mprwa agenda packet 3-10-16

8/19/2019 MPRWA Agenda Packet 3-10-16

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Closed Session AgendaMonterey Peninsula Regional Water Authority (MPRWA)

7:00 PM, Thursday, March 10, 2016

Council Chambers580 Pacific St.Monterey, California

CALL TO ORDER

CLOSED SESSION AGENDA ITEMS

cs1. Performance Evaluations for Executive Director and Authority Legal Counsel Positions- Pursuant to Government Code 54957

ADJOURNMENT

____________________________________________________________________________

The Monterey Peninsula Regional Water Authority is committed to including the disabled in allof its services, programs and activities. In compliance with the Americans with Disabilities Act,if you need special assistance to participate in this meeting, please contact the Monterey CityClerk’s Office at (831) 646-3935. Notification 30 hours prior to the meeting will enable the Cityto make reasonable arrangements to ensure accessibility to this meeting [28 CFR 35.102-35.104 ADA Title II]. Later requests will be accommodated to the extent feasible. Forcommunication-related assistance, dial 711 to use the California Relay Service (CRS) to speakto City offices. CRS offers free text-to-speech, speech-to-speech, and Spanish-language

services 24 hours a day, 7 days a week. If you require a hearing amplification device to attenda meeting, dial 711 to use CRS to talk to the Monterey City Clerk's Office at (831) 646-3935 tocoordinate use of a device.

Agenda related writings or documents provided to the MPRWA are available for publicinspection during the meeting or may be requested from the Monterey City Clerk’s 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.

http://../agdocs.aspx?doctype=agenda&itemid=87377http://../agdocs.aspx?doctype=agenda&itemid=87377http://../agdocs.aspx?doctype=agenda&itemid=87377http://../agdocs.aspx?doctype=agenda&itemid=87377


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AgendaMonterey Peninsula Regional Water Authority (MPRWA)

Director's Meeting

7:00 PM, Thursday, March 10, 2016

Council Chambers580 Pacific Street

Monterey, California

ROLL CALL

PLEDGE OF ALLEGIANCE

REPORTS FROM BOARD DIRECTORS AND STAFF

***Adjourn to Closed Session (See additional agenda)***

Adjourn to Regular Meeting

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 person

or 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.

APPROVAL OF MINUTES

1. Approval of Minutes from December 10, 2015 - Romero

CONSENT ITEMSCONSENT AGENDA consists of those items which are routine and for which a staffrecommendation has been prepared. A member of the public or a Councilmember may requestthat an item be placed on the regular agenda for further discussion.

2. Receive Letter from Sand City in Support of GWR - Cullem

3. Approve and File Authority Checks Through March 10, 2016, Receive a Mid-year Budget Report, and Receive an Estimate of Requested FY 2016-2017 Member Contributions - Romero/Cullem

4. Adoption of Resolution 16-01, Approving Donald G. Freeman as Legal Counsel through June 30, 2017 and Authorizing the Authority President to Execute a contract extension with Perry Freeman at a Price not-to-exceed $36,000 - Cullem

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Thursday, March 10, 2016

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5. Adoption of Resolution 16-02, Approving Brownstein Hyatt Farber Schreck as Special Legal Counsel through June 30, 2017 and Authorizing the Authority President to Execute a Contract Extension at a Price not-to-Exceed $100,000 - Cullem

6. Authorize The Authority President To Extend The Contract With The City Of Monterey For Executive Director Services for a Price of $5000 for the Period July 1, 2016 to June 30,2017, and To Request The City Of Monterey To Extend Its Contract With James M. Cullem For That Position - Cullem

7. Adoption of Resolution 16-03 Approving an Extension of the Agreement with the City ofMonterey for Clerk of the Board, Clerical, and Financial Support Services, and Authorizing the Authority President to Execute a Contract with the City of Monterey for at a Price of$30,000 for the Period July 1, 2016 to June 30, 2017 - Cullem

8. Authorize the Utilization of $10,000 from Contingency Funds to Pay for Preparation of aTechnical Report as a Part of the Water Authority's Rebuttal Testimony on The Testimony of Curtis Hopkins, Hydrogeologist for the Marina Coast Water District - Cullem

AGENDA ITEMS

9. Receive and Discuss Recommendations from the Technical Advisory Committee (TAC)

and from Staff on CPUC Testimony Submitted on January 22, 2016 and Provide Direction - Cullem

10. Receive and Discuss Recommendations from the Technical Advisory Committee (TAC) on the Water Authority Policy Position Statement and Provide Direction - Cullem

11. Discuss City of Monterey Request to Include a Response to the Cal Am Rate Increase Proposal into the Mission and Work Plan of the Water Authority and Provide Staff Direction- Cullem

12. Receive an Update on the Summary Project Schedule for the Monterey Peninsula Water Supply Project (MPWSP) and the Status of Test Slant Well Operations - Cullem

ADJOURNMENT

The City of Monterey is committed to including the disabled in all of its services, programs andactivities. In compliance with the Americans with Disabilities Act, if you need special assistanceto participate in this meeting, please contact the City Clerk’s Office at (831) 646-3935.Notification 30 hours prior to the meeting will enable the City to make reasonable arrangementsto ensure accessibility to this meeting [28 CFR 35.102-35.104 ADA Title II]. Later requests willbe accommodated to the extent feasible. For communication-related assistance, dial 711 to use

the California Relay Service (CRS) to speak to City offices. CRS offers free text-to-speech, speech-to-speech, and Spanish-language services 24 hours a day, 7 days a week. If you require a hearingamplification device to attend a meeting, dial 711 to use CRS to talk to the City Clerk's Office at(831) 646-3935 to coordinate use of a device.

Agenda related writings or documents provided to the MPRWA are available for publicinspection during the meeting or may be requested from the Monterey City Clerk’s 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

7:00 PM, Thursday, December 10, 2015COUNCIL CHAMBER

MONTEREY, CALIFORNIA

Directors Present: Rubio, Edelen, Pendergrass, Kampe, Burnett, Alternate Director Downey Directors Absent: Roberson

Staff Present: Executive Director, Legal Counsel, Clerk

ROLL CALL

President Burnett called the meeting to order at 7:01 PM.

Alternate Director Downey was present for Director Roberson.

PLEDGE OF ALLEGIANCE

REPORTS FROM BOARD DIRECTORS AND STAFF

President Burnett invited reports from the Board and Staff.

Executive Director Cullem reported that he attended the workshop on the externalities study at

the Water Management District. He then welcomed Bill Connor, the legal counsel stand-in forMr. Freeman, and Nova Swain, the Clerk understudy for Lesley Milton.

President Burnett said that the cease and desist order (CDO) proposal that the board adopted

at the last meeting was submitted to the State, and stated that there is now a prohibition on ex-

parte communications with the Board and its staff.

PUBLIC COMMENTS

President Burnett opened public comments. Receiving no requests to speak he closed the

public comments session.

CONSENT AGENDA

Executive Director Cullem requested that the minutes from November 12th, item #6, be changed

to reflect that the City of Monterey contract be awarded on a fiscal year basis, not a calendar

year basis. Mr. Cullem says this would change the dollar amount to $15,000, and extend

contract to the end of the fiscal year on June 30th 2016.


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MPRWA Minutes Thursday, December 10, 2015

Monterey Peninsula Regional Water Authority

Regular Meeting Minutes - Thursday, December 10, 20152

Alternate Director Downey noted that she would be abstaining from items #1 and #2, approval

of minutes, because she was not present for those meetings.

