deschutes river conservancy - board of directors meeting 2016 drc board book...deschutes brewery,...

Board of Directors Meeting March 3, 2016 • 9 am – 12 pm

Mountain Room – Deschutes Brewery 901 SW Simpson Avenue

Bend, OR 97702

Board Book

Board Book

Deschutes River Conservancy Board of Directors – March 2016

John Allen – Forest Supervisor USFS – Deschutes National Forest 63095 Deschutes Market Road Bend, OR 97701 (541) 383-5512 fax-(541) 383-5531 [email protected] Rick Allen - Jefferson County RL Allen Group, LLC, President 384 SW 5th Street Madras, OR 97741 (541) 475-2220 fax-(541) 475-5662 (541) 815-4380 cell [email protected] Ron Angell – At Large 18160 Cottonwood Rd. #721 Sunriver, OR 97707 (541) 593-3242 [email protected] Arya Behbehani – Hydro Portland General Electric 121 SW Salmon St. Portland, OR 97204 [email protected] Bob Bell - At Large 56245 Twin Rivers Dr. Bend, OR 97707 (541) 593-1143 [email protected] Bruce Bischof – At Large 747 SW Mill View Way Bend, OR 97702 (541) 389-1292 cell-(541) 480-7560 [email protected] Nathan Boddie – Central Cities Organization 52 NW McKay Ave Bend, OR 97701 [email protected] Linda (Bo) Bonotto – At Large 885 NW Chelsea Loop Bend, OR 97701 [email protected] Mike Britton – Irrigation 2024 NW Beech Street Madras, OR 97741 [email protected] Robert A. Brunoe – Confederated Tribes of the Warm Springs – Vice Chair P.O. Box C Warm Springs, OR 97761 (541) 553-2051 fax-(541) 553-1994 (541) 980-2898 cell [email protected]

Doug DeFlitch – Department of the Interior Bureau of Reclamation 1375 SE Wilson Ave., Ste 100 Bend, OR 97702 (541)389-6541 Ext. 226 [email protected] Phil Fine - Irrigation North Unit Irrigation Phil Fine Farms 6921 NW Columbia Dr. Madras, OR 97741 (541) 325-1151 [email protected] Chris Gannon – Crook County Crooked River Watershed Council 498 SE Lynn Blvd. Prineville, OR 97754 [email protected] Nancy Gilbert 17401 Cascade Estates Dr. Bend, OR 97703 (541) 968-3071 [email protected] Kyle Gorman – State of Oregon Oregon Water Resources Dept. 231 SW Scalehouse Lp., Ste 103 Bend, OR 97702 (541) 388-6669 [email protected] Ellen Grover – Secretary, Non Voting Karnopp, Petersen LLP 360 SW Bond St., Ste 400 Bend, OR 97702 (541) 382-3011 fax-(541) 388-5410 [email protected] Jay Henry – Chair (541) 460-0460 cell [email protected] Craig Horrell – Irrigation – At Large Central Oregon Irrigation District 1055 SW Lake Ct. Redmond, OR 97756 (541) 548-6047 cell (541) 788-2003 [email protected] Michael LaLonde – At Large Deschutes Brewery, Inc. 901 SW Simpson Ave. Bend, OR 97702 (541) 385-8606 [email protected]

Board Book

mailto:[email protected]
















Jim Manion– Tribal Warm Springs Power Enterprises P.O. Box 960 Warm Springs, OR 97761 (541) 553-1046 fax-(541) 553-3436 (541) 325-1464 cell [email protected] Jade Mayer (Treasurer) – At Large Brooks Resources 409 NW Franklin Ave. Bend, OR 97701 (541) 382-1662 fax-(541) 385-3285 [email protected] Gregory McClarren - Environment 65491 Bay Breeze Rd North Bend, OR 97459 (541) 923-6670 cell (541) 633-0228 [email protected] Damien Nurre - Recreation & Tourism 906 NE 11th St. Bend, OR 97701 (541) 323-3007 (541) 390-6697 cell [email protected] John Shelk – Timber Ochoco Lumber Company P.O. Box 668 NE Combs Flat Rd. Prineville, OR 97754 (541) 447-6296 fax-(541) 447-8992 (541) 410-4316 cell [email protected] William Smith – Land Development William Smith Properties Inc. 15 SW Colorado Ave. Bend, OR 97702 (541) 382-6691 fax-(541) 388-5414 (541) 480-0357 cell [email protected] Mike Tripp 1020 NW Foxwood Bend, OR 97701 (541)312-2193 [email protected] Ted Wise – ODFW Oregon Dept. of Fish & Wildlife 61374 Parrell Rd. Bend, OR 97702 (541) 388-6363 [email protected] Alan Unger – Deschutes County 1300 NW Wall St., Suite 200 Bend, OR 97701 (541) 388-6569 (541) 419-0556 cell [email protected]

Board Book









Term

Cou

ntC

lass

Rep

rese

ntin

gN

ame

Expi

res

Com

men

ts1

IH

ydro

elec

tric

Prod

uctio

nAr

ya B

ehbe

hani

Jun.

201

72

ILi

vest

ock/

Gra

zing

Vaca

nt3

ITi

mbe

rJo

hn S

helk

Sep.

201

84

ILa

nd D

evel

opm

ent

Bill

Smith

Sep.

201

85

IIrr

igat

ed A

gric

ultu

rePh

il Fi

neSe

p. 2

018

6I

Irrig

ated

Agr

icul

ture

Mik

e Br

itton

Jun.

201

77

IEn

viro

nmen

tG

rego

ry M

cCla

rren

Sep.

201

88

lEn

viro

nmen

tM

ike

Trip

pSe

p. 2

016

9I

Rec

reat

ion/

Tour

ism

Dam

ien

Nur

reSe

p. 2

018

10II

Con

fede

rate

d Tr

ibes

of W

arm

Spr

ings

Bobb

y Br

unoe

Mar

. 201

711

IIC

onfe

dera

ted

Trib

es o

f War

m S

prin

gsJi

m M

anio

nSe

p. 2

018

12II

Dep

t of I

nter

ior (

BOR

)D

oug

DeF

litch

Sep.

201

613

IID

ept o

f Agr

icul

ture

(USF

S)Jo

hn A

llen

Dec

. 201

714

IIO

rego

n D

ept o

f Fis

h an

d W

ildlif

eTe

d W

ise

Jun.

201

715

IIO

rego

n W

ater

Res

ourc

es D

ept

Kyle

Gor

man

Jun.

201

816

IID

esch

utes

Cou

nty

Alan

Ung

erM

ar. 2

018

17II

Cro

ok C

ount

yC

hris

Gan

non

Mar

-18

18II

Sher

man

/Was

co C

ount

yVa

cant

19II

Jeffe

rson

Cou

nty

Ric

k Al

len

Sep.

201

820

llC

entra

l Ore

gon

Citi

es O

rgan

izat

ion

Nat

han

Bodd

ieJu

n. 2

015

21III

At la

rge

Cra

ig H

orre

llD

ec-1

822

IIIAt

larg

eJa

de M

ayer

Jun-

1823

IIIAt

larg

eBr

uce

Bisc

hof

Sep.

201

624

IIIAt

larg

eBo

b Be

llSe

p. 2

016

25III

At la

rge

Mic

hael

LaL

onde

Sep.

201

726

IIIAt

larg

eR

on A

ngel

lJu

n. 2

018

27III

At la

rge

Jay

Hen

ryJu

n. 2

018

28III

At la

rge

Nan

cy G

ilber

tJu

n. 2

016

29III

At la

rge

Bo B

onot

toJu

n. 2

017

30Bo

ard

Secr

etar

yEl

len

Gro

ver

DR

C B

oard

of D

irect

ors

by C

lass

Board Book

DRC Board and Committee Dates for 2016

Thursday, February 11th: Communications 11AM – 12:45PM, Program 1 – 4PM Friday, February 12th: EXEC 9 – 11AM, F&A 11AM – 12PM Wednesday, March 2nd: Board Retreat 8:30AM – 5PM, Board Dinner 5:30PM - 7:30PM Thursday, March 3rd: Board Meeting 9AM – 12PM Thursday, May 12th: Communications 11AM – 12:45PM, Program 1 – 4PM Friday, May 13th: EXEC 9 – 11AM, F&A 11AM – 12PM Wednesday, June 8th: Board 1 – 5PM Thursday, August 11th: Communications 11AM – 12:45PM, Program 1 – 4PM Friday, August 12th: EXEC 9 – 11AM, F&A 11AM – 12PM Wednesday, September 7th: Board 9AM – 2PM Thursday, November 10th: Communications 11AM – 12:45PM, Program 1 – 4PM Friday, November 11th: EXEC 9 – 11AM, F&A 11AM – 12PM Thursday, December 8th: Board 1 – 5PM

Board Book

Board Book

AGENDA

Board of Directors Meeting 9:00 AM – 12:00 PM, Thursday, March 3

Deschutes Brewery Mountain Room

901 SW Simpson Ave, Bend, OR 97702

9:00 1. Introductions a. Approve Board Meeting Minutes (Tab 1) b. Board Elections:

Thomas Nilan, PGE ‐ hydropower 9:15 2. Finance & Audit (Tab 2)

a. Review FY 2015 Audit b. Review 1st Qtr FY16 Financial Statements

9:45 3. Communication and Development (Tab 3)

10:30 BREAK 10:45 4. Program Updates (Tab 4)

a. Crooked Initiative i. McKay Switch ii. North Unit Water Supply Program

b. Whychus Initiative i. TSID Piping

c. Deschutes Initiative i. Basin Study

11:30 5. Strategic Issues Discussion

a. DRC positioning – Basin Study, Spotted Frog Litigation, Habitat Conservation Plan b. DRC messaging

12:00 ADJOURN

Board Book

Board Book

Meeting Notes Board of Directors Meeting

1:00 PM – 5:00 PM, Thursday, December 10, 2015 Mt. Bachelor Village, Bend

Board Members Attending: Doug DeFlitch, Jim Manion, Bob Bell, John Shelk, Gregory McClarren, Damian Nurre, Jay Henry, Craig Horrell, Kyle Gorman, Chris Gannon, Alan Unger, Bo Bonotto, John Allen, Ron Angell, Nancy Gilbert, Mike Tripp, Phil Fine, Jade Mayer, Ted Wise, Bobby Brunoe, Rick Allen, Ellen Grover, Bruce Bischof Board Members Absent: Bill Smith, Nathan Boddie Staff Attending: Tod Heisler, Brett Golden, Gen Hubert, Kate Fitzpatrick, Debbie Conners, Hoyt Wilson, Marisa Hossick, Kelsey Wymore, Bea Armstrong Guests Attending: Mike Kasberger, Suzanne Butterfield, Pam Thalacker, Jeremy Giffin, Shon Rea, Jeff Wieland, Dave Dunahay, Bruce Brody-Hein

1 Introductions 1.1 Approve Board Meeting Minutes A board member proposed a change to Section 3 (Deschutes River Campaign) of the minutes. The proposed change was: “the ultimate decision lies with the Basin Study Communications sub-group Communications Committee.”

Action Item: Gregory McClarren moved to approve the September DRC board meeting minutes with proposed change included. A board member seconded - Passed unanimously.

1.2 Board elections:

a) Jay Henry, Chair

Tod discussed the role of DRC Board Chair and the ascendance of Jay Henry (Vice Chair) to a new role as DRC Board Chair.

Action Item: Gregory McClarren moved to approve, Jade Mayer second – Passed unanimously

b) Bobby Brunoe, Vice Chair Tod introduced Bobby Brunoe as the recommendation by Executive Committee for DRC Board Vice Chair. Discussion followed.

Action Item: Jade Mayer moved to approve, Gregory McClarren second – Passed unanimously

Board Book

c) Craig Horrell, At Large

Action Item: Jim Manion moved to approve, Jade Mayer second – Passed unanimously

2 Finance & Audit 2.1 Review FY15 Financials, unaudited

Hoyt led the board through the draft year end 2015 financial statements. Hoyt addressed a change to accounts receivable in the balance sheet. Hoyt explained notable differences between 2014 and 2015 financial statements. Hoyt discussed fundraising and bridge funding for the DHM contract for the Deschutes River Campaign. A board member asked the reason for the decrease in administrative costs from 2014 to 2015. Hoyt explained there were reductions in rent, wages and office expenses. A board member asked about the eventual expenditure of the Pelton Fund. Tod explained how Pelton Funds are being spent, and in some cases, repaid when other funders (e.g. OWEB, NFWF) are willing to grant funds after a project is completed.

