year 2006. Until the full 300 AFY production is used within the City, CAW has access to potable water to help reduce water extractions from the Carmel River and Seaside Basins to meet existing community water needs.

EVIDENCE: Application #20070803SAN, including all technical attachments, including environmental and engineering documents. Draft Environmental Impact Report (EIR) for Sand City Water Supply Project, SCH #2004041133 dated June 2004; Final EIR for Sand City Water Supply Project dated December 2004; Addendum to Final EIR/Cal-Am Interconnection dated September 2007. Map with legal description of parcels for “Schedule A - Sand City Desalination Facility, Lands of the Sand City Redevelopment Agency” dated September 25, 2007. All SCWDS documents are also available at the City of Sand City.

2. FINDING: The SCWDS is within the area served by California American Water with the exception of parcel APN 011-501-014. The MPWMD Board approval of a separate application by CAW includes annexation of this parcel.

EVIDENCE: Permit application as specified in Finding #1; CAW permit application #20070829CAW; map of CAW service area; minutes of MPWMD Board meeting of October 15, 2007 [pending].

3. FINDING: A total of four wells at two locations on beach sands west of Highway One between Bay and Tioga Avenues to extract brackish water from the shallow Aromas Sands Formation, and a horizontal injection well on Vista del Mar Drive roughly 200 feet south of Tioga Street will be installed pursuant to well construction and water distribution system permits issued by the Monterey County Health Department (MCHD) and/or California Department of Public Health (CDPH) and other responsible agencies.

EVIDENCE: Permit application as specified in Finding #1.

4. FINDING: Applicant has applied to MPWMD for a permit to create the SCWDS described in Finding #1.

EVIDENCE: Permit application as specified in Finding #1.

5. FINDING: Based on District staff analysis of the engineering, hydrogeologic and environmental data provided in the application, 300 AFY has been set as the annual production limit for the SCWDS specified in Finding #1 for delivery to the CAW system via one connection, with the constraints imposed by the MPWMD Conditions of Approval.

EVIDENCE: Permit materials specified in Finding #1; MPWMD Permit #M07-02-L4, Condition of Approval.

6. FINDING: The application to create the SCWDS, along with supporting materials, is in accordance with District Rules 21 and 22.

EVIDENCE: Permit application as specified in Finding #1.

Required Findings (MPWMD Rule 22-B)

7. FINDING: The approval of the permit would not cause unnecessary duplication of water service with any existing system. The subject property is within the areas served by CAW, and would function as an additional source of supply to be integrated into the CAW system that is exempt from the one-for-one requirement imposed by State Water Resources Control Board (SWRCB) Order WR 95-10. The SCWDS would help reduce CAW diversions from the Carmel River and Seaside Groundwater Basins in the near-term as CAW develops a replacement source of supply. The Superior Court has determined that the City enjoys rights to the Aromas Sands Formation for its Project pursuant to the Final Decision on the Seaside Basin Adjudication. [Rule 22-B-1]

EVIDENCE: Map of CAW service area; SWRCB Order 95-10; letter from SWRCB to City dated January 31, 2006; Monterey County Superior Court Final Decision, Seaside Basin Adjudication, Case M66343, March 27, 2006.

8. FINDING: The approval of the permit would not result in water importation or exportation to or from the District, respectively. [Rule 22-B-2]

EVIDENCE: The referenced service area is located wholly within the MPWMD as shown on District boundary location maps.

9. FINDING: Approval of the application would not result in significant adverse impacts to “Sensitive Environmental Receptors (SER)” as defined by MPWMD Rule 11, including the Seaside Groundwater Basin. Site-specific hydrogeologic evaluations have demonstrated that proposed pumping of extraction wells and use of discharge injection wells are not expected to have significant impacts on SERs or neighboring wells. [Rule 22-B-3]

EVIDENCE: Hydrogeologic Assessment and environmental review documents specified in Finding #1.

10. FINDING: The application adequately identifies the right of the City to the source of water supply for its Project (brackish water in Aromas Sands Formation) and provides supporting verification. [Rule 22-B-4]

EVIDENCE: Permit Application materials specified in Finding #1, including Superior Court Final Decision on Seaside Basin Adjudication, Case M66343, March 27, 2006.

11. FINDING: The application demonstrates existence of a long-term reliable source of water supply for the proposed use of up to 300 AFY for delivery into the CAW system; the desalination plant includes redundant facilities to ensure reliability. [Rule 22-B-5]

EVIDENCE: Hydrogeologic assessment and engineering analyses included in permit application materials specified in Finding #1.

12. FINDING: The source of supply is brackish water in the ancient sand dunes comprising the Aromas Sands Formation. The cumulative effects of issuance of a permit for the subject property would not be expected to result in significant adverse impacts to the source of supply or the species and habitats dependent on the source of supply. [Rule 22-B-6]

EVIDENCE: Hydrogeologic Assessment and environmental review documents specified in Finding #1.

