ITEM:		GENERAL MANAGER’S REPORT
16.	UPDATE ON DEVELOPMENT OF WATER SUPPLY PROJECTS
Meeting Date:			January 29, 2014	Budgeted:	N/A
From:			David J. Stoldt	Program/	N/A
			General Manager	Line Item No.: N/A
Prepared By:			David J. Stoldt	Cost Estimate:	N/A
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A

DISCUSSION:

SWRCB: On January 15, 2014 the District General Manager and General Counsel met with enforcement staff of the State Water Resources Control Board, Cal-Am, the Regional Water Authority, Sierra Club, attorney for water rights holders, and the Pebble Beach Company (Parties to the lawsuit over the Cease and Desist Order (CDO)) and held initial discussions about the process for petitioning for a modification of the CDO under section 1832 of the California Water Code.

In December, the General Manager met individually with each SWRCB Board member to discuss resolving the mixed-use metering issue. The District proposed that the SWRCB allow the water use factor methodology to be used to determine whether a proposed use would intensify use of water.  SWRCB Chair Felicia Marcus indicated via email that staff would be directed to work on this issue, but we have received no additional clarification.

Desalination Facility (A.12-04-019): The District participated in a joint opening brief on the sizing of the desalination facility, submitted to the CPUC on January 21, 2014 (Exhibit 16-A).

Legislation was finalized for the Water Rate Relief Bonds and is expected to be introduced by Senator Monning next week. The General Manager concluded 15 public presentations on the status of the water supply projects and the use of the Water Rate Relief Bond financing with presentations to the Carmel Valley Association and the Seaside City Council on January 16th.

Groundwater Replenishment (GWR): District staff has been meeting with MRWPCA staff and consultants every other Friday, tracking project progress. CEQA work and source water feasibility studies continue to proceed.

Larry Hampson, District Engineer, joined the MRWPCA team in a visit to Sacramento to meet with State Revolving Fund (SRF) staff on January 7, 2014. SRF staff responded very favorably to the prospect of funding the GWR project and the project consultants have been instructed to begin the loan application process.

A mid-year budget increase for GWR has been recommended and is included in this meeting agenda under Item 19.

Aquifer Storage and Recovery (ASR): The District has reached agreement with the City of Seaside for the size and shape of the easement for the Santa Margarita site however, we await results of an appraisal conducted by the City of Seaside. Staff will be directing General Counsel to modify proposed agreements for the City of Seaside which will enable FORA to approve final plans. This could lead to completion of the backflush pond, undergrounding of pipes, paving, and landscaping in 2014. FORA has indicated that a 3-way Agreement between the District, FORA, and Seaside may be required.

Alternative Desalination Project: The General Manager met with the DeepWater Desal team, including their data center developer, on January 22, 2014. The Cost Sharing Agreement with DeepWater Desal requires execution of certain activities by February 28, 2014. For example, definitive agreements for the following are required:

· an option agreement for the Company to purchase the “Tank Farm” parcel adjacent to the Dynegy Moss Landing Power Plant from Dynegy Moss Landing, LLC, together with easements necessary to construct intake and/or outfall pipelines necessary to operate the CCRWP and the Desalination Plant; and

· an agreement for the Company to purchase from the City of Salinas sufficient electricity needed to operate the CCRWP and the Desalination Plant; and

· an agreement in a form reasonably acceptable to MPWMD for development of intake and outfall pipeline facilities, and data center components for the CCRWP.

It is evident that the milestones will not have been met, but progress is being made. As a result, staff will recommend to the Board at its February meeting that the milestone dates be extended.

The Tenera Study on impacts of the intake facility has been completed. Power Engineering Inc completed its study on energy delivery in December. The Preliminary Environmental Assessment (PEA) is expected to be delivered to the State Lands Commission in March or April followed in May or June with a Notice of Preparation for an environmental impact report.

Local Water Projects: The District General Counsel has drafted a grant agreement that is being finalized by staff. This should enable actual award of monies to the Airport District and the City of Pacific Grove.

MPWSP Governance Committee: The Governance Committee recommended approval of Cal-Am’s decision to hire CDM Constructors, Inc as the design-build team for the desalination facility (see Exhibit 16-B). The District, jointly with the Regional Water Authority, contracted with Separation Processes Inc to participate in the procurement process. Their assessment of the process is contained in Exhibit 16-C.

EXHIBITS

16-A Joint Opening Brief on Plant Sizing in Support of Approval and Implementation of Settlement Agreements

16-B Monterey Peninsula Water Supply Project Governance Committee Response to Cal-Am Notification #3 – Execution of Design Build Agreement for Desalination Infrastructure (letter from Jason K. Burnett)

16-C Review of Selection Process for the Design-Build Contractor for the Monterey Peninsula Water Supply Project (Memorandum from SPI Engineering)

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