mprwa agenda packet 01-24-13

7/29/2019 MPRWA Agenda Packet 01-24-13

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AgendaMonterey Peninsula Regional Water Authority (MPRWA)

Regular Meeting

7:00 PM, Thursday, January 24, 2013

Few Memorial Hall of RecordsCouncil Chamber

Monterey, California

ROLL CALL

PLEDGE OF ALLEGIANCE

APPROVAL OF MINUTES

1. January 10, 2013

PUBLIC COMMENTSPUBLIC COMMENTS allows you, the public, to speak for a maximum of three minutes on anysubject which is within the jurisdiction of the MPRWA and which is not on the agenda. Any personor group desiring to bring an item to the attention of the Authority may do so by addressing theAuthority during Public Comments or by addressing a letter of explanation to: MPRWA, Attn:Monterey City Clerk, 580 Pacific St, Monterey, CA 93940. The appropriate staff person will contactthe sender concerning the details.

AGENDA ITEMS

2. Approve Contract for Executive Director Services with the City of Monterey

(Discussion/Action)

3. Review and Discuss Project Evaluation Matrix Submissions by the TAC, MontereyPeninsula Water Management District and SPI Consultants (Information/Discussion)

4. Discuss Draft Governance Proposal and Provide Direction to Staff(Information/Discussion/Action)

ADJOURNMENT

The Monterey Peninsula Regional Water Authority is committed to include the disabled in all of

its services, programs and activities. For disabled access, dial 711 to use the California RelayService (CRS) to speak to staff at the Monterey City Clerks Office, the Principal Office of theAuthority. CRS offers free text-to-speech, speech-to-speech, and Spanish-language services24 hours a day, 7 days a week. If you require a hearing amplification device to attend ameeting, dial 711 to use CRS to talk to staff at the Monterey City Clerks Office at(831) 646-3935 to coordinate use of a device or for information on an agenda.

Agenda related writings or documents provided to the MPRWA are available for publicinspection during the meeting or may be requested from the Monterey City Clerks Office at 580Pacific St, Room 6, Monterey, CA 93940. This agenda is posted in compliance with CaliforniaGovernment Code Section 54954.2(a) or Section 54956.


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MINUTES

MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA)Regular Meeting

6:00 PM, Thursday, January 10, 2013FEW MEMORIAL HALL OF RECORDS

MONTEREY, CALIFORNIA

Directors Present: Burnett, Edelen, Kampe, Pendergrass, Rubio, Della Sala

Directors Absent: None

Staff Present: Interim Executive Director, Legal Counsel, Clerk to the Authority

ROLL CALL

PLEDGE OF ALLEGIANCE

REPORTS FROM BOARD DIRECTORS AND STAFF

Director Burnett reported that he will be traveling to Sacramento next week to meet with

representatives from The State Water Resources Quality Control Board. Director Rubioreported on a meeting he had with a Cal Am representative regarding a general issues updatesince he took office in November. Interim Executive Director Meurer reported on the hiringstatus of the Executive Director position. The Authority gave instructions that the selectedperson would become an employee of City of Monterey and to facilitate that, the City needs tocreate a position, which will be on the January 15, 2013 City Council agenda. If approved, riskmanagement will need to be resolved. This position is not in the Authority adopted budget but ison the agenda this evening. Appointment can be made when the position administration isresolved.

PUBLIC COMMENTS

President Della Sala invited public comments for items not on the agenda. Nelson Vegaexpressed concern about new TAC appointments from the farm interest. David Armanascospoke representing Deep Water Desal to inform the Authority that the project receivedconfirmation from California State Lands Commission the contract was executed and therehave been discussions about becoming a lead agency for CEQA studies. Bill Hood questionedcontinued discussions regarding governance asking what the Authority is trying to accomplish.Tom Rowley speaking as a citizen, spoke about the January 2, 2013 City of Monterey CityCouncil meeting indicating the action taken was not fully understood by the councilmembersand encouraged a review of the minutes before the resolution was formalized. Sue McCloudrequested documents be published with enough time for the public to review them prior to themeeting. Safwat Malek spoke to Mr. Rowleys comments requesting the Authority to focus onboth lowest cost water as well as ownership. With no further requests to speak, President Della

Sala closed public comment and spoke to Mr. Hoods comment indicating the Authority isseeking the most cost effective project to deliver water before the cease and desist order is ineffect and ownership of the plant has not been determined by this body. He also reiterated thatthe Authority has not made a recommendation to endorse one project but hopes to before theFebruary 22, 2013 deadline. Director Edelen commented about published research about thebenefits of public vs. private ownership. The results showed ownership was inconclusive madeno significant difference.


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MPRWA Minutes Thursday, January 10, 2013

Monterey Peninsula Regional Water Authority

Regular Meeting Minutes - Thursday, January 10, 20132

APPROVAL OF MINUTES

1. December 27, 2012Action: Approved

On a motion by Director Rubio, seconded by Director Pendergrass and carried by the followingvote, the MPRWA approved the October 15, 2012 minutes:

AYES: 6 DIRECTORS: Burnett, Edelen, Kampe, Pendergrass, Rubio, DellaSala

NOES: 0 DIRECTORS: NoneABSENT: 0 DIRECTORS: NoneABSTAIN: 0 DIRECTORS: NoneRECUSED: 0 DIRECTORS: None

AGENDA ITEMS

2. Receive Budget Update and Authorize Changes to the July 27, 2012 Adopted BudgetAction: Discussed, Authorized and Passed Resolution 13-001

Interim Director Meurer presented the report and verbalized the needs for requesting thebudget adjustments based on the Authoritys additional requests for services. The largest costitems are that of the Executive Director position and legal services. The total amended budgetwill require an increase of $172,000 and distributed by allocations previously established basedon water usage. Draft staff reports were sent to the City managers and no comments werereturned. Staff will forward action taken tonight to the member City Managers for additionalappropriation if necessary.

Mr. Meurer indicated that if the County of Monterey is added to the JPA the allocations would

change, however since they have not been formally adopted, their portion cannot be included intheir assessment. Mr. Meurer answered questions from the Directors.

