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MINUTES OF THE REGULAR BOARD MEETING

BOARD OF DIRECTORS INDIAN WEI.T.S \/A. I.I.EV W7.\T8B DTSTBI

February 13, 2017

The Regular Meeting of the Board of Directors of the Indian Wells CALL TO ORDER Valley Water District was called to order by President Brown at 6:00 p.m. in the Board of Directors Hearing Room, 500 West Ridgecrest Boulevard, Ridgecrest, California.

The Pledge of Allegiance was led by Jim Worth.

DIRECTORS PRESENT:

DIRECTORS ABSENT:

ALSO PRESENT:

President Peter E. Brown Vice-President Charles F. Cordell Director Donald J. Cortichiato Director Charles D. Griffin Director Ronald R. Kicinski

None.

Jim Worth, Attorney; Don Zdeba, General Manager; Jason Lillian, Operations Superintendent; Renee Morquecho, Chief Engineer; Jennifer Keep, Chief Financial Officer; Rose Koch, Recording Secretary;

AGENDA DECLARATION

Recording Secretary, Rose Koch, reported that the agenda for tonight's Regular Board Meeting was posted on Friday, February 10, 2017.

Jim Worth announced that a matter has come before the Board of Directors after posting of the Regular Board Meeting Agenda that requires immediate action by the Board. The item being 'Receipt of written claim to threaten potential litigation against the District.' This item will be discussed in Closed Session.

None.

MOTION: was made by Director Cortichiato and seconded by Vice­President Cordell to add proposed item to the Closed Session Agenda. Motion was carried, unanimously. (Ayes: Brown, Cordell, Cortichiato, Griffin, Kicinski. Nays: None.)

CONFLICT OF INTEREST DECLARATION

PUBLIC QUESTIONS AND COMMENTS

Public making comment: Renee Wes ta-Lusk commented on the Notice of Preparation of Environmental Impact Report for Kern County Marijuana Land Use Ordinance. Mike Neel commented on the perception of a conflict of interest with Director Kicinski and the hiring of TOSS

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PLEDGE

ROLL CALL

AGENDA DECLARATION

CONFLICT OF INTEREST

PUBLIC COMMENTS

temporary employees. Mr. Neel also commented on recording/videoing future board meetings. Elaine Mead also commented on recording/videoing future Board meetings. Judie Decker reported that

ina o:f the Eastern Kern Countv Resource Conservation District (EKCRCD) it was announced that California City was proceeding with and investigating the details of hydroponic marijuana growing. Judie Decker commented on the possible conflict of interest between Jim Worth as the District's legal counsel and Gene McMurtrey as the legal counsel on the proposal to import water from Fremont Valley. Jim Worth and Gene McMurtrey are partners with the firm McMurtrey, Hartsock and Worth.

CONSENT CALENDAR

MOTION: was made by Director Cortichiato and seconded by Director Kicinski to approve the Minutes of the January 9, 2017 Regular Board Meeting, January 2 4, 201 7 Special Board Meeting Workshop, and to approve payment of Accounts Payable totaling $2,180,633.56.

his Meeting

These 2017

Director Griffin commented that for the record, he would like written comments of the January 24, 2017 Special Board Workshop be included with tonight's board meeting minutes. comments will be included as an attachment to the February 13, Regular Board Meeting Minutes.

Motion was carried, unanimously. Cortichiato, Griffin, Kicinski. Nays:

(Ayes: None.)

Brown, Cordell,

CONSENT CALENDAR

PLANT AND EQUIPMENT COMMITTEE P & E

Renee Morquecho reported that the East Kern Air Pollution Control EKAPCD District (EKAPCD) is requesting permission to install a new air REQUEST quality monitoring station on District property located off Primavera Street and Sydnor Avenue (Wells 9A/10 site). The current outdoor station at City Hall is not capable of meeting the needs of the new station. The new station will need 100-amp electrical service, a shelter to house electronic equipment, HVAC system, and 33-foot tall antenna. The building requires a 10-foot x 12-foot concrete slab. The committee recommended allowing the EKAPCD to construct the air quality monitoring station on District property provided they pay for their own electricity. The committee also recommended that the current Southern California Edison (SCE) account, which serviced old Well 8, be transferred to EKAPCD once the station is operable.