On a motion by Director Pendergrass, seconded by Director Edelen, and carried by the

following vote, except Items 1 & 2 from which Alternate Director Downey abstained, the

Authority Directors approved Consent Agenda, with the correction of the dollar amount in theNovember 12 th minutes to $15,000 for contract extension through June 30 th :

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

NOES: 0 DIRECTORS: None

ABSENT: 0 DIRECTORS: None

ABSTAIN: 0 DIRECTORS: None

RECUSED: 0 DIRECTORS: None

1. Approve Minutes from August 13, 2015 - Milton

Action: Approved, Downey abstained

2. Approve Minutes from November 12, 2015

Action: Approved with change, Downey abstained

3. Approve and File Authority Checks Through December 10, 2015

Action: Approved

4. Receive Report on the November 17, 2015 Update of the California Public Utilities Commission

(CPUC) Schedule for the Monterey Peninsula Water Supply Project

Action: Approved

5. Terminate the Contract with the City of Seaside for Clerk of the Board and Financial Support

Services for the Monterey Peninsula Regional Water Authority (MPRWA) as of Dec 31, 2015,

Adopt Resolution 2015-06 Approving an Agreement with the City of Monterey for Those

Services, and Authorize The Authority President to Execute a Contract with the City of

Monterey for at a Price not to Exceed $15,000 for the Period January 1 to June 30, 2016

Action: Approved, adopted Reso 15-06

6. Approve Extension of the Separation Processes Inc (SPI) Contract Until 30 June 2016 for

Additional Technical Support to the MPRWA and Authorize the Expenditure of Not-to- Exceed

$10,000 from Reserve Funds

Action: Approved


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AGENDA ITEMS

7. Presentation of Certificate of Appreciation to Lesley Milton

Action: Presented certificate

President Burnett presented an award of appreciation to Lesley Milton who is retiring from

MPRWA Clerk of the Board. Ms. Milton thanked the Board for the opportunity to serve thecommunity.

8. Receive Report and Discuss the Status of the Pure Water Monterey (PWM) / Ground Water

Replenishment (GWR) Project.

Action: Received and discussed report

Dave Stoldt, the General Manager of the Monterey Peninsula Water Management District

(MPWMD), reported that Marina Coast Water District approved the pipeline agreement with the

Monterey Regional Water Pollution Control Agency (MRWPCA). He also reported that the

MRWPCA Board is considering a 2.4 million dollar contract to award bid packets for various

design components for the project to be ready to go in July. He also said that the externalities

study that Director Cullem attended made progress by pulling out the financial analysis and

focusing solely on the non-project economics such as social or sustainable return on

investment.

Mr. Stoldt reported that most of the 9 criteria related to groundwater replenishment with Pure

Water Monterey (PWM) have been met but that cost comparison remains the largest hurdle. He

said the cost of PWM is $1,800-2,100 per acre foot and desal water is $3,000 per acre foot, and

there isn’t enough recycled water to do everything so a desal plant with associated cost is

required. He added that on December 15th there will be a filing for updated cost estimates. Mr.

Stoldt invited questions from the Board. Alternate Director Downey asked about the status of thewater purchase agreement with California American Water (CalAm). Mr. Stoldt responded that

the work with CalAm has been cooperative and well attended although there is a slow response

with CalAm. He also said that one issue is that CalAm is requesting a joint and severable

liability between PCA and MPRWA, but neither party’s legal counsel will agree to that due to the

operational and financial differences between the two agencies. Mr. Stoldt continued to say that

the MPRWA doesn’t want to subordinate the agreement already in place with the growers by

allowing CalAm to tap into the drought reserve. He added that overall most of the agreements

have been executed and there is a draft agreement which might be done by December 31st.

Alternate Director Downey questioned if another agency is added to the agreement later they

will want some control. Mr. Stoldt replied that adding another agency will decrease the buffer ofallocated water. He added that there may be additional water sources or annexations and pre-

existing water rights that need to be factored in to the agreement. Alternate Director Downey

asked President Burnett if the time in between meetings with CalAm could be reduced to

encourage CalAm to be more efficient. President Burnett said the MPRWA is not centrally

involved in those negotiations but that there are other agencies involved.


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Dave Stoldt answered financial questions of the board.

Dave Stoldt gave a report that MPRWA is in the application pool for a state loan, and is

applying for storm water grants to reduce the overall cost.

9. Receive an Update on the Summary Project Schedule for the Monterey Peninsula Water

Supply Project (MPWSP), including Award of Production Well and Conveyance System

Contracts and Status of Test Slant Well Operations and Results.

Action: Received and discussed report

Catherine Stedman from CalAm Public Relations gave a report that the current schedule

remains on track for project completion in 2019. She said the conveyance facility contract

selections will be publicly available on December 11.

President Burnett stated that the governance committee recommended a contract for source

water slant wells close to the budgeted amount. Ms. Stedman replied that the contract is with

the lowest bidder.

10. Receive Report, Discuss, and Revise the Mission, Purpose, and Sunset of the Monterey

Peninsula Regional Water Authority

Action: Adopted the position to sunset at the first production of water from the full

portfolio of the MPWSP, and the lifting of the cease and desist order

Executive Director Cullem reviewed the Monterey Peninsula Water Authority (MPRWA)mission, work plan, and duration of the Authority. He said there was a previous revision to the

mission statement i.e., replace "Cities' water users" with "water users within the incorporated

cities and unincorporated portions of the County". Mr. Cullem asked for the board to give

feedback on the mission statement and work plan.

President Burnett said the County had questions about the sunset date of the Authority.

Director Rubio wondered what was meant by the County concern about "mission creep", and

was unaware of the Authority adding projects or doing anything outside of the scope. President

Burnett responded that the County did not have any specific examples of mission creeping from

the Authority when they were asked.

President Burnett opened public comments.

• Jody Hansen from the Monterey Peninsula Chamber of Commerce, read from a letter in

support of MPRWA from the Coalition of Peninsula Businesses. The letter supported the

MPRWA not sun setting until the mission is accomplished


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President Burnett responded to public comments, and asked for comments from the board.

Director Edelen spoke in support of the Authority continuing until water is flowing. He

suggested that working through the Local Agency Formation Commission of Monterey County

(LAFCO) to form a Joint Powers Authority (JPA) between the affected agencies to replace the

Water Management District could hold water officials accountable and ensure that taxpayer

money is used to secure adequate water sources.

Director Pendergrass agreed that the Authority was formed to accomplish a mission and should

remain to collaborate with all the agencies and support each other.

President Burnett said he suggests the option where the Authority sunsets at first production of

water from the full portfolio of Monterey Peninsula Water Supply Project (MPWSP), GWR,

enhanced ASR, and lifting of the CDO.

Director Kampe suggested adding some milestones to reach by 2017 to ensure that the

mission is on track. He also said the Authority should be alert once the water is flowing that its

usage and allocation is appropriate and the community should have a voice through the

Authority or the aforementioned JPA in the policy.

President Burnett said that an Environmental Impact Report (EIR) will be necessary to govern

how the water is allocated, and that process should begin sooner rather than later.

Alternate Director Downey said the Authority needs to be careful how money is spent. She said

that she supported the idea of looking into what LAFCO could do with regard to forming a JPA

between the various agencies and MPWMD. She stated that Supervisor Potter said that the

County was reluctant to join the Authority because it is spending too much money. She said

that the Authority needs to be very careful when looking at the budget as to how the money isspent, and this should be a consideration when determining a sunset date.

Director Rubio said LAFCO may not be the appropriate agency to collaborate with due to the

Joint Powers Authority (JPA) special legislation. Alternate Directory Downey agreed that

LAFCO may not be the correct agency to work with, but she would like to keep the idea of

creating a JPA with the Water District on the horizon.

President Burnett suggested that the Agency not take a position regarding the JPA issue at this

time, and Director Rubio agreed, saying that some more milestones should be reached before

addressing that matter.

Alternate Director Downey said that augmenting the efforts of MPWMD through the formation of

a JPA might be something to consider.

Director Kampe said he sees the MPRWA working as collaborators with the MPWMD on how

water is allocated and conserved. He would like to see the Authority assist businesses use

water resources more efficiently.


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Director Pendergrass opined he would like to have less frequent meetings and less repetition.

Director Rubio made a motion for the Authority to adopt the position to sunset at the first

production of water from the full portfolio of the MPWSP, and the lifting of the cease and desist

order, this was seconded by Director Kampe.

Alternate Director Downey asked to clarify if voting for the Authority to sunset at the firstproduction of water from the full portfolio of water would be a concrete decision. Bill Connor

stated that this would not be set in stone if the Authority decided in the future to vote again on a

new sunset date. Alternate Director Downey said she could support the motion if it meant that it

was not set in stone.