3 Strategic Issues 3.1 Deschutes River Campaign Bea reviewed progress on the Campaign, including desired outcomes and the strategic issues the Campaign is designed to address. Bea discussed some recent publicity regarding river issues, and the varying levels of public awareness regarding those issues. Bea reviewed the timeline for the Campaign. Bea presented the results of DHM’s completed baseline public opinion study. A board member asked for clarification regarding the geographic demographic distinctions in the DHM baseline study. Bea updated the board on discussions from the DRC Communications Committee. A board member commented that other groups/organizations around the basin are mounting their own grass roots public opinion strategies and that this should motivate the DRC to develop its own story quickly. Bea asked members of the DRC Communications Committee to comment on the Committee’s discussions:

Phil Fine expressed his desire to be part of the solution to river issues.

Craig Horrell said the districts need help (from the DRC) to take control of the message with regards to Endangered Species Act (ESA) litigation.

Nancy Gilbert commented that stakeholders may be developing messaging ‘in silos’ and there is a need to develop a unified message.

Phil Fine expressed a need for Communications Committee members not to micro-manage the Campaign process, so that communications issues can be addressed more quickly.

Dave Dunahay commented that some other groups are becoming increasingly impatient to see less rhetoric and more action for the river.

Shon Rea said that Central Oregon Irrigation District and Deschutes Basin Board of Control have directed her to engage in timely communications as issues arise.

Board Book

Ron Angell suggested DRC be more active and timely in its communications surrounding potential ESA litigation.

Jeff Weiland suggested that once the public is more educated and appreciates the complexity of river issues, they would better understand why litigation may not be required and that collaboration is what will provide the sustainable, long term solutions.

John Allen reiterated the urgency surrounding both communications and action regarding potential ESA litigation.

3.2 DRC Role in Basin Processes Tod addressed the difficulty of coordinating DRC’s actions in the midst of parallel voluntary and regulatory processes. These processes include:

Potential Litigation

Habitat Conservation Plan

DRC Strategic Plan

Deschutes Basin Study Tod discussed the risks to the DRC strategy and project work. Tod mentioned that DRC’s communications are sometimes restricted by conflict. Tod discussed the conclusions of the legal review of DRC’s options for engagement in the Habitat Conservation Planning (HCP) / ESA process. Ellen Grover said that the ‘do-nothing’ option is not an option for an organization like the DRC and advocated for an informal engagement and technical assistance by the DRC. A board member advocated that the DRC consider the ‘amicus’ option and urge the court to allow for the collaborative process to play out (as opposed to court mandated outcomes). They went on to say that if the DRC did not formally engage in this way, it would be rendered irrelevant and other groups/interests/stakeholders would engage in more combative tactics. Another board member agreed that somebody should engage in amicus briefs, but perhaps not the DRC. Ellen Grover commented that some DRC board members may be required to step down (from the board) if DRC formally engaged as an amicus. She also said that DRC’s strength is to work with stakeholders, not the court. She urged the parties to pursue short term progress (through the collaborative process), which would surely be pointed out to the court during any eventual legal proceedings. Craig Horrell said that Central Oregon Irrigation District and the districts need DRC to navigate the process. A board member said that it is likely a judge would mandate the parties to enter into mediation prior to a court ruling – the DRC could provide a productive role as a technical advisor during the mediation process. Tod circulated a joint board resolution from Central Oregon Irrigation District and North Unit Irrigation District, pledging participation in the Basin Study process, collecting data and developing and implementing voluntary conservation measures. Mike Britton expressed a desire to find a way to openly communicate the Deschutes Basin Board of Control’s accomplishments to date and future intentions. Bobby Brunoe expressed support for moving forward in a positive direction. Craig Horrell said that Central Oregon Irrigation District’s board feels strongly that they must both address environmental issues and help North Unit Irrigation District. 3.3 Initiative Updates

a) Leasing and Groundwater Mitigation Bank (Action Item: 2016 Program Approvals)

Board Book

Gen reviewed the Annual Water Leasing Program (AWLP) and presented the goals and budget for 2016. She recommended that the DRC board approve renewal of the AWLP for 2016. Gen presented the program’s accomplishments by year and acres leased. She pointed out the portion of the AWLP that is used to generate and broker temporary mitigation credits. Gen presented a detailed 2016 budget. Gen presented how the AWLP is funded and which funding sources were secured versus pending. Gen outlined the 2016 leasing strategy, including increasing the amount of longer term leases and keeping the overall program’s cost below $10/acre-foot. A board member asked what portion of lessors lease every year. Gen said a significant portion (about 30%) of lessors lease water in consecutive years. A board member suggested that leasing could be used to address HCP/ESA issues. Craig Horrell commented that modeling through Central Oregon Irrigation District’s System Improvement Plan might allow Central Oregon Irrigation District to lease additional acres.

Action Item: Kyle moved to approve the 2016 AWLP, John Shelk second – Passed unanimously Gen reviewed the Deschutes Groundwater Mitigation Program and the DRC’s Groundwater Mitigation Bank. Gen reviewed groundwater demand by type of use. Gen explained that 12%-18% of the AWLP’s leased acres are used for mitigation. Gen explained how temporary credits are priced and proposed a price increase in 2016 from $105/credit to $120/credit. Gen also proposed a $250 reinstatement fee for clients who let their mitigation lapse. A board member asked about increasing mitigation credit prices moving 10-20 years into the future. Gen explained that small landowners would be more sensitive than cities or resorts to increased prices. Another board member commented that retention of mitigation buyers is important to financing the DRC mission.

Action Item: Kyle Gorman moved to approve to approve the 2016 GMB, mitigation credit price increase and reinstatement fee, Gregory McClarren second – Passed unanimously

a) Crooked Initiative

i. North Unit Water Supply Program (Central Oregon Irrigation District West F

Lateral) Brett reviewed the mechanics of the North Unit Water Supply Program and the financing plan for the West F Piping project. He explained how the passage of the Crooked River Legislation affected DRC’s ability to finance ongoing phases of the North Unit Water Supply Program. Brett explained the DRC and North Unit Irrigation District have not reached agreement on how to maintain the ‘one-to-one wet water exchange’ principle of the North Unit Irrigation District Water Supply Program following the passage of the legislation. Brett explained that DRC may need alternate approaches to finance the West F. Brett asked the board to allow DRC staff to engage with partners on innovative options for the West F, bring recommendations to DRC Executive Committee and give Executive Committee authority to review and approve the recommended course of action. Mike Britton commented that North Unit Irrigation District has expended significant resources into preparing to allocate Deschutes River water rights to the Crooked River lands associated with this phase.

Board Book

Bobby Brunoe pointed out that steelhead and Chinook still exist in the lower Crooked River and that reintroduction is also a priority. He advised against focusing solely on the spotted frog in the upper Deschutes River A board member suggested that the DRC Program Committee be included in the vetting process for any recommended course of action.

Action Item: Gregory McClarren moved to delegate approval of a recommended option for the West-F project to the Executive Committee provided that staff first review that option with the Program Committee, Ted Wise second – Passed unanimously

ii. Crooked River Collaborative Water Security and Jobs Act

Brett provided an update on the instream flow portion of the Crooked River legislation. Reclamation will submit an application for the right to store water in Prineville Reservoir very soon.

b) Whychus Initiative

i. TSID Piping Zach updated the board on the status of the Three Sisters Irrigation District Piping Program. The district has started construction on Phase 7, and the district’s crew is currently welding pipe and excavating the ditch for pipe placement. Zach discussed the selection of an 1895 priority date for the conserved water, and Pamela commented that the inclusion of variety of priority dates would lead to less water instream than the inclusion of only 1895 water rights (because the district holds more twice as many water rights junior to 1895 than water rights senior to 1895). Zach commented on the floodplain restoration project downstream from the Three Sisters Irrigation District’s diversion and the associated increased in infiltration. Zach discussed the benefits of measuring stream flows at a gauge just downstream from the diversion and from installing telemetry and automation on the diversion. Zach commented on the district’s hydropower plant ribbon-cutting ceremony.

c) Deschutes Initiative

i. Basin Study Kate reminded the Board of the history of the Basin Study, the study’s goals, and the four components of the study. She commented that the DRC hopes stakeholders will use the information developed through the study to develop long-term water management plans. The Basin Study will help to shape the DRC’s action plans. Kate reviewed the Basin Study schedule with the Board. The BSWG finalized a Plan of Study in May of 2015. Over the next year, the Study will complete climate change projections, model development, instream studies, and water supply options. The Study will complete in 20XX Kate showed the board graphics of the Study’s work elements and schedule.

Board Book

Kate updated the board on the status of the elements of the Basin Study. Kate highlighted the two water conservation assessments. Water Conservation Assessment #1 will evaluate efficiency within districts. Water Conservation Assessment #2, completed by Farmers Conservation Alliance, will evaluate how to modernize irrigation districts. This second assessment will provide input into the Basin Study but will occur outside of it. Reclamation is updating models and initiating the storage assessment components of the Study. Kate commented on managing challenges with the study, including ensuring that information leads to action.

ii. TID Feed Canal piping Tumalo Irrigation District’s goal, which aligns with the DRC’s strategic plan, is to pipe the entire district. The district’s completing Phase 4 of their piping project this winter. The district estimates that they will conserve at least 35 cfs from piping their entire district.

3.4 Development Report (Bea)

Bea mentioned that anyone wishing to make a donation on behalf of Julie Keil should donate to the Oregon Humane Society or the newly formed PGE Women In Hydro Scholarship Fund. Bea outlined how events, notably Tight Lines and River Feast, contribute towards the DRC’s development efforts and noted the difficulty having successful ongoing, annual events. Bea informed the board that DRC has hired a contractor to evaluate and reassess the DRC’s event fundraising program for 2016. Bea presented the development results for 2015.

Board Book

Thomas J. Nilan, P.E. 3145 NE 46th Avenue Portland, OR 97213

(503) 464-8738 [email protected]

EDUCATION

Certificate in Environmental Hazard Management, University of California Berkeley, Berkeley, CA 1992

MBA, UCLA Anderson Graduate School of Management, Los Angeles, CA, 1988

Institut Superieur des Affaires, Paris, France. International management studies as part of UCLA exchange program, 1987 BS, Chemical Engineering, The Pennsylvania State University, University Park, PA, 1984

EXPERIENCE

Portland General Electric July 2015 - Present

Manager, Environmental Compliance & Licensing. Portland, OR. Leads 13-person team responsible for environmental permitting and compliance of utility generation, transmissions & distribution, and service operations. Generation assets include hydropower, coal, gas, wind and solar in Oregon and Washington. Team includes staff in air quality permitting, Federal Energy Regulatory Commission (FERC) hydropower license compliance, Energy Facility Siting Council (EFSC) permitting, water quality, and general compliance. Technical responsibilities include stakeholder outreach for Pelton Round Butte hydropower project on the Deschutes River, air quality permitting issues for thermal generation assets, and support to internal compliance review programs. Coordinate closely with associated fish biology and site remediation teams.

CH2M 1992 – 1997, 2001 – 2015

Environmental Planning & Permitting Staffing Manager. Portland, OR. Responsible for staffing operations for US environmental planning and permitting staff serving clients in power generation, pipeline, transmission line, and transportation markets. Lead team of nine direct report local Operations Leaders to address resource planning, recruiting, workload leveling, and performance management for 200+ person organization. Staffing representative on management team, working with business development, finance, and technology leaders for business strategy and operations in a team environment focused on building best-in-class permitting organization. Served in a variety of operations-related roles including Operations Leader, Business Group Leader, and Project Delivery since 2002, and focused on the environmental permitting area since 2008.

Project Delivery Coordinator. Served as Project Delivery Coordinator (PDC) for power generation clients nationally. Role required review and approval of client proposals for siting and licensing projects for wind, transmission line, hydropower compliance, fossil fuel generation, and other disciplines, with particular emphasis in the Pacific Northwest. Role required strong understanding of technical team capabilities, risk management, and development of project

Board Book

approaches that cost-competitively delivered superior technical services. Served as Portfolio Manager for two utility programs focused on wind power generation in the western US.