MOTION: was made by Vice-President Cordell and seconded by Director Griffin to approve EKAPCD to construct the air quality monitoring station on District property with the caveat they pay for their own electricity and the current account with SCE be transferred to EKAPCD once the station is operable. Motion was carried, unanimously. (Ayes: Brown, Cordell, Cortichiato, Griffin, Kicinski. Nays: None.)

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On Wednesday January 18, 2017, the District received one (1) bid for AWARD OF subject project from Layne Christensen Company. The bid amount was CONTRACT: RE­$ 337, 255. 00. EQUIP WELL 34

A pre-bid job walk was required to bid on this project. Two other contractors participated in the job walk but did not bid the project. When contacted, both indicated they did not realize how much site work was required and simply did not have a construction crew or subcontractor available to do the work at this time.

The bid by Layne included exceptions to some of the insurance requirements and also the disinfection requirements. After review by legal counsel, two items were of concern that the District could not waive. After discussion with Layne, Layne agreed to drop those two requests.

The committee recommended awarding the contract for re-equipping Well No. 34 to Layne Christensen Company in the amount of $337,255.00.

MOTION: was made Director Kicinski to No. 34 to Layne $337,255.00. Motion Cordell, Cortichiato,

by Director Cortichiato award the contract for

Christensen Company in was carried, unanimously. Griffin, Kicinski. Nays:

and seconded by re-equipping Well

the amount of (Ayes: Brown,

None.)

Vance Corporation completed the site grading for Well No. 35 on ACCEPTANCE OF December 16, 2016. No preliminary or stop notices were received. The CONTRACT Contract Work was completed in accordance with the contract documents. WORK: VANCE The committee recommended the Board accept the Contract Work performed CORPORATION by Vance Corporation for $80,700.00 and release retention of $4,035.00.

MOTION: was made by Director Kicinski and seconded by Vice­President Cordell to accept contract work performed by Vance Corporation in the amount of $80,700.00 and release retention of $4, 035. 00. Motion was carried, unanimously. (Ayes: Brown, Cordell, Cortichiato, Griffin, Kicinski. Nays: None.)

All work performed by Eric Onstott Construction for the Construction ACCEPTANCE OF of Temporary Pavement Replacement has been completed in accordance CONTRACT with the contract documents. No preliminary or stop notices were WORK: ONSTOTT received. The committee recommended the Board accept the Contract CONSTRUCTION Work performed by Eric Onstott Construction in the amount of $233,478.50 and release retention of $11,673.92.

MOTION: was made by Director Griffin and seconded by Director Cortichiato to accept contract work performed by Eric Onstott Construction in the amount of $233,478.50 and release retention of $11,673.92. Motion was carried, unanimously. (Ayes: Brown, Cordell, Cortichiato, Griffin, Kicinski. Nays: None.)

ADMINISTRATION/EXECUTIVE COMMITTEE ADMIN/EXEC

Resolution No. 17-01 was presented for concurring in nomination to the RESO 17-01 Executive Committee of the Association of California Water Agencies Joint Powers Insurance Authority ( "ACWA JPIA") . Cucamonga Valley Water District has requested support of Director Kathleen Tiegs' nomination through the adoption of a concurring resolution.

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MOTION: was made Director Kicinski, nomination to the

by Vice-President Cordell and seconded accepting Resolution 17-01 for concurring Executive Committee of the ACWA JPIA.

President Brown: Vice-President Cordell: Director Cortichiato: Director Griffin: Director Kicinski:

Yes Yes Yes Yes Yes

by in

The

The Board discussed the proposed policy for delinquent insurance DELINQUENT premium payments for Retirees, Directors, and COBRA Recipients INSURANCE (Recipients). There has not been any previous policy to follow for PREMIUM delinquent insurance premium payments. Proposed policy includes the PAYMENT following: POLICY

Recipients are billed the first business day of each month. Recipients become delinquent if not paid by the first day of the month after billing. Delinquent balances will be charged a $2.00 late fee plus five percent (5%) on the late balance each month. If delinquent, the next bill sent will include a courtesy notice of delinquent status. The notice will state "If your previous balance remains unpaid 10 days after the billing date of this invoice, a Reminder Letter will be generated for $6.00." No sooner than eleven days after the bill with the courtesy notice was sent, the Administrative Assistant will mail a Reminder Letter to the Recipient via U.S. first class mail.

