EXHIBIT 1-B
DRAFT MINUTES Regular Meeting Board of Directors Monterey Peninsula Water Management District February 26, 2009
The meeting was called to order at 7:00 PM in the District Conference Room.	CALL TO ORDER/ROLL CALL
Directors Present: Kristi Markey, Chair -- Division 3 Regina Doyle, Vice Chair – Division 4 Alvin Edwards – Division 1 Judi Lehman – Division 2 Bob Brower – Division 5 (participated by telephone) David Pendergrass – Mayoral Representative David Potter – Monterey County Board of Supervisors Directors Absent: None General Manager present: Darby Fuerst District Counsel present: David C. Laredo
The assembly recited the Pledge of Allegiance.	PLEDGE OF ALLEGIANCE
The following comments were directed to the Board during Oral Communications. (1) Victor Kragg read a statement on file at the District office. He alerted the public to check their water bills for unusual increases that could be due to malfunctioning water meters. (2) Roy Thomas, representing the Carmel River Steelhead Association (CRSA), requested that the District identify environmental triggers which would be used to establish water production reductions in critically dry years when flow in the Carmel River is limited.	ORAL COMMUNICATIONS
On a motion by Director Pendergrass and second by Director Edwards, the Consent Calendar was adopted on a roll-call vote of 7 – 0.	CONSENT CALENDAR
Approved.	1.	Consider Adoption of Minutes from the January 21, 2009 Special Meeting and January 29, 2009 Regular Meeting of the Board of Directors
Approved.	2.	Consider Expenditure of Budgeted Funds to Contract with Idias Consulting to Provide Assistance with Projects Related to the Seaside Basin Watermaster and the Water Allocation Program Mitigation Plan
Approved.	3.	Consider Expenditure of Budgeted Funds to Purchase License for Utilization of Water Wise Gardening in Monterey County Software
Approved.	4.	Consider Approval of Second Quarter Fiscal Year 2008-2009 Investment Report
Approved.	5.	Review and Accept Independent Audit Report for Fiscal Year 2007-2008
Approved.	6.	Consider Approval of Treasurer's Report for November 2008
Approved.	7.	Consider Adoption of Treasurer's Report for December 2008
	PRESENTATIONS
Mr. Anthony’s report included the following. (1) 27 acre-feet of water from the Carmel River have been injected through the aquifer storage and recovery (ASR) well since February 17, 2009. (2) Bishop Well No. 2 is undergoing maintenance and should be operational by March 10. (3) Maintenance on Ryan Ranch Well Nos. 8 and 11 should be completed by mid-March. (4) CAW is working with California Department of Fish and Game and the U. S. Fish and Wildlife Service on planning construction of a fish ladder at Los Padres Dam. (5) Measured on a 24-month rolling average, unaccounted for water totals are 1.5 percent below the previous 12-month period. (6) Leaky water pipes will be replaced in the Cannery Row area. Replacement of the water lines is scheduled to coincide with road work previously planned by the City of Monterey. (7) CAW will proceed with plans to buttress San Clemente Dam, and has abandoned the San Clemente Bypass Project. (8) The abandoned, above-ground pipeline positioned along General Jim Moore Blvd. will eventually be removed by CAW. (9) It is anticipated that a new billing system will be implemented that will alert CAW staff to irregularities in customer water bills. Director Markey asked that Mr. Anthony report to the Board on when the billing system will be upgraded to trigger staff when unusual spikes in customer water use occur.	8.	Monthly Report from California American Water General Manager, Craig Anthony
Henrietta Stern, Project Manager, presented the report. An outline of Ms. Stern’s presentation is on file at the District office and can be viewed at the District’s website.	9.	Water Supply Project Alternatives Update
Stephanie Pintar, Water Demand Manager, presented the report. An outline of Ms. Pintar’s report is on file at the District office and can be viewed at the District’s website.	10.	Water Conservation Program Report
The District will participate in a Greywater Roundtable, that was formed to establish greywater guidelines and catchment systems. The District’s Water Demand Committee has requested that the Legislative Advocacy Committee pursue efforts at the state level to facilitate greywater and rainwater reuse.	11.	Progress Report on Greywater Initiative
	GENERAL MANAGER’S REPORT
Darby Fuerst, General Manager, presented the report. An outline of the presentation is on file at the District office and can be viewed at the District’s website. Mr. Fuerst reported that for the period of October 1, 2008 through February 22, 2009, CAW production from the Carmel River was 246 acre-feet under the production limit of 3,801 acre-feet established as a result of State Water Resources Control Board (SWRCB) Order 95-10. Production from the Coastal Subareas of the Seaside Basin was 242 acre-feet under the production limit of 1,200 acre-feet established by the Seaside Groundwater Basin Adjudication. Production from the Laguna Seca Subarea was 62 acre-feet over the production limit of 103 acre-feet established by the Seaside Groundwater Basin Adjudication. Therefore, total CAW production from the Seaside Basin was 180 AF under the adjudication limit of 1,303 AF. Mr. Fuerst noted that the community has been subject to Stage 1 water reduction regulations since 1999 and water use is 15% below pre-1995 levels. Mr. Fuerst also stated that rainfall measured at San Clemente Dam between October 1, 2008 and February 24, 2009 was 85 percent of normal, and runoff was 40 percent of normal. The District has moved from critically-dry-year conditions to the status of dry-year conditions. The District has considered development of a specific streamflow based triggers that would cause water use reductions.	12.	Status Report on California American Water Compliance with State Water Resources Control Board Order 95-10 and Seaside Groundwater Basin Adjudication Decision
