168 West Alisal Street,

1st Floor
Salinas, CA 93901
831.755.5066
Monterey County
Legislation Details (With Board Report)
File #: 14-1056 Name: MPRWA Presentation
Status: Type: General Agenda Item Scheduled PM
File created: In control: 9/17/2014 Board of Supervisors
On agenda: Final action: 9/30/2014
Title: a. Receive a report from the Monterey Peninsula Regional Water Authority (Authority) regarding the
Authoritys request for additional funding and participation by the County, and the Authoritys strategic
plan, budget, and anticipated future expenses; and
b. Provide direction regarding the Countys participation in and funding of the Authority.
Sponsors:
Indexes:
Code sections:
Attachments: 1. Exhibit A, 2. Exhibit B, 3. Exhibit C, 4. Exhibit D
Action By Date Action Result Ver.
a. Receive a report from the Monterey Peninsula Regional Water Authority (Authority) regarding the
Authoritys request for additional funding and participation by the County, and the Authoritys strategic plan,
budget, and anticipated future expenses; and
b. Provide direction regarding the Countys participation in and funding of the Authority.
RECOMMENDATION:
It is recommended that the Board of Supervisors:
a. Receive a report from the Monterey Peninsula Regional Water Authority (Authority) regarding the
Authoritys request for additional funding and participation by the County, and the Authoritys strategic
plan, budget, and anticipated future expenses; and
b. Provide direction regarding the Countys participation in and funding of the Authority.
SUMMARY:
Monterey County is a non-voting member of the Monterey Peninsula Regional Water Authority (Authority).
To date the County has authorized payments in the amount of $92,281 to the Authority. The Authority seeks
additional funding and a commitment of future funding and participation from the County. Although $153,000
was included in the Countys FY14-15 budget for Authority participation, the Authoritys past, current, and
future funding requests to the County significantly exceed that amount. During the Boards June 10, 2014
budget hearings, Supervisor Dave Potter requested that the Authority provide a report to the Board regarding
the Authoritys requests which would include a presentation on the Authoritys strategic plan, budget and
anticipated future expenses. The Authoritys Executive Director, Jim Cullem, will provide this report.
Additionally, this report seeks Board direction regarding the Countys current and future financial participation,
and representation as a voting member of the Authority
DISCUSSION:
The Monterey Peninsula Regional Water Authority (Authority) was formed in February 2012 by the Monterey
Peninsula cities to ensure the timely development, financing, construction, operation, repair, and maintenance
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Peninsula cities to ensure the timely development, financing, construction, operation, repair, and maintenance
of one or more water projects; and to ensure that the governance of such water projects includes representation
that is directly accountable to water users.
The Authority was formed due to concerns regarding severe and increasing restrictions as a result of the
California Water Resources Control Board cease and desist order limiting pumping by the California American
Water Company (Cal-Am) in the Carmel Valley Groundwater Basin, and a judicial order limiting pumping in
the Seaside Groundwater Basin. Cal-Am has been pursuing a regional desalination project to provide
additional water to its customers.
Since 34% of total water consumption in the Cal-Am Monterey Peninsula service area takes place within the
unincorporated areas of Pebble Beach and Carmel Valley, as well as unincorporated areas near the cities of
Monterey and Carmel, the Authority invited the County to become a member.
In recognition of the Authoritys efforts on behalf of County residents, the Board approved a pro-rata
contribution of $83,300 to the Authority on September 11, 2012, based on the Authoritys FY 2012-13 budget
of $245,245. On April 22, 2014, the Board approved the transfer of funds from General Fund Contingencies to
make this payment.
The Authority subsequently increased its FY 2012-13 budget to $476,726. The budget increase was due to the
hiring of a part-time Executive Director and a contract for expanded Attorney of Record expenses in support of
