ADMINISTRATIVE COMMITTEE
6.	DEVELOP RECOMMENDATION TO THE BOARD REGARDING MEMORANDUM OF UNDERSTANDING (MOU) WITH MONTEREY REGIONAL WATER POLLUTION CONTROL AGENCY AND CALIFORNIA AMERICAN WATER REGARDING JOINT FUNDING OF A GROUNDWATER REPLENISHMENT PROJECT
Meeting Date:		April 9, 2012	Budgeted:	N/A
From:		David J. Stoldt,	Program/	N/A
		General Manager	Line Item No.:
Prepared By:		David J. Stoldt	Cost Estimate:	N/A
General Counsel Review: N/A
Committee Recommendation: The Administrative Committee considered this item on April 9, 2012 and recommended _____________.
CEQA Compliance: N/A

SUMMARY: At its February 15, 2012 meeting, the District’s Board directed the General Manager to develop a draft Memorandum of Understanding (MOU) between the District, MRWPCA, and Cal-Am setting forth terms similar to those reflected in the Draft Partnership Concepts presented at the February 15^th meeting and bring it back to the Board for approval. The draft MOU is attached as Exhibit 6-A. [TO BE PROVIDED; This document was not available from Cal-Am and MRWPCA by time of distribution; To be delivered Friday April 6, 2012 and available at meeting]

RECOMMENDATION: The General Manager recommends that the Committee approve the draft Memorandum of Understanding between the District, MRWPCA, and Cal-Am.

DISCUSSION: The key features of the MOU are as follows:

A. MRWPCA will be the source of the recycled water supply which is the predicate for this project. MRWPCA would convey that water to the Seaside Basin, and inject it into the aquifer, thus making an additional source of water available for use by Cal Am and its customers.

B. If the project is deemed feasible, MRWPCA will act as CEQA lead agency, and will prepare or have prepared an environmental document pursuant to CEQA to evaluate the environmental impacts of such a groundwater replenishment project.

C. MRWPCA, MPWMD, and Cal-Am will negotiate in good faith with the other Parties to develop a permanent GWR Agreement acceptable to all Parties in a time frame which will enable the GWR to be on-line such that water can be made available to Cal-Am on the schedule set forth by the SWRCB.

D. MPWMD will annually provide matching funding for MRWPCA and MPWMD GWR evaluation, planning, pre-design, and environmental review costs for the GWR derived from its new revenue collection mechanism implemented for the 2012-13 fiscal year. The Parties anticipate that MPWMD will contribute 50% of MRWPCA’s GWR related costs, estimated to be $1,036,550 in FY 2012-13 and $1,469,200 in FY 2013-14.

E. In the event that a permanent GWR Agreement is executed, MPWMD will undertake the permanent financing of GWR with long-term debt, secured by either revenues of MPWMD or payments to be received under a water purchase agreement with Cal-Am, or both. Proceeds of the financing, or revenues received from water sales, will be used to reimburse MRWPCA for its past out-of-pocket contributions.

F. Subject to CPUC approval at such time the GWR Agreement is negotiated, Cal-Am will enter into a water purchase agreement with MPWMD, with minimum annual purchase obligations of water at a price sufficient to pay the annual costs of debt and the costs of the GWR project, including without limitation operations, maintenance, repair, replacement, regulatory compliance and administration costs.

G. Cal-Am will bear its own costs with respect to all of its efforts in furtherance of realizing a GWR

H. Both MRWPCA and MPWMD each expressly retains its discretion with respect to whether it will enter into a GWR Agreement, and on what terms; as well as its discretion to consider the CEQA document in a manner fully consistent with its role as a responsible agency under CEQA.

Non-Binding Terms of a future agreement include the following:

1. The Groundwater Replenishment Project (“GWR”) will provide 2700 to 3300 AF of advanced treated wastewater, conveyed to the Seaside Basin and injected therein using new wells. MRWPCA will design, construct, own and operate the facilities to convey the water and inject it into the Basin.

2. Upon payment by MPMWD to MRWPCA as set forth below, MPWMD shall take title to the Replenishment Water that has been injected into the aquifer. MPMWD will make the Replenishment Water available for purchase by Cal-Am.

3. Upon permanent financing, MPWMD will pay to MRWPCA the full amount of MRWPCA’s costs to design, construct, obtain regulatory approvals, treat, deliver and inject the Replenishment Water. The commodity cost for the Replenishment Water shall recover at minimum all costs associated with GWR operation, maintenance, repair, replacement and administration, including regulatory compliance.

4. MRWPCA, MPMWD, and Cal Am shall coordinate the scheduling of injection of recycled water, Carmel River water, and any other water.

5. Cal Am shall enter into a “take or pay” contract to purchase the Replenishment Water from MPWMD. This contract will reimburse MPWMD for its annual cost of debt service, Replenishment Water payments to MRWPCA for operations and maintenance, reimburse MRWPCA for any of its project development costs not previously reimbursed by MPWMD, as well as for MPWMD’s costs.

6. Brine Disposal. Disposal of brine from the GWR treatment process will be done through the Outfall. This is anticipated to create a benefit for any Cal-Am desal project, due to dilution rates.

7. MRWPCA and MPWMD will jointly negotiate a Storage and Recovery Agreement with the Seaside Basin Watermaster.

8. There will be additional provisions to the permanent GWR Agreement, to be determined in the future.

EXHIBITS

6-A Draft MOU [TO BE PROVIDED; This document was not available from Cal-Am and MRWPCA by time of distribution; To be delivered Friday April 6, 2012 and available at meeting]

U:\staff\Board_Committees\Admin\2012\20120409\06\Item6.docx