This procedure will continue until the account is 90 days past due, at which time, the District shall seek legal resolution which may include termination of benefits.

MOTION: was made by Director Kicinski and seconded by Director Cortichiato to approve the Delinquent Account Procedure for Health Insurance Premium Contributions for Retirees, Directors, and COBRA Recipients as presented.

Vice-President Cordell expressed concern with the termination of benefits and suggested termination should be considered on a case-by­case basis.

Jim Worth recommended that if there was someone who had reached the termination point, it could come back to the Board of Directors for consideration.

Before termination of benefits, the Board of Directors will discuss and take under consideration.

MOTION: was made by Director Kicinski and seconded by Director Cortichiato to amend the previous motion to include that before termination of benefits, it will come before the Board of Directors for discussion and consideration. Motion was carried, unanimously. (Ayes: Brown, Cordell, Cortichiato, Griffin, Kicinski. Nays: None.)

Don Zdeba presented the revisions to draft Ordinance No. 101 Adopting ORDINANCE 101 Regulations and Penalties to Identify and Discourage Excessive Water Use Pursuant to Senate Bill 814. As per discussion at the January 24,

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2017 Special Board Meeting Workshop, a redline version of draft Ordinance No. 101 was included in the Board Packet.

1) changes of reference to Exhibit A, 2) Ordinance 101 to also apply to Cormnercial use and Cormnercial Customers, and 3) an assessed fine of 1% of the total Tier 3 and Tier 4 use during that billing cycle until the Drought State of Emergency is declared over by the Governor or like action. The Ordinance will be published in its entirety in a local media within 10 days of adoption.

Don Zdeba reported that it has come to his attention that the District's 2015 Urban Water Management Plan Section 6. Water Supply Reliability and Water Shortage Contingency Planning, Section c. Excessive Use Penalties defines "excess water" as "the amount of water delivered in excess of the specific customer's established allotment during any billing period; however, if a customer's total annual usage is equal to or less than the annual allotment ... " In Don Zdeba' s opinion, this definition is vague. Section c. also states "During any declared water shortage emergency, a customer who exceeds the established allotment will pay a surcharge of two times the highest rate tier per hundred cubic feet (ccf) for excess water delivered during the first or second billing period, and a surcharge of four times the highest rate tier per ccf for excess water delivered during the third and subsequent consecutive billing periods."

Don Zdeba recormnended to the Board that this item be tabled, brought to the Administration/Executive Committee, and then to the Board of Directors at the March 13th Regular Board Meeting.

Director Kicinski inquired what the ramifications were if the District did not comply with Senate Bill 814.

Jim Worth suggested review of the 2015 Urban Water Management Plan to see if it meets the State's requirement of Senate Bill 814, add an appeal process, remove any ambiguity, and keep penalties to a minimum.

INDIAN WELLS VALLEY GROUNDWATER AUTHORITY (IWVGA)

President Brown reported that there were four presentations at the January 19th meeting. Presentations may be found on the Kern County website. The bylaws were discussed. Draft bylaws will be distributed at the Groundwater Sustainability Agency's (GSA) Board meeting to everyone for their agencies to approve. The goal is to have the bylaws approved by March. One change in the bylaws is the addition of a Water Resource Manager. Jim Worth recommended that the Board keep discussion at a minimum and that it would be more appropriate for the discussion to take place at the GSA meeting. The bylaws will be voted upon at the March 16th GSA meeting. Once the bylaws have passed, the goal will be to get the Policy Advisory Committee (PAC) in place as soon as possible.

The next IWVGA meeting will be held Thursday, February 16th at 10: 00 a.m.

