M I N U TE S MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA) Regular Meeting 7:00 PM, Thursday, February 13, 2014 COUNCIL

CHAMBER 580 PACIFIC STREET MONTEREY, CALIFORNIA Directors Present: Alternate Director Carbone, Director Edelen, Director Kampe, Director Pendergrass, Director Rubio, Alternate Director Talmage, President Della Sala None Executive Director, Legal Council, Clerk

Directors Absent: Staff Present: ROLL CALL

The meeting was called to order at 7:00 p.m. PLEDGE OF ALLEGIANCE REPORTS FROM BOARD DIRECTORS AND STAFF PUBLIC COMMENTS Executive Director Cullem reported that the Authority presented the Certificate of Appreciation to Deanna Allen, former Finance Specialist during a Carmel By the Sea Council Meeting and that financial services are now under the administrative contract with the City of Seaside. He also reported that Authority interns and Public Outreach consultant Ashely Beleny participated at Whale Fest. He reported on additional activates of Ms. Beleny. Last, he reported that the County of Monterey has been invoiced for their fair share contribution due to their participation on the Governance Committee and when paid, will reduce all current member cities contribution rates. APPROVAL OF MINUTES On motion by Director Kampe and seconded by Director Rubio and passed by the following vote the Authority approved the minutes from January 14, 2014. AYES: NOES: ABSENT: ABSTAIN: RECUSED: 1. 4 0 0 2 0 DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: Edelen, Kampe, Rubio, Della Sala None None Carbone, Talmage None

January 9, 2014 AGENDA ITEMS

2.

Receive Annual Financial Report and a Full Opinion Audit for FY 2012-13 and 2012 from McGilloway, Ray, Brown and Kaufman (Kaufman) CPA; Approve a Modification to the Kaufman Contract to Complete the FY 2013-2014 Audit with a Completion Date of October 1, 2014 at an additional fee not-to-exceed $6,000; and Provide Direction to Staff.

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Thursday, February 13, 2014

Executive Director Cullem introduced auditor Patricia Kaufman who presented the results of the financial audit. She informed the Directors she presented the findings listed in the Management letter in detail on January 23, 2014 to the Ad-hoc finance committee composed of Directors Rubio and Edelen. The Authority received an unqualified or "clean" opinion which means that the report is a fair representation of the Authoritys financial position and the current practices comply with Government Accounting Statements and Principles. She spoke to the management process, noting that as a new agency, it is understood there should be recommendations. They encountered no challenges performing the audit. She complimented the Director and staff for needing no adjustments, and being supportive and cooperative. Mrs. Kaufman answered questions from the Directors. President Della Sala invited public comment and had no requests to speak. On motion by Director Kampe and seconded by Director Rubio and passed by the following vote, the Authority approved the staff recommendation to receive the financial report and full opinion audit and approve the modification of the existing contract to extend services for two additional fiscal years. AYES: NOES: ABSENT: ABSTAIN: RECUSED: 3. 6 0 0 0 0 DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: Carbone, Edelen, Kampe, Rubio, Talmage, Della Sala None None None None

Accept and File Checks for the Period of December 31, 2013 through January, 31 2014 On motion by Director Rubio and Seconded by Alternate Director Carbone and passed by the following vote, the Authority accepted and filed checks for the period of December 31, 2013 thru January 31, 2014. AYES: NOES: ABSENT: ABSTAIN: RECUSED: 6 0 0 0 0 DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: Carbone, Edelen, Kampe, Rubio, Talmage, Della Sala None None None None

Director Kampe spoke to the administrative process of modifying the budget to be sure it is very clear where changes are happening. Executive Director Cullem spoke to future reports that will incorporate expenses and obligations and will be articulated in the policies and procedures. 4. Receive Report, Discuss, Provide Direction and Approve Resolution 2014-XX and Letter of Support for Senate Bill 936, and Authorize the Executive Director to Forward a Sample Resolution and Sample Letter for Consideration by Member City Councils.