President Della Sala opened the item for public comment. Nelson Vega questioned how longthe Authority expects expenses for this Authority to be incurred. Mr. Meurer responded to thisquestion that the answer will be driven by which project is selected and what is the ultimategovernance of that project. President Della Sala also responded that the Authority will moveforward and take necessary steps to avoid duplication of efforts until the Authority is no longerneeded. With no more requests to speak, President Della Sala closed public comment.

On a motion by Director Edelen, seconded by Director Burnett and carried by the followingvote, the MPRWA agreed with the staff recommendation and authorized changes to the July

27, 2012 adopted budget and passed resolution 13-001.

AYES: 6 DIRECTORS: Burnett, Edelen, Kampe, Pendergrass, Rubio,Della Sala



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3. Discuss and Provide Direction on Modifications to the October 1, 2012 Governance andFinancing ProposalAction: Discussed and Approved

Director Burnett delivered a recap of the process the Authority involved to attain publicparticipation in the governance of the Cal Am project. The purpose tonight was to see if the adhoc committee is fulfilling the goals of the Authority. The Ad Hoc committee recommends

formulating the proposal into a tier two advice letter, to be submitted by Cal Am to the PUCwhich, if not responded to within 30 days, it goes into effect. Director Burnett answeredquestions of the Authority.

Director Edelen questioned what aspects of the proposal Cal Am is opposed to. DirectorBurnett responded that there are no deal breakers but noted changes made from the previousproposal including the approval of change orders over $1 million moved to Category B. Also,provisions for confidentiality agreements were not taken out because it does not enable us tohave transparency to the public. The Authority goal will be to have many of the provisions ofpublic agencies apply to ensure transparency.

Director Pendergrass expressed concerns about the category B issue that Cal Am can exercise

a veto right. President Della Sala clarified that they do not have veto power in elements outsideof category B. Director Burnett justified some level of veto rights that responsibility must containa level of authority to facilitate and deliver as well as to be held accountable for theresponsibility.

Director Kampe questioned the level of governance during the operations phase, thenquestioned what the process is for assigning categories for undefined or unknown products.What the methodology is for identifying and dealing with the unanticipated. Director Burnettconfirmed it is only through the design-build phase and indicated the goal is to have theAuthority facilitate this period only and then disband.

President Della Sala opened the item for public comment. Bill Hood talked about the impact of

the perception of what the Authority is discussing and indicated the Authority is devoting toomuch time to a project that will be more expensive. He then commented that the message is notbeing communicated in an understandable way to the public but appears to focus too much onCal Am instead of other viable alternatives. Nelson Vega spoke to the fact that the responsibilityof the PUC is to govern. He then reminded the Authority of the voter turnout that declined thepublic ownership of water. Dale Haikus spoke against having a veto clause. Rudy Fischerspoke to section B6, aesthetic attributes indicating it is an unnecessary category and agreedwith Mayor Pendergrass regarding the veto option and encouraged a decision to be madeabout facility sizing. Doug Wilhelm requested the Authority to consider an agreement similar tothe Poseidon project. Safwat Malek expressed his desire and position for public ownership. JimCullem encouraged the Authority to ask the CPUC to demand the option to buy the facility atthe end of the construction. President Della Sala closed public comment and Director Burnett

responded to each comment made by the public then brought the discussion back to the board.


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Director Kampe expressed a need for a timely disagreement resolution process to keep theprocess moving but allows all parties to specify details, especially for unforeseen topics. TheAuthority agreed to include language on the unforeseen items, will attempt to forecast othersthe governance committee will have charge over and will attempt to reword the veto issue.

Director Rubio indicated a true public partnership would be significantly different and since weare not adding our own risk we must inject ourselves into the private project. He encouraged

the issue of facility sizing to be decided before hand and thanked the Ad Hoc committeeDirectors for all their work and efforts on this document. He agreed that the word veto hasnegative connotation although the intent is good. President Della Sala closed discussion on thegovernance aspect and opened discussion on the financing portion of the agenda item.

Director Burnett discussed the position of the Authority that if there was public financingavailable, the PUC should require Cal Am to utilize those funds. The public financing option forthe Cal Am project would proceed based on the following principles:

It cannot make the project more expensive It cannot delay the project Public financing would not create an adverse affect on ratepayer communities outside of

the Monterey Peninsula There be no share holder effects except reduced shareholder equity There be no need for a Cal Am specific credit rating There be no change to the debt equity ratio There be no change to the authorized rate of return, authorized by the PUC

Director Rubio questioned the ability to participate financially and if that will impact theproposed governance structure. Director Burnett responded that a public contribution would beimportant because ratepayers stand to save a significant amount of money with the publiccontribution. Kampe questioned where the money will come from and what the repaymentexpectation will be and indicated there should be a clear record of recovery of costs.

Carmel Alternate Director and Ad Hoc Committee member Ken Talmage responded that thestranded costs will be taken care of by the surcharge. The public financing does not come intoplay until after the high risk period and assured the Directors that this conversation is why theAuthority has authorized hiring a Financial Consultant. The financing discussion drives thegovernance discussion.

President Della Sala invited public comment on the financing portion of the agenda item.Nelson Vega suggested that the system be set up that those that use the most water shouldpay the most. With no further requests to speak, President Della Sala closed public comment.

Director Burnett explained the importance of instilling a backstop into the agreement in theevent Cal Am becomes bankrupt. If the funding agency is not able to service the bonds, it willtake on the credit rating of Cal am, instead instilling a backstop will vie down the interest rate toa public agency interest level.


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On a motion by Director Rubio, seconded by Director Kampe and passed by the following vote,the MPRWA approved to presented guiding principles with two amendments, remove the itemabout the stock holders, add the item about the debt service based on a user fee on the waterbill but backstopped.

AYES: 6 DIRECTORS: Burnett, Edelen, Kampe, Pendergrass,Rubio, Della SalaNOES: 0 DIRECTORS: NoneABSENT: 0 DIRECTORS: NoneABSTAIN: 0 DIRECTORS: NoneRECUSED: 0 DIRECTORS: None

4. Accept and Review Final Report: Evaluation of Seawater Desalination ProjectsAction: Accepted Report

Director Burnett reported that the TAC reviewed the item and comments received were

regarding the financial tables including the revenue requirements and the cost per acre foot andrequested the Authority receive the report. President Della Sala opened public comment on theagenda item and with no requests to speak and no discussion from the Directors, closed publiccomment and proceeded to the next agenda item.

