ADMINISTRATIVE COMMITTEE
8.	CONSIDER APPROVAL OF REIMBURSEMENT AGREEMENT FOR WATER PROJECT 2 COST
Meeting Date:		July 9, 2012	Budgeted:	N/A
From:		David J. Stoldt,	Program/	Water Supply
		General Manager	Line Item No.:	1-2-1 B
Prepared By:		Joe Oliver	Cost Estimate:	NA, Cal-Am reimbursement
General Counsel Review: Yes
Committee Recommendation: The Administrative Committee reviewed this item on July 9, 2012 and recommended ________________.
CEQA Compliance: N/A

SUMMARY: The Monterey Peninsula Water Management District (District) and California American Water (Cal-Am) are in the process of completing a formal agreement for second well as part of the Phase 2 Aquifer Storage and Recovery (ASR) Project (i.e., Water Project 2). The agreement is an outgrowth from the recent decision (Decision 12-06-020, June 21, 2012) issued by the California Public Utilities Commission (CPUC) that allows Cal-Am to create a Phase 2 project memorandum account in which to record costs associated with the second ASR well (ASR-4 well) and associated appurtenant facilities at the Seaside Middle School site in Seaside.

The reimbursement agreement is not available at this time, but is anticipated prior the July 16, 2012 Board meeting and will be distributed separately. Under the proposed agreement, Cal-Am would reimburse the District for the costs that the District incurs in designing, permitting, constructing, equipping, and testing the ASR-4 well, as well as the associated permanent appurtenant facilities at the Seaside Middle School site. It should be noted that the reimbursement agreement does not include any funding provisions for existing or planned improvements at the District’s Phase 1 (i.e., Water Project 1) site, located at the adjacent Santa Margarita site near the southeast corner of the intersection of General Jim Moore Boulevard and Eucalyptus Road. Costs for Water Project 1 were primarily funded through the user fee that was included with the Cal-Am water bills, until this funding mechanism was curtailed per the CPUC requirements imposed in 2009. The District is continuing to work on replacement revenue sources for Water Project 1 expenditures.

RECOMMENDATION: Staff recommends that the Cal-Am reimbursement agreement for completing the ASR-4 well and associated appurtenant facilities at the Water Project 2 Seaside Middle School ASR site be authorized. If approved, the General Manager will be authorized to finalize and execute the agreement for this work.

BACKGROUND: In August 2008, the District began discussions with the Monterey Peninsula Unified School District (MPUSD) for consideration of an unused portion of the Seaside Middle School property for potential expansion of the Seaside Basin ASR program (i.e., Phase 2 ASR or Water Project 2). In October 2009, the District drilled an exploratory borehole and constructed a monitor well array at the site. This work confirmed that the site would be suitable for drilling a full-scale ASR test well. During the July – August 2010 period, the District installed the first full-scale ASR well at the site under a separated reimbursement agreement with Cal-Am. The subject reimbursement agreement will cover District costs associated with development of the second ASR well and other associated appurtenant facilities at the Water Project 2 site.

It is planned that the Water Project 2 site will ultimately be completed as a permanent ASR facility similar to the existing Santa Margarita (i.e., Phase 1 ASR or Water Project 1) site that is located approximately 1,000 feet to the southeast of the Seaside Middle School site. Remaining work will entail completion of the necessary engineering designs, permitting and construction of permanent facilities, including: (a) a second full-scale ASR well (i.e., ASR-4), (b) permanent utility pipelines, permanent electrical facilities, and permanent backflush percolation system. There will be no water treatment facilities at the Seaside Middle School ASR site; all water from this site will be treated prior to distribution into the Cal-Am system at the offsite Santa Margarita ASR Facility building, which was recently constructed as part of Water Project 1.

IMPACT TO STAFF/RESOURCES: A significant staff effort has been expended in planning, coordinating, analyzing and overseeing work on the District’s ASR development program in the Seaside Basin. The District and Cal-Am have been cooperating on expansion of that level of effort with the implementation of the Water Project 2 expansion in the basin. This work is an ongoing significant staff commitment, as reflected in the District’s Strategic Plan. Funding allocations for this work are included in the MPWMD FY 2012-13 budget under Line Item 1-2-1 B (adopted June 27, 2012).

EXHIBITS

None

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