Authoritys participation in the California Public Utilities Commission (CPUC) settlement negotiations on Cal-
Ams application A. 12-04-019 for a Monterey Peninsula Water Supply Project.
The Authoritys FY 2013-14 adopted budget is $423,680.
The Authority requests that the County provide additional funding to the Authority based upon the Countys
pro-rata share of cost of 34%. The additional funding requested is $78,700 for FY 2012-13, $144,051 for FY
2013-14, and $155,951 for FY 2014-15.
Additionally, the Authority entered into a contract with Separation Processes Inc. (SPI) for engineering
consultation services on behalf of the Authority, Monterey Peninsula Water Management District, and
Monterey County (the three public members of the Authoritys Governance Committee) relating to Cal-Ams
interview and selection process for the Monterey Peninsula Water Supply Project design-build contractor. The
Countys pro-rata share of cost for this contract is $9,281, which was paid in August 2014.
The Board included $153,000 in its FY 2014-15 budget for Authority membership. However, the amount
requested by the Authority to bring the County current is $387,983, which leaves a shortfall of $234,983. In
the current budget, with the exception of the $9,281 paid to the Authority for the SPI contract, no other
payments have been authorized pending direction from the Board following receipt of todays report.
The Authoritys estimated budget for fiscal years FY15-16, and FY16-17 is $450,000 per year. The Countys
pro-rata share (34%) is estimated to be $153,000 per year during that time period. It is important to note that
these projections are only estimates. Approximately 50% of the Authoritys budgets have been consumed by
their legal counsel and contracted special counsel (Counsel of Record). Legal expenses have been difficult to
predict as the Authority is responding to requests and requirements from the California Public Utility
Commission (CPUC) administrative law judge overseeing the Cal-Am application for the Monterey Peninsula
Water Supply Project (MPWSP), and to unforeseen requirements in responding to other legal challenges.
Staff seeks direction regarding the Countys continued participation in the Authority, and if continued
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Staff seeks direction regarding the Countys continued participation in the Authority, and if continued
participation is directed staff seeks direction on future funding for Authority activities.
OTHER AGENCY INVOLVEMENT:
Development of this report was coordinated with County Counsel. The Monterey Peninsula Regional Water
Authority contributed information included in this report, and the Authoritys Executive Director, Jim Cullem,
will be presenting the report.
FINANCING:
The FY14-15 budget includes $153,000 for Authority membership, and the Authority is seeking additional
funding of $234,983 this fiscal year. If the Board selects to participate in the Authority, there will be an impact
to the General Fund of up to $234,983 and this action would require staff to acquire funds from another
program and return to the Board for approval at a later date. The Authority estimates the Countys pro-rata
share in FY15-16 and FY16-17 to be $153,000 per year. Funding for future years costs will be prioritized as
budgets are formed.
Prepared by: Annette DAdamo, Management Analyst III; Ext. 3045
Approved by:
__________________________________
Nicholas E. Chiulos
Assistant County Administrative Officer
Attachments:
Exhibit A Chart of Authorized Payments and Requested Funding
Exhibit B 9/12/14 Letter from Monterey Peninsula Regional Water Authority
Exhibit C 1/6/14 Letter from Monterey Peninsula Regional Water Authority
Exhibit D 9/30/14 Power Point Presentation by the Monterey Peninsula Regional Water Authority to the Monterey
County Board of Supervisors
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EXHIBIT A
MONTEREY PENINSULA REGIONAL WATER AUTHORITY
Previous Funds Committed / Paid
FY 12-13 83,300 $ Paid - April 2014 from contingencies
Current Funds Requested with Monterey County @ 34%
SPI Contract (paid to Authority) 9,281 $ Paid - August 2014 from FY14-15 budget allocation
FY 12-13 (additional funding) 78,700 $
FY 13-14 144,051 $
FY 14-15 155,951 $
Total 387,983 $
Amount included in County FY14-15 budget 153,000 $
Shortfall in Requested Funding FY14-15 234,983 $
Future funding requests - ESTIMATED
FY 15-16 153,000 $ estimated
FY 16-17 153,000 $ estimated