Senior Project Manager. Senior Project Manager for environmental consulting services including air quality, industrial wastewater, environmental permitting, and site remediation clients. Developed client opportunities, prepared proposals, and led multi-disciplinary teams of environmental professionals for client projects. Serve as Project Manager in parallel with duties as Staffing Manager. Responsible for sales, project planning, staffing and executing environmental projects for industrial and government clients. Extensive regulatory analysis and permitting experience with EPA and over 20 state agencies. Project disciplines include air quality, regulatory compliance auditing, industrial wastewater, and site remediation. Client industries served include power generation, airports, highways, Department of Defense, and chemical industries. Successfully delivered projects ranging from one-week duration, $5K efforts to multi-year projects over $1M in fee. Serve as senior reviewer for variety of projects, and firm-wide resource for identifying innovative permitting approaches that meet regulatory requirements while maintaining operational flexibility. History of identifying means to shift struggling projects to success.

American Chemistry Council 1997 – 2001

Director, Regulatory Affairs. Represented environmental policy positions for chemical industry Washington, DC trade association with over 190 member companies. Responsible for assessing regulatory impacts to members, building consensus industry regulatory/legislative strategy, and communicating to policy makers at Federal and state level. Developed strong working relationships with EPA management and represented members’ interests to EPA, Office of Management and Budget, congressional staff, and other stakeholders. Coordinated with other industry groups including Edison Electric Institute (EEI), Utilities Solid Waste Activities Group (USWAG), and the Council of Industrial Boiler Operators (CIBO) on regulatory issues affecting multiple industries.

Extensive communications experience including written regulatory comments, presentations to regulators and other stakeholders, and press contacts. Responsible for coordinating coalitions with other industries, budgeting, staffing, and contracting. Recipient of “Council Hero” award for developing and successfully negotiating alternative Clean Air Act regulatory approach resulting in multi-million dollar savings to individual members while fully meeting EPA’s policy needs.

National Environmental Testing 1991 – 1992

Technical Services Representative. Served as laboratory – client liaison for environmental laboratory. Evaluated analytical requirements and appropriate support for hazardous waste and remediation projects. Responsible for developing and implementing marketing plans, and direct sales to environmental consulting professionals.

Liquid Air Corporation 1988 – 1990

Field Applications Engineer. Technical support and marketing of industrial gas (liquid hydrogen, nitrogen and oxygen) applications for metallurgical, forest products, and food industries. Identified product benefits to manufacturing operations, prepared client proposals, engineered delivery systems, and assisted in start-up of operations. Served on expatriate assignment for Calgary, Canada on-site bulk gas plant division.

Board Book

Armstrong World Industries 1984 – 1986

Production/Development Engineer. Lead engineer for U.S. production start-up of manufacturing facility for new extruded foam polyethylene pipe insulation product originally developed by Swiss affiliate company. Responsibilities included manufacturing process optimization, raw material evaluation, production scheduling, and management of hourly employees. Liaison with research and development staff for evaluation of alternative product formulations. Served on expatriate assignment for start-up of similar operation in Manchester, England.

REGISTRATION

Professional Engineer, Virginia, license number 026205

INTERESTS

Cycling, running, skiing, paddling, and fitness enthusiast. Volunteer activities include Meals On Wheels, Community Cycling Center, and Big Brothers of America.

Board Book

Board Book

Meeting Notes

DRC Program Committee Meeting

February 11, 2016, 1:00 to 4:00 PM

Brooks Resources Conference Room

Board Members Attending: Mike Britton, Nancy Gilbert, Craig Horrell, Gregory McClarren,

Mike Tripp, Kyle Gorman, Ted Wise, Jason Gritzner, Phil Fine,

Guests Attending: Jeremy Giffin, Jeff Perreault, Peter Lickwar, Russel Rhoden, Gail Snyder

Staff Attending: Brett Golden, Tod Heisler, Gen Hubert, Zach Tillman, Bea Armstrong, Kate

Fitzpatrick, Kelsey Wymore, Marisa Hossick

1. Introductions

2. Update: Deschutes Habitat Conservation Plan & ESA Lawsuit

Although not on the agenda, Kate updated the Committee on recent and evolving events

related to the Oregon spotted frog (OSF). She provided a handout compiled by Deschutes

Basin Board of Control (DBBC) that summarized the recent request by Center for

Biological Diversity and Water Watch for injunctive relief, DBBC’s proposed interim

measures to benefit the frog; and a calendar of upcoming court-related dates and Habitat

Conservation Plan (HCP) milestones.

The lawsuits have been consolidated and the plaintiffs have filed requested

measures for injunctive relief for Crescent Creek, Wickiup Reservior, summer

and winter upper Deschutes flows and habitat monitoring conditions. The

plaintiffs provided two alternatives in the mainstem upper Deschutes– one

regulated and one un-regulated, and one for Crescent Creek.

Arnold Irrigation District and Lone Pine Irrigation District have intervened on

behalf of the defendants and are now named on the lawsuit as well.

The Confederated Tribes of the Warm Springs Reservation have requested and

been granted amicus status (“friend of the court”) which allows them to introduce

additional information into the case.

A board member noted that recreational interests in Crane Prairie and Wickiup

Reservoirs and the upper Deschutes River have not been consulted and may be

impacted.

Mike Britton commented that North Unit Irrigation District (NUID) would be out

of business if the plaintiff’s proposed measures were implemented. He also said

that there is not enough information about the OSF to make concrete decisions.

Board Book

Jason Gritzner commented that the plaintiff’s proposed measures (near-natural

flows) may not provide the ecological benefits they are intended to accomplish, in

part because the channel structure has changed over time (due to the over-fit

channel).

Craig Horrell pointed out that the $85,000 ecological study of the upper

Deschutes River through the Basin Study is not designed to be a comprehensive

study of the OSF, and advised people to understand what this study is and is not.

There was discussion around actions in the case of imperfect/inadequate

information and utilizing adaptive management in those situations.

Phil Fine pointed out that the lawsuits have set the clock forward on the HCP and

that the DBBC is being forced to commit water now, in advance of the projects

and water management changes that will keep NUID from going out of business.

Tod urged DBBC to utilize DRC staff to assist in facilitating/developing

solutions. A board member urged caution in getting involved in the lawsuit, and

Tod clarified that our role is not to be involved in the lawsuit, but to help with

solutions.

Phil Fine asked Craig Horrell about progress towards formulating a larger plan

which would enable DBBC to implement proposed conservation measures. Craig

said Central Oregon Irrigation District (COID) will have a draft System

Improvement Plan in June, 2016. He said COID has identified approximately 400

cfs of system losses. Craig said that the DBBC’s proposed conservation measures

mean that Crane Prairie Reservoir will not be used at all in 2016.

3. Crooked River Initiative: Crooked River Act Implementation (discussion)

a. Application for the right to store water

b. Relationship to DRC’s work

Kate Fitzpatrick summarized the key issues of consensus that came out of the Act,

but that disagreement remains on several specific issues related to the

implementation of the Act. She described the purpose of the table that

accompanied the Crooked River memo. It is meant to illustrate the breadth of

issues DRC has heard there is disagreement around. Many of these are highly

technical/legal issues. The table does not suggest any “true” interpretation, and

does not capture every perspective on the issue. It does, however, suggest several

issues that may slow the process down if parties disagree.

Doug DeFlitch confirmed that Bureau of Reclamation (BOR) filed an application

for the primary right to store water (in Prineville Reservoir) was filed on January

4th and that comments on the application are due February 18th.

Kate shared that Ochoco Irrigation District does not want to move forward on the

McKay project until the first water rights application gets sorted out. Potential

delays in this process could further delay the McKay switch.

Kate Fitzpatrick asked the committee if DRC should play some role, given that

our work in the Crooked Initiative on both the North Unit Water Supply Program

Board Book

and the McKay Switch is dependent on successful implementation of the Act.

Roles could include: commenting on either of the applications (i.e. the primary

right to store water in Prineville Reservoir and the secondary right to use water) to

OWRD; trying to bring parties together to find agreement; or supporting

somebody else in trying to bring parties together to find agreement. Doug

DeFlitch responded that BOR tried to engage stakeholders for about seven months

prior to developing the applications.

Russ Rhoden summarized the purpose and individual components within the

application to change the character of use of water in Prineville Reservoir. There

was discussion around why portions of the un-contracted water have an irrigation

component and whether that makes the fish/wildlife flows vulnerable to future

appropriation. Peter Lickwar cautioned that future climate change could further

exacerbate conflict over scarce water. There was discussion around how secure

the fish & wildlife flows would be under the current application and which parties

might comment/protest the application. A board member commented that since

the two applications are being prepared and submitted separately/incrementally, it

creates mistrust around the security of the fish & wildlife flows.

A board member suggested submitting both applications as a package may reduce

distrust amongst parties as everyone would be clear on what the whole package

looks like. BOR and OWRD confirmed this is not the current pathway, but it is a

possible pathway.

Tod Heisler pointed out that a protest to the application (by WaterWatch or

others) is virtually assured in its current form. A board member suggested hiring a

neutral mediator to discuss modifying the application. Doug DeFlitch asked about

the administrative process for a protested application. Kyle Gorman/Jeremy Giffin

said that OWRD would hold an administrative hearing with the parties and that

the application would be seriously delayed. A board member suggested that the

parties voluntarily enter an informal mediation in advance to avoid a protest.

Russ Rhoden pointed out that OID voluntarily forewent 60,000 AF of potential

new water for irrigation to get the Act passed, just to protect the water they have

now. He expressed frustration that opponents would make such a big deal over

dual character of use for storage water (i.e. fish & wildlife and irrigation). He said

he did not think the OID board will be enthusiastic to sit down with parties to find

agreement after they feel they have already given up a lot, but that he will check

in with them.

Kate suggested that seeing what comments come in by February 18th may provide

more clarity on level of disagreement and likelihood of delays, and we as a group

of interests can think more about whether trying to bring parties together may

make sense. If it appears the water rights application will end up in protracted

protests, there would likely be value in bringing parties together. If the

Board Book

disagreements can get solved expediently through the public comment period set

up in the administrative process that would not be necessary. Although parties

agree there will be controversy around the secondary application, so there may be

some efficiency on finding agreement on both at the same time.

4. Update: Deschutes River Campaign Project

Bea informed the group that the DHM survey has been finalized and has been initiated.

She said DHM will be at the DRC’s March Board Retreat. She listed specific

stakeholders that are being targeted in formulating the Campaign platform.

A board member asked about the distinction between messaging within the context of the

OSF lawsuit.

5. Cross Initiative: Basin Study (discussion)

a. Desired outcomes and multi-criteria assessment of results

Kate updated the group on the timeline and study elements for the Basin Study.

Kate outlined the desired outcomes and evaluation criteria to ascertain how well the

Basin Study meets those desired outcomes, specifically suggesting that a range of

flow targets will be used, not one specific number.

Board Book

MEMORANDUM DESCHUTES RIVER CONSERVANCY

To: DRC Board of Directors

From: Finance & Audit Committee Attending: Jay Henry, Jade Mayer, Tod Heisler, Bea Armstrong and Hoyt Wilson.

Date: February 12, 2016, 11:00 a.m. to 12:00 p.m.

Re: Finance & Audit Committee Meeting

The Committee discussed the following agenda items and any action item is noted within the agenda item:

1. Review of FY15 Audit 11:00 – 11:35 Chris Mahr and Sandy Freeman of Chris Mahr & Associates presented the FY15 Audit draft to the committee. Discussion included the DRC’s methods for calculating billing rates charged to grants and the need to update the organization’s procurement policies. Also discussed were the reduction in net assets from prior years and the need for fundraising to support current operations and the Deschutes River Campaign. Jade Mayer moved to approve the audit as presented and submit to the board for final approval. Jay Henry seconded the motion.

2. Review of 1st Qtr Financial Statements 11:35 – 11:45 Hoyt presented the FY 2016 1st Qtr financial Statement beginning with the balance sheet. There were only a few notable differences from fiscal year end 2015 with both accounts receivable and accounts payable considerably reduced. This is typical for the winter period with the larger projects and activity starting later in the spring. Net ordinary income reflects the receipt of two restricted grants, Bella Vista and the Collins Foundation. Admin costs are slightly higher compared with the prior year due to the amortization of audit costs.

