ITEM:		ACTION ITEM
1.	PROPOSITION 84 PLANNING AND IMPLEMENTATION GRANT APPLICATIONS: (A) CONSIDER APPROVAL OF RESOLUTION 2014-08 IN SUPPORT OF FILING A PROPOSITION 84 GRANT APPLICATION; (B) Authorize the General Manager to ENTER INTO GRANT AGREEMENTS; AND (C) CONSIDER THE EXPENDITURE OF FUNDS to retain a consultant for professional services TO PREPARE A GRANT APPLICATION
Meeting Date:			June 3, 2014	Budgeted:	Yes, partially
From:			Dave Stoldt, General Manager	Program/	Protect Environmental Quality
				Line Item No.:	Program 2-6
Prepared By:			Larry Hampson	Cost Estimate:	$ 100,000 ( partially reimbursable)
General Counsel Approval: N/A
Committee Recommendation: No Committee reviewed this item.
CEQA Compliance: N/A

SUMMARY: The Department of Water Resources (DWR) is proposing to award $200 million statewide in an expedited solicitation under the Integrated Regional Water Management Grant Program. The final Proposal Solicitation Package is expected to be announced in early June 2014, with grant applications due as soon as 30 days after the announcement. Staff is requesting authorization to apply for funds and enter into agreements to complete projects that would provide immediate water savings or provide future drought preparedness. An exact amount of the grant request will be developed through a project solicitation to be conducted in early June 2014. The grant cap for the Central Coast is approximately $18 million, although the Central Coast planning regions have recommended to DWR that the cap be set at a lower amount to preserve funds for a final Prop. 84 grant round in 2015.

Preparation of a competitive grant application in a short period with projects from several project sponsors requires a significant and focused dedication of resources that the Monterey Peninsula Water Management District (MPWMD) cannot provide at this time. Additionally, other IRWM applicants elsewhere in the state have shown that professionally prepared grant applications have demonstrated a higher success rate. To date, the District has not succeeded in obtaining “implementation grant” monies. MPWMD resources will be required to conduct a project solicitation, provide project information for MPWMD-sponsored projects, and to submit a final application.

RECOMMENDATION: If this item is approved, the Board will:

A) Adopt Resolution 2014-08 to apply for Proposition 84 grant funds (Exhibit 1-A);

B) Authorize the General Manager to enter into a contract with the State of California to

receive funds for projects funded by DWR. The General Manager would also be authorized to negotiate sub-grantee agreements with local agencies, non-profits, and consultants to carry out the scope of work described in the State of California grant contract;

C) Authorize the General Manager to enter into an agreement for professional services associated with completing a grant application to DWR at a cost not-to-exceed $100,000, a portion of which would be reimbursed by project sponsors.

DISCUSSION: The MPWMD is currently the entity designated within the planning region to apply for Proposition 84 funds, such as those authorized as a result of the Drought State of Emergency declared by Governor Brown in January 2014. Senate Bills (SB) SB 103 and SB 104 provide $687.4 million to support drought relief, which includes a directive to award $200 million through an expedited process in the IRWM Grant Program. The focus of this next round is entirely on water supply. Projects must meet at least one of the following criteria

Ø Provide immediate regional drought preparedness

Ø Increase local water supply reliability and the delivery of safe drinking water

Ø Assist water suppliers and regions to implement conservation programs and measures that are not locally cost-effective

Ø Reduce water quality conflicts or ecosystem conflicts created by the drought

The project proposal requires a 25% local match, which can consist of project expenditures since January 2010. DWR is proposing a two-step selection process. The initial grant application will be considered a “high-level” proposal. If DWR selects the proposal for funding, additional documentation may be requested to prove the claims made in the initial application, including substantiating that a claim that projects or programs can be implemented on or before April 1, 2015. Several local stakeholders have expressed interest in applying for grant funds for the following projects (note: this is a preliminary list subject to change through a project solicitation):

POTENTIAL PROJECTS:

1) City of Monterey: El Estero stormwater to Monterey Regional Water Pollution Control Agency (MRWPCA) wastewater collector improvements. Cost - $500K. Project would modify the storm drain system at El Estero Lake to allow water to be pumped from the lake into the MRWPCA wastewater collector instead of flowing to the ocean. Estimated annual flows to El Estero are about 275 acre-feet per year. Currently, if completed, a portion of this flow could augment wastewater flow to the MRWPCA Regional Treatment Plant (RTP) for use with supplying tertiary-treated recycled water to the Castroville Seawater Intrusion Project (CSIP).