The motion made by Director Rubio, seconded by Director Kampe for the Authority to adopt the

position to sunset at the first production of water from the full portfolio of the MPWSP, and the

lifting of the cease and desist order, passed unanimously.

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

NOES: 0 DIRECTORS: None

ABSENT: 0 DIRECTORS: None

ABSTAIN: 0 DIRECTORS: None

RECUSED: 0 DIRECTORS: None

The Board of Directors discussed whether to take action regarding the future formation of a

Joint Powers Authority or merging with the Water Management District in some form. No action

was taken with regard to that matter.

ADJOURNMENT

The meeting adjourned at 8:35PM.

ATTEST:

Nova Swain, Clerk of the Authority MPRWA President


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Monterey Peninsula Regional Water AuthorityAgenda Report

Date: March 10, 2016

Item No: 2.

№06/12

FROM: Executive Director Cullem

SUBJECT: Receive Letter from Sand City in Support of GWR

RECOMMENDATION:

It is recommended that the Authority formally receive the Sand City letter received bythe Water Authority on January 8, 2016 requesting the Water Authority submit CPUCtestimony in support of Ground Water Replenishment (GWR).

DISCUSSION:

At the January 14, 2016 Water Authority meeting, the Executive Director noted receiptof the Sand City letter which was not included into the meeting minutes. The letter is atattachment A for the record.

ATTACHMENTS:

A - Sand City letter dated January 8, 2016


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Date:

Item No: 3.

FROM: Executive Director Cullem / Authority Clerk Romero

SUBJECT: Approve and File Authority Checks Through March 10, 2016, Receive aMid-year Budget Report, and Receive an Estimate of Requested FY 2016-2017 Member Contributions.

RECOMMENDATION:

It is recommended that the Authority approve and file the accounts payable paymentsmade during the period January 11 through March 10, 2016 with total payments for theabove referenced period of $43,657.45 from the general fund account and authorize theDirectors to sign for such checks. It is also recommended that the Board receive the

budget update and estimated FY 16-17 membership contributions.

DISCUSSION:

At its meeting on September 12, 2013, the Authority Board approved a staffrecommendation to provide the Directors a listing of financial obligations since the lastreport for inspection and confirmation. Each invoiced expense has been reviewed andapproved by the Executive Director and Finance personnel prior to payment to insure thatit conforms to the approved budget.

The following checks are hereby submitted to the Authority for inspection andconfirmation:

• $16,840.70 City of Monterey for Executive Director Services, Quarter 4 2016

• $6,756.00 To Brownstein Hyatt Farber & Schreck for Services Rendered throughDecember 31,2016

• $1,425.00 to McGilloway, Ray Brown & Kaufman for Financial Audit Services

• $960.00 to Access Monterey Peninsula

• $7,500 to Perry and Freeman for Legal Counsel Services January, February andMarch 2016

• $2,676.45 to Separation Processes Inc

• 3,500.00 To City of Seaside for Financial Services for FY 15-16

• 2,000.00 To the City of Seaside for Clerk Services Through December 2016

• 2,000.00 To City of Monterey for Principal Office of the Authority FY 15-16


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Staff is also requesting that a check be issued to Cal Am Water, which is the totalbalance remaining from the Value Engineering Account, totaling $15,051.91. Once thecheck has cleared, staff will close this account as the project has been completed.

The bank balance as of March 10, 2016 is sufficient to cover the above checks so staffis recommending approval.

BUDGET UPDATE

For the current fiscal year, the budget was increased $10,000 from the Reserve Fundsto cover the costs of the testimony preparation for the CPUC. At this time no additionalchanges to the budget are anticipated. The projections for the Fiscal Year 2016-17 iscurrently expected to remain the same as for Fiscal Year 2015-16, i.e. $290,000. Staffwill present the final budget for adoption in May 2016.

The estimated annual membership contributions are attached for Fiscal Year 2016-17.These figures appear higher than the previous year because they will not have the carryover credits from the previous fiscal year.

ATTACHMENTS:

• A - Budget to Actual Report through March 10, 2016

• B - Estimated Annual Membership Contributions FY 2016-17


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4:00 PM

02/25/16

Accrual Basis


Profit & Loss Budget vs. Actual July 1, 2015 through February 25, 2016

Page 1 of 4

Jul 1, '15 -Mar 10, 16 Budget $ Over Budget

Ordinary Income/Expense

Income

47200 · Program Income

47230 · Membership Dues 45,948.00 137,000.00 -91,052.00

47240 · Transfer From Reserve Funds 10,000.00 10,000.00 0.00

47250 · Reimbursement SPI Contract 0.00 0.00 0.00

47260 · Reimburesment VE Contract 0.00 0.00 0.00

47200 · Program Income - Other 8.50 0.00 8.50

Total 47200 · Program Income 55,956.50 147,000.00 -91,043.50

49900 · Carry Over fr om FY 14-15 153,000.00 153,000.00 0.00

Total Income 208,956.50 300,000.00 -91,043.50

Expense

60900 · Admin istrati on and Clerical

60901 · Clerk of the Board 24,000.00 24,000.00 0.00

60902 · Executive Director 36,707.47 85,000.00 -48,292.53

60903 · Principal Offc of the Authority 5,000.00 5,000.00 0.00

60904 · Financial Services 6,000.00 6,000.00 0.00

60905 · Misc Admin Expenses 0.00 500.00 -500.00

60900 · Admini stration and Clerical - Other 0.00 0.00 0.00

Total 60900 · Admin istrati on and Clerical 71,707.47 120,500.00 -48,792.53

62100 · Legal Fees

62110 · Board Counsel 22,500.00 36,000.00 -13,500.00

62140 · Special Counsel 55,834.76 100,000.00 -44,165.24

62100 · Legal Fees - Other 0.00 0.00 0.00

Total 62100 · Legal Fees 78,334.76 136,000.00 -57,665.24

62800 · Contract Services

60801 · Public Outreach 50.00 0.00 50.00

60806 · Contract VE 0.00 0.00 0.00

62802 · Audit Services 6,300.00 6,000.00 300.00

62803 · Televised Meeting 2,922.50 5,000.00 -2,077.50

62804 · Contract Services & Studies 0.00 0.00 0.00

62805 · Contract SPI 45,190.56 10,000.00 35,190.56

62800 · Contract Services - Other 0.00 0.00

Total 62800 · Contract Services 54,463.06 21,000.00 33,463.06

65000 · Insurance 6,438.48 7,500.00 -1,061.52

65100 · Travel Expenses 521.20 5,000.00 -4,478.80

66000 · Payroll Expenses 0.00 0.00 0.00

68300 · Contingency 0.00 10,000.00 -10,000.00

Total Expense 211,464.97 300,000.00 -88,535.03


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Accrual Basis



Page 2 of 4

Jul 1, '15 -Mar 10, 16 Budget $ Over Budget

Net Ordinary Income -2,508.47 0.00 -2,508.47

Other Income/Expense

Other Income

Reserve Fund 160,000.00 160,000.00

47220 · Interest Earned 0.80 0.00 0.80

Total Other Income 160,000.80 160,000.00 0.80

Other Expense

80000 · Ask My Accountant 0.00 0.00 0.00

Total Other Expense 0.00 0.00 0.00

Net Other Income 160,000.80 160,000.00 0.80

Net Income 157,492.33 160,000.00 -2,507.67


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Accrual Basis

Monterey Peninsula Regional Water Author ity


Page 3 of 4

Ordinary Income/Expense

Income

47200 · Program Income

47230 · Membership Dues

47240 · Transfer From Reserve Funds

47250 · Reimbursement SPI Contract

47260 · Reimburesment VE Contract

47200 · Program Income - Other

Total 47200 · Program Income

49900 · Carry Over from FY 14-15

Total Income

Expense

60900 · Administration and Clerical

60901 · Clerk of the Board

60902 · Executive Director

60903 · Princi pal Offc of the Authority

60904 · Financial Services

60905 · Misc Admin Expenses

60900 · Admin istration and Clerical - Other

Total 60900 · Admini stration and Clerical

62100 · Legal Fees

62110 · Board Counsel

62140 · Special Counsel

62100 · Legal Fees - Other

Total 62100 · Legal Fees

62800 · Contract Services

60801 · Public Outreach

60806 · Contract VE

62802 · Audit Services

62803 · Televised Meeting

62804 · Contract Services & Studies

62805 · Contract SPI

62800 · Contract Services - Other Total 62800 · Contract Services

65000 · Insurance

65100 · Travel Expenses

66000 · Payroll Expenses

68300 · Contingency

Total Expense

% of Budget

33.54%

100.0%

0.0%

0.0%

100.0%

38.07%

100.0%

69.65%

100.0%

43.19%

100.0%

100.0%

0.0%

0.0%

59.51%

62.5%

55.84%

0.0%

57.6%

100.0%

0.0%

105.0%

58.45%

0.0%

451.91%

0.0%

259.35%

85.85%

10.42%

0.0%

0.0%

70.49%


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Accrual Basis

Monterey Peninsula Regional Water Author ity


Page 4 of 4

Net Ordinary Income

Other Income/Expense

Other Income

Reserve Fund

47220 · Interest Earned

Total Other Income

Other Expense

80000 · Ask My Accountant

Total Other Expense

Net Other Income

Net Income

% of Budget

100.0%

100.0%

100.0%

0.0%

0.0%

100.0%

98.43%


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30.40% $,160

6.50% $1,50

0.0% $2,320

13.10% $37,0

14.0% $42,20

33.00% $5,700

1.40% $4,060

/ 100% $20,000

* 20122014

Estimated Jurisdiction Contribution

Assuming County Participation

Contributions With County Participation

FY 2016-17

** ( )

1617


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Item No: 4.

№06/12


SUBJECT: Adoption of Resolution 16-01, Approving Donald G. Freeman as LegalCounsel through June 30, 2017 and Authorizing the Authority President toExecute a Contract Extension with Perry Freeman at a Price not-to-exceed$36,000

RECOMMENDATION:

It is recommended that the Monterey Peninsula Regional Water Authority (MPRWA)

adopt Resolution 16-01 approving Donald G. Freeman as legal counsel through June30, 2017 and authorizing the Authority President to execute a contract extension with

Perry Freeman at a price not-to-exceed $36,000.

DISCUSSION:

Following a formal Request for Qualifications (RFQ) for legal services for the Water

Authority conducted during August and September 2012, an Ad-Hoc committee of the

MPRWA recommended selection of Perry and Freeman (Donald G. Freeman). On

September 27, 2012, the Water Authority adopted a resolution selecting Mr. Freeman tobe legal counsel. On December 10, 2012, Mr. Freeman provided the Water Authority

with waivers of conflict of interest from all other participating jurisdictions to which he

has professional, contractual obligations.

Due to Don Freeman's extensive knowledge of the water supply issues that the Water

Authority has dealt with the last three years, and in light of his excellent performance in

the position of Authority Counsel, the Executive Director recommends the Authority

maintains continuity with Donald G. Freeman, at least through June 30, 2017.

Resolution 16-01 approves an extension of Donald G. Freeman as Authority legalcounsel through June 30, 2017 and authorizes the Authority President to execute a

contract extension accordingly.

BUDGET CONSIDERATIONS:


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The budget for FY 2016-2017 will request a maximum of $36,000 for Legal Counsel

services through June 30, 2017.

ATTACHMENTS:

A-Resolution 16-01


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MPRWA RESOLUTION NO. 2016-01

A RESOLUTION OF THE MONTEREY PENINSULA REGIONAL WATER AUTHORITY

ACKNOWLEDGING DONALD G. FREEMAN AS LEGAL COUNSEL FOR THE MONTEREY

PENINSULA REGIONAL WATER AUTHORITY AND AUTHORIZING THE PRESIDENT TO

EXTEND A CONSENT AND WAIVER OF CONFLICT OF INTEREST

WHEREAS, Donald G. Freeman has been requested to continue to represent theMonterey Peninsula Regional Water Authority (MPRWA);

WHEREAS, Donald G. Freeman is currently the City Attorney for the City of Seaside andthe City of Carmel-by-the-Sea;

WHEREAS, Donald G. Freeman and MPRWA recognize the potential conflict of interestwhich may arise as a result of Donald G. Freeman’s legal representation of MPRWA, City ofSeaside, and the City of Carmel-by-the-Sea;

WHEREAS, MPRWA wishes to acknowledge Donald G. Freeman as legal counsel forMPRWA;

WHEREAS, the President of MPRWA and members of the MPRWA Board of Directorshave reviewed a letter from Donald G. Freeman dated November 20, 2012, indicating that Mr.Freeman does not believe that his legal services for the Monterey Peninsula Regional WaterAuthority will have any impact on his full and effective representation of each party, and doesnot believe he has knowledge of any confidential information from any party which would bematerial or relevant to his representation of MPRWA, the City of Seaside, and the City ofCarmel-by-the-Sea;

WHEREAS, Donald G. Freeman recognizes that by concurrently representing theMPRWA, the City of Seaside, and the City of Carmel-by-the-Sea an issue of divided loyalty,such as in litigation, could possibly arise at some future date, and that at that time it could benecessary for him to make full disclosure to all parties, could be subject to disqualification fromrepresenting any party, and at such time it would be necessary for each party to seekindependent legal counsel;

WHEREAS, the City of Carmel-by-the-Sea and the City of Seaside have passed theirrespective Resolutions and their respective Mayors have executed the Consent and Waiver ofConflict of Interest;

WHEREAS, the President and Board of Directors have reviewed this request with

independent legal counsel;

WHEREAS, according to Rule 3-310 of the California Rules of Professional Conductapplicable to California lawyers which requires informed written consent of all representedparties because of concurrent representation, MPRWA recognizes that Donald G. Freeman isthe City Attorney for the City of Seaside, and for the City of Carmel-by-the-Sea;

WHEREAS, the Board of Directors has been fully satisfied with the performance ofDonald G. Freeman during the period of his tenure as Authority legal Counsel between


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September 27, 2012 and the present;

WHEREAS, due to the critical nature of on-going legal activities associated with theCPUC consideration of the California American Water application for the Monterey PeninsulaWater Project, the Board of Directors finds that the public interest is better served by renewingDonald G. Freeman’s contract at this time than to re-advertise a request for proposal for legal

services and;

WHEREAS Board of Directors wishes to authorize the President to extend a Consentand Waiver of Conflict of Interest, and hereby acknowledges Donald G. Freeman as legalcounsel for the Monterey Peninsula Regional Water Authority, at a total fee not-to-exceed$36,000.00 for the period July 1, 2016 to June 30, 2017.

NOW, THEREFORE, BE IT RESOLVED, that the President of MPRWA is herebyauthorized to extend on behalf of MPRWA a Consent and Waiver of Conflict of Interest therebyacknowledging Donald G. Freeman as legal counsel for the Monterey Peninsula Regional WaterAuthority and authorizes the President to execute a contract extension with Donald G. Freemanfor legal counsel services.

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

AYES: 0 DIRECTORS:NOES: 0 DIRECTORS:ABSENT: 0 DIRECTORS:ABSTAIN: 0 DIRECTORS:

APPROVED:

ATTEST:

Jason Burnett, President

Clerk to the Authority


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Item No: 5.

№06/12


SUBJECT: Adoption of Resolution 16-02, Approving BrownsteinHyatt Farber Schreck as Special Legal Counsel throughJune 30, 2017 and Authorizing the Authority President toExecute a Contract Extension at a Price not- to-Exceed$100,000.

RECOMMENDATION:

It is recommended that the Monterey Peninsula Regional Water Authority(MPRWA) adopt Resolution 16-02 approving Brownstein Hyatt FarberSchreck, LLP as Special Legal Counsel for the period July 1, 2016 throughJune 30, 2017 and authorize the Authority President to extend a contractwith Brownstein at the current hourly rates and a total contract price not-to-exceed $100,000.

DISCUSSION:

In March 2012, The Authority negotiated an agreement for Attorney of

Record services with Brownstein. The firm provided special expertise in

water law, at a reduced rate, in support of Water Authority formation and

activities.