3. Marketing and Development 11:45 – 12:05Bea presented an update on marketing and development that included a discussion of thetypes of fundraising sources the organization is targeting. Jay asked if we have consideredpursuing social impact bonds with Bea responding that she has researched them as a potentialsource of revenue. Bea discussed the consolidation of the organizations fundraising eventswith the focus this year on growing and expanding the Tight Lines annual event.

The meeting was adjourned at 12:05 p.m.

Board Book

Board Book

FINANCIAL STATEMENTS

YEAR ENDED SEPTEMBER 30, 2015

Board Book

DESCHUTES RIVER CONSERVANCY

FINANCIAL STATEMENTS

TABLE OF CONTENTS

YEAR ENDED SEPTEMBER 30, 2015 Page AUDITOR’S REPORT ...................................................................................................................... 1‐2 STATEMENT OF FINANCIAL POSITION ............................................................................................ 3 STATEMENT OF ACTIVITIES ............................................................................................................. 4 STATEMENT OF CASH FLOWS ......................................................................................................... 5 NOTES TO FINANCIAL STATEMENTS .......................................................................................... 6‐16 SUPPLEMENTARY SCHEDULE Schedule of Expenses by Funding Sources ....................................................................... 17 SINGLE AUDIT COMPLIANCE Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards ................................................................................. 18‐19 Independent Auditor’s Report on Compliance With Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance With OMB Circular A‐133 ........................................................................ 20‐21 Schedule of Findings and Questioned Costs ....................................................................... 22‐23 Schedule of Expenditures of Federal Awards ........................................................................... 24

Board Book

Board Book

SEPTEMBER 30, 2015 AND 2014

2015 2014

ASSETS

CURRENT ASSETS

Cash 1,046,087$ 1,087,393$

Grants and other receivables 574,164 708,929

Prepaid expenses 18,269 17,636

TOTAL CURRENT ASSETS 1,638,520 1,813,958

PROPERTY AND EQUIPMENT, net of accumulated depreciation

of $77,054 and $74,082, respectively 7,725 9,257

OTHER ASSETS

Water rights available for resale 219,020 219,020

Restricted cash and deposits 5,269 5,269

TOTAL OTHER ASSETS 224,289 224,289

TOTAL ASSETS 1,870,534$ 2,047,504$

LIABILITIES AND NET ASSETS

CURRENT LIABILITIES

Accounts payable and accrued expenses 309,229$ 504,532$

Accrued payroll and related expenses 102,627 105,743

Current portion of long term liabiltiies 2,097 1,542

Deferred revenue 332,476 231,839

TOTAL CURRENT LIABILITIES 746,429 843,656

LONG‐TERM LIABILITIES

Prepayments on contracts 38,122 38,122

Leasehold improvements loan 5,118 7,215

Line of credit 100,000 100,000

TOTAL LONG‐TERM LIABILITIES 143,240 145,337

TOTAL LIABILITIES 889,669 988,993

NET ASSETS

Unrestricted

Operating 652,585 626,192

Board designated 232,861 232,861

Total unrestricted 885,446 859,053

Temporarily restricted 95,419 199,458

TOTAL NET ASSETS 980,865 1,058,511

TOTAL LIABILITIES AND NET ASSETS 1,870,534$ 2,047,504$


STATEMENT OF FINANCIAL POSITION

See accompanying notes to financial statements

‐3‐Board Book

Temporarily

Unrestricted Restricted 2015 2014

REVENUE

Grants 1,787,363$ 29,998$ 1,817,361$ 1,822,130$

Interest income 490 490 525

Contributions and events 247,791 13,317 261,108 266,549

Other income 249,707 249,707 248,674

In‐kind 398 398 1,429

TOTAL REVENUE 2,285,749 43,315 2,329,064 2,339,307

EXPENSES

Program services

Water acquisition ‐ stream‐flow restoration

Conservation 1,324,406 1,324,406 1,138,130

Water management 300,498 300,498 280,997

Leasing of water rights 118,177 118,177 132,600

Permanent transfers ‐ restoration 52,746 52,746 23,120

Mitigation

Temporary transfers ‐ mitigation 41,728 41,728 37,422

Permanent transfers ‐ mitigation 3,625 3,625 1,474

Riparian restoration, monitoring, planning 60,095 60,095 104,074

Consulting 21,385 21,385 42,021

Total Program services 1,922,660 1,922,660 1,759,838

Supporting services

Management and general 227,661 227,661 261,588

Communications and outreach 158,682 158,682 181,881

Fundraising 97,707 97,707 92,796

Total Supporting services 484,050 484,050 536,265

TOTAL EXPENSES 2,406,710 2,406,710 2,296,103

NET ASSETS RELEASED FROM RESTRICTIONS 147,354 (147,354)

CHANGE IN NET ASSETS 26,393 (104,039) (77,646) 43,204

NET ASSETS ‐ Beginning of year 859,053 199,458 1,058,511 1,015,307

NET ASSETS ‐ End of year 885,446$ 95,419$ 980,865$ 1,058,511$



STATEMENT OF ACTIVITIES

Totals

(WITH COMPARATIVE TOTALS FOR THE YEAR ENDED SEPTEMBER 30, 2014)


‐4‐Board Book

YEARS ENDED SEPTEMBER 30, 2015 AND 2014

2015 2014

CASH FLOWS FROM OPERATING ACTIVITIES

Change in net assets (77,646)$ 43,204$

Adjustments to reconcile change in net

assets to net cash provided (used) by operating activities

Depreciation 2,973 2,821

Changes in current assets and liabilities

Grants and other receivables 134,765 (24,673)

Prepaid expenses (633) (1,006)

Accounts payable (195,303) 245,562

Accrued payroll liabilities (3,116) 25,153

Payments on contracts 15,029

Deferred revenue 100,637 (305,590)

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (38,323) 500

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of equipment (1,441)

NET CASH USED BY INVESTING ACTIVITIES (1,441)

CASH FLOWS FROM FINANCING ACTIVITIES

Tenant improvement loan payments (1,542)

Proceeds from release of restricted escrow funds 19,782

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (1,542) 19,782

NET INCREASE (DECREASE) IN CASH (41,306) 20,282

CASH ‐ Beginning of year 1,087,393 1,067,111

CASH ‐ End of year 1,046,087$ 1,087,393$

SUPPLEMENTAL DISCLOSURES

Noncash investing and financing transactions:

Leasehold improvements construction

Cost of Leasehold improvements 8,757$

Obligation of Leasehold improvements Loan (8,757)

Disposal of fully depreciated assets

Furniture, fixtures and equipment (8,555)

Accumulated depreciation 8,555

Interest of $266 was paid for the year ending September 30, 2015.


STATEMENT OF CASH FLOWS


‐5‐Board Book


NOTES TO FINANCIAL STATEMENTS


‐6‐

NOTE 1 – NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Activities The Deschutes River Conservancy (the Organization), is a multi‐stakeholder consensus based organization with a mission to restore stream‐flow and improve water quality in the Deschutes River Basin. The Organization’s founders recognized the need for a non‐profit organization with ecosystem restoration goals and methods focused on positive incentives, consensus and local governance rather than regulation. In March 1996, Senator Mark Hatfield introduced federal legislation authorizing federal agencies to work with this cooperative non‐profit organization, then known as the Deschutes Basin Working Group. The Organization’s Board of Directors is comprised of the key private and public interests in the Deschutes River Basin. It has representatives from hydropower, livestock grazing, recreation/tourism, timber, land development, irrigated agriculture, environment, as well as members from the Confederated Tribes of Warm Springs, the Departments of Interior and Agriculture, the State of Oregon, local governments and several at‐large board members. The Organization has received grant funds from state, federal, private foundation and hydro mitigation sources. In addition, as a 501(c)(3) organization, the Organization receives tax‐deductible contributions from individuals and corporations. The funds are used to finance stream‐flow restoration projects in the Deschutes River Basin using four basic approaches: 1) leasing water rights, 2) permanent water transfers, 3) water conservation and 4) reservoir operations. The Organization has classified the Organization’s activities in four major classes of programs: 1) water acquisition and stream flow restoration, 2) mitigation through water transfers, 3) riparian restoration, including monitoring and planning and 4) consulting. The Organization was formed as an Oregon nonprofit corporation November 13, 1996. Basis of Accounting The financial statements of the Organization have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.

Board Book




-7-

NOTE 1 – NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ‐ continued Financial Statement Presentation The financial statements are presented in accordance with Statement of Financial Accounting Standards No. 117, “Financial Statements of Not‐For‐Profit Organizations,” which requires the Organization to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets and permanently restricted net assets. The Organization did not have any permanently restricted net assets at September 30, 2015. Comparative Financial Information The financial statements include certain prior period summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United States of America. Accordingly, such information should be read in conjunction with the Organization’s financial statements for the year ended September 30, 2014, from which the summarized information was derived. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Income Taxes The Organization is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and did not conduct unrelated business activities for the year ended September 30, 2015. Therefore, the Organization has made no provision for federal income taxes in the accompanying financial statements. In addition, the Organization has been determined by the Internal Revenue Service not to be a “private foundation” within the meaning of Section 509(a) of the Internal Revenue Code. Fair Value of Financial Instruments The Organization has not elected to measure financial assets and liabilities using the Fair Value Option for Financial Assets and Financial Liabilities under Financial Accounting Standards No. 159. The Organization does have financial instruments, which include items such as accounts receivable, grants receivable, accounts payable, and notes payable that have carrying amounts which approximate fair value at September 30, 2015.

Board Book




-8-

NOTE 1 – NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Revenue Recognition ‐ Contributions The Organization has adopted the Financial Accounting Standards Board Statement of Financial Accounting Standards No. 116, “Accounting for Contributions Received and Contributions Made.” Accordingly, all contributions are considered to be available for unrestricted use unless specifically restricted by the donor. Contributions received that are designated for future periods or restricted by the donor for specific purposes are reported as temporarily restricted or permanently restricted support that increases those net asset classes. When a donor restriction expires (when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Contributed Services A portion of the DRC’s functions and programs are conducted by unpaid volunteers. The value of this contributed time is not reflected in the accompanying financial statements since the services do not require specialized skills and because the amount is not susceptible to objective measurement or valuation. Contributed professional services have been recorded at fair value as in‐kind revenue in the amount of $398 and $1,429 for the years ended September 30, 2015 and 2014, respectively. The contributed professional services may include legal, engineering and catering services. For the year ended September 30, 2015, $398 has been recorded as administrative expenses. Cash Cash and cash equivalents for purposes of the statement of cash flows consist of demand deposits, highly liquid investments with an original maturity of three months or less and amounts held by the United States Treasury Department in the Organization’s name which are immediately available for use. Grants Receivable Grants receivable relate to reimbursement‐basis awards from various granting agencies. No allowance for uncollectible amounts is considered necessary.

Board Book




-9-

NOTE 1 – NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Contribution and Other Receivables Contribution and other receivables are stated at the amount management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on prior years' experience. For the year ended September 30, 2015, management has determined that no allowance for uncollectible amounts is necessary and therefore, no valuation allowance has been recorded. Balances that are still outstanding after management has used reasonable collection efforts are written off through a charge to the valuation allowance and a credit to trade accounts receivable. Past due receivables are determined based on contractual terms. Finance charges are not assessed. Inventories/Water Rights Available for Re‐sale The Organization implemented a trial program in 2007 to track water rights purchased for resale. Inventory is recorded at cost on the date of purchase. All of the water rights are presold. The time between acquisition and sale of water rights currently has been estimated to be greater than one year. Fixed Assets Fixed assets are recorded at cost or fair market value on the date of receipt, if donated, and are depreciated using the straight‐line method over their estimated useful life of three to seven years. Leasehold improvements are depreciated over the life of the lease. The Organization capitalizes all items with a cost exceeding $1,000 and an estimated useful life greater than one year. If donors stipulate how long the donated fixed assets must be used, the contributions are recorded as temporarily restricted support when received. In the absence of such stipulations, contributions of fixed assets are recorded as unrestricted support. Fixed assets acquired by the Organization are generally considered owned by the Organization. However, fixed assets purchased with federal funding sources may require the Organization to refund the proceeds from the sale of these assets, if any, to the appropriate federal agency. Depreciation expense on fixed assets amounted to $2,973 and $2,821 for the years ended September 30, 2015 and 2014, respectively.

