EXHIBIT 1-A

MONTEREY PENINSULA WATER MANAGEMENT DISTRICT

MEMORANDUM

DATE: September 7, 2010

TO: Darby Fuerst, General Manager

FROM: Andrew M. Bell, District Engineer

SUBJECT: Progress Report on Identifying Potential Desalination Project Sites Located within the MPWMD Boundary

SUMMARY

This memorandum reports progress to date on identifying potential desalination projects within the MPWMD boundary. This effort was directed and reviewed by the Water Supply Planning Committee at their February 2, March 8, May 3, July 1, and August 2, 2010 meetings.

TASKS AND ESTIMATED SCHEDULE

1. Develop Feasibility Criteria Goal: March 31, 2010

a. In consultation with the Water Supply Planning Committee, establish water supply goals and feasibility criteria for desal projects within the District.

Status: This task was completed at March 8, 2010 Committee meeting. Project locations were limited to between Cypress Point and the northern extent of the District boundary. The minimum water supply production was set at 2,000 acre-feet per year.

2. Literature Search Goal: April 16, 2010

a. Review MPWMD reports to determine what sites have been identified and investigated (completed - see Jan. 25, 2010 memo, Bell to Fuerst).

b. Assemble geologic maps of MPWMD coastline to allow identification of potential locations of feedwater intake.

Status: This task was completed in mid-May 2010. In addition, I have reviewed articles and reports on desalination projects and technology that have been developed in recent years.

3. Field Surveys Goal: August 20, 2010

a. Visit all sites that appear may have potential.

Status: This task was completed in mid-August 2010. I drove and walked portions of the coast from Cypress Point to Seaside to assess areas that may support desalination project facilities, in particular feedwater intake facilities. In August I surveyed the area surrounding the abandoned City of Monterey wastewater treatment plant site.

4. Meet with Agencies and Property Owners Goal: August 20, 2010

a. Meetings held:

1. City of Sand City (City Engineer)

2. City of Santa Cruz/Soquel Creek Water District

3. Monterey Bay National Marine Sanctuary

4. Diana Brooks, DRA

5. Pebble Beach Company

6. City of Sand City (City Manager and City Engineer)

b. Planned meeting:

1. Naval Postgraduate School

Status: I reviewed the environmental and technical documents on the Sand City Desalination Project in the District’s files. On May 7, 2010 I met with the City of Sand City’s engineer, Richard Simonich of Creegan & D’Angelo, to review additional information about the project and to learn if there is potential for installing feedwater intake facilities along the coast in Sand City and in adjacent areas. Mr. Simonich provided information on the City of Sand City’s intake facilities but did not believe there are additional feasible intake sites in adjacent areas to the north. He did not have information on areas to the south.

I met with a representative of the City of Santa Cruz on July 1, 2010 to get an update on the city’s desalination project, which is being considered in partnership with Soquel Creek Water District. I asked in particular what they have learned regarding the potential for surface and subsurface intake facilities. A report by a consultant to the city regarding alternative methods for intake is in preparation. I have requested that I be sent a copy when the report is available.

On July 20, 2010 General Manager Darby Fuerst and I met with Brad Damitz of the Monterey Bay National Marine Sanctuary to further discuss regulations and procedures regarding desalination projects located within the Sanctuary. Mr. Damitz reiterated many of the items addressed in the May 2010 Guidelines for Desalination Plants in the Monterey Bay National Marine Sanctuary issued by the Sanctuary and the National Marine Fisheries Service. Copies of this document were provided to members of the Board on May 3, 2010. Mr. Damitz also described how the Sanctuary staff works with the California Coastal Commission and the Regional Water Quality Control Board in review and approval of desalination projects.

On August 16, 2010, Darby Fuerst and I met with the City of Sand City’s City Manager Steve Matarazzo and City Engineer Richard Simonich to pursue opportunities for locating desalination project facilities (e.g., desalination plant, storage tank, pump station(s), pipelines) within the city. Mr. Matarazzo stated that the City’s would be concerned about any project that would impact the City’s desalination project, and that the City retains all rights to the Aromas Sands (the shallow beach or dune sand aquifer where the City’s intake and discharge facilities are located) within its boundary. He also stated a fiscal concern, that the City does not want more tax-exempt uses of properties within the city

To date I have not been successful in arranging a meeting with representatives of the Naval Postgraduate School (NPS) regarding the potential for project facilities located at the abandoned City of Monterey wastewater treatment plant site. I will continue to pursue a meeting with NPS representatives.

5. Analyze Information Collected and Prepare Report on Findings September 30, 2010

a. Review information collected.

b. Prepare conceptual project designs and cost estimates for each site identified.

3. Prepare report of findings, including assessment of feasibility of each site.

Status: Preparation of the report is under way.

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