For reasons outlined in the staff report on the subject at the Water Authority

meeting in November 13, 2015, the Authority extended the Brownstein

agreement to June 30, 2016 and approved preparation of a contract

accordingly.

The CPUC process, in particular hearings related to approval of the

EIR/EIS and issuance of Cal Am's Certificate of Public Convenience and

Necessity(CPCN), as well as expected future negotiations with the State


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Water Resources Control Board on the Cease and Desist Order, will

continue to require a substantial amount of specialized legal work in 2016

and 2017. To insure continuity in Special Legal Counsel services, the

Executive Director recommends the Authority extend the contract withBrownstein through June 30, 2017.


Funds are expected to be sufficient for these legal services through the

current fiscal year. A new budget for will need to provide funding of Special

Legal Services in FY 2016-2017.

ATTACHMENTS:

A-Resolution 16-02


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MPRWA RESOLUTION NO. 16-02

A RESOLUTION OF THE MONTEREY PENINSULA REGIONAL WATERAUTHORITY ACKNOWLEDGING BROWNSTEIN HYATT FARBER SCHRECK LLP

AS SPECIAL COUNSEL OF RECORD FOR THE MONTEREY PENINSULAREGIONAL WATER AUTHORITY, AUTHORIZING THE EXECUTIVE DIRECTOR TOEXECUTE A CONSENT AND WAIVER OF CONFLICT OF INTEREST, ANDAUTHORIZING THE PRESIDENT TO EXECUTE AN AGREEMENT WITH

BROWNSTEIN FOR LEGAL SERVICES

WHEREAS, Brownstein Hyatt Farber Schreck LLP (Brownstein) has beenrequested

to represent the Monterey Peninsula Regional Water Authority (MPRWA) as SpecialCounsel;

WHEREAS, Brownstein is currently acting as Special Counsel for the City ofCarmel-by-the-Sea and the City of Seaside;

WHEREAS, Brownstein and MPRWA recognize the potential conflict of interestwhich may arise as a result of Brownstein’s legal representation of MPRWA, the City ofCarmel-by-the-Sea, and the City of Seaside;

WHEREAS, MPRWA wishes to acknowledge Brownstein as Special Counsel forMPRWA;

WHEREAS, the President of MPRWA and members of the MPRWA Board ofDirectors have reviewed a letter from Brownstein indicating that Brownstein does notbelieve that its legal services for the Monterey Peninsula Regional Water Authority willhave any impact on its full and effective representation of each party, and does notbelieve it has knowledge of any confidential information from any party which would bematerial or relevant to its representation of MPRWA, the City of Carmel-by-the-Sea, andthe City of Seaside;

WHEREAS, Brownstein recognizes that by concurrently representing theMPRWA, the City of Carmel-by-the-Sea and the City of Seaside an issue of dividedloyalty, such as in litigation, could possibly arise at some future date, and that at thattime it could be necessary for it to make full disclosure to all parties, could be subject todisqualification from representing any party, and at such time it would be necessary foreach party to seek independent legal counsel;

WHEREAS, the City of Carmel-by-the-Sea and the City of Seaside have passedtheir respective Resolutions and their respective representatives have executed theConsent and Waiver of Conflict of Interest;


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WHEREAS, the President and Board of Directors have reviewed this requestwith independent legal counsel;

WHEREAS, according to Rule 3-310 of the California Rules of ProfessionalConduct applicable to California lawyers which requires informed written consent of all

represented parties because of concurrent representation, MPRWA recognizes thatBrownstein is the Special Counsel for the City of Carmel-by-the-Sea, and for the City ofSeaside; and

WHEREAS Board of Directors wishes to authorize the Executive Director toexecute a Consent and Waiver of Conflict of Interest, and hereby acknowledgesBrownstein as Special Counsel for the Monterey Peninsula Regional Water Authority.

NOW, THEREFORE, BE IT RESOLVED, that the Executive Director of MPRWAis hereby authorized to execute on behalf of MPRWA a Consent and Waiver of Conflictof Interest thereby acknowledging Brownstein as Special Counsel for the Monterey

Peninsula Regional Water Authority.

NOW, THEREFORE, BE IT FURTHER RESOLVED, that the President ofMPRWA is hereby authorized to execute on behalf of MPRWA an agreement withBrownstein for Special Counsel services for the Monterey Peninsula Regional WaterAuthority through June 30, 2017, at a fee not-to-exceed $100,000.00.

PASSED AND ADOPTED BY THE MONTEREY PENINSULA REGIONALWATER AUTHORITY this ____day of ____ 20____, by the following vote:

AYES: 0 DIRECTORS:NOES: 0 DIRECTORS:ABSENT: 0 DIRECTORS:ABSTAIN: 0 DIRECTORS:

APPROVED:

ATTEST:

Jason Burnett, President

Clerk to the Authority


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Item No: 6.

№06/12


SUBJECT:Authorize The Authority President To Extend The Contract WithThe City Of Monterey For Executive Director Services for aPrice of $5000 for the Period July 1, 2016 to June 30, 2017,andTo Request The City Of Monterey To Extend Its Contract WithJames M. Cullem For That Position

RECOMMENDATION:

It is recommended that the Monterey Peninsula Regional Water Authority(MPRWA) extend the contract with the City of Monterey for employmentservices for the Authority Executive Director position and to request theCity to extend its employment contract with James (Jim) M. Cullem to serveas the Executive Director for the MPRWA.

DISCUSSION:

At its meeting of January 24, 2013, the Water Authority Board approved

Resolution 2013-04 and entered into an annual, renewable, contract with

the City of Monterey for Executive Director services. In May 2013, with the

approval of the Water Authority Board, the City hired Jim Cullem through

an annual, renewable contract as Executive Director. The contract with the

City was extended to June 30, 2016. The City also extended Jim Cullem's

contract to June 30, 2016.

At its meeting of March 10, 2016, the Water Authority Board will conduct a

performance review of the Executive Director and should therefore be in a

position to determine if Jim Cullem should continue to serve in that position.

The Authority is also requested to authorize the President to sign the

necessary documents prior to the June 30, 2016 contract expiration date.


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The Executive Director position for FY 2015-2016 is budgeted. The City ofMonterey is reimbursed for Director salary by invoice and the City receives

$5,000 a year to provide the official office of the MPRWA. Funding of the

position for FY 2016-2017 will be addressed at the Authority budget

meeting in May 2016.

ATTACHMENTS:

None


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Item No: 7.


SUBJECT: Adoption of Resolution 16-03 Approving an Extension of the Agreementwith the City of Monterey for Clerk of the Board, Clerical, and FinancialSupport Services, and Authorizing the Authority President to Execute aContract with the City of Monterey for at a Price of $30,000 for the PeriodJuly 1, 2016 to June 30, 2017.

RECOMMENDATION:

It is recommended that the Authority adopt Resolution 16-03 authorizing an extension ofthe agreement with the City of Monterey for Clerk of the Board, and Clerical andFinancial Support services, and authorize the Authority President to execute a contractaccordingly on behalf of the Water Authority at a price of $30,000 for the period July 1,2016 to June 30, 2017.

DISCUSSION:

When the Monterey Peninsula Regional Water Authority was formed as a JPA in 2012,the intent was for the member agencies to provide Executive Director andAdministrative and Clerical support services on a rotating basis. Over time it became

obvious that this was not a workable arrangement as the time demands weresubstantial and there was need for more specialized expertise. In Feb 2013 theAuthority contracted with the City of Monterey to serve as Agency of Record and toprovide the Executive Director and Clerk of the Board Services.

In September 2013 Monterey sub-contracted with the City of Seaside to provide theClerk of the Board but retained the contract to remain the Agency of Record and toemploy the Executive Director on a reimbursable basis.

The City of Carmel-by-the-Sea provided financial services on a pro-bono basis. InJanuary 2014, the City of Seaside assumed financial services as a part of the ClericalServices contract.

On September 11, 2014 the City of Seaside contracted directly with the Authority toprovide Clerk, administrative, and financial services. Monterey agreed to provide back-up for Seaside.