5. Authorize Expenditure for Professional Agreement for Financial ServicesAction: Authorized and Passed Resolution 13-002

Legal counsel Freeman indicated adopting the resolution will memorialize the action taken atthe December 24, 2012 meeting to approve a professional services agreement. President DellaSala opened public comment on item number five and had no requests to speak.

On a motion by Director Kampe, and seconded by Director Pendergrass and approved by thefollowing vote, the MPRWA approved the resolution as written authorizing expenditures for aprofessional agreement for financial services and adopted resolution 13-002.

AYES: 6 DIRECTORS: Burnett, Edelen, Kampe, Pendergrass,Rubio, Della Sala



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6. Review TAC Recommendation of State Water Board Memo Regarding Water Rights andProvide DirectionAction: Discussed and Tabled

Director Burnett introduced the item indicating the TAC discussed the memo, including how theagricultural community is dissatisfied and points to Tim Durbins testimony as well as the

Salinas Valley Water Coalition letter. He reported that Supervisor Potter offered to convene aregular meeting with representation between the Peninsula and the agricultural community towork through the water rights issues. Director Burnett urged the Authority to be careful aboutinvolvement in the water right issue and thinks Supervisor Potter is well suited to take a leadrole. Director Burnett is not recommending any action at this time.

President Della Sala opened public comment on this item. Tom Rowley spoke to hisdissatisfaction with the PUC order of operations and processes and indicated that the waterrights need to be resolved before any project can be approved. Pursuing a project without waterrights in place will result in legal action before approval can be given, but should be looking atwhich project misses the deadline by the least. Nelson Vega spoke in support of Mr. Rowleyscomments about water rights and urged looking for an alternate source of water. With no further

requests to speak, President Della Sala closed public comment.

On a motion by Director Rubio and seconded by Director Edelen, the MPRWA agreed to tablethis item.

AYES: 6 DIRECTORS: Burnett, Edelen, Kampe, Pendergrass,Rubio, Della Sala


7. Discuss and Provide Direction Regarding Framework for Decision Making for the February 22,2013 Public Utilities Commission Testimony on Desalination ProjectAction: Discussed and Provided Direction

Director Burnett introduced the item indicating that in order to direct staff in the testimony to thePUC on February 22, 2013 the Authority must make a decision on which project to endorse. Hesaid great information is available and there has been great interaction from the public. Byusing the draft matrix as a tool, the Authority may be able to more easily compare the differentprojects in order to make an informed decision. Director Burnett requested feedback on thematrix to ensure all needed information is addressed. The Matrix lists the three projects with thecriteria and variables for each project and can be completed with information provided byAuthority hired consultants as well as other recent reports.

President Della Sala requested TAC member Bill Reichmuth review the document categoriesfor completeness, then opened the item for public comment.


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Nelson Vega suggested putting things into a decision tree. Categorize them in a form that willeliminate undesirable projects and questioned if Deep Water Desal was still a viable project.Tom Rowley suggested that all land use agencies should be represented on the watermanagement district and the Authority should request reconfiguration to include directrepresentation from the six peninsula cities and the county. Ken Talmage recommended itshould also include a risk assessment and indicates a judgment call is based on the

assessment of both the risks and the assumptions. Rudy Fischer encouraged the Authority tohave an alternate plan in the event the Cal Am project fails and encouraged the review of allprojects to be able to take advantage of as an alternate. Sue McCloud questioned the purposeof the document and said it is not do the projects justice due to its brevity, specifically forpermitting, assuming no lawsuits. She then questioned the status of the Peoples Moss LandingDesal project and asked if that changes the SPI report. Tom Frutchey spoke to Ms. McCloudsquestion indicating there is no new management of the Peoples project, but the decision is tobe made tomorrow. With no further requests to speak, President Della Sala closed publiccomment.

The Directors discussed the process for filling out the matrix and making a decision. InterimDirector Meurer advised that there will be no correct answer and that each project should have

the opportunity to make their case before the Authority and the public. The process to allow thepublic to speak will be almost as important as the decision itself. Director Rubio spoke insupport of Meurers comments.

Mr. Talmage suggested that there are three versions of the matrix that be completed. One bythe TAC, one by the SPI Consultant and one by the MPWMD. With the magnitude of thedecision, it will be important to receive data from the three sources. Mr. Talmages suggestionwas approved unanimously by the Authority. Director Burnett indicated they will request thematrix to be reviewed and returned by January 22, 2014.

ADJOURNMENT

With no further business on this agenda President Della Sala adjourned the meeting at 10:05p.m.

ATTEST:

Lesley Milton, Clerk of the Authority MPRWA President


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Agenda ReportDate: January 24, 2013

Item No: 2.

08/12

FROM: Interim Executive Director MeurerPrepared By: Clerk to the Authority Milton

SUBJECT: Adopt a Resolution Authorizing a Contract with the City of Monterey for Executive

Director Services

RECOMMENDATION:

That the Authority adopt a Resolution authorizing a contract for employment services with theCity of Monterey who, with input from the Authority Directors, selected Bill Reichmuth as anemployee and is willing to appoint him as Executive Director to the Monterey PeninsulaRegional Water Authority (MPRWA).

POLICY IMPLICATIONS:

This recommendation, in part, supports the MPRWA Joint Powers agreement and mission toensure the timely development, financing, construction, operation, repair, and maintenance ofone or more water supply projects to replace pending lost water supplies and to ensure that thegovernance of such projects includes representation that is directly accountable to the Citiesresidents that are served by such projects and to undertake any additional related or ancillaryactions.

FISCAL IMPLICATIONS:

The revised Fiscal Year 2012-13 budget approved on January 10, 2012 included a line itembudget for the professional services of an Executive Director. This position will be an employeeof the City of Monterey and the Authority will contract for services, not to exceed $72,588 for FY2012-13.