Board Book




-10-

NOTE 1 – NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Notes Payable Notes payable are recorded at the original amount borrowed and classified between short‐term and long‐term depending on the maturity date of payments. Payments due within the next year are classified as short‐term, with the remainder as long‐term. Other Income Other income includes revenue related to permanent transfers of water rights, consulting and miscellaneous income. Functional Allocation of Expenses

The cost of providing the programs and other activities has been summarized on a functional basis in the

statement of activities.

Costs are allocated between fundraising, management and general, or program services based on

evaluations of the related benefits in accordance with generally accepted accounting principles in the

United States of America for non‐profit organizations.

Program expenses consist of all expenses paid for conservation projects. Management and general

expenses include oversight, business management, general recordkeeping, budgeting, facility and other

such management and administrative activities that support the projects and the Organization overall.

Fundraising expenses include the cost of recruiting volunteers, writing grant applications and conducting

other activities to solicit contributions from individuals and other organizations.

Additionally, a schedule of expenses by funding source has been provided. This schedule lists the

expenses for each program which include, when appropriate and in accordance with the programs, an

allocation of management and general costs.

Advertising Costs Deschutes River Conservancy expenses the costs of advertising the first time advertising takes place. Advertising expense was $926 and $632 for the years ended September 30, 2015 and 2014, respectively.

Board Book




-11-

NOTE 1 – NATURE OF ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Administration and contract services The Organization provides bookkeeping, administrative and technology support to Upper Deschutes Watershed Council (UDWC). The Organization has entered into an agreement with UDWC and received $47,544 and $47,544 for the years ending September 30, 2015 and 2014, respectively. The income has been recorded as “other income” and the costs are included in “administration and contract services.” The Organization does not exercise significant control over UDWC. Comparative Information The financial statements include certain prior year summarized comparative information in total. Such information does not include sufficient detail to constitute a presentation in conformity with accounting principles generally accepted in the United State of America. Accordingly, such information should be read in conjunction with the Organization’s prior year financial statements from which the summarized information was derived. Reclassifications of prior year amounts Some amounts from the prior year have been reclassified to be consistent with the current year classifications. NOTE 2 – CASH The Organization maintains deposit accounts which can, at times, exceed federally insured limits of $250,000. To eliminate it’s exposure to significant risk related to deposits over the FDIC coverage, the Organization has opened accounts in several banks and monitors the balances so that they are below the $250,000 limit. Additionally, the Organization uses a “sweep” for their operating bank account. On each business day, deposit balances over $200,000 are swept from the operating account’s bank to another bank to utilize FDIC insurance. As of September 30, 2015, account balances were within FDIC insured limits.

Board Book




-12-

NOTE 2 – CASH ‐ continued Cash consisted of the following amounts at September 30:

2015 2014

Bank of the Cascades no interest checking 545,772$ 553,344$

Bank of the Cascades money market 50,159 50,118

Umpqua Bank money market 249,125 248,976

US Bank money market 200,791 200,550

Cash on hand 240 240

Bureau of Reclamation and Bureau of Land

Management grant funds held by the

Unites States Treasury Department 34,165

1,046,087$ 1,087,393$

NOTE 3 – GRANTS AND OTHER RECEIVABLES At September 30, grants and other receivables consisted of the following:

2015 2014

Grants receivable 549,868$ 657,526$

Contributions receivable 6,450 32,981

Other receivables 17,846 18,422

Total grants and other receivables 574,164$ 708,929$

All contributions receivable are due within the following year. NOTE 4 – PROPERTY AND EQUIPMENT Property and equipment consist of the following:

2015 2014

Furniture, fixtures and equipment 76,022$ 74,582$

Leasehold improvements 8,757 8,757

84,779 83,339

Accumulated Depreciation (77,054) (74,082)

Net property and equipment 7,725$ 9,257$

Board Book




-13-

NOTE 5 – DEBT

Line of Credit December 30, 2008, the Organization entered into a revolving line of credit with the Oregon Community Foundation‐North Rim Deschutes River Fund for up to $100,000 to be requested in $50,000 minimum advances. The balance owed as of September 30, 2015 was $100,000. On October 1, 2013, the Organization executed an agreement to renew the line of credit for an additional five years. The renewal expires on December 30, 2018 and does not bear interest.

Leasehold Improvement Loan

September 10, 2013, the Organization entered in a lease agreement with Hill Street General Partnership

which commenced January 1, 2014. The lease includes a provision for a tenant improvement loan

whereby the lessor would loan the Organization funds for tenant improvement work. The Organization

incurred tenant improvement costs of $8,757. The terms of the loan include monthly payments beginning

January 1, 2014 and continuing until December 31, 2018, the end of the lease term. The Lessor

subsequently revised the beginning date of payments to be October 1, 2014. The loan bears interest at

the rate of 5%. For the year ending September 30, 2015, interest costs incurred and charged to expense

for this loan were $266.

Future maturities of debt are as follows:

Year ending September 30, Principal Interest Total

2016 2,097$ 314$ 2,411$

2017 2,204 205 2,409

2018 2,317 94 2,411

2019 100,597 5 100,602

107,215$ 618$ 107,833$

NOTE 6 – LEASING ACTIVITIES Office Space Lease The Organization leases office space in Bend, Oregon, under an operating lease expiring December 31, 2018. Rent payments for the years ended September 30, 2015 and 2014 were $49,275 and $52,776, respectively. Upper Deschutes Watershed Council reimburses the Organization for a portion of the annual lease payments, which is recorded as an offset to rental expense. For the years ended September 30, 2015 and 2014, the Organization received $22,044 and $21,443, respectively from Upper Deschutes Watershed Council. This resulted in rent expense of $27,231 and $31,333 for the years ended September 30, 2015 and 2014 respectively.

Board Book




-14-

NOTE 6 – LEASING ACTIVITIES – continued Copier Lease January 1, 2014, the Organization entered into an agreement to lease a copier. This operating lease is in effect for five years through December 31, 2018. Minimum monthly payments vary and include some additional rental payments based on equipment usage. Base rents paid under this lease are $134 per month. At September 30, 2015 future minimum annual lease payments under the operating leases are as follows:

Year ending September 30, Amount

2016 50,689$

2017 52,155

2018 53,667

2019 13,512

170,023$

NOTE 7 – PREPAYMENT ON CONTRACTS

Prepayments on contracts represent money received for water mitigation credits. These obligations will be fulfilled in a future time period when the state of Oregon has changed the water rights into water mitigation credits. At that time, title of the water mitigation credits will be transferred to the pre‐payer’s name and fulfill these obligations.

NOTE 8 – EMPLOYEE RETIREMENT PLAN The Organization offers a tax sheltered annuity (TSA) retirement plan under Internal Revenue Code Section 403(b), which is available to all employees. Employees may contribute a portion of the qualified wages, subject to a limit under the Code. In addition to employee contributions, the Organization makes discretionary contributions on behalf of all eligible employees. To be eligible, employees must normally work more than 20 hours per week and have at least 1,000 hours of service during the 12 month period following date of hire. All contributions immediately vest at 100%. IRS contributions limits apply. The Organization’s contributions for the years ended September 30, 2015 and 2014 amounted to $49,268 and $46,634, respectively. NOTE 9 –NET ASSETS

Board Book




-15-

Unrestricted board designated net assets available for water purchases from the Instream Capital Water Acquisition Fund were $232,861 for both years ending September 30, 2015 and 2014. Temporarily restricted net assets represent grants from the following funding sources:

2015 2014Bella Vista 2010 387$

Bella Vista 2012 10,985

Bella Vista 2014 3,037 80,000

Deschutes Brewery 21,367 11,089 GMB: Avion Blue Water Res 5,787 5,168

JUBITZ10 64

JUBITZ12 5,349

Lamb Foundation 10,377 Laird Norton 2012 5,372

Laird Norton 2013 20,000 20,000

Laird Norton 2014 10,000 10,000

Meyer Operation Grant 35,228 40,667

95,419$ 199,458$

NOTE 10 – CREDIT RISK AND CONTINGENCIES

Reimbursement claims and revenue from various grant programs may be subject to further audit and

adjustment by grantor agencies. Disallowed claims could become a liability to be paid from unrestricted

net assets. Any such amounts are not expected to be significant.

The Organization receives a substantial amount of its support from several agencies. A significant

reduction in the level of this support, if this were to occur, may have an effect on the Organization’s

programs and activities.

The Organization has credit risk arising from grant receivables and other receivables. The maximum

amount of loss at September 30, 2015 equals the grants and other receivables balance of $574,164.

NOTE 11 ‐ COMMITMENTS

Board Book




-16-

Under the terms of the some grant agreements, Deschutes River Conservancy is required to match the funding it receives on a dollar for dollar basis. These matching commitments are in the normal course of business. NOTE 12 – RELATED PARTY TRANSACTIONS An agreement was entered into to fund a portion of the projects undertaken by Central Oregon Irrigation District (COID). The agreement and payments are in the normal course of business for the Organization. The Board of Directors, during the current fiscal year, included a COID representative. The Organization subcontracted grant funds of $614,477 to COID during the year ended September 30, 2015. As of September 30, 2015 no amounts were owed to or were receivable from COID. The Board has a conflict of interest policy which requires a board member who has an interest in a transaction to abstain from voting on the transaction. NOTE 13 ‐ SUBSEQUENT EVENTS Subsequent events have been evaluated by management through January 7, 2016, which is the date the financial statements were available to be issued. On January 7, 2016, the Organization entered into an agreement with dhm RESEARCH Davis Hibbitts & Midghall Inc. for marketing research services to be provided in fiscal year 2016 in the amount of up to $94,500.

Board Book

SUPPLEMENTARY SCHEDULE

Board Book

Program 2015 2014

Avion Blue Water Program 12,698$ 12,159$

Bella Vista 88,335 39,099

Bureau of Reclamation 74,116

Department of Commerce 23,364 11,720

Deschutes Basin Board of Control 32,326

Deschutes Brewery 19,720 33,271

Deschutes Water Alliance Bank (DWA) 61,052 67,908

Deschutes Partnership 348 5,226

Ground Water Mitigation Bank (GMB) 61,724 61,018

JUBITZ 5,413 1,506

Laird Norton Family Foundation 5,372 19,485

Lamb Foundation 10,377 4,623

Meyer Operation Grant 5,439 18,270

Wells Fargo Grant 17,650

Columbia Basin Water Transaction Fund ‐ BPA / NFWF 525,024 716,617

Oregon Community Foundation ‐ Water Management 24,369 24,059

Oregon Department of Fish & Wildlife (ODFW) 5,836

Oregon Watershed Enhancement Board (OWEB) 563,829 305,963

PELTON ‐ PGE/ Warm Springs Tribes 634,913 433,612

United States Forest Service / NFWF 5,363 74,637

Consulting ‐ various funding sources 20,008 34,931

Other miscellaneous program expenses 6,019 6,982

Total expenses by funding source 2,105,693 1,968,688

Unrestricted ‐ other 301,017 327,415

Total Expenses 2,406,710$ 2,296,103$


SCHEDULE OF EXPENSES BY FUNDING SOURCES

YEARS ENDED SEPTEMBER 30, 2015 AND 2014

-17- Board Book

SINGLE AUDIT COMPLIANCE

Board Book

Board Book

-22-


SCHEDULE OF FINDINGS AND QUESTIONED COSTS


Section I – Summary of Auditor’s Results Financial Statements

Type of auditor’s report issued: Unmodified

Internal control over financial reporting:

Material weaknesses identified? ______ yes __ X__ no

Significant deficiencies identified? __ ___ yes __X__ none reported

Noncompliance material to financial statements noted? __ ___ yes ___X___ no

Federal Awards

Internal control over major programs:

Material weaknesses identified? ______ yes ___X___ no

Significant deficiencies identified? ______ yes ___X___ none reported

Type of auditor's report issued on compliance for major programs: Unmodified

Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of OMB Circular A‐133? ______ yes ___X___ no Identification of major programs: Bonneville Power Administration passed through National Fish and Wildlife Foundation – Columbia Basin Water Transaction Program

CFDA Number: 81.000

Dollar threshold used to distinguish between type A and type B programs: $300,000 Auditee qualified as low‐risk auditee? ___X__ yes

Board Book

-23-


SCHEDULE OF FINDINGS AND QUESTIONED COSTS ‐ continued


Section II – Financial Statement Findings There were no findings or questioned costs. Section III – Federal Award Findings and Questioned Costs There were no findings or questioned costs. Section IV – Summary Schedule of Prior Audit Findings There were no prior year audit findings or questioned costs.