13. FINDING: The source of supply for the subject parcel is not derived from the Carmel Valley Alluvial Aquifer or the Monterey Peninsula Water Resource System. The source of supply is not within the jurisdiction of the SWRCB, and has not been determined to be tributary to the source of supply for any other system. The City has been granted water rights to the source of supply by the Superior Court. [Rule 22-B-7]

EVIDENCE: MPWMD map showing boundaries of project site and jurisdiction of SWRCB superimposed on Monterey County parcels; Hydrogeologic Assessment and environmental review documents specified in Finding #1; Superior Court Final Decision on Seaside Basin Adjudication, Case M66343, March 27, 2006.

14. FINDING: MPWMD Permit #M07-02-L4 allows a permanent intertie to the CAW system as the SCWDS represents a new source of supply for the CAW system. Intensification of use of CAW water facilitated by the SCWDS for new connections and remodels will be limited to parcels within the City as specified by the permit Conditions of Approval and a separate Entitlement Ordinance creating MPWMD Rule 23.6 and amending Rules 11, 21 and 23.1. Parcels within the City already have access to CAW service pursuant to MPWMD Rules and Regulations. Fire-flow within the service area is already provided by CAW. [Rule 22-B-8]

EVIDENCE: Map of CAW service area available at District office; MPWMD Permit # M07-02-L4, Condition of Approval #3, 13 and 28; MPWMD Rules and Regulations.

15. FINDING: The City and CAW have developed engineering and water quality requirements to prevent contamination of the CAW system, which is required to be in place to deliver water to CAW. [Rule 22-B-9]

EVIDENCE: Map of CAW service area; MPWMD Permit # M07-02-L4, Condition of Approval #14; project description in FEIR Addendum, September 2007.

Minimum Standards for Granting a Permit (MPWMD Rule 22-C)

16. FINDING: The application adequately identifies the responsible parties as the owners listed in Finding #1. [Rule 22-C-1]

EVIDENCE: Permit application as specified in Finding #1.

17. FINDING: The SCWDS will meet the water quality requirements to comply with California Title 22 water quality standards as administered by County and State health authorities. [Rule 22-C-2]

EVIDENCE: Permit application materials as specified in Finding #1. MPWMD Permit #M07-02-L4, Conditions of Approval #6, 15 and 17; California Administrative Code, Title 22.

18. FINDING: The application identifies the location of the source of supply for the water distribution system (water source and well site). [Rule 22-C-3]

EVIDENCE: Permit application as specified in Finding #1, including location map. MPWMD Permit #M07-02-L4, Conditions of Approval #4 and 5.

19. FINDING: The approval of the application would not create an overdraft or increase an existing overdraft of a groundwater basin unless a valid superior right is proven. No overdraft has been declared for the brackish Aromas Sands Formation. The Superior Court determined that the City shall have the right to produce brackish water from this Formation to operate its proposed desalination project “so long as such Production does not cause a Material Injury.” [Rule 22-C-4]

EVIDENCE: Final Decision of Monterey County Superior Court on Seaside Basin Adjudication, Case M66343, March 27, 2006.

20. FINDING: The approval of the application would not adversely affect the ability of existing systems to provide water to users due to conditions of approval by MPWMD and other entities, based on certified environmental review documents. The Superior Court determined that the City shall have the right to produce brackish water from the Aromas Sands Formation to operate its proposed desalination project “so long as such Production does not cause a Material Injury.” Proof of such an injury is the responsibility of the complaining Party [Rule 22-C-5]

EVIDENCE: Environmental review materials in application as specified in Finding #1; Final Decision of Monterey County Superior Court on Seaside Basin Adjudication, Case M66343, March 27, 2006.

Compliance with California Environmental Quality Act (CEQA)

21. FINDING: In the review of this application, MPWMD has followed those guidelines adopted by the State of California and published in the California Administrative Code, Title 14, Section 15000 et seq. Specifically, the MPWMD, as a Responsible Agency under CEQA for this action, has complied with Guidelines Section 15096. The MPWMD, as a Responsible Agency for this project, has considered the Notice of Determination filed by the City of Sand City on September 19, 2007, City Resolution SC 07-84 adopting the Addendum to the Final EIR for the Project, and all environmental documents associated with the project. Copies of the Draft and Final EIR and the Addendum to the Final EIR have been provided to MPWMD Board members for review prior to the public hearing on this matter. The MPWMD Board has reviewed the environmental information and relied on the information as part of its decision-making on this matter.

EVIDENCE: CEQA and CEQA Guidelines, Section 15096. MPWMD Notice of Determination for Approval of SCWDS dated October ___, 2007. [pending Board action]

U:\staff\word\boardpacket\2007\2007boardpackets\20071015\PubHrgs\20\item20_exh20e.doc

Prepared by H. Stern, 10/9/07