ENVIRONMENTAL DETERMINATION:

The proposed action is not a project as defined by the California Environmental Quality Act.

ALTERNATIVES CONSIDERED:

The Authority could chose not to execute this contract but the ability of member City Managersto act as Executive Director to facilitate the operations of the Authority has proven to be lessefficient due to their current obligations and time capacity.


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DISCUSSION:

The City of Monterey managed the recruitment process for the MPRWA Executive Directorposition. The City received 17 applications. The City transmitted the applications to an Ad Hoccommittee of Mayor Garcia and Mayor Pendergrass for review. The Ad Hoc committeerecommended three (3) applicants to be considered by the full Authority. The Authorityinterviewed the three (3) candidates on October 8, 2012. At that time, the Authority decided notto proceed with hiring an Executive Director. At the December 24, 2012 meeting, the Authoritydirected staff to again proceed with hiring an Executive Director and requested a member city tosponsor the position as an employee and to contract for services, similar to the currentagreement with the City of Monterey for clerk services. The City of Monterey facilitated thisrequest, approving an amendment to their Position Control List to add the Water AuthorityExecutive Director position to their part-time salary schedule. As confirmed by both MPRWAand the City of Monterey, this position will be an employee of the City of Monterey and theAuthority will contract with the City of Monterey for this service.

At the January 10, 2013 meeting the Authority amended the Fiscal Year 2012-13 budget toinclude expenses for the position.

The proposed budget of the Executive Director is provided below.

Executive Director Cost Breakdown

$105.20 Benefited Wage Per Hour

600 Hours Budgeted Through June 30, 2013

$63,120 Total Wages

$9,468 Administrative, Travel and Meeting Expenses (15%)$72,588

The Authority will reimburse the City of Monterey for the expenses as listed above. TheExecutive Director compensation will be $100.00 per hour for actual hours worked. The purposeof this arrangement is to allow the individual to fall under the City of Monterey current policiesand premiums. This will eliminate additional costs to the Authority for these same services.

City Manager Meurer, fulfilling the position of Interim Executive Director for the Authority, hasfacilitated the recruitment process of the Executive Director position and, with input from theAuthority Directors, has appointed Bill Reichmuth. It is recommended that the Authority approvea Resolution authorizing the Authority to enter into the contract with the City of Monterey forExecutive Director services.

Attachments: 1. Resolution

c: President Della SalaLegal Counsel FreemanInterim Executive Director and TAC Chair Burnett


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RESOLUTION NO. __-___ C.S.

A RESOLUTION OF THE MONTEREY PENINSULA

REGIONAL WATER AUTHORITY

APPROVE CONTRACT FOR EXECUTIVE DIRECTOR SERVICESWITH THE CITY OF MONTEREY

WHEREAS, the City of Monterey is a member city of the Monterey Peninsula RegionalWater Authority; and

WHEREAS, the MPRWA has authorized the need for having a dedicated Executive Directordedicated the the MPRWA and has requested that a member city sponsor the position of ExecutiveDirector as an employee of their agency and contract for services to the MPRWA; and

WHEREAS, the City of Monterey has agreed to provide the services of Executive Director tothe MPRWA; and

WHEREAS, the President and MPRWA Directors have reviewed the contract and agrees toits terms and conditions; and

WHEREAS, the cost of retaining the Executive Director services is not to exceed $72,500.00for fiscal year 2012-13 and additional expenses will be incurred according to the budget adopted bythe Authority on January 10, 2013 and referred to in Exhibit A.

NOW, THEREFORE, BE IT RESOLVED that the President is hereby authorized to executeon behalf of the MPRWA a contract with the City of Monterey for Executive Director Services for theMPRWA.

PASSED AND ADOPTED BY THE MONTEREY PENINSULA REGIONAL WATERAUTHORITY this ___ day of ____ 201_, by the following vote:

AYES: DIRECTORS:NOES: DIRECTORS:ABSENT: DIRECTORS:ABSTAIN: DIRECTORS:

APPROVED:

ATTEST:

Chuck Della Sala, President

Clerk to the Authority


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EXHIBIT A

SCOPE OF SERVICES/PAYMENT PROVISIONSEXECUTIVE DIRECTOR SERVICES

I. City of Monterey to Provide the Following:

A.Executive Director Duties and Services- Policy Functions Work to prepare agendas and packets for Board & TAC meetings Prepare recommendations on policy matters and action items Respond to Authority requests for information or agenda items Keep press/media informed of MPRWA actions Address requests for information or statements by public or media as appropriate Coordinate with Chair of the Technical Advisory Committee regarding board delegations and

placing TAC matters before the Authority for consideration/action

B. Administrative Functions Serve as liaison to the City Mangers of the member cities Maintain listing of forthcoming CPUC workshops and hearings, assist Authority in developing

positions and instructing their representatives

Coordinate with legal services so board requests are met in a timely way Work with agency proving clerk services for agenda management, recordation of minutes,

maintenance of records, complying with Public records act requests, and related matters

Coordinate with the designated fiscal agent, on financial matters, and coordinate with theAuthority Treasurer to maintain accounts of MPRWA

Prepare budget necessary to support agencys ability to perform functions Maintain list of contracts approved by the MPRWA Develop policy binder of all board adopted policies Develop programs as necessary to implement policy direction of Board Maintain working files as necessary to administer the core functions Arrange for places for regular and special meetings of MPRWA, unless delegated to another

party

Protect, maintain and keep inventory of MPRWA property and equipment Schedule meetings of such Committees (Regular and Ad HOC) as the MPRWA have created,

and coordinate with Chair to see that the work of MPRWA proceeds

Performs other duties as required to best ensure the smooth operation of MPRWAC. Miscellaneous Services Performed by City of Monterey:

Payroll Services for Monterey employee(s) providing these services Tracking of employee hours and resultant costs of services provided Invoices requesting payment for services are to be submitted on a monthly basis by the City of

Monterey to the designated fiscal agency

II. MPRWA to Provide the Following:


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Reimbursement to the City of Monterey shall be made within thirty (30) days after receipt ofinvoice

III. Executive Director Rate and Budget

Executive Director Expenses

$105.20 Benefited Wage Per Hour

600 Hours Budgeted Through June 30, 2013*

$63,120 Total Wages

$9,468 Administrative, Travel and Meeting Expenses (15%)

$72,588

*Note - MPRWA budget is based on a fiscal year. A revised budget for the Executive Director position may

be created for fiscal year 2013-14.


