ADMINISTRATIVE COMMITTEE
3.	CONSIDER ADOPTION OF RESOLUTION NO. 2012-14 REIMBURSEMENT OF EXPENDITURES FOR GROUNDWATER REPLENISHMENT PROJECT
Meeting Date:		December 3, 2012	Budgeted:	Yes
From:		David J. Stoldt	Program/	Augment Water Supply
		General Manager	Line Item No.:	1-5-1
Prepared By:		David J. Stoldt	Cost Estimate:	$1,036,600 (FY2013)
General Counsel Approval: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A

SUMMARY: At its April 20, 2012 meeting, the District’s Board approved a Memorandum of Understanding (MOU) between the District, MRWPCA, and Cal-Am setting forth terms under which the development of the Groundwater Replenishment Project will occur.

Under the MOU, MPWMD will annually provide matching funding for evaluation, planning, pre-design, and environmental review costs for the GWR derived from the District’s new Water Supply Charge. 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.

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 MPWMD and/or MRWPCA for its out-of-pocket contributions. Under federal tax code costs may be reimbursed no later than 18 months from when a project is placed into service, but in no event more than 3 years after the cost is paid.

Resolution 2012-14 (Exhibit 3-A) is a Resolution of the Board of Directors of the Monterey Peninsula Water Management District Declaring the Official Intent to Reimburse Expenditures from the Proceeds of Tax Exempt Securities. Adoption of the Resolution will allow amounts expended for construction of the GWR project between the date of the adoption of the Resolution and actual receipt of the financing proceeds to be reimbursed from the financing proceeds when they are actually received.

RECOMMENDATION: District staff recommends that the Committee recommend that the Board adopt Resolution 2012-14, A Resolution of the Board of Directors of the Monterey Peninsula Water Management District Declaring the Official Intent to Reimburse Expenditures from the Proceeds of Tax Exempt Securities. [The Water Supply Planning Committee considered this matter on December 4, 2012 and voted _ to _ to recommend approval.] This item will be approved if adopted along with the Consent Calendar.

BACKGROUND:

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.

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.

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.

Cal-Am shall enter into a 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.

EXHIBIT

3-A Resolution 2012-14

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