Board Book

Federal

CFDA Grant Program

Number Number Expenditures

Department of Commerce ‐ National Oceanic & Atmospheric Administration

Pacific Coast Salmon Recovery ‐ Pacific Salmon Treaty Program

Passed through Oregon Watershed Enhancement Board 11.438 210‐925‐7952 23,364

United States Forest Service

Passed through National Fish and Wildlife Foundation

Three Sisters Irrigation District Main Canal Piping 10.683 0901.13.040335 5,363

Bonneville Power Administration

Passed through National Fish and Wildlife Foundation

Columbia Basin Water Transaction Program Challenge grant 81.000 BPA XI #0201.15.045197 525,024

Subtotal of Bonneville Power Administration

Total expenditures of federal awards 553,751$

Notes to Schedule:

The Organization follows the accrual basis of accounting in preparing this schedule.

The method is consistent with preparation of the Organization's financial statements.


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


-24- Board Book

Dec31,2015 Sept30,2015 $Change

ASSETSCurrentAssets

Checking/SavingsCASH 1,240,011 1,046,087 193,924

TotalChecking/Savings 1,240,011 1,046,087 193,924

AccountsReceivableAccountsReceivable 53,297 564,300 ‐511,003

TotalAccountsReceivable 53,297 564,300 ‐511,003

OtherCurrentAssetsAccruedRevenues 29,825 9,864 19,961PrepaidExpense 21,744 18,269 3,475

TotalOtherCurrentAssets 51,569 28,133 23,436

TotalCurrentAssets 1,344,877 1,638,520 ‐293,643

FixedAssetsNetFixedAssets 7,068 7,725 ‐657

TotalFixedAssets 7,068 7,725 ‐657

OtherAssetsInventoryAsset 219,020 219,020 0OtherAssets‐long‐term 5,269 5,269 0

TotalOtherAssets 224,289 224,289 0

TOTALASSETS 1,576,234 1,870,534 ‐294,300

LIABILITIES&EQUITYLiabilities

CurrentLiabilitiesAccountsPayable

AccountsPayable 12,446 44,649 ‐32,204TotalAccountsPayable 12,446 44,649 ‐32,204

OtherCurrentLiabilitiesAccruedExpenses 0 264,580 ‐264,580Shorttermliab‐prepayments 38,122 38,122 0Accruedbenefittime 42,592 42,592 0CurrentPortionofLTDebt 0 2,097 ‐2,097PayrollLiabilities 61,545 60,035 1,511DeferredRevenue 278,918 332,476 ‐53,559

TotalOtherCurrentLiabilities 421,178 739,903 ‐318,725

TotalCurrentLiabilities 433,623 784,552 ‐350,928

LongTermLiabilitiesLoansPayable 106,701 105,118 1,582

TotalLongTermLiabilities 106,701 105,118 1,582

TotalLiabilities 540,324 889,670 ‐349,346

EquityUnrestrictednetassets

Operating 738,920 674,570 64,350BoardDesignated 232,861 232,861 0

Totalunrestricted 971,781 907,431 64,350

Temprestrictednetassets 64,129 73,433 ‐9,304TotalEquity 1,035,910 980,864 55,046

TOTALLIABILITIES&EQUITY 1,576,234 1,870,534 ‐294,300

DESCHUTESRIVERCONSERVANCYDecember31,2015BalanceSheet

Board Book

FY16

Budget

FY16‐YTD

12‐31‐2015

%to

Bud

FY16

Budget

FY16‐YTD

12‐31‐2015

%to

Bud

FY16

Budget

FY16‐YTD

12‐31‐2015

%to

Bud

FY16

Budget

FY16‐YTD

12‐31‐2015

%to

Bud

Income

Federal

276,901

76,481

28%

273,601

76,481

28%

‐

‐

3,300

‐

0%State

367,840

6,142

2%367,840

6,142

2%‐

‐

0%‐

‐

Foundation&corporation

1,054,125

163,559

16%

919,125

163,559

18%

135,000

‐

0%‐

‐

PrivateRevenue

497,507

89,406

18%

211,363

25,816

12%

237,000

51,508

22%

49,144

12,082

25%

In‐kind

‐

‐

‐

‐

TotalIncome

2,196,373

335,588

15%

1,771,929

271,998

15%

372,000

51,508

14%

52,444

12,082

23%

Expense

Personnelcharges

877,424

212,602

24%

513,954

128,541

25%

203,454

48,599

24%

160,016

35,462

22%

Projects&TransExpenses

753,829

13,648

2%753,829

13,648

2%‐

‐

‐

‐

Subcontractors‐DRCprojects

257,849

12,441

5%257,849

12,441

5%‐

‐

‐

‐

WaterProjects‐otherdirect

22,551

4,027

18%

22,551

4,027

18%

‐

‐

‐

‐

Marketing&Dev

175,900

18,163

10%

‐

175,900

18,163

10%

‐

‐

In‐kind

‐

‐

‐

‐

‐

‐

‐

General&Administration

83,323

19,662

24%

‐

‐

‐

83,323

19,662

24%

Subtotalexpensesbeforeadmin

allocation

2,170,876

280,542

13%

1,548,183

158,656

10%

379,354

66,762

18%

243,339

55,124

23%

AdminAllocationAccounts

‐

‐

202,808

43,086

21%

(11,913)

‐

0%(190,895)

(43,086)

23%

Totalexpenses

2,170,876

280,542

13%

1,750,991

201,743

12%

367,441

66,762

18%

‐

45

NetOrdinaryIncome

25,497

55,046

20,938

70,255

4,559

(15,254)

‐

45

‐

RestrictedAssetsOffsetting

Expenses

31,291

20,094

11,196

‐

‐

NetIncomePlusRestrictedOffset

86,337

90,350

(4,058)

45

LessReleaseofRestrictedNetAssets

(31,291)

YTDChangeinNetAssets

55,046

NetAssetsBOY

980,864

NetAssetsEOY

1,035,910

Total

Program

sMarketing/Development

DESCHUTESRIVERCONSERVANCY

Decem

ber31,2015

Statem

entofActivities

Administration

Board Book


Decem

ber31,2015

$‐

$50

$100

$150

$200

$250

$300

$350

Sept 2014

Sept 2015

Sept 2016

$59

$53

$76

$16

$11

$6

$51

$92

$44

$25

$44

$20

$37

$4

$120

$78

$69

$69

Year to Date Reven

ue Source Comparison

Individuals & Corporations

Foundation

Other (includes consulting & leasing trans rev)

Pelton

State

Federal

in $1,000

Board Book


Decem

ber31,2015

$166,725

$198,490

$158,656

$‐

$50,000

$100,000

$150,000

$200,000

$250,000

Sept 2014

Sept 2015

Sept 2016

Year to Date

Program

Expense

Comparison

Board Book


Decem

ber31,2015

$63,477

$54,761

$55,124

$‐

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

Sept 2014

Sept 2015

Sept 2016

Year to Date

Administrative Expense

Comparison

Board Book


PREPARED FOR FINANCE & AUDIT COMMITTEE MEETING FEBRUARY 11, 2016

Projections: Corporate & Foundation: 135K Individual & Event: 155K

FY16 Q2 Outreach Highlights: 1. QLE Bi-Annual Meetings, Seattle, WA – February 2-4th 2. Farm Fair, Madras, OR – February 3 & 4th 3. Fly Fishing Film Festival, Tower Theater – February 6th 4. Living on a Few Acres, Redmond, OR – March 12th 5. Major Gifts Six-Month Seminar – Monthly 6. Ongoing Donor Meetings

FY16 Q1 Foundation Prospects:

1. Bella Vista Foundation – confirmed 2. Collins Foundation – confirmed 3. Wells Fargo – submitted Dec. 2015 4. Roundhouse Foundation – submitting April 2016 5. Meyer Memorial Trust – relationship cultivation 6. Burning Family Foundation – relationship cultivation 7. Lazar Family Foundation – relationship cultivation 8. Temper of the Times – relationship cultivation 9. Compton Foundation – relationship cultivation 10. Hewlitt Foundation – relationship cultivation

Save the Date: Tight Lines Auction & Dinner – May 7, 2016 at UUFCO

FY16 Budget

Left to Raise

TOTAL UNRESTRICTED FUNDRAISING GOAL $372,000 $289,000

Board Book

Website Statistics

• 4,867 page views from December 10, 2015 to February 18, 2016. • 78.2% of visits are from new visitors.

Social Media Statistics

• 37 new subscribers on Facebook from December 10, 2015 to February 18, 2016 raising total number to 1,461.

• Facebook messages were seen by an average of 308 DRC subscribers per day from December 10, 2015 to February 18, 2016, a 305% increase over average. An average of 21 subscribers are engaging with DRC messages per day (liking, commenting, sharing), a 320% increase.

• 22 new DRC subscribers on Twitter from December 10, 2015 to February 18, 2016 raising total number to 964, a 15% increase. 123 subscribers clicked through to links provided in our tweets.

• Above average open rate on e-newsletters sent out in December and January. 29.5% compared to the industry average of 21.2%. Combined, 37 people clicked on a link in the e-newsletter to read more on the DRC website or blog.

Print Media Coverage of the Deschutes River

• Bulletin: 12 articles • KTVZ: 7 articles • Oregonian: 2 articles

Board Book

Meeting Notes

Communications Committee Meeting February 11, 2016, 11:00 am to 12:30 pm

DRC Conference Room 700 NW Hill Street, Bend, Oregon

Committee Members Attending: Gregory McClarren, Nancy Gilbert, Phil Fine, Mike Tripp, and Shon Rae

DRC Staff Attending: Bea Armstrong, Kate Fitzpatrick and Marisa Hossick

1. Introductions

The bullet points below represent the agenda items discussed at the DRC Communications Committee Meeting. They do not represent specific actionable decision points by the DRC. At the March 3, 2016 board meeting, a list of DRC Communications action items will be presented to the DRC Board of Directors for approval.

2. Intersection between DRC, HCP & BSWG Communications • How the DRC can stay ahead of this communication need and effectively remain

relevant when there is a clear desire for action? • The DRC has done well communicating the process of BSWG. • The DRC can come out in support of the river, its partners, and the process. Use

messaging supporting better streamflow through a process that doesn’t place undue harm on any one stakeholder. Explain that this lawsuit derails the collaborative process.

• Winter flow component is a huge issue. The districts named in the litigation are well aware of the need for this.

• Relevance of the DRC after projected flows as dictated by legislation. • Revision of DRC role within the litigation process. • DRC can’t be completely silent and stay relevant as an entity to be listened to.

3. Discussion of threats by stakeholders represented on DRC Communications Committee

• Don’t get distracted – we don’t serve one entity, we serve them all. • Don’t let the lawsuit derail our collaborative work. • Continue to communicate about the collaborative, long term approach. • If DBBC commits to a high flow regime right out the gate, reversing this will be very

difficult because of established expectations. • You can’t want water in the river and not want to pipe canals/do conservation projects. • Funders will support infrastructure if they see a tangible goal. • People need to thoroughly understand that the collaborative approach is a slow

process.

Board Book

• There is a group forming called the Deschutes River Coalition or Coalition for the Deschutes that will act as an education and potentially advocacy organization.

4. What would it look like for DRC to take a stand? • Short term strategy that dovetails with a long term strategy. • Clearly map out a Communications Strategy for the next 3 months, 6 months, and 12

months. • Messaging platform states that we are not “silent” about the lawsuits and flow issues

facing the Deschutes, we represent all stakeholders. Everyone needs to come to the table and collaborate - quickly.

• Collaborative process: Our founding partners believed in this process so much that they created the DRC.

5. The lawsuit and what to do with the announcement that by April 1st there will be 600 cfs in the river.

• The DRC could announce progress on the behalf of a partner organization. o Suggestions for phrasing:

“We congratulate the irrigation districts for taking this bold step this year.”