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Agenda Report

Date: January 24, 2013

Item No: 3.

08/12

FROM: Interim Executive Director MeurerPrepared By: Clerk to the Authority Milton

SUBJECT: Discuss Project Decision Matrix and Provide Recommendations to the Authority

DISCUSSION:

There is no agenda report for this item. The Authority will receive a completed decision matrixfrom the TAC as well as the Authority contracted consultant to use as a tool for policy anddecision making regarding selecting a desalination facility to endorse.

The attached matrix was approved by the Authority at the January 10, 2013 meeting.


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Project(alphabetical

order)

CalAm

DWD

PML

Note

sandreferences

Size

IntakeSource

Pretreatment

Economics

CapitalCost

OperatingCost

Interestrate

Annualizedcost

Costperacrefoot

Financing

Financialabilitytodeliver

Costofelectricity(confirmed?)

AccessofSRFfunds

Permiting/Schedule

Estimatedpermitschedule

Majorpermitinghurdles

Possibledelayassociatedwith

TechnicalFeasibility

Opentechnicalquestions

Stateofprojectdevelopment

Legal

CEQA/NEPA

WaterRights

Other

Ownership/Management

PublicvsPrivateOwner

Decisionpoints

Accountability

Transparenc

DetailedProposal

Organizationalcapacity

Deliverability


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Agenda Report

Date: January 24, 2013

Item No: 4.

08/12

FROM: Clerk of the Authority

SUBJECT: Discuss Draft Governance Proposal and Provide Direction to Staff

DISCUSSION:

There is no written report for this item at this time. An oral report and discussion will take placeat the meeting regarding updates to the attached version.

ATTACHMENT: Draft Governance Proposal (Current as of 1/23/13)


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MPRWA Draft (January 10, 2013)

1

AGREEMENT TO FORM THE MONTEREY PENINSULA WATER SUPPLY PROJECT GOVERNANCECOMMITTEE

This AGREEMENT TO FORM THE MONTEREY PENINSULA WATER SUPPLY PROJECTGOVERNANCE COMMITTEE (Agreement) is made and entered into as of __ of February, 2013, byand among the MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA), theMONTEREY PENINSULA WATER MANAGEMENT DISTRICT (MPWMD), the COUNTY OFMONTEREY (County), and the CALIFORNIA AMERICAN WATER COMPANY (Cal-Am) TheMPRWA, the MPWMD, the County, and Cal-Am are sometimes referred to herein as a Party, andcollectively as the Parties.

I. Formation of Governance Committee

Pursuant to the terms of this Agreement, the Parties hereby form the Monterey Peninsula Water SupplyProject Governance Committee (Governance Committee) comprised of representatives of theMPRWA, the MPWMD, the County, and Cal-Am to ensure efficient and effective public input into thedevelopment and operation of the Monterey Peninsula Water Supply Project (Project). Cal-Ams entryinto this Agreement is expressly conditioned upon its legal obligations to abide by the orders and decisionof the California Public Utilities Commission (CPUC), and therefore, to the extent the CPUC issues anyorder or decision that conflicts with any provision of this Agreement, Cal-Am shall be relieved of any

obligation to abide by the conflicting provision herein.

II. Definitions [Rich Svindland to assist with Defintions]

A. Application A.12-04-019

B. ASR Infrastructure

C. Cal-Am Notification. The time when Cal-Am notifies the Governance Committee that amatter is ready for consideration, consultation, or action by the Governance Committee as providedherein, and as further defined within Section __.

D. Contracts e.g. design and build, engineering, etc. contracts for desalination plant (DB),

intake wells (likely DB), product and raw pipelines (DBB), ASR wells (DBB), terminal reservoir and ASRpump station (DBB).

E. County of Monterey

F. CPCN

G. Brine Discharge Infrastructure

H. Desalination Infrastructure

I. Desalination Project [note definition needs to be broad enough to incorporate all aspectsof the Project for which the GC desires input. Definition will likely incorporate other defined terms]

J. Design-Build Contract

K. Design Build Contractor

L. GWR Project

M. MPRWA


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N. MPWMD

O. Product Water Pipeline

P. Source Water Infrastructure

Q. Terminal Reservoir

III. Membership and Voting

Each of the public entities will be represented on the Governance Committee by one elected member andone alternate who shall also be an elected official. Cal Am shall be represented by the President of Cal-Am or the Presidents designee. The Governance Committee shall appoint a Chair and Vice-Chairfrom the primary (non-alternate) elected officials appointed to the Governance Committee. Each of thepublic entity representative members shall have a single equal vote in decision-making. Cal-Am shall nothave a vote for purposes of the issuance of decisions or recommendations by the GovernanceCommittee. However, Cal-Am shall, unless it abstains from doing so, state its preference with respect toany decision made by the Governance Committee (the Cal-Am Preference) at the time that anydecision is made by the Governance Committee and the Cal-Am Preference shall be recorded within themeeting minutes together with a summary of any explanation provided by Cal-Am for the Cal-AmPreference.

IV. Powers

A. Purpose. The purpose and function of the Governance Committee shall be to: (i) consultwith, advise, and in some circumstances, provide direction, to Cal-Am and the design-build firm selectedfor the Desalination Project concerning the design, permitting, construction, operations, maintenance,repairs, and replacements of the components of the Desalination Project; and (ii) serve as the entitywhich Cal-Am regularly updates as to Desalination Project status and issues. The members of theGovernance Committee shall diligently consider all matters and cause the Governance Committee totimely and promptly issue decisions or recommendations brought before it as provided pursuant to theterms of this Agreement.