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IWVGA

GENERAL MANAGER AND STAFF UPDATE

GENERAL MANAGER & STAFF UPDATE

Don Zdeba updated the safety record to 762 consecutive days without a SAFETY, recordable injury. PRODUCTION &

NEW SERVICES Metered water production at the wells for the month of January was 97,643,700 gallons (299.7 acre-feet). The number the State Water Resources Control Board (SWRCB) is using for comparison is metered water through the distribution system or consumption, and non-revenue water which is water lost to leaks, flushing activities, blow-offs, etc. For the month of January, the number is 99, 360, 000 gallons (304.9 acre-feet). The conservation results for January were reported to the SWRCB on February 6th. Consumption was down 25.5% compared to January 2013. The 20% conservation target established by the Board of Directors took effect June ist. For the eight-month period since, the District's cumulative result is 21% exceeding the goal by 1%.

For the month of January, the District's reported R-gpcd was 88, 10% lower than January 2015 and 4.3% lower than January 2014.

There were three new connections during the month of January. Total number of new connections for this fiscal year is 30, contributing $231,450.00 in revenue.

Public Outreach: Don Zdeba attended the Community Collaborative meeting at City Hall on February 7th. Mr. Zdeba provided the following update:

> Conservation results for January and the cumulative results since the Board adopted the 20% target beginning in June.

> State Water Resources Control Board will be meeting to consider a staff recommendation to extend the Emergency Drought actions set to expire the end of this month.

> Conductor pipe being set for Well No. 34. > Mr. Zdeba has accepted an invitation to speak at the

Democratic Club on Saturday at noon. > The District will be staffing a booth at the annual Home

and Leisure Show on March 11th and 12th at the Desert Empire Fair Grounds.

Don Zdeba updated the Board of Directors on the July 19th, 2016 Special Board Workshop Action Items:

Purchase Policies: Draft a vehicle purchase policy. Contact all vendors on the vendor list by e-mail and advise them to register on the District's website to receive e-mail alerts for all District projects requiring bids. Also, advertise annually in the newspaper advising vendors to register on the website. Resolution 16-09 was presented to the Board for approval August 8th. The Board agreed by consensus to continue current policy practices and not approve Resolution 16-09. This item will be complete when staff emails vendors to register on website. Update: No change. The review and vetting of the vendor list is in the final stages. Since there is a lack of e-mail information for every vendor, staff will send a direct mailing to each one inviting them to register on the District's website.

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PUBLIC OUTREACH

BOARD WORKSHOP UPDATE 2016

Don Zdeba updated the Board of Directors on the January 24, 2017 BOARD Special Board Workshop Action Items: WORKSHOP

Arsenic Plant vs Blending : Staff and Chuck Krieger to present UPDATE 2017

concepts related to arsenic facility vs. blending including costs for consideration. Update: No progress to report. Cost of Service Study : Staff run scenarios keeping the current tiers, 3% increase annually, and reviewing the debt service. Staff to present scenarios at a subsequent Board Meeting. Update: Staff is working on incorporating the adjustments discussed at the Workshop and is planning to bring a report to the March 7th Finance Committee Meeting. Ordinance No. 101 Excessive Water Use: Staff draft Ordinance No. 101 to reflect a 1% increase in Tiers 3 and 4 for all residential/commercial (if applicable) users if the Governor declares a State drought condition or local drought condition. If there is an Indian Wells Valley Water District emergency water shortage condition, draft as proposed in Section 5 (as proposed) Local Water Supply Shortage Condition for all residential/commercial (if applicable) users. Jim Worth to confirm whether or not commercial users may be included in Ordinance No. 101. Update: Tabled. Director Compensation: Legal Counsel review District resolutions pertaining to director compensation. Board recommends director compensation $100 or allowable amount per training event/meeting/etc. including consideration of an annual increase of 5%. Update: Legal Counsel plans to bring this item to the March 13th Board Meeting.

Renee Morquecho reported that the Board approved the proposal from WELL 33 REHAB Layne Christensen to line and test pump the well at the January 24th workshop. Layne has ordered the needed parts and is tentatively scheduled to begin work week of February 27th.

District staff continues to hold weekly meetings with OpTerra. Wiring and electrical are being installed at all the well sites. Installation of modules at Well No. 33 was finished last week. Some modules at the Wells 9A/10 site and the Well No. 30 site had to be installed a little higher up off the ground using uni strut supports due to their location in the 100-year flood plain. The HVAC and lighting upgrades are scheduled to begin the end of this month.