580 PACIFIC ST, ROOM 6 MONTEREY CALIFORNIA 93940 www.mprwa.org
MONTEREY PENINSULA REGIONAL WATER AUTHORITY


September 12, 2014

Nicholas E. Chiulos
Assistant County Administrative Officer
County of Monterey Administrative Office
168 W. Alisal Street, 3rd Floor
Salinas, CA 93901




Directors:
J ason Burnett, President
Bill Kampe, Vice President
David Pendergrass, Secretary
J erry Edelen, Treasurer
Chuck Della Sala, Director
Ralph Rubio, Director

Executive Director:
J im Cullem, P.E.
Re: Updated MPRWA Projected Budgets through FY 2017-2018

Dear Nick;

As requested, I am providing updated budget projections through FY 2017-2018 for the
Monterey Peninsula Regional Water Authority (MPRWA) in support of the J anuary 6,
2014 letter (attached) to the Board of Supervisors requesting a 34% fair-share
contribution towards funding the Water Authoritys expenses. This update replaces my
letter dated February 18, 2014.

Projections for FY 2015-2016 and beyond are tentative since approximately 40-50% of
our budgets have been consumed by our Legal Counsel and contracted Special
Counsel (Counsel of Record). Legal expenses have proven difficult to predict as the
Authority is actively participating as an "Intervener" in the CPUC process for Cal Am
application A.12-04-019 for the Monterey Peninsula Water Supply Project (MPWSP.)
Counsel has had to respond to periodic requests and requirements from the CPUC
Administrative Law J udge , as well as providing guidance to the Authority in support of
Cal Am's efforts to obtain permits and approvals for the MPWSP from a variety of public
agencies.

All expenditures, including legal expenses, for FY 2011-2012 (partial year) and FY
2012-2013 have been paid and were addressed in the recently completed audit of the
Water Authority. Accordingly, the request for an increase in the FY 2012-2013 County
fair-share from $83,300 to $162,000, as requested in the J anuary 6th letter, is well
established.

The FY 2013-2014 budget was approved at $423,680 and although the year-end
finances have not yet been audited, expenditures should fall well within budgeted
amounts. Accordingly, at 34%, the County fair-share for FY 2013-2014 would be
$144,051.20.

The adopted budget for FY 2014-2015 is $458,680 and the County fair-share would be
$155,951.20.

September 12, 2014
2



We now expect legal expenses to remain at about $200,000 per year, and by increased
staff efforts to reduce other expenses, we hope to keep the total budget at or below
$450,000 per fiscal year for the next 4 years. At 34%, the County fair-share would be
approximately $153,000 per year during that time period.

Please do not hesitate to contact me for discussion or additional information at 831-241-
8503 (cell) or cullem@monterey.org.

Sincerely,





J ames M. Cullem P.E.
Executive Director
MPRWA


C: MPRWA Letter to the Board of Directors dated J anuary 6, 2014


580 PACIFIC ST, ROOM 6 MONTEREY CALIFORNIA 93940 www.mprwa.org
MONTEREY PENINSULA REGIONAL WATER AUTHORITY



J anuary 6, 2014

Fernando Armenta, Chair
Monterey County Board of Supervisors
168 W. Alisal St.
Salinas, CA 93901



Directors:
Chuck Della Sala, President
J ason Burnett, Vice President
Ralph Rubio, Secretary
J erry Edelen, Treasurer
Bill Kampe, Director
David Pendergrass, Director

Executive Director:
J im Cullem, P.E.

RE: Pro-Rata Share of Costs for Water Authority Representation and Invitation to Participate


Dear Supervisor Armenta:

As you know, the Monterey Peninsula Regional Water Authority (MPRWA) was created by a
J oint Exercise of Powers Agreement on February 12, 2012 and originally consisted of the six cities on
the Monterey Peninsula: Carmel-by-the-Sea, Del Rey Oaks, Monterey, Pacific Grove, Sand City and
Seaside. Since 34% of California American Water Company (Cal-Am) customers reside within non-
incorporated areas, a restatement of the Agreement was adopted by the Water Authority on February
14, 2013 to allow membership by Monterey County.

Although Supervisor Dave Potter represents the County on the Monterey Peninsula Water
Supply Project (MPWSP) Governance Committee, the Water Authority also separately considers
issues impacting residents of the unincorporated areas. Accordingly, we would again like to invite the
Board of Supervisors to name a representative to the MPRWA Board.

In recognition of Water Authority efforts on behalf of County residents, the Board of
Supervisors approved a pro-rata contribution of $83,300 on 11 September 2012, based on an initial
FY 2012-2013 MPRWA budget of $245,245. To date, the Authority has not yet invoiced the County for
those funds.

The FY 2012-2013 MPRWA budget was subsequently increased to $476,726 to cover the
costs of a part-time Executive Director and a contract for expanded Attorney of Record expenses in
support of Authority participation in the California Public Utilities Commission (CPUC) settlement
negotiations on Cal-Ams application A.12-04-019 for a Monterey Peninsula Water Supply Project
(MPWSP).

The Countys revised FY 2012-2013 pro-rata share at 34% would be $162,000 or an increase
of $78,700 over the previously approved contribution.

The FY 2013-2014 MPRWA budget of $423, 680 was adopted on April 25, 2013. The
Countys pro-rata share at 34% is $144,000.



J anuary 6, 2014
2


Accordingly, the Water Authority hereby requests that the Board of Supervisors approve a
revision to its fair-share (pro-rata) contribution to the MPRWA budget for FY 2012-2013 in the amount
of an additional $78,700 and approve its pro-rata contribution to the MPRWA budget for FY 2013-
2014 in the amount of $144,000.