	ATTORNEY’S REPORT
District Counsel Laredo reported that for items 3 A, C, D, E, F and G a status report was provided to the Board but no reportable action was taken. Regarding item 3.B, the Board reviewed a three-party comprehensive settlement agreement regarding water conservation and rationing issues between the MPWMD, CAW and the Division of Ratepayer Advocates. On a motion by Director Edwards and second by Director Lehman, the agreement was approved on a vote of 5 – 0. Directors Doyle, Edwards, Lehman, Markey and Pendergrass voted in favor of the motion. Directors Potter and Brower were absent. The Board also took action on item 4. On a motion by Director Doyle and second by Director Potter, the Board appointed William Avery of Avery and Associates to serve as lead negotiator. The contract was awarded on an hourly basis with a not to exceed amount of $15,695. The motion was adopted on a vote of 6 – 1. Directors Doyle, Edwards, Lehman, Markey, Pendergrass and Potter voted in favor of the motion. Director Brower was absent.	13.	Report on 5:30 PM Closed Session of the Board
		3.	Conference with Legal Counsel – Existing Litigation (Gov. Code 54945.9 (a))
		A.	Application of California American Water Company to the Public Utilities Commission Application No. 04-09-019 – Coastal Water Project
		B.	Application of California -American Water Company for an Order Authorizing a Special Conservation Program and Modifications to its Rate Design in its Monterey District, and Authorization to Increase its Rates for Water Service in its Monterey District to the CPUC – Conservation Program Application (Applications No. 07-12-010, 08-02-018)
		C.	Application of California -American Water Company for Authorization to Increase its Revenues for Water Service in its Monterey District in years 2009; 2010; and 2011 General Rate Case (Application No. 08-01-027)
		D.	SWRCB Cease and Desist Order WR 2008-00XX-DWR
		E.	SWRCB Complaint re CAW (Sierra Club, Ventana Chapter, and Carmel River Steelhead Association)
		F.	MPWMD v. Nick and Gerda Marotta, Monterey Superior Court (M83498)
		G.	MPWMD v. Roy Woods, WOODS 1995 Trust, Monterey Superior Court (M83499)
		4.	Conference with Labor Negotiators (Gov. Code §54957.6)
			Agency Designated Representatives: Rick Dickhaut, Cynthia Schmidlin, Darby Fuerst
			Employee Organization: General Staff and Management Bargaining Units Represented by United Public Employees of California/LIUNA, Local 792
			Unrepresented Employees: Confidential Unit
	DIRECTORS’ REPORTS (INCLUDING AB 1234 REPORTS ON TRIPS, CONFERENCE ATTENDANCE AND MEETINGS)
No reports.	14.	Oral Report on Activities of County, Cities, Other Agencies/Committees/ Associations
	PUBLIC HEARINGS
Director Doyle offered a motion that was seconded by Director Lehman, to deny the request for an amendment to the CAW system to serve the Monterey Bay Shores Ecoresort, and direct staff to prepare findings of denial to be presented at the March 26, 2009 Board meeting. If the applicant desires to re-apply for the water distribution system amendment, preparation of a subsequent EIR on the water related aspects of the project will be required. The motion was approved on a roll-call vote of 4 – 3. Directors Doyle, Lehman, Markey and Potter voted in favor of the motion. Directors Brower, Edwards and Pendergrass were opposed. The following comments were directed to the Board during the public hearing on this item. (1) Sheri Damon, representing Security National Guarantee, responded to comments on the Conditions of Approval presented by the co-applicant CAW in a letter dated February 26, 2009. Ms. Damon requested that Condition Nos. 4, 5, 11, 13, 15, 16 and 29 be adopted as presented by staff. Condition 8 should be amended by deleting the word “permitted system” and replacing it with the word “permittee.” In Condition 9, the word “Permittee” should be deleted and replaced with the words “Property owner.” In Condition 17, the word “Permittee” should be deleted and replaced with the words “Property owner.” Ms. Damon requested that Condition No. 32, Option 1 should be adopted, or the Modified Option 1 outlined in a letter from the City of Seaside, dated February 25, 2009. She urged the Board to approve the application for an amendment to the CAW distribution system. (2) Craig Anthony, General Manager of CAW, stated that there will be some intermingling of Carmel River water and Seaside Basin groundwater that is unavoidable due to pumping operations. Groundwater will be pumped into the Hilby tank, but that tank will also contain some Carmel Valley water that was previously pumped there during the winter months. He explained that CAW will report on a monthly basis, the amount of water pumped into the Hilby tank from the Carmel River and from the Seaside Basin. Mr. Anthony noted that the letter submitted by CAW dated February 26, 2009 incorrectly expressed an objection to Option 3 in Condition No. 32. The letter should be corrected to state that CAW objects to Option 2. (3) Roy Thomas, representing the CRSA, reminded the Board that the District must ensure that reductions in pumping from the Carmel River are achieved. (4) Paul Kephart