“Our partners in the collaborative process have taken a bold step to support the recovery of the river and the spotted frog. We are pleased to see this step and are anxious to see what comes next.”

• Keep reminding the public about the long-term process of BSWG, citing the examples of Whychus and the summer flows in the middle Deschutes as proof of effectiveness.

• List the things the irrigators have committed do doing despite facing litigation. • Raise the point that NUID cannot sustain a flow regime with added winter flow and

funding will be needed to back fill the projects needed to recuperate the water they have given up.

• This is a short term solution, but there are many things that need to happen in the long-term for effective sustainable restoration.

• Bea proposed that maybe Tod or a board member should write an OP/Ed piece for the Bulletin?

• DRC needs to create a one-page talking point page for staff. • The DRC Communications Committee proposed that 2-3 key board members meet with

The Bulletin to explain the DRC’s role, why we think that the initial commitment by the irrigation district to put 600 cfs into the river starting April 1st is a bold move. This however, should not precede the DBBC’s official announcement. The message should be that we are supporting our partners in this process.

• We need to have something to address the winter flow needed. • There will be a winter flow number but the districts are trying to figure out how to

actually supply the water for it.

Board Book

• The DRC is not a party named in the lawsuit. We are behind restoring streamflow and maintaining a sustainable environment. We’d like to acknowledge our partners who have already committed to this step.

6. Discussion of the conservation measures in the HCP • The committee will need to help the public understand why 600 cfs by April 1st is

important. • Suggested phrasing: “March 31st – September 15th new innovative measures that allow

for flows XX times greater than we’ve seen in the past.” • Warning to remember the omissions. We can’t talk about new commitments for

improved flows without acknowledging what still needs to be done. There are still things to do that are coming out of the BSWG process.

• The COID internal plan will be adapted into the overall basin plan.

7. DHM Survey • Short discussion of relevancy of DHM during a time when we need immediate

communication points. • The overall DHM report was given later at the Program Committee Meeting.

8. Closing Thoughts

• The DRC Communications Committee recommends that the DRC remain steady and focused on the collaborative process while acknowledging the accomplishments of the organization and our partners.

Board Book

Board Book

Crooked Initiative Update

Board Meeting March 3, 2016

The Deschutes River Conservancy’s Crooked Initiative focuses on restoring stream flow in the Crooked River and its tributaries downstream from Prineville Reservoir. To date, we have primarily used leases and water conservation to achieve our goals in these streams. The following sections update the Board of Directors on stream flow related activities in four reaches: the Crooked River downstream from North Unit Irrigation District’s pumps, Ochoco Creek, McKay Creek, and the Crooked River downstream from Prineville Reservoir. Updates since the last Board Meeting appear in italics. Crooked River downstream from North Unit Irrigation District’s Pumps The DRC and its partners have identified historically low stream flows and high temperatures in the Crooked River downstream from North Unit Irrigation District’s pumps as a potential barrier to fish passage. The DRC and North Unit Irrigation District have collaborated to restore stream flow through this reach through the North Unit Water Supply Program. The DRC’s objective is to restore 22,250 acre-feet of stream flow to the Crooked River. To date, the DRC and North Unit Irrigation District have restored 9,180 acre-feet of stream flow with an additional 1,605 acre-feet pending associated with the West F piping (see below). The DRC and North Unit Irrigation District have not yet identified specific projects to provide the remaining 11,465 acre-feet to reach our objective. To date, we’ve partnered on the following projects in this reach:

NUID Main Canal Lining (completed in May 2013). This project lined a portion of North Unit Irrigation District’s Main Canal and conserved 7,880 acre-feet of Deschutes River water. The project allocated the conserved water to lands in the district historically served by water pumped from the Crooked River. It allocated the associated Crooked River water rights instream. The project received a Final Order from the Oregon Water Resources Department at the beginning of the 2013 irrigation season, permanently protecting the water instream.

COID I Lateral Piping II (completed in May 2015). This project piped a portion of Central Oregon Irrigation District’s I Lateral and conserved 1,300 acre-feet of Deschutes River water. The project allocated the conserved water to lands in the district historically served by water pumped from the Crooked River. It allocated the associated Crooked River water rights instream. The water was protected instream through a Limited License with the Oregon Water Resources Department in 2013 and 2014. OWRD has issued a Final Order for this conserved water application. Project partners’ original application for conserved water did not specifically include supplemental water from Crane Prairie Reservoir. In 2014, Oregon Water Resources Department recommended that project partners agree to submit a supplemental water right application to ensure that North Unit Irrigation District could apply supplemental Crane Prairie water to their associated lands as needed. OWRD has issued a Final Order for this supplemental water right application.

COID Juniper Ridge Piping II (hold). This project will pipe a portion of Central Oregon Irrigation District’s Pilot Butte Canal and conserve 2,552 acre-feet of Deschutes River water. It will allocate 2,000 acre-feet to

Board Book

the North Unit Water Supply Program and 552 acre-feet to the Deschutes River. The project is currently on hold due to this section of canal’s listing as a historic site. DRC staff do not expect project construction to proceed this year.

COID West F Lateral (implementation). Central Oregon Irrigation District’s Board has approved their piping a portion of the West F Lateral and allocating the conserved water through the North Unit Water Supply Program. The project will contribute 1,605 acre-feet to the program. The district has completed piping the lateral. The districts and the DRC have completed a conserved water purchase agreement, conserved water application, and supplemental water rights application for this transaction. At the request of the Oregon Water Resources Department, the districts and DRC will submit this application after identifying the associated lands in North Unit Irrigation District. As noted below, the Crooked River Collaborative Water Security and Jobs Act (the Act) will affect stream flows in the Crooked River. The DRC and the district have agreed to submit the conserved water application for the West F project as-is and expect any remaining questions to be resolved during the state’s administrative process.

COID-NUID Pilot Mitigation Transfer (implementation). This project will transfer water rights off of 40 acres of urbanized lands in Central Oregon Irrigation District and onto lands in North Unit Irrigation District that currently receive water from the Crooked River. It will transfer the associated Crooked River water rights instream. The districts and DRC are still committed to this transfer. However, we’ve currently prioritized other ongoing efforts in the basin.

The North Unit Water Supply Program (the Program) protects stream flow in the Crooked River through a management agreement with North Unit Irrigation District. Under the agreement, the district agrees to manage their pumping to not reduce flows in the Crooked River below agreed upon minimums. The agreement protects the additional stream flow restored through the program in addition to the stream flows that would have been present if the program were not in place. It sets minimum flows by month for both dry and non-dry years. The implementation of the Act will change stream flows in the Crooked River. The minimum stream flows protected through the Program ensure that NUID’s future pumping protects the conserved water added to the Crooked River through the Program in addition to the stream flow that would have been present if these conservation projects were not in place. NUID and the DRC have identified the stream flow that would have been present if these conservation projects were not in place based on records of historical flows downstream of NUID’s pump station. Following the implementation of the Act, historical stream flows will no longer represent the stream flow that would have been present if these conservation projects were not in place. The applications to store and use water associated with the Act will take several years to process, leading to several more years of uncertainty. As NUID's and DRC's Boards have not directed their staffs otherwise, staff will re-submit the West F conserved water application as-is to allocate the West F conserved water in the Crooked River. Staff expect any remaining questions to be resolved through the administrative process. Ochoco Creek The DRC has worked with Ochoco Irrigation District each year to lease water rights instream in Ochoco Creek. Typically, the DRC leases about 9 cfs in the creek. The passage of the Crooked River legislation provides additional opportunities to restore stream flow through water conservation and leasing, including removing the restriction on leasing or conserving water associated with the Reclamation project. While OID submitted no new Crooked River leases this year, there is opportunity in the future.

Board Book

McKay Creek The DRC has focused its restoration efforts on the middle reaches of McKay Creek. The McKay Water Rights Switch, planned in partnership with OID starting in 2006, will secure Ochoco Irrigation District water rights for direct diverters on McKay Creek. It will restore up to 11.2 cfs, or all natural flow, in the low flow reach of McKay Creek. With the passage of the Crooked River legislation, this project is back under development. DRC has continued working with Newton Consultants to update costs and power issues, and assess infrastructure capacity issues. DRC, Ochoco Irrigation District and Newton Consultants met with local and regional Bureau of Reclamation staff to understand new requirements related to a formal request to Bonneville Power Administration to include the McKay lands in Ochoco Irrigation District’s existing low-cost power contract. This inclusion will greatly improve the long-term cost-effectiveness of the project. Project partners are now working on compiling and submitting this request to Bonneville Power Administration. DRC will continue to work with Ochoco Irrigation District and Newton Consultants in the next quarter on a landowner engagement strategy and a project financing plan. Crooked River downstream from Prineville Reservoir The passage of the Crooked River legislation provided the means to improve stream flows downstream from Prineville Reservoir. The legislation directs the Bureau of Reclamation to release a sufficient amount of the previously unallocated stored water, as well as 5,100 af of water designated for the City of Prineville’s mitigation needs, based on an annual release schedule developed with the National Marine Fisheries Service and the United States Fish and Wildlife Service. The annual release schedule is to be developed to maximize benefits to fish and wildlife downstream of Bowman Dam. Additionally, it directed the Bureau of Reclamation to provide, to the maximum extent practicable, a minimum of 80 cfs of in-stream flows from Bowman Dam to Lake Billy Chinook. Bureau of Reclamation and the Services are currently working on the annual release schedule. Before any schedule can be implemented, Oregon Water Resources Department will first need to change the water rights characterizations in Prineville Reservoir. Bureau of Reclamation has submitted its application for the change in type of use of stored water to OWRD. The implementation of the Crooked River Collaborative Water Security and Jobs Act has affected all of the DRC’s work in the Crooked River and its tributaries. Please refer to the accompanying strategic issues memo for additional context.

Board Book

Board Book

Whychus Initiative Update

DRC Board Meeting March 3, 2016

The Deschutes River Conservancy’s Whychus Initiative focuses on restoring stream flow in Whychus Creek and its tributaries. To date, we have primarily implemented leases and water conservation in Three Sisters Irrigation District (TSID) to achieve DRC goals, however opportunities for out‐of‐district water acquisitions and/or conservation projects occasionally arise. The following sections update the DRC Board on stream flow related activities. Whychus Creek Flow Restoration Program The DRC and its partners have identified historically low stream flows, and the high stream temperatures they cause, as the primary limiting factor for reintroduced steelhead trout and Chinook salmon in Whychus Creek. To date, the there have been four permanent instream transfers and sixteen conserved water projects implemented, with the instream leasing program operating on an ongoing basis. The following projects are currently active:

TSID Water Conservation. Whychus Creek is a small stream system characterized by a large seasonal fluctuation in flow, which drops precipitously in June/July each year. As a result, there are very few senior water rights (~20 cfs), with Three Sisters Irrigation District’s (TSID’s) 1895 water rights for 100 cfs taking the remaining water in the creek. With so few water rights with which to restore flows in the creek, ongoing water conservation in TSID remains the DRC’s most crucial tool for achieving its flow goals.

o Main Canal Piping, Phases 4 ‐6. TSID began piping its Main Canal in 2010, starting at the District diversion south of Sisters. Phases 1‐3 reached four miles to the TSID office at Watson Reservoir near the rodeo grounds. Phases 4 ‐ 6 are now complete, bringing the total amount of conserved water generated within TSID to 23.9 cfs. It is anticipated to take a total of 9 phases to reach McKenzie Reservoir, which marks the final stage of large scale piping within TSID.

o Main Canal Piping, Phase 7. TSID is currently constructing Phase 7 of the TSID Main Canal. When complete Phase 7 will yield 1.33 cfs of conserved water, 100% of which will be allocated to permanent instream use. The cash budget for Phase 7 is $1,091,503, resulting in a cost effectiveness of $1,935/acre‐foot. For comparison, the first six phases of piping TSID’s Main Canal were achieved at an average cost of $2,040/acre‐foot and the TSID McKenzie Canyon Pipeline was constructed for $1,775/acre‐foot.

Pending Instream Transfers There are currently three pending instream transfers in Whychus creek, two of which were submitted on behalf of the city of Sisters and the Tehan family to generate groundwater mitigation credits. The remaining transfer involves 33.33 acres of senior Whychus Creek water rights that the DRC purchased from the Leithauser family in 2011. All three transfers were recently issued Draft Preliminary Determinations from OWRD and are expected to be finalized during early‐to‐mid 2016. Collectively, the three transfers are expected to protect 1.7 cfs of senior water in Whychus Creek.

