ITEM:		ADMINISTRATIVE COMMITTEE
This report originally prepared for the May 9, 2011 cancelled meeting.
1.	CONSIDER APPROVAL OF CALIFORNIA AMERICAN WATER INTERIM REIMBURSEMENT AGREEMENT FOR THE DISTRICT MITIGATION PROGRAM
Meeting Date:			May 9, 2011	Budgeted:
From:			Darby Fuerst,	Program/	Mitigation
			General Manager	Line Item No.:
Prepared By:			Darby Fuerst	Cost Estimate:
General Counsel Review: N/A
Committee Recommendation: The Administrative Committee considered this item on May 9, 2011 and recommended_______________________.
CEQA Compliance: N/A

SUMMARY: District staff and counsel are working with California American Water (Cal-Am) staff and counsel to develop an interim reimbursement agreement to provide Cal-Am funding to continue the District’s Mitigation Program between May 24, 2011, when the current funding arrangement ends, and the effective date of final action by the California Public Utilities Commission (CPUC) on Cal-Am’s amended application to reinstate the District’s User Fee. The agreement is still being reviewed by legal counsel and will be provided at the Administrative Committee meeting.

RECOMMENDATION: District staff recommends that the Committee recommend that the Board authorize the General Manager to execute the Interim Implementation Agreement between Cal-Am and the District for the 2011 – 2012 Mitigation Program.

BACKGROUND: Since 1990, the District has implemented a comprehensive Mitigation Program to lessen the environmental impacts resulting from community water use and Cal-Am diversions from the Carmel River and Seaside Groundwater Basins. The Mitigation Program has been funded primarily by a user fee that Cal-Am collected and remitted to the District. In July 2009, the CPUC ordered Cal-Am to discontinue collection and remittance of the District’s user fee and directed Cal-Am to file an application addressing the manner in which the Mitigation Program was funded. In January 2010, Cal-Am filed the requested application, which included an all-party all-issue settlement agreement. In March 2011, the CPUC rejected the settlement agreement and ordered Cal-Am to file an amended application. To ensure that the Mitigation Program continues pending a decision by the CPUC on Cal-Am’s amended application, Cal-Am and the District have developed an interim reimbursement agreement that will provide approximately $1,560,000 per year to continue the Mitigation Program in Fiscal Year 2012.

IMPACT ON STAFF/RESOURCES: The proposed interim reimbursement agreement will provide funding to continue the core activities of the Mitigation Program. As proposed, no funding will be provided for additional work at the Water Project 1 site (Phase 1 Aquifer Storage and Recovery [ASR] site) or for water conservation activities. All capital asset purchases will be deferred and project expenditures will be minimized.

EXHIBIT

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