In February 2015, the City of Monterey and the Authority extended the contract forAgency of Record and Executive Director services until June 30, 2016.


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The Agreements with Monterey and Seaside provided that any party could give 30 daysnotice to discontinue providing respective services. Due to an increasing workload atSeaside, the Clerk of the Board was unable to serve the Water Authority past the end of2015. Accordingly, Seaside gave notice it would terminate its contract with the Authorityas of Dec 31, 2015.

In order to provide a maximum of continuity and to retain access to the City of Monterey(Agency of Record) computer system, the City of Monterey contracted with the WaterAuthority to provide clerk of the Board and Clerical Support Services from January 1,2016 through June 30, 2016.

Seaside contracted to provide Financial Support services through June 30, 2016.

The City of Monterey has indicated a willingness to extend the contract foradministrative support and Clerk of the Board services and to assume responsibility forfinancial support services for FY 2016-2017at an annual fee of $30,000.


Funding for this agreement in FY 2016-2017 will be addressed during budgetdiscussions in May 2016.

ATTACHMENTS:

A- Resolution 16-03


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1

RESOLUTION NO. 16-03

RESOLUTION OF THE MONTEREY PENINSULA REGIONAL WATER AUTHORITYAPPROVING AN AGREEMENT WITH THE CITY OF MONTEREY FOR PROVIDING

ADMINISTRATIVE, BOARD CLERK, AND FINANCIAL SERVICES

WHEREAS, the City of Monterey is a participating Member of the MontereyPeninsula Regional Water Authority; and

WHEREAS, the Authority has deemed it to be more efficient to contract forcontinuous administrative services rather than rotating between member cities; and

WHEREAS, the City of Monterey served as the Office of Record for the Authorityfrom 2012 to 2016; and

WHEREAS, the City of Monterey resumed the contract with the Authority to provideadministrative support and Clerk of the Board services from January 1, 2016 to June 30,2016 at a fee of $15,000; and

WHEREAS, the City of Monterey has indicated a willingness to continue providingadministrative support and Clerk of the Board services, and to assume financial supportservices for the period July 1, 2016 to June 30, 2017 at a fee of $30,000;

NOW THEREFORE BE IT RESOLVED, that the Authority President is herebyauthorized to execute a contract between the Monterey Peninsula Regional WaterAuthority and the City of Monterey to provide administrative, Board Clerk and financial

services, as outlined in Exhibit A, for the period July 1, 2016 to June 30, 2017 for a fee of$30,000.

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

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

ABSTAIN: DIRECTORS:

ATTEST:

__________________________

APPROVED:

Clerk of the Board Jason Burnett President


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2

EXHIBIT A

SCOPE OF SERVICES/PAYMENT PROVISIONS

CLERK OF THE BOARD AND FINANCIAL SERVICES

I. City of Monterey to Provide the Following:

A. Clerk of the Board and Administrative Services:

♦ Produce and distribute Agendas and Packets for Board & TAC meetings♦

Attend & take minutes at Board & TAC meetings♦ Transcribe, format, & finalize meeting minutes♦ Complete administrative paperwork to follow up on Board actions♦ Records management services♦ FPPC filing administration♦ Website administration

B. Financial Services

♦ Financial services in accordance to the adopted Financial policies andProcedures including the following:

o Production of an annual budget and budget amendments asnecessary

o General Journal Entry Procedures, Expenditures and Disbursementso Bank Reconciliation and Final Budget Closing processes

C. Equipment:

♦ Office space and computer work stations for staff assigned to waterauthority functions

♦ Administrative and clerical supplies related to Clerk’s Office activity.♦ Monterey City Council Chamber as a meeting facility

♦ Audio-visual equipment that exists in the Council Chamber♦ Office space and computer work stations with content management

software in Monterey.

D. Miscellaneous Services Performed by City of Monterey:


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3

♦ Monterey to set up and prepare the meeting rooms for Board and TACmeetings

♦ Payroll Services for Monterey employee(s) providing these services♦ Tracking of employee hours and resultant costs of services provided

II. MPRWA to Provide the Following:

♦ An amount of $15,000 semi-annually, paid to the City of Monterey at thecommencement of the contract, and to be allocated as a portion ofSalaries within the Office of the City Clerk to be paid as part of the regularpayroll to employee(s) performing the services described in Exhibit A herein


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Item No: 8.

№06/12


SUBJECT: Authorize the Utilization of $10,000 from Contingency Funds to Pay forPreparation of a Technical Report as a Part of the Water Authority'sRebuttal Testimony on The Testimony of Curtis Hopkins, Hydrogeologistfor the Marina Coast Water District

RECOMMENDATION:

Staff recommends that the Water Authority authorize the utilization of $10,000 fromContingency Funds to Pay for the preparation of a technical report as a part of theWater Authority's rebuttal on The testimony of Curtis Hopkins, hydrogeologist for theMarina Coast Water District.

DISCUSSION:

At its meeting of Dec 10, 2015, the Water Authority Board approved an extension of theSeparation Processes Inc (SPI) "DEIR Review Services Agreement" to 30 June 2016to provide technical Support from it hydrogeological sub-consultant Geosyntec for

MPRWA comments on CPUC supplemental testimony and to report periodically onfuture Hydrogeological Working Group (HWG) Analyses.

At the December meeting the Board also authorized the Executive Director to executeand administer a change order (C/O #2) to prepare Authority testimony on brinedisposal, and approved the expenditure of not-to- exceed $10,000 from reserve funds topay for the work. Supplemental testimony on brine disposal was prepared by Geosyntec(Al Preston) and submitted to the CPUC on January 22, 2016.

On January 22, 2016 supplemental testimony on the hydrogeological model, theHydrogeological Working Group (HWG) analysis, and on the slant well intake water

system were submitted to the CPUC by Marina Coast Water District (MCWD) andCurtis Hopkins. Rebuttal testimony is due to the CPUC by March 22, 2016. This issue isaddressed in more detail on agenda item #9.Accordingly, since time was of the essence, the Executive Director directed the use ofnot-to-exceed $10,000 in Contingency Account funds, subject to authorization of theWater Authority at its meeting of March 10, 2016, to have Geosyntec (Gordon Thrupp)provide consultant support, prepare an independent technical report as a basis for


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rebuttal testimony, and, if necessary, attend CPUC hearings on the issues raised byMCWD.

FISCAL IMPACT:

The FY 2015-2016 Water Authority budget has a contingency fund balance of $10,000.The Board is requested to authorize the use of the contingency funds for GordonThrupp's work.

ATTACHMENTS:

None


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Item No: 9.

№06/12


SUBJECT: Receive and Discuss Recommendations from the Technical AdvisoryCommittee (TAC) and from Staff on CPUC Testimony Submitted onJanuary 22, 2016 and Provide Direction

RECOMMENDATION:

Staff recommends that the Water Authority receive recommendations from the TACand from staff on the supplemental testimony that was submitted to the CPUC ALJ,

especially that from Tom Moore and Curtis Hopkins, and provide direction to staff withrespect to any rebuttal testimony.

DISCUSSION:

Cal Am provided updated costs estimates to the CPUC on December 15, 2015, and theMPRWA, the MPWMD and the MRWPCA did the same on January 22, 2016.

The supplemental testimonies submitted with the approval of the Water Authority Boardby Mayor Jason Burnett (Board President) and by Al Preston of Geosyntec (Authority's

hydrogeologic expert) are at attachments A and B.

The supplemental testimony submitted by Tom Moore of the MCWD Board and thatsubmitted by Curtis Hopkins, a hydrogeologist for the MCWD, as well as allsupplemental testimony that was submitted by intervenors, can be reviewed at theWater Authority Web page under "Documents" within "Resource Central".

Following several conference calls with Russ McGlothlin, the Authority Special Counsel,and discussions at the TAC, the Executive Director recommends that the Authorityextend its existing contract with Separation Processes Inc (SPI), and its hydrogeologistsub-consultant Geosyntec (Gordon Thrupp), to prepare a technical report on the

Hopkins testimony. Thrupp's report would serve as the basis of rebuttal testimony fromthe Authority due to the CPUC ALJ by March 22, 2016.