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Executive Director Cullem spoke to the securitization issue that is critical to the substantial savings for the construction costs for the MPSWP, noting legislated changes are needed to enact. This action would provide a resolution of support to be sent to the state to encourage passage of Senate Bill 936. President Della Sala invited public comment and we have no requests to speak On motion by Director Rubio and seconded by Director Kampe and passed by the following vote, the Authority approved Resolution 14-01 and authorized sending a letter of support of Senate Bill 935 and authorizing staff to circulate approval to member cities. AYES: NOES: ABSENT: ABSTAIN: RECUSED: 5. 6 0 0 0 0 DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: DIRECTORS: Carbone, Edelen, Kampe, Rubio, Talmage, Della Sala None None None None

Receive Verbal Report, Discuss and Provide Direction to Staff Regarding the Bore Hole Permitting Process Executive Director Cullem spoke to the recent barriers to obtaining permits through the City of Marina which almost delayed the project a minimum of six months. He spoke to the purpose of the bore holes and their necessity to complete the environmental review for the MPWSP. He reported that the Marina Planning Commission interpreted their municipal code in a way that disallowed the request to extract water for mineral content testing as it violated the mining ordinance. Director Burnett, acting as representative of the Authority, appealed the decision to the City Council which held a special meeting on February 12, 2014 and approved the interpretation that no permit would be required by MPWSP if the bore holes were drilled on the Cemex property. This decision is not appealable, but is threatened by litigation. The next step would be to request the Administrative Law Judge to rescind the decision to delay the release of the environmental review. Director Burnett, Legal Counsels McLaughlin and Freeman and Executive Director Cullem Worked diligently to provide all necessary support to ensure this passed and did not delay and provided a classic example of the purpose of the Authority, to provide support for the permitting processes. Legal Counsel Freeman noted that this incident allowed the Authority to involve the State Water Resources Control Board regarding the challenges this project faces and they will better understand a request for extension of the CDO. He requested that the Authority work to identify any additional potential barriers to keep work from being done in crisis mode. Present Della Sala requested sending thank you letters to all involved including the City of Marina City Council for their the due deliberation and careful consideration of this item and for recognizing the time sensitivity to the movement of the project. Director Kampe spoke to the situation and how this truly is a regional problem. Mr. Cullem noted he will work to figure out a way to have better working relationships with all the impacted agencies, including keeping them apprised of next steps. Director Rubio suggested incorporation of the Marina Coast Water District into the project to make it a regional solution. Monterey Peninsula Regional Water Authority Regular Meeting Minutes - Thursday, February 13, 2014 3

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Ian Crooks, Engineering Manager from Cal Am thanked the Authority for their support and the efforts provided by Director Burnett, Legal Counsels McLaughlin and Freeman and Executive Director Cullem. He indicated that the next big milestone is the slant test well, which is also delayed and is schedule to begin in November. Mr. Crooks committed to keeping the Authority updated and developing a strategy and schedule through completion. President Della Sala invited public comment on the item. David Lifland questioned drilling the test wells in November, instead of October and requested the Authority to keep an eye on costs to be passed on to the rate payer.

Executive Director Cullem requested authorization to work with Cal Am and other portfolio projects to revisit some of the critical path issues that may not have been anticipated to be proactive rather than reactive. Mr. Crooks spoke to the schedule that the Coastal Commission meets in the Central Coast region in November 2014 and that is when they expect to approve the test well environmental permissions, even through the environmental review will be completed in late spring. Director Edelen suggested that an earlier meeting be requested due to the time sensitivity of the project and that we should be timing to meet our needs and if they don't help, it gives us more amunition to request a delay. Legal Counsel Freeman indicated that the Authority staff will help to facilitate that request. In closing, all present Directors expressed appreciation to Director Burnett for his efforts on this issue. 6. Discuss Governor Brown's Proclamation Declaring a Drought State of Emergency and the Potential Local Implications Executive Director Cullem explained the purpose of this item to identify any components within Governor Browns proclamation that would be applicable to the current water supply projects which could be expedited. However, recent interpretations have revealed that because of the long-range project status, nothing significant could be done with regards to this proclamation to move the process forward faster than scheduled. President Della Sala invited public comment on the item. David Lifland spoke to the CEQA exemptions listed in the proclamation that might be applicable for the projects.

Legal Counsel Freeman indicated there has been a review of each code section and at this time, it does not appear that they would apply to the local projects. ADJOURNMENT

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President Della Sala thanked all Directors, Staff and Authority affiliates for their participation with the City of Marina appeal process. Executive Director Cullem spoke to the retirement of Royal Calkins from the Monterey Herald and thanked him for the objective and fair coverage of efforts made by governmental organizations. The meeting was adjourned at 8:14 p.m.

ATTEST:

Lesley Milton, Authority Clerk

Chuck Della Sala, President

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