B. Waiver of Action. Upon motion and affirmative vote of the Governance Committee, theGovernance Committee may choose to waive its right to issue a decision or recommendations withrespect to any matter for which the Governance Committee is afforded such right herein. The purpose ofthe Governance Committees right to waive its right to make any specified decision or recommendationherein is to empower the Governance Committee to avoid issuing any decision or recommendation,which, in its determination, would violate any law, unreasonably delay efforts to develop water suppliesfor the Monterey Peninsula, or otherwise compromise the public interest.

V. Governance Committee Action; Procedures

A. Matters Subject to Governance Committee Action. Matters for consideration,consultation, decision, or recommendation by the Governance Committee shall be divided among threecategories, with varying processes for consultation, recommendations, and/or decision-making, as

follows:

Category A: The Governance Committee makes the decision respecting the matter afterreceipt of a written recommendation from Cal-Am, and upon issuance of its decision, theGovernance Committee provides a written explanation of the reasons for its decision to Cal-Amwithin seven (7) calendar days of its decision. Thereafter, Cal-Am complies with the determinationissued by the Governance Committee so long as the decision is consistent with the terms of thisAgreement. However, notwithstanding any provision of this Agreement, for any matter covered byCategory A that relates to an action which may cause either a direct physical change in the


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environment, or a reasonably foreseeable indirect physical change in the environment, as definedby section 21065 of the California Public Resources Code, no decision shall be made by theGovernance Committee as to the subject matter unless and until such time as the action hasbeen subject to review by an appropriate agency in accordance with the California EnvironmentalQuality Act (CEQA). The foregoing provision shall not be construed as an agreement ordetermination by or among any of the Parties that CEQA applies to any action of the GovernanceCommittee. This Agreement is itself not a project as defined by section 15378 of the CEQAGuidelines (California Code of Regulations, Title 14, Chapter 3) because it is an organizationalactivity that will not result in direct or indirect physical changes in the environment and thisAgreement makes no commitment to any project.

Category B: The Governance Committee makes a recommendation respecting thematter after receipt of a written recommendation from Cal-Am. However, Cal-Am may determine,at its sole discretion, whether or not to follow the Governance Committees recommendation,provided that if Cal-Am chooses not to follow the recommendation, Cal-Am shall provide a writtenexplanation of Cal-Ams reasons for its decision not to follow the recommendation within ten (10)calendar days of the issuance of the Governance Committees recommendation. Further, shouldCal-Am choose not to follow the advice of the Governance Committee, then any Party may raisethe issue for review by the CPUC during Cal-Ams next general rate case.

Category C: Cal-Am makes the decision respecting the matter after receiving advicefrom the Governance Committee. Cal-Am need not issue a written explanation for its decision,although should Cal-Am choose not to follow the advice of the Governance Committee, then anyParty may raise the issue for review by the CPUC during Cal-Ams next general rate case.

B. Procedure for Cal-Am Notification. Whenever Cal-Am is presented with, or becomesaware of, a matter that falls within any of the subjects identified herein for consideration, consultation, oraction by the Governance Committee that is ripe for presentation to the Governance Committee, Cal-Amshall promptly notify the Chair of the Governance Committee (Cal-Am Notification), who shall schedulethe matter for consideration by the Governance Committee. For purposes of this agreement, a mattershall be deemed ripe for presentation to the Governance Committee at such time as the subject matter isready for a decision which shall materially impact any financial, design, aesthetic, function, or schedulingaspect of the Project, as it relates to the subject matter. Unless a different period is specified herein, for

all matters for which a decision or recommendation is to be made by the Governance Committee ,theGovernance Committee shall issue its decision/recommendation within ten (10) calendar days of receiptof the Cal-Am Notification. In the event that the Governance Committee determines that it requires morethan the prescribed time period provided for in this Agreement to act on any matter that is the subject ofthe Cal-Am notification, the Chair of the Governance Committee may request an extension of time bywritten request to Cal-Am, and Cal-Am shall cooperate in good faith with the Governance Committee toset an alternative deadline for action on the subject matter to the extent that said extension does notunreasonably delay the Project or otherwise compromise the public interest. So as to avoid undue delay,in the event the Governance Committee fails to make any decision or provide any recommendation uponany matter brought before it (including all Category A decisions) on or before the expiration of theprescribed period for action by the Governance Committee (or the period of any extension agreed to byCal-Am),or if the Governance Committee affirmatively waives it right to make a decision orrecommendation respecting a matter before it, then Cal-Am may make the subject decision without a

decision or recommendation, as applicable, by the Governance Committee.

C. Procedure for Presentation of a Matter Upon Request of the Governance Committee;Action Upon a Presentation. Upon reasonable advance, written notice, the Governance Committee mayrequest that Cal-Am present to the Governance Committee the status of any matter that is set forth in anyof the three categories for decision, recommendation, or consultation established below, together with anexplanation of any pending or soon-to-be-pending decisions or options concerning the subject matter. Inthe event Cal-Am believes that a presentation to the Governance Committee pertaining to the subjectmatter at that time would unreasonably delay the Project or otherwise compromise the public interest,Cal-Am shall provide a written explanation to the Governance Committee, within ten (10) calendar days of


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the Governance Committees aforementioned written notice to Cal-Am, that explains the reasonssupporting Cal-Ams determination. Upon issuance of a such a written explanation by Cal-Am, apresentation pertaining to the subject matter shall not be required at that time. If a presentation is madeby Cal-Am to the Governance Committee upon request of the Governance Committee, as provided for inthis Section, then within ten (10) calendar days of that presentation, the Governance Committee mayissue any recommendation concerning the subject matter to Cal-Am. Cal-Am may determine, at its solediscretion, whether or not to follow the recommendation, provided that if Cal-Am chooses not to follow therecommendation and the subject matter is a matter covered by either Category A or Category B, Cal-Amshall, within ten (10) calendar days of the issuance of the Governance Committees recommendation,provide a written explanation of the reasons for Cal-Ams decision not to follow the recommendation. Ifthe subject matter is a matter covered by Category C below, Cal-Am need not issue a written explanationof Cal-Ams reasons for its decision not to follow the recommendation.