Additional comments and recommendations from the TAC meeting of March 7 will beprovided to the Board at the meeting.


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FISCAL IMPACT:

The $10,000 fiscal impact of the additional Geosyntec work is addressed in consentagenda item #8.

ATTACHMENTS:A- Testimony of Jason BurnettB- Testimony of Al Preston


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BEFORE TH E PUBLIC UTILITIES COM MISSION

OF THE ST TE OF C LIFORNI

In the Ma tter of Application of California-

Amer ican Water Company U210W) fo r

Approval of the M onterey Peninsula W ater

Supply Project and Authorization to R ecover All

Present and Future Costs in Rates

A.12-04-019

Filed April 23, 2012)

SUPPLEMENT L TESTIMONY OF J SON BURNETT

RU SSELL M . MC G LO TH LI N SB N 20 882 6)

JENA R. SHOA F SBN 296060)

B R O W N S T E I N H Y A T T F A R B E R S C H R E C K , L L P

1020 S tate Street

Santa Barbara , CA 9 3101

Telephone: 805) 963-7000

Facsimile: 805) 965-4333

Email: [email protected];

-

shclifs sjon

Attorneys for:

M O N T E R E Y P E N IN S U L A R E O IO N A L W A T E R

AUTH O RI TY

Dated: January 22,2016


41/145

BEFORE THE PUBLIC UTILITIES COMMISSION

OF THE ST TE OF C LIFORNI

In the M atter of Appl icat ion of Cal i fornia-

Am er ican Water Company (U210W ) fo r

Approval of the Monterey Peninsula Water

Supply Project and A uthorization to Recover All

Present and Future Costs in Rates

A.12-04-019

(Filed April 23, 2012)

T BLE OF CONTENTS

I .

Int roduct ion

1

II .

The W a te r Au thori ty s Su ppor t fo r I nc lu s ion o f G W R in t he M P W SP

V .

The W ater Author i ty s Suppor t for the Return W ater Se tt lement Term Sheet

VI. The W ater Author i ty s Suppor t for the Br ine Discharge Se t tlement Term Sheet

2


42/145

SUPPLEMENTAL TESTIMONY OF JASON BURNETT

I.

ntroduction

Ql:

lease state your nam e and business add ress.

Al: My n am e is Jason Burnett . My business ad dress is Carme l-by-the-Sea City Hall, Monte

Verd e St., Carmel-by-the-Sea, CA 93921.

Q2: By whom are you em ployed and in what capacity?

A2: I am currently the M ayor of the City of C armel-by-the-Sea, California. I was elected

Mayor in 2 012, was reelected in 2014, and was previously a mem ber of the City Coun cil from

2010 through 2012.

Q3: What offices and roles do you perform for the Mon terey Peninsula Regional Wa ter

Authority ( Water Authority )?

A3:

am cu rrently the President of the Water Autho rity. I was previou sly its Vice-Presiden t

and the Chair of its Technical Advisory Co mm ittee. I have been highly involved in the Water

Authority's efforts concerning the Monterey Peninsula Water Supply Project (MPWSP)

proposed by the California-American Water Company ( Cal-Am ) as well as efforts pertaining

to this proceedin g before the California Public Utilities Com mission ( CPUC ). I am also the

Wa ter Authority's principal representative to the Mon terey Peninsu la Water Supply Project

Go vernance Com mittee, which was established to afford comm unity input into the planning and

developm ent of the MPWSP, and I chair that comm ittee.

Q4: Have yo u tes t i fied before the CPUC ?

A4:

es, I provided testimo ny in the prior evidentiary phase of this proceeding in 2013 .

Additional background testimony concerning my education and professional experience and the

role of the Water Authority and its efforts concerning the MPW SP are set forth in my earlier

testimony. I have also testified in an un related proceeding involving PG &E g as distribution.

Q5: What is the purpose of yo ur tes t im ony ?


43/145

A5:

he purpose of my testimon y is to testify in support of the following sub jects:

•

Inclusion of the Pure Water Monterey Project, commonly referred to as the groundwater

replenishment project or GWR as a component of the MPWSP;

•

The return water settlement term sheet; and

•

The draft brine discharge settlement term sh eet.

H .

he W ater Authority s Support for Inclusion of GWR in the MPW SP

Q6: What is the Water Authority s position on whether GWR should be a component of the

MPWSP?

A6: The Water Authority has long supported a portfolio approach to solving our water supply

challenges. However, at the time of the submission of my earlier testimony we did not know

whether the GWR project would advance to the point of warranting our support for inclusion in

the portfolio. At that point, in 2013, we supported the notion of including the

possi ility

of GWR

with a smaller desalination facility (6.4 million gallons per day or MGD) or the possibility of a

larger desalination facility (9.6 MGD) without GWR. Since 2013, the Water Authority and the

Governance Committee have pursued both options including through the request for proposal

(RFP) process for the design-build firm and a value engineering process that evaluated both 6.4

MGD and 9.6 MGD desalination plants. By pursuing both options, we kept both options open

until more information was available.

Since the submission of my earlier testimony, the Water Authority has held numerous public

meetings to receive updates on the planning efforts for the GWR project, to receive public

comment regarding the same, and to provide an opportunity for discussion by the Water

Authority's board of directors concerning the merits of including the GWR project as a

component of the MPWSP. We now conclude that GWR should be a component of the MPWSP.

Q7: What does the Water Authority consider to be the most important issues pertaining to

whether the GWR project should be a component of the MPWSP?

A7: The Water Authority believes the key issues include: (i) the timing of development of

GW R, (ii) the certainty of app rovals, financing, and project viability; (iii) potential

2


44/145

im pr

ov em

ents t

o the

Mon

tere y

Pen i

nsula

's w at

er su

pply

re liab

il ity;

(iv) p

oten

tial in

terim

ass

istanc

e in m

eeti

ng th

e requ

irem

ents o

f a p

ropos

ed m

odifie

d Ce

ase an

d De

sist O

rder

(see

Attac

hmen

t 1),

whic

h is p

resen

tly un

der c

onsid

eratio

n by

the S

tate W

ater

Reso

urces

C on

trol

Bo

ard (

SW R

CB

); (v)

relat

iv e en

viron

men

ta l im

pacts

of G

W R a

nd d

esalin

ation

; (vi)

the v

alue

of co

ntinu

ing a

nd en

han c

ing th

e com

mun

ity c

onsen

sus a

round

a po

rtfoli

o of

water

sup p

ly

p

ro jec

ts; an

d (vii

) the

ra te i

mplic

ation

s o f G

W R

's inc

lu sion

. T he

M on

terey

Pe n

insula

W at

er

M an

age m

ent D

istri

ct ( M

PW

M D )

and

the M

onte

rey R

egion

al W

ater P

ollut

ion C

ontro

l A g

en cy

(

MR.W

PCA

), i

n con

sultat

ion w

ith th

e W a

ter A

uthor

ity an

d Ca

l-Am

have

expl

ored

vario

us

effor

ts to

lower

the c

ost o

f GW

R, in

cludi

ng th

e term

s app

licab

le to

GW R

with

in th

e Sett

leme

nt

Agre

emen

t (dis

cusse

d bel

ow),

grant

fun d

ing, c

ost s

ha ring

, and

valu

e eng

ineer

in g.

Q8: Please describe the criteria set forth in the Settlement Agreement pertaining to GWR.

A

8: Th

e Se

ttlem

ent A

gree

ment

whic

h wa

s ent

ered

into b

y the

Wat

er A

uthor

ity an

d mo

st of

th e pa

rties

to th

is pro

ceedi

ng, a

nd su

bmitt

ed to

CPU

C on

July

31, 2

013,

prov i

des th

at th

e

de

cisio

n w h

ether

to in

clud e

GW R

as a

co m

pon e

nt of

th e M

PW S

P sho

uld b

e b as

ed on

whe

ther

nine

criter

ia are

satis

fied.

I have

para

phras

ed th

e nin

e crit

eria f

rom t

he Se

ttlem

ent A

greem

ent a

s

fo llow

s:

1.

A

n Eli

ft has

been

com

plete

d for

GW R

with

out c

hallen

ge;

2.

