ITEM:		DISCUSSION ITEM
19.	DISCUSS STAFF RECOMMENDATIONS ON CRITERIA FOR DEVELOPMENT OF FEASIBILITY STUDY ON PUBLIC OWNERSHIP OF THE MONTEREY PENINSULA WATER SYSTEM
Meeting Date:			March 18, 2019	Budgeted:
From:			David J. Stoldt	Program/
			General Manager	Line Item No.:
Prepared By:			David J. Stoldt	Cost Estimate:
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: This action does not constitute a project as defined by the California Environmental Quality Act Guidelines Section 15378.

DISCUSSION: The Board first discussed this topic at its February 21, 2019 meeting.

On November 6, 2018 voters within the District passed Measure J 56% to 44%. Measure J directed that a new Rule 19.8 shall be added to the Monterey Peninsula Water Management District Rules and Regulations, Regulation I, General Provisions. The first section of the rule states that “It shall be the policy of the District, if and when feasible, to secure and maintain public ownership of all water production, storage and delivery system assets and infrastructure providing services within its territory.”

The District Board has determined the best means to meet the “if and when feasible” criterion requires engagement of a team of consulting professionals to work with District General Counsel and Special Counsel to perform a feasibility analysis.

The Board felt it was important to hold “Listening Sessions” for the public in order to both explain the process going forward, and to hear the public’s input on which measure of “feasibility” is most important. Five listening sessions were held over the course of 8 days in January. The Board has also heard public comment at its regular meetings and has had some discussion regarding measures of feasibility.

The District’s entire acquisition/feasibility consulting team met March 5, 2019 where this subject was again discussed.

RECOMMENDATION: Based on all the input to date, the General Manager recommends that the Board do the following:

· Set the standard for “feasible” to be the combination of cost, quality of service, and governance that could successfully demonstrate “public necessity” in a bench trial, in the opinion of the consulting team.

· Let the consulting team do their scope of work (see Exhibit 19-A, attached) and evaluate the range of outputs.

· Instruct the Valuation and Cost of Service Consultant and the Investor Owned Utility Consultant to focus on identifying cost-savings to ratepayers.

· Instruct the Investment Bankers to confirm a creditworthy financing can be secured by the revenues of the enterprise and paid in the rates.

U:\staff\Boardpacket\2019\20190318\Discussion\19\Item-19.docx