of Rana Creek Restoration Ecology, spoke in support of the Monterey Bay Shores Ecoresort (MBSE) because it would serve as an example of modern construction utilizing unique water saving technologies. (5) Amy White, representing LandWatch, stated that the EIR prepared for the MBSE is inadequate and requested that the Board deny the application and require additional environmental review. (6) Amy White, citizen of Seaside and homeowner, installed a 4,000 gallon cistern. She asked why citizens are asked to conserve water, and at the same time new projects like the MBSE are under consideration. (7) Paul Bruno, Vice Chair of the Seaside Basin Watermaster, who is also a well owner and represents private and coastal pumpers. He noted that the Watermaster unanimously approved a letter stating that water for the MBSE is consistent with the terms of the Seaside Basin Adjudication decision. He urged the Board to approve the application. (8) Todd Norgard, representing the Carmel Valley Association, requested that Conditions of Approval Nos. 1 through 4 be revised. He stated that denial of the application would be in keeping with the District’s goal to enhance and protect the water resources of the Carmel River and the Seaside Basin. (9) Ron Chesshire urged the Board to approve the application. He expressed support for Option 1 of Condition 32, but stated it would be best to delete the condition. He described Option 2 of Condition 32 as extortion. (10) Rita Dalessio, President of the Ventana Chapter of the Sierra Club, requested that a supplemental EIR be prepared on the MBSE. She asked that consideration be given to utilizing water from the Sand City desalination project for the MBSE. She asked that the District respond to questions raised in a letter dated February 24, 2009 from Laurens Silver. (11) Jordan Daniels, Project Manager for the Marina Dunes Project and Co-Chair of the U.S. Green Building Council, Monterey Branch. He urged the Board to approve the application. (12) John Dalessio urged the Board to deny the application. (13) George Riley, representing Citizens for Public Water, requested that the Board require additional environmental review on the MBSE due to inadequacy of the EIR. He also expressed concern that Director Potter may have a conflict of interest in making a decision on this application, due to his membership on the California Coastal Commission. (14) Kathy Anderson, owner of property in Seaside, urged the Board to approve the application. (15) Gene Zelmer, an architect, expressed support for the MBSE and described it as a unique prototype project that will show other builders how to reduce water use. (16) Adam Tight urged the Board to approve the application. (17) Jeff Condit, a resident of Monterey, urged the Board to approve the application. (18) Safwat Malek, a local architect, spoke in support of the MBSE. (19) Marta Kephart stated that speakers who requested additional environmental studies on the MBSE have not identified specific deficiencies in the EIR. She expressed support for the staff recommendation to approve the application. (20) Ed Ghandour, the applicant, stated that the greywater system proposed for the MBSE will result in a net use of 55 acre-feet of water per year for the project. He stated that the issue raised by Mr. Anthony about intermingling of Carmel River water and Seaside Basin Groundwater is not relevant. He urged the Board to approve the application. Director Brower excused himself from the meeting following the public hearing on item 15. A recess was called at 9:50 PM. The meeting was reconvened at 9:55 PM.	15.	Consider Application to Amend California American Water Distribution System to Serve Monterey Bay Shores Ecoresort in Sand City; California American Water and Security National Guaranty, Co-Applicants; MPWMD Application #20080915MBS-L4; APN# 011-501-014
On a motion by Director Potter and second by Director Edwards, the Board adopted the mid-year budget adjustment for Fiscal Year 2008-09. The motion was adopted on a vote of 6 – 0. Directors Doyle, Edwards, Lehman, Markey, Pendergrass and Potter voted in favor of the motion. Director Brower was absent. No comments were directed to the Board during the public hearing on this item.	16.	Consider Adoption of Mid-Year FY 2008--2009 Budget Adjustment
	ACTION ITEMS
The Board took no action on this item. General Manager Fuerst explained that Steve Kasower of the WFMCC acknowledged that it would be inappropriate for the Board to take a position on a water supply project at this time. George Riley addressed the Board during the public comment period on this item. He expressed concern that if the CAW water supply project is built, the result could be formation of a “monster water agency.”	17.	Request from the Water For Monterey County Coalition (WFMCC) that the Board Sign a Letter to the Public Utilities Commission Expressing Support for the Proposed Regional Project
There was no discussion of the Informational Items/Staff Reports.	INFORMATIONAL ITEMS/STAFF REPORTS
	18.	Letters Received
	19.	Committee Reports
	20.	Strategic Plan Update
	21.	Carmel River Fishery Report for January 2009
	22.	Water Conservation Program Report
	23.	Monthly Allocation Report
	24.	Monthly California American Water Production Report
	25.	Monthly Water Supply Status Report
	26.	Semi-Annual Financial Report on the CAWD/PBCSD Wastewater Reclamation Report
The meeting was adjourned at 11 PM.	ADJOURNMENT

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Darby Fuerst, Secretary to the Board

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