D. Categories for Matters Subject to Governance Committee Action. Matters forconsideration, consultation, decision, or recommendation by the Governance Committee shall be dividedamong the following three categories as follows:

Category A

1) This matter concerns the GWR Recommendation, which specifically is whether Cal-Am shall:

(i) pursue a water purchase agreement with the MRWPCA for the purchase of water from theGWR Project, and consequently Cal-Am shall develop a smaller desalination facility with acapacity of approximately 6.4 MGD; or (ii) forgo the pursuit of a water purchase agreement withMRWPCA for the GWR Project, and consequently Cal-Am shall develop a larger desalinationfacility with a capacity of approximately 9.6 MGD. If the GWR Recommendation becomes ripe fordecision before a CPCN is issued upon Application A.12-04-019, the Governance Committeeshall not issue any binding decision concerning the GWR Recommendation. If the GWRRecommendation becomes ripe for decision after a CPCN is issued upon Application A.12-04-019, the Governance Committee shall decide whether Cal-Am shall adopt the GWR Project ornot, which decision shall then be subject to CPUC approval or rejection pursuant the procedurespecified herein. The Governance Committee shall make this decision based upon the criteriaattached hereto as Exhibit A. The decision shall be made within sixty (60) calendar days from theCal-Am Notification concerning this matter. The decision issued by the Governance Committee

shall be submitted by Cal-Am to the CPUC for approval or rejection pursuant to a Tier 2 AdviceLetter (or at the direction of the CPUC, an alternate form of submission) within ten (10) calendardays of the decisions issuance by the Governance Committee for the CPUCs review andapproval.

2) Select a Certified Value Engineer (to facilitate and report on the proposed value engineering forthe Desalination Project), with consideration given to any recommended engineer submitted byany member of the Governance Committee;

3) Subsequent to the issuance of the CPCN and subsequent to the selection of the design-buildcontractor for the Desalination Project, issue decisions concerning the Desalination Projectsaesthetics consistent with community values, if the decision would in the opinion of the design-build contractor, have no adverse financial impact on the cost of the Desalination Project; and

4) Subsequent to the issuance of the CPCN and subsequent to the selection of the design-buildcontractor for the Desalination Project, issue decisions concerning procurement of alternative(non-PG&E) energy supplies for the Desalination Project, including waste-to-energy, so long assuch decisions result in lowering the Desalination Projects estimated unit price for power.

Category B

1) Recommend qualifications and selection criteria for the Contracts not previously executed for theProject;


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2) Recommend which professionals to be retained under the Contracts after review and evaluationof proposals from qualified contractors for the Contracts. The Governance Committee and itsmembers shall maintain the confidentiality of all proposals, bids, [and other documents] [Need toaddress confidentiality concers]];

3) Review and issue recommendations concerning significant changes to the Project at key stages

of the design process, including:

Basis of Design 30% Design 60% Design Value Engineering 90% Design, and Final Design

As used in this paragraph, significant changes to the Project shall include _______________

4) Establish a community outreach program, including a plan and budget for community outreach tobe included within the CPCN, and issue decisions concerning the same;

5) Recommend the Desalination Projects aesthetic attributes and design consistent with communityvalues if not covered by Section A(3) above;

6) Coordinate with Cal-Am with respect to resolution of issues concerning the use of the MRWPCAsocean outfall and issue recommendations concerning the same;

7) Review and recommend whether to adopt any value engineering recommendations issued by theValue Engineer;

8) Review and recommend whether to approve any major change order pertaining to anycomponent or components of the Desalination Project, if the change order exceeds $1 million;and

Category C

1) Cal-Am shall monitor the design, engineering, and permitting of all elements of the DesalinationProject, and report on such monitoring to the Governance Committee on a quarterly basis. TheGovernance Committee shall discuss Cal-Ams quarterly report and issue recommendations toCal-Am pertaining to the Desalination Project;

2) Review contract terms relating to the Contracts. [Cal-Am deletes financial contracts. Cal-Amlimits to construction contracts Cal Am recommends that if there are terms the public agenciesbelieve should be in the financial contracts then the public agencies should recommend suchterms in their CPUC testimony, but Cal-Am does not intend to negotiate terms for financialcontracts, which it states are largely preset by CPUC, SRF terms, or American Water forAmerican Water debt. Requires further discussion.];

3) Preparation and quarterly update of an overall construction budget for the Desalination Project;

4) Review and acceptance of a detailed plan for acceptance testing, including follow-up reporting;

5) Annually review the Desalination Project operations and maintenance budget and rate impacts;and

6) Coordinate with Cal-Am with respect to local and regional permit requirements.


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7) [Cal-AM adds Provide the Governance Committee with quarterly progress reports during majordesign milestones (i.e., 30% design, 60% design, 90% design, and final design) and informationon any material challenges to the Project Design.]

E. Additional Matters. If agreed by all members of the Governance Committee, includingCal-Am, additional matters not provided for herein, may be added to Category A for decision by theGovernance Committee or to Category B for recommendation from the Governance Committee.Additional matters may also be added to Category C for Cal-Am consultation with the GovernanceCommittee upon affirmative vote of the Governance Committee unless Cal-Am determines that theaddition of the matter to Category C would unreasonably delay the Project or otherwise compromise thepublic interest. In the event Cal-Am determines that a matter affirmed by the Governance Committee foraddition to Category C should not be so added, Cal-Am shall issue a written explanation to theGovernance Committee within ten (10) calendar days of the Governance Committees vote to add thematter to Category C that explains the reasons supporting Cal-Ams determination.

VI. Meetings and Action of the Governance Committee; Agendas and Minutes

A. Meetings. Meetings of the Governance Committee shall be held at the office of theMPWMD and may be called by the Governance Committees Chair or Vice-Chair. GovernanceCommittee meetings shall be conducted in compliance with the Ralph M. Brown Act (Government Code

sections 54950, et seq.). The Board may use teleconferencing in connection with any meeting inconformance with and to the extent authorized by applicable law. The following shall be the order ofbusiness of all meetings of the Governance Committee:

1. Call to Order2. Roll Call.3. Pledge of Allegiance4. Public Comment5. Report from Governance Committee Members6. Approval of Minutes of the Previous Meeting7. Agenda Items8. Adjournment

B. Action by the Governance Committee. All resolutions of the Governance Committeeshall be in writing, signed by the Chair. All other actions of the Governance Committee shall be by motionrecorded in written minutes.