P

ermi

tting

is on

sched

ule;

3

.

The

re is s

uffic

ient l

egal c

ertain

ty re

gardi

ng th

e GW

R pro

ject

abilit

y to p

roduc

e

suffi

cient

wa ter

;

4.

Th

e Cal

iforn

ia De

partm

ent o

f Hea

lth o

r the R

egio

nal W

ater

Qual

ity Co

ntrol

Boa

rd wi

ll lik

ely ap

prov

e the

GW R

extr

actio

n and

GW

R trea

tmen

t and

injec

tion

p

roces

ses;

5

.

The

GW R

Proj

ect is

on s

chedu

le;

6.

Prelim

inar

y des

ign fo

r the

G W R

Pro

ject is

suffi

cient

to ge

nerat

e an a

ccur

ate

project cost estimate;

7.

A suf

ficie

nt ly d

etaile

d G W

R P

ro ject

fun d

ing p

lan to

supp

ort a

n app

licati

on fo

r a

Stat

e Rev

olvin

g Fu

nd lo

an is

in pla

ce;

8.

Calif

ornia

A me

rican

Wate

r, M

PW M

D, an

d M R

W PC

A h

ave a

greed

on a

W PA

w

ith ju

st an

d reas

onab

le ter

ms; a

nd


45/145

9

he

reve

nue r

equir

emen

t for

the co

mbin

ation

of th

e GW

R Pr

oject

and

the sm

aller

d

esalin

ation

is ju

st an

d reas

onab

le wh

en co

mpa

red to

the r

even

ue req

uirem

ent

for

a la

rger d

esali

natio

n pro

ject a

lone.

Q

9: D

oes t

he W

ater A

utho

rity

belie

ve th

e nin

e crit

eria f

or the

GW

R de

cisio

n set

forth

in th

e

Set

tleme

nt Ag

reem

ent h

ave b

een s

atisfi

ed?

A9:

e

s, the

W at

er Au

thori

ty co

nclud

es th

at the

nine

criter

ia ha

ve be

en sa

tisfie

d. Th

e firs

t

eig

ht cri

teria

have

been

defin

itivel

y sati

sfied

. Afte

r ext

ensiv

e ana

lysis,

publ

ic me

eting

s, and

d

iscu

ssion

by its

boar

d, th

e W a

ter Au

thor

ity co

nclud

es th

at the

ninth

crite

rion

has a

lso be

en

s

atisfi

ed .

Q1

0: W

hy d

oes th

e Wa

ter A

utho

rity c

onclu

de th

at th

e nint

h cri

terion

has

been

satisf

ied?

A10:

The

inclu

sion o

f GW

R w

ill lik

ely r

esult

in a

cost p

remi

um t

o the

Cal A

m r

atepa

yers

in

mos

t year

s, bu

t we b

eliev

e it is

like

ly to

be mo

dest

and a

ccep

table

when

weig

hed a

gain

st the

ot

her b

enefi

ts obt

ained

from

the

GW R

proj

ect.

Q1

1: Ple

ase e

xpla

in wh

y yo

u anti

cipat

e tha

t the

inclu

sion o

f GW

R w

ill lik

ely r

esult

in a

cost

pre

mium

.

Al

1: T

he A

uthor

ity be

lieve

s tha

t cost

diffe

renc

es sh

ould

first b

e ex

amin

ed ba

sed o

n a

c

ompa

rison

of ne

t pre

sent v

alue

NPV

) of

the li

fetim

e pro

ject c

osts o

f eac

h opt

ion G

W R

plus

sm a

ller d

esali

nation

vers

us la

rger d

esali

natio

n) and

then

w e s

houl

d also

cons

ider

any in

ter-

tem

po ral

cost

diver

ge nce

s ove

r the

life o

f the

proj

ects.

The M

PW

M D,

M RW

PCA

, and

C al-

Am

have

deve

loped

a co

st mo

del a

nd th

e W a

ter A

uthor

ity co

ncurs

that

it is a

n app

ropr

iate m

odel

.

The

cost

mode

l allo

ws u

s to c

hang

e key

varia

bles

to dev

elop

a rea

sonab

le ar

ray o

f scen

arios

. The

v

ariab

les in

clude

w he

ther g

rant

fundi

ng is

obtai

ned f

or the

G W

R pro

ject,

the fu

ture

escal

ation

in

the c

ost o

f elec

tricit

y low

er co

sts in

crea

se the

prem

ium

for th

e GW

R/sm

alle

r desa

linat

ion

hyb

rid op

tio n

, h ow

muc

h of

ex isti

ng su

nk -c

osts i

ncu rr

ed by

th e M

PW

M D

an d M

RW

PCA

will

be in

clude

d in c

ost re

imbu

rsem

ent th

roug

h rate

s, wh

ether

any

cost-

sharin

g ag

reeme

nt fo

r the

GW

R pi

pelin

e can

be ag

reed

to wi

th oth

er lo

cal ag

enci

es, an

d the

disco

unt r

ate u

sed fo

r the

N PV

ca

lcula

tion.

Depe

nding

o n t

he va

riabl

es inp

utted

in th

e mo

del, w

e ha

ve de

velop

ed a

high-

,

m

ed ia

n-, an

d low

-cos

t s cen

ar io.

The

de tai

ls of

the co

st m

od el a

nd it

s ou tc

om e

s bas

ed on

4


46/145

diff

eren

t var

iable

s are

set

fo rth

in th

e te

st im

ony f

iled

by D

avi d

Sto

ld t, G

ene

ra l M

ana

ger o

f th e

M P

WM

D.

M ost sce narios sh ow a higher N PV with the inclusion of GWR. How ev er, under m os t sce narios

t

he co

st d i

ffere

nce

is w

ithin

abou

t fiv

e pe

rcen

t of t

he re

ven u

e re

qu ire

men

t of

the t

otal

M PW

SP

cos

ts (i.

e. , th

e NP

V c

osts

of G

W R

plus

sma

ller d

esa l

in at i

on p

lant

is wi

th in

five

perc

en t o

f th e

NP

V co

st of

the

stand

-a lo

ne la

rger

desa

lina

tion

plan

t). (S

ee S

up pl

em e

ntal

Tes ti

mon

y of

D av

id

S

told

t, file

d Ja

nu ar

y 22

,201

6, A

ttach

men

t 2

GW R

Co

st C

omp

ariso

n M

od el

M ed

ian

Cos t

Sce

nario

.) T h

is fi

ve p

ercen

t fig

ure i

s wi

th in

th e r

an ge

of e

xist i

ng co

st u

ncer

ta int

ies. T

his

t

rans

lates

into

an a

pp ro

xim

ately

one

perc

en t

im pa

ct on

the

ave

rageC

al -A

m w

ater

b ill

in th

e fir

st

yea

r of

opera

tion

or a

bout

an $

1 pr

em iu

m p

er m

onth

fo r t

he av

erag

e C a

l-Am

cu

stom

er . (

See

Supplementa l Tes timony o f Jef frey Linam, filed Jan ua ry 22, 2016 .)

Un

de r m

os t

m od

el sc

en ar

ios t

he c

ost d

iffer

en tia

l de c

reas

es o

ve r t

im e

(i.e.,

the

GW R

pre

m iu

m

dim

in ish

es ).

In fa

ct , i

n the

late

r yea

rs m

odel

ed , t

he la

rg e d

esa l

in at i

on w

ith n

o GW

R

actua

lly

i

nc ur

s a p

remi

um u

nde

r the

med

ian-c

ost

sc en

ar io.

How

eve r

, the

tem

pora

l dif

fe ren

ce s

are n

ot

s

ignif

ican

t, an

d in

ou r j

ud gm

en t

, it is

fair

to a

ck no

wled

ge t

hat t

here

will

likel

y be

a m

od es

t co s

t

pr e

m ium

if G

WR

is i

nc lu

de d

with

in th

e M P

W S

P esp

ec ia

lly f

ro m

the p

ersp

ec ti

ve of

toda

y's

ra

tepa

yers .

Q 2

: W

hy d

oes t

he W

ater Authority deem t