Sincerely,

Chuck Della Sala, President
Monterey Peninsula Regional Water Authority



C: Lew Bauman, County Administrative Officer
Charles McKee, County Counsel


MONTEREY PENINSULA REGIONAL
WATER AUTHORITY
Monterey Peninsula Water Supply
MPRWA - The Mayors Authority
The Monterey Peninsula Regional Water Authority is a Joint Powers Authority (JPA) It
consists of six peninsula cities: Carmel-by-the-Sea, Del Rey Oaks, Monterey, Pacific
Grove, Sand City and Seaside, with Monterey County participating on the Governance
Committee. Each city is represented by its Mayor.
Formed in January 2012 and amended in February 2013 to include Monterey County.
The purpose of the Authority is to ensure the timely construction of one or more water
projects and to ensure governance that is accountable to water users.
The Water Issue
35 years of searching for new water sources.
1995 Only entitled to 30% of current Carmel River use.
2003 Required to reduce Seaside basin withdraw.
2009 CDO for use of Carmel River water.
2010 Regional desal project approved by the state PUC.
2012 Application for new desal project
2017 January 1
st
Carmel River CDO goes into effect
2021 Restrict the use of Seaside Aquifer water


Fair Share Contributions
(based on metered water delivery per Cal Am)
Member Agency Contribution %
Carmel By the Sea 6.14%
Sand City .86%
City of Pacific Grove 12.40%
City of Seaside 14.50%
City of Monterey 30.70%
City of Del Rey Oaks 1.40%
Monterey County 34.00%
Budget of the Authority
FY 14-15 NOT INCLUDING $200,000 Reimbursable contract for Value
Engineering Services

Actual FY
11-12
Actual FY
12-13
Actual FY
13-14
Proposed
FY 14-15
Operating Revenues 30,000 417,445 $441,529 458,680
Operating Expenses 17,994 422,183 319,744 458,680
Change in Net Position 12,006 -4,738 Pending N/A

$0
$100,000
$200,000
$300,000
$400,000
$500,000
Actual FY 11-
12
Actual FY 12-
13
Actual FY 13-
14
Proposed FY
14-15
Total Annual Budgets By Fiscal Year
Expenses: By Type, By Year
Expenses By Type, By Year
$0
$50,000
$100,000
$150,000
$200,000
$250,000
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Actual FY 11-12
Actual FY 12-13
Actual FY 13-14
Proposed FY 14-15
Expenses
$0
$50,000
$100,000
$150,000
$200,000
$250,000
Actual FY
11-12
Actual FY
12-13
Actual FY
13-14
Proposed
FY 14-15
Legal Expenses
Expenses: Special Legal Counsel
Operating Revenues
OPERATING REVENUES
Actual
FY 11-12
Actual
FY 12-13
Actual FY
13-14
Proposed
FY 14-15
Starting Balance from Previous FY $0 $12,006 $90,568 Pending
Contributions from Monterey County $0 $83,000 $0* $153,000
Fair Share Membership Fees $30,000 $417,445 $341,680 $305,608*
Reimbursements for Consultant
Services $0 $0 $9,281 $0
Total Operating Revenue $30,000 $512,451 $441,529 $458,680
*144,000 Requested for FY 13-14
Operating Expenses, By Year

OPERATING EXPENSES
Actual
FY 11-12
Actual
FY 12-13
Pre-Final
FY 13-14
Proposed
FY 14-15
Administration/Clerical $264 $74,714 $94,141 $130,180
Legal Services $17,700 $226,597 $169,184 $215,000
Contract Services $0 $114,462 $481,52 $8,1000
Insurance $5,746 $6,702 $7,500
Travel Expenses $30 $652 $828 $5,000
Contingency
Pre-Final Expenses
$12

$734
$121,785
$20,000

$17,994 $422,183 $441,529 $458,680
Return on Investment (ROI)
The most significant ROI was the participation and leadership provided by
the Authority in the settlement agreements for MPWSP.
The Authority played a key role in development and pursuit of State
legislation for securitization and public financing for desal, which could result
in excess of $50 million in savings to the ratepayers.
The Authority provided leadership in the formation of a Governance
Committee which ensures public control of the desal project completion.
The Authority continues to assist the MRWPCA with the GWR project and to
work with the City of Marina on the installation of source wells.
July 2013 Settlement Agreement
16 Parties agree on:
Portfolio Approach
Groundwater Replenishment Project Criteria
Financing Plan
Cost Caps for Desalination and Pipelines
Governance Committee for Desal
Hydrologic Studies, Environmental Factors,
& Contingencies
9 Parties agree on desal plant size
Authority
Cal Am
County
District
MRWPCA
Key Local Parties to Settlement

www.mprwa.org