C. Agendas and Minutes. Agendas and minutes of the meetings of the GovernanceCommittee shall be taken, maintained, and distributed by a designated staff member of the MPWMD.

VII. Quorum and Affirmative Action of the Governance Committee

To constitute a quorum at all meetings of the Governance Committee for the transaction ofbusiness, the representative or alternate public representative of each of the Governance Committee spublic entities must be present in person or represented by proxy. Action by the Governance Committeeshall require the affirmative vote of at least two of the public entity representatives.

VIII. Submission of Project Information to the Governance Committee; Project Inspections

Concurrent with Cal-Ams submission of [describe financial reports]to the CPUC, Cal-Am shall provide acopy of the documents filed with the CPUC to the Chair of the Governance Committee. The Chair maynotice a meeting on his or her own initiative, or upon the request of any member of the GovernanceCommittee to review any financial matter addressed by the documents. Cal-Am, upon request of theChair of the Governance Committee, shall be afforded an opportunity to provide a presentation or anyoral explanation relating to the noticed financial matter. Further, upon reasonable advanced notice, any


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member(s) of the Governance Committee may inspect any physical facility or structure constructed orbeing constructed as an element of the Project, and Cal-Am shall provide an employee, consultant, orother representative, who is knowledgeable of the aspects and elements of the physical facility orstructure, to accompany the member(s) of the Governance Committee during the inspection.

IX. Miscellaneous

A. Further Assurances. The Parties shall execute such further documents and do any andall such further things as may be necessary to implement and carry out the intent of this Agreement.

B. Construction. The provisions of this Agreement shall be liberally construed to effectuateits purposes. The language of this Agreement shall be construed simply according to its plain meaningand shall not be construed for or against any Party, as each Party has participated in the drafting of thisAgreement and had the opportunity to have their counsel review it.

C. Choice of Law. This Agreement shall be governed and construed under the laws of theState of California, with venue proper only in Monterey County.

D. Severability. If any term or provision of this Agreement is determined to be illegal,unenforceable, or invalid in whole or in part for any reason, such illegal, unenforceable, or invalidprovision or part thereof, shall be stricken from this Agreement, and such provision shall not effect thelegality, enforceability, or validity of the remainder of this Agreement. If any provision or part of thisAgreement is stricken in accordance with the provisions of this section, then the stricken provision shallbe replaced, to the extent possible, with a legal, enforceable and valid provision that is as similar incontent to the stricken provision as is legally possible.

E. Dispute Resolution. In the event that any dispute arises between two or more of theParties relating to this Agreement, or the rights and obligations arising therefrom, the Parties in disputeshall attempt in good faith to resolve the controversy through informal means. However, if the Parties indispute cannot agree upon a resolution of the controversy within thirty (30) calendar days from a Partysrequest to submit a depute to dispute resolution, the dispute shall be submitted to mediation prior tocommencement of any arbitration or litigation. The cost of mediation shall be paid in equal proportionamong the Parties in dispute. The mediator shall be either voluntarily agreed to, or appointed by the

Superior Court upon a suit and motion for appointment of a neutral mediator. So long as the parties indispute have engaged in mediation as a condition precedent to further proceedings concerning anydispute, the parties in dispute may mutually agree to resolve any dispute through binding arbitrationwhich, unless the parties in dispute mutually agree otherwise, shall be administered by the AmericanArbitration Association, and absent such a mutual agreement for arbitration, any dispute may be litigated.

F. Attorneys Fees. In any arbitration, lawsuit, or other legal action or proceeding, relatingto the interpretation or enforcement of this Agreement, the prevailing Party(s) shall be entitled to recoverfrom the other Party(s) in dispute reasonable expenses, attorneys fees and costs.

G. Members to Bear their Own Costs. Each Party shall bear its own costs relating to therights and obligations of each Party arising from this Agreement and its participation in the GovernanceCommittee. Therefore, no Party shall be entitled to any reimbursement from another Party as a result of

any provision of this Agreement.

H. Notices and Communication. Any notice or communication hereunder shall bedeemed sufficient if given by one Party to the other Parties in writing and either delivered in person,transmitted by electronic mail or facsimile and acknowledgment of receipt is made by the receivingParty(s), or deposited in the United States mail in a sealed envelope, certified and with postage andpostal charges prepaid, and addressed as follows:

If to Cal-Am: California American Water Company


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Attn: Robert MacLean1033 B Avenue #200Coronado, CA 92118Email: [email protected]

If to MPRWA:If to MPWMD:If to County:

or to such other address or to such other person as each Party shall have last designated for receipt ofnotices pursuant to this Agreement. Where this Agreement provides for written notices orcommunication from Cal-Am to the Governance Committee, such written notice, explanation, orcommunication shall be directed to the Chair of the Governance Committee at the address set forthabove for notices to the public entity from which the Chair is appointed, and when provided shall bedeemed provided to all public entity members of the Governance Committee. The effective date of anywritten notice, explanation, or communication shall be the earlier of the date of actual receipt,acknowledgment of receipt, or three days following deposit in the United States mail.

I. Effective Date. This Agreement shall take effect on date first stated above.

J. [Any other miscellaneous provisions?]

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first stated above.

[signature page to follow]


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California American Water Company

By:_______________________________Robert MacLean, President

Agreed as to form:

By:_______________________________Anthony J. Cerasuolo, Vice President, Legal - Operations

Monterey Peninsula Regional WaterAuthority

By:_______________________________Chuck Della Sala, President

Agreed as to form:

By:_______________________________Donald Freeman, Authority Counsel

Monterey Peninsula Regional WaterAuthority

By:_______________________________David Pendergrass, Chair

Agreed as to form:

By:_______________________________David Laredo, District Counsel

County of Monterey

By:_______________________________Dave Potter, Chair of the Board of Supervisors

Agreed as to form:

By:_______________________________Charles McKee, County Counsel

mprwa agenda packet 01-24-13

Documents