Board Book

Board Book

Basin Study Update

http://www.usbr.gov/pn/studies/deschutes/index.html

Board Meeting March 3, 2016

New information is under Updates at the end

Overview What is a Basin Study? Basin Studies are part of the Bureau of Reclamation’s WaterSmart Grant Program. They are awarded on a competitive basis. Eligible applicants include states, tribes, water districts, cities or other local governmental entities with water management authority located in the 17 Western Reclamation States. Basins that have implemented basin studies include the Yakima, the Colorado, the Hood River, and the Henry’s Fork in Idaho.

The following description is excerpted from Reclamation’s website (http://www.usbr.gov/WaterSMART/bsp/):

Funding is available for comprehensive water studies that define options for meeting future water demands in river basins in the western United States where imbalances in water supply and demand exist or are projected. Each study includes four key segments:

• State-of-the-art projections of future supply and demand by river basin. • An analysis of how the basin’s existing water and power operations and infrastructure will

perform in the face of changing water realities. • Development of options to improve operations and infrastructure to supply adequate water in

the future. • Recommendations on how to optimize operations and infrastructure in a basin to supply

adequate water in the future. What is the Deschutes Basin Study Work Group? Water interests have a long history of collaborative planning in the Deschutes Basin. The Deschutes Water Alliance (DWA) produced a series of reports in 2006 that estimated supply and demand imbalances and outlined potential solutions. The DWA successfully applied for a Basin Study in 2010, yet was unable to implement it due to cost-share issues. All of the interests around water in the basin have now come together under the name Basin Study Work Group (BSWG) to secure and manage a Deschutes Basin Study. BSWG’s purpose is to obtain and manage a Basin Study with the Bureau of Reclamation toward the goal of developing and implementing a plan that addresses the long-term water needs of agriculture, municipalities, instream flow, and others in the Upper Deschutes River Basin.

Board Book

http://www.usbr.gov/pn/studies/deschutes/index.html

http://www.usbr.gov/WaterSMART/bsp/

The Basin Study Work Group (BSWG) has a steering committee (members listed below) that makes decisions by consensus, as well as a planning team that make recommendations to the larger group. The Deschutes Basin Board of Control submitted a Basin Study proposal on behalf of the BSWG to Reclamation in February 2014 and was awarded a Basin Study in June 2014. It is a $1.5 million study, with $750,000 committed from Reclamation, and $750,000 committed by the State through Oregon Water Resources Department. No water management decisions will be made under the Basin Study, but it will provide information useful for coming to future water management agreements. The Deschutes Basin Board of Control is the fiscal agent and the cost-share partner on behalf of the BSWG.

The Study Approach is based on the following concepts: • Agricultural, instream and municipal (or domestic water supplier) goals are met incrementally

and simultaneously throughout the study (i.e. all boats row together). • The analysis will be framed to maximize cost-effective efficiencies within the current water

distribution system to meet baseline targets • More expensive options (i.e. new storage) will be analyzed to achieve benefits beyond baseline

targets over the longer planning horizon.

What are the benefits of being involved in the Basin Study? The Basin Study will provide additional resources to understand the extent of water supply and demand imbalance into the future and to assess possible solutions. Being involved ensures that there is local input into this planning process.

DRC Role and Connection The Basin Study is critical to the DRC’s mission because it provides information to support a long-term management agreement in the Deschutes Basin that restores instream flow targets while meeting other needs.

The DRC is the coordinator of the Basin Study Work Group, and anticipates continuing this role throughout the Basin Study. The DRC will also continue to provide technical expertise to the Basin Study, as appropriate.

The Deschutes Water Planning Initiative (DWPI) made significant progress between 2012 and 2014 assessing the supply and demand imbalance in the upper Deschutes basin, and developing supply options and scenarios to meet flow, agricultural and municipal goals. The DWPI work feeds directly into the Basin Study.

Timeline The Basin Study was awarded in June 2014. The BSWG and Reclamation developed an MOA and Plan of Study that was approved by BSWG on April 17, 2015. The study will run from April 2015 through June 2018. After the study is complete, basin partners can use the information to negotiate, sign and implement a regional long-term water management plan that meets instream flow targets and meets goals of agriculture and municipalities.

Funding The Basin Study will bring $1.5 million into the basin to implement the Plan of Study. The DRC has cost-shared its participation, the cost of professional BSWG facilitation and the initial participation of GSI consultants for its technical coordination role. DRC funding has included a Bureau of Reclamation Collaborative Watershed Management Planning grant, as well as support from the Collins Foundation,

Board Book

Oregon Community Foundation, Bellavista Foundation, the National Fish and Wildlife Foundation/Wells Fargo Community Grant, the Lamb Foundation , Oregon Department of Fish and Wildlife and the Meyer Memorial Trust. Between November 2014 and April 2015, the DRC received funding under a subcontractor agreement with GSI Water Solutions who is subcontracted to DBBC to receive State money (OWRD SB 839 money) to help develop the Plan of Study. These funds helped to pay for DRC process coordination and facilitation by The Mary Orton Company. The DRC now has a contract in place with DBBC for $50,000 of the State Basin Study funding to provide Communications, Outreach, Coordination, Technical and Project Management Support.

Updates The Deschutes Basin Board of Control has signed contracts for seven scopes of work, and the Study is underway. See Attachment B for Study Overview and Attachment C for Study Schedule. Detailed monthly email updates on all study elements will be sent out to the BSWG distribution list. All are welcome to sign up for the mailing list (currently, contact Kate to be put on the list; a mailchimp listserve is under development). The BSWG Steering Committee continues to meet the first Tuesday of every month from 10-Noon at the Deschutes County Admin building. Recent highlights include:

• Reclamation has selected climate projections and continues to make progress on updating the water resource model.

• The Storage Technical Working Group met January 14th, approved the Storage Assessment approach, and Reclamation is gathering input on concepts and resources.

• Anderson Perry completed its draft Water Conservation Assessment literature review for the eight irrigation districts and has circulated these to the districts for review.

• Farmers Conservation Alliance (FCA) interviewed district managers as an initial step in its Irrigation Modernization program. Niklas is closely coordinating how the AP and FCA work integrate into the Water Conservation Assessment.

• For the Upper Deschutes Ecological Assessment, River Design Group/HDR held a Habitat Suitability Criteria (HSC) workshop January 12th related to flow-habitat relationships for redband trout, spotted frog and riparian vegetation, and will be circulating a draft HSC memo in February.

• For the Legal, Policy and Economic (LPE) scope GSI has completed a draft memo summarizing existing water demand information. EE has begun building the framework for the multi-criteria assessment, including draft desired outcomes and criteria.

• There was Crooked Workshop January 13th. It was recommended that a smaller technical group meet to further refine the Crooked Temperature Assessment approach. This group met and generated recommendations on February 16th.

Board Book

ATTACHMENT A

Basin Study Work Group

Chair: • Craig Horrell, Central Oregon Irrigation District Process Coordinator: Kate Fitzpatrick, DRC

Steering Committee Members:

• North Unit Irrigation District • Central Oregon Irrigation District • Ochoco Irrigation District • Swalley Irrigation District • Three Sisters Irrigation District • Tumalo Irrigation District • Lone Pine Irrigation District • Deschutes County • Upper Deschutes River Coalition • Central Oregon Flyfishers • Trout Unlimited • Department of Environmental Quality • Upper Deschutes Watershed Council • City of Prineville • Central Oregon Cities Organization • Deschutes Water Alliance • Crooked River Watershed Council • WaterWatch • US Forest Service • Oregon Water Resources Department • US Fish and Wildlife Services • City of Bend • City of Madras • Deschutes River Conservancy • Deschutes Reintroduction Network • Bend Paddle Trail Alliance • Natural Resources Conservation Service • Central Oregon Land and Water Alliance • Oregon Department of Agriculture • Deschutes Soil and Water Conservation District • City of LaPine

Board Book

ATT

ACH

MEN

T B

Ove

rvie

w o

f Wat

er P

lann

ing

Stud

y

His

toric

al C

limat

eCl

imat

e Ch

ange

Mod

els

Gro

undw

ater

/Sur

face

Wat

er M

odel

Wat

er R

esou

rce

Mod

elW

ater

Con

serv

atio

n A

sses

smen

t #1

Rese

rvoi

r Opt

imiz

atio

n

Stor

age

Ass

essm

ent

Wat

er C

onse

rvat

ion

Ass

essm

ent

#2 (E

TO/F

CA)

Wat

er R

ight

s, P

olic

y,Le

gal,

Soci

o-Ec

onom

ic

Mid

dle

D E

colo

gica

lCr

ooke

d Ec

olog

ical

Why

chus

Ecol

ogic

alU

pper

D E

colo

gica

l

Inflo

w F

orec

astin

g

Impa

cts

Wat

er U

seW

ater

Rig

hts

Futu

reEx

istin

g

Oth

er

Water Resource Alternatives

Mul

ti-Cr

iteri

a Ev

alua

tion

Reco

mm

enda

tions

and

Impl

emen

tatio

n Pl

an

BSW

G W

orks

hop

BSW

G W

orks

hop

BSW

G W

orks

hop

Wat

er R

esou

rce

Scen

ario

s

Board Book

ATT

ACH

MEN

T C

Jul

Au

gSe

pt

Oct

No

vD

ec

Jan

Feb

Mar

Ap

rM

ayJu

nJu

lA

ug

Sep

Oct

No

vD

ec

Jan

Feb

Mar

Ap

rM

ayJu

nJu

lyA

ug

Sep

tO

ctN

ov

De

cJa

nFe

bM

arA

pr

May

Jun

Hy

dro

Jul

Au

gSe

pt

Oct

No

vD

ec

Jan

Feb

Mar

Ap

rM

ayJu

nJu

lA

ug

Sep

Oct

No

vD

ec

Jan

Feb

Mar

Ap

rM

ayJu

nJu

lyA

ug

Sep

tO

ctN

ov

De

cJa

nFe

bM

arA

pr

May

Jun

2018

Co

ord

inat

ion

, Ad

min

istr

atio

n, D

ata,

Rep

ort

ing,

Ou

trea

ch

Eval

uat

e N

ew/E

xpan

ded

Sto

rage

Sit

es

2015

2016

2017

DB

BC

/ D

RC

Mo

del

Sce

nar

ios

Dev

elo

p W

ater

R

eso

urc

e Sc

enar

ios

Up

per

Des

chu

tes

Eco

logi

cal A

sses

smen

t

Eval

/

Rec

om

men

d

Wat

er C

on

serv

tio

n A

sses

smen

t #2

(E

TO/F

CA

fu

nd

ed)

Cro

oke

d E

colo

gica

l Ass

essm

ent

Wh

ych

us

Eco

logi

cal A

sses

smen

t

Eval

/

Rec

om

men

d

Dev

elo

p W

ater

Res

ou

rce

Scen

ario

s

Wat

er R

igh

ts, P

olic

y, L

egal

, an

d S

oci

o-E

con

om

ic

2018

2015

2016

2017

Clim

ate

Pro

ject

ion

s

Hyd

rolo

gy /

Gro

un

dw

ater

Mo

del

ing

BU

REA

U O

F R

ECLA

MA

TIO

N

CO

NSU

LTA

NTS

Up

dat

e an

d D

evel

op

Wat

er R

eso

urc

e M

od

el

Res

ervo

ir O

pti

miz

atio

n

Wat

er C

on

serv

atio

n A

sses

smen

t #1

(B

asin

Stu

dy

fun

ded

)Wat

er Q

ual

ity

Ass

essm

ent

Pro

ject

Man

agem

ent

and

Mee

tin

gs

Fin

al R

epo

rtin

g

Mid

dle

Des

chu

tes

Eco

logi

cal

Ass

essm

ent

Wat

er Q

ual

ity

Ass

essm

ent

Tech

nic

al D

irec

tio

n /

Pro

ject

Man

agem

ent

Up

pe

r D

esc

hu

tes

Bas

in S

tud

y W

ork

Ele

men

ts a

nd

Sch

edu

le

Board Book

deschutes river conservancy - board of directors meeting 2016 drc board book...deschutes brewery,...

Documents