2) Seaside: 90-inch storm drain to wastewater collector improvements. Cost - $1 million. Project would modify the 90-inch outfall in Seaside to the Monterey Bay to allow stormwater to be pumped into the MRWPCA wastewater collector instead of flowing to the ocean. Estimated annual yield is not known at this time. Currently, if completed, this flow could augment wastewater flow to the MRWPCA Regional Treatment Plant (RTP) for use with supplying tertiary-treated recycled water to CSIP.

3) MPWMD and Marina Coast Water District (MCWD): expanded water conservation program. Cost - $1 million. Program would include retrofits of institutions and multi-family buildings, metering in military units at the Ord Community, potential relocation of a pipeline in the Ord Community to allow use of greywater.

4) MPWMD/MRWPCA: purchase Ground Water Replenishment (GWR) Advanced Waste Treatment (AWT) pilot plant. Cost - $400K. Project would purchase and operate the pilot plant currently planned for dismantling. The project would assist in design of the GWR AWT process.

5) MPWMD: Seaside Basin Aquifer Storage Recovery (ASR) expansion. Cost – $2 million. Drill an additional injection/extraction well at Water Project 1 to provide capability to maximize injection and extraction of excess Carmel River flows.

6) MCWD/MRWPCA/MCWD: complete installation of Regional Urban Water Augmentation Pipeline (RUWAP). Grant fund request: $10 million. The initial phase of this project would complete the RUWAP pipeline from the MRWPCA RTP through the Ord Community to Seaside. Recycled tertiary-treated wastewater could be provided to agricultural customers, California State University Monterey Bay, the Seaside golf courses and parks located near the pipeline in Seaside. The second phase would entail conversion to AWT water after the GWR Project is completed.

MPWMD is proposing to partner with MCWD on two projects that potentially would provide benefits to the Ord Community (expanded conservation and completion of the RUWAP). Forming a partnership addresses a concern that DWR has about how the Greater Monterey County and Monterey Peninsula regions address inter-regional cooperation in areas shared by both regions.

CONSULTANT SERVICES: Staff is recommending the retention of consultant services to assist with preparation of a grant application due to the compressed timeline DWR will allow for a grant application submittal (see the attached scope of services in Exhibit 1-B). In a previous, unsuccessful grant application to DWR for implementation funds, project sponsors elected to use in-house staff to prepare grant application documents. This resulted in a poorly formatted application with varying levels of quality and a lack of consistency among projects.

Project sponsors will be expected to commit to reimbursing MPWMD for a share of the costs associated with preparing an application. Because the amount of work per project is roughly equal no matter how much the grant fund request is, costs will be spread equally among the projects contained in the application (i.e., if there are 10 projects, each project would be expected to pay 10% of the grant application costs). Staff will seek letters of commitment to be reimbursed by project sponsors prior to starting work with project sponsors on a grant application. MPWMD requested proposals for services from GEI Consultants, Inc., and Brezack and Associates. Staff will discuss these proposals at the Special Board Meeting.

IMPACT TO STAFF/RESOURCES: Funds for MPWMD’s portion of this work are included in the Draft Fiscal Year 2014-15 Budget in Project Expenditures Line Item 2-6-1-A “Drought Solicitation Grant Application” at $35,000. MPWMD would be responsible for paying the full cost of submitting the ASR expansion project; however, for projects involving the GWR Project (e.g., purchase of the pilot plant or pipeline construction), project costs would presumably be shared between MWPMD and MRWPCA. In addition, if a cooperative project between MPWMD and MCWD is submitted, there would also be shared costs.

If awarded a grant, MPWMD may incur additional costs to prepare documents requested by DWR in the second step of the application process. These include documents from project sponsors such as: a detailed work plan; documents to support project claims; audited financial statements; CEQA/NEPA documentation and other materials. It is expected that an implementation grant budget would include a line item to reimburse MPWMD for grant administration costs (estimated at 5% to 7% of grant funds awarded).

EXHIBITS

1-A Resolution No. 2014-08 – To Apply for Proposition 84 Funding and Authorize the General Manager to Enter into a Contract with the State of California

1-B Scope of Services -- Assistance with Preparation of a DWR IRWM Grant Application

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