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DRAFT REGULAR MEETING MINUTES MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA) Thursday, June 14, 2012

1. CALL TO ORDER The MPRWA regular meeting of Thursday, June 14, 2012 was held at the Seaside City Council Chambers and was called to order at 6:01 p.m. by President Chuck Della Sala. 2. ROLL CALL AND INTRODUCTIONS Roll call was taken and a quorum established with the following members in attendance: PRESENT: President Chuck Della Sala, Monterey; Vice President Felix Bachofner, Seaside; Directors Jerry Edelