ITEM:		ACTION ITEM
11.	CONSIDER AUTHORIZATION OF EXPENDITURE OF FUNDS FOR SERVICES RELATED TO THE ACQUISITION OF THE MONTEREY WATER SYSTEM (MEASURE J) AS FOLLOWS: A. NOT TO EXCEED $120,000 FOR ADDITIONAL LEGAL SERVICES BY RUTAN + TUCKER B. NOT TO EXCEED $230,000 FOR ADDITIONAL APPRAISAL AND COST OF SERVICE ANALYSIS BY RAFTELIS C. NOT TO EXCEED $50,000 FOR ADDITIONAL REAL ESTATE APPRAISAL SERVICES BY CHRIS CARNEGHI MAI D. NOT TO EXCEED $28,000 FOR SURVEY SERVICES BY PSOMAS
Meeting Date:			September 20, 2021	Budgeted:	No
From:			David J. Stoldt,	Program/	Services & Supplies
			General Manager	Line Item No.:	Professional Fees
Prepared By:			David J. Stoldt	Cost Estimate:	$428,000
General Counsel Review: N/A
Committee Recommendation: The Administrative Committee voted 3-0 to approve each
CEQA Compliance: This action does not constitute a project as defined by the California Environmental Quality Act Guidelines Section 15378.

SUMMARY: Delays and multiple Cal-Am letters in the LAFCO process, have resulted more review and work product by several of the firms working for the District on the potential acquisition of the Monterey Water System (Measure J). At its September 13, 2021 the District’s Administrative Committee voted 3-0 to recommend the Board authorize expenditure of funds for additional services as described below.

RECOMMENDATION: The Administrative Committee recommends authorization of expenditure of funds for services related to the acquisition of the Monterey Water System (Measure J) as follows:

a. Not to Exceed $120,000 for additional legal services by Rutan + Tucker

b. Not to Exceed $230,000 for additional appraisal and cost of service analysis by Raftelis

c. Not to Exceed $50,000 for additional real estate appraisal services by Chris Carneghi MAI

d. Not to Exceed $28,000 for survey services by Psomas

IMPACT TO DISTRICT RESOURCES: Such Measure J related expenses have not been budgeted and will come from District reserves.

BACKGROUND: Rutan + Tucker has been the District’s eminent domain attorneys working on the acquisition of the California American Water Company (Cal-Am) Monterey Water System since December 2018. Delays and multiple Cal-Am letters in the LAFCO process, have resulted more review and work product by the firm. There is $34,900 remaining in their budget and July and August invoices have not been reflected.

The potential acquisition is just now readying itself for finalizing the “findings” of public necessity and, if the District Board decides it wishes to move forward, a bonafide offer to purchase, a District Resolution of Necessity, and a condemnation action – all requiring legal acumen. It is recommended that Rutan + Tucker’s budget be increased by $120,000 to prepare for such activities.

Raftelis has been the District’s financial consultant working on the acquisition of the California American Water Company (Cal-Am) Monterey Water System since January 2019. In November 2019 the firm completed the Preliminary Valuation and Cost of Service Analysis Report determining that an acquisition of the System is financially feasible. Raftelis provided additional work on rate impacts and formal appraisal work that was ready to go in October 2020. Unfortunately, delays in the LAFCO process have resulted the appraisal work becoming “stale” and in need of updating. Additional cost of service analysis and rate impact analysis will likely also be needed to inform the District Board’s decision to move forward. There is $14,440 remaining in their budget and July and August invoices have not been reflected.

Raftelis scope of services (redacted) is attached as Exhibit 11-A. The proposed budget is just under $230,000.

Chris Carneghi MAI has been the District’s real estate appraiser working on the acquisition of the California American Water Company (Cal-Am) Monterey Water System since June 2020. Mr. Carneghi evaluated all of the identified Cal-Am real estate assets within the proposed acquisition and his formal appraisal work was ready to go in October 2020. Unfortunately, delays in the LAFCO process have resulted the appraisal work becoming “stale” and in need of updating. Additional analysis will be required to update the work and incorporate into Raftelis’ overall appraisal.

The update will likely take two to three months. The fee would be billed on an hourly basis the same as last time. It is difficult to know the time that would be involved since some reinspection will be necessary along with any new comparables that can be found. There is just under $44,000 left in Mr. Carneghi’s budget. The addition of $50,000 to the budget should be more than sufficient to meet all the real estate appraisal needs before the start of trial preparation/testimony. We would continue under the same authorization letter signed by David Laredo in June 2020.

The District provided detailed maps in its LAFCO application of the 58 parcels in Yankee Point and Hidden Hills proposed to be annexed as part of the potential acquisition of the California American Water Company (Cal-Am) Monterey Water System. However, detailed legal descriptions for both annexations must be prepared in conformance with the State Board of Equalization Mapping Requirements dated August 1, 2005. For that purpose, a licensed surveyor is required. Psomas was recommended for this task by our outsourced GIS professional and the exchange of GIS files and information has been facilitated by that prior relationship. The District has used Psomas for other purposes such as construction management and has had a very good relationship with the firm.

Psomas’ proposal and budget are attached in Exhibit 11-B. The State Board of Equalization mapping requirements are included in that Exhibit.

EXHIBITS

11-A Raftelis Proposed Scope of Services and Budget

11-B Psomas Proposal and Budget

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