OPTERRA SOLAR PROJECT

Hydro Resources has drilled a pilot hole at Well No. 35. The WSIP geophysical logging was completed Friday night. Formation samples were taken to Kreiger and Stewart to be dried and analyzed. Krieger and Stewart is finalizing the design of the well within the next few days.

Jennifer Keep reported that the estimated year-to-date revenues as of January 31, 2017 are $7,477,766 and estimated expenses are $6,124,684, so estimated revenues exceed estimated expenses by $1, 353, 082, which is better than budget by $212,310.

Jennifer Keep announced that she and Don Standard & Poors rating review in December.

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Zdeba participated in a The re-evaluation of the

FINANCIAL STATUS

District's 2009 Certificate of Participation the District being re-rated from A+ to AA-. Release.

(COP) Bonds resulted in There will be a Press

The District has begun using the new Neptune system for meter reading. AMI PROJECT The system can pick up usage data via the towers or through the hand held devices. Right now they can read the meters that are part of the pilot project and also the Automated Meter Infrastructure (AMI) meters that were part of the 5/8" meter exchange project. This will be the first month of using the new system and the District will be able to gauge the success by the end of the month.

Jennifer Keep reported on the following conservation items: CONSERVATION ~ State Water Resources Control Board (SWRCB) Water Waster Report

- There were 12 water waste reports during January 2017. Ten contacts were made. Two resulted in formal Second Notices and one Third Notice with penalty.

~ Cash for Grass -Ninety two yards have been completed resulting in removal of 100,341 square feet of turf ($100,341). There are 23 yards (28,778 square feet) in the process of being converted. There are 47 yards ($102, 000) that are pre-approved and are awaiting notice for pre-inspection. There is approximately 8,000 sq. ft. for applications (4) pending. There is $142,881 Cash for Grass funds available from the revised $382,000 budget. Staff is working with the State to see if it is possible to make a modification to the program again to offer more rebate to top users. Approximately 17.2 acre-feet of water per year will be saved from yards that have been converted.

~ XERIC© Ambassador Consultations: No consultations were scheduled or completed for the month of January. There are three consultations pending.

Jason Lillion reported that the new 8-inch mainline is installed on CHURCH Sunset Place and the District will be sending off the Bac-T sample SERVICE tomorrow. Once the sample is confirmed absent, District crew will LATERAL begin installation of laterals on Sunset Place. Mr. Lillion reported PROJECT that staff has fabricated a dog leg to get over and around utilities in the intersection of Margalo Street and Church Avenue. The dog leg should be installed tomorrow. The next step will be to install laterals on the 100, 200, and 500 block of Church Avenue.

Staff pulled the variable speed pumps at both plants. Both stainless ARSENIC impellers and epoxy-coated impellers look good. Over time, the FACILITIES District plans to gauge the longevity of each type of impeller.

For the month of January, one service was repaired and 22 were replaced. There were 33 blowoffs for a loss of 56,078 gallons. Sixty eight valves were turned. The NO-DES truck should be enroute soon and training is scheduled for week of March 6th.

BOARD COMMENTS/FUTURE AGENDA ITEMS

Vice-President Cordell commented on the need to look at expenditures and possibly cut back.

Director Griffin thanked the public for their participation. Griffin also thanked Mike Neel for his letter of support.

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Director

OPERATIONS REPORT

BOARD COMMENTS

President Brown Regional Water present at the

meetings.

commented on who will be attending Management Plan (IRWMP) meetings. January meeting and will continue

the Integrated Don Zdeba was

to represent the

President Brown thanked staff for the PowerPoint pictures of the Opterra Solar Project.

President Brown thanked Stan Rajtora for his comments on the GSA Bylaws.

With no further Board or Public comments, President Brown recessed the meeting and adjourned to Closed Session at 7:50 p.m.

CLOSED SESSION

The meeting was reconvened in Closed Session at 8:04 p.m.

The meeting was recalled to Open Session at 8:58 p.m.

No action was taken that would require disclosure under the Brown Act.

CLOSED SESSION

ADJOURNMENT ADJOURNMENT

With no further business to come before the Board, the meeting was adjourned at 8:58 p.m.

RespectfullJ submitted,

/~~ t\ uJ--Rose Koch Recording Secretary

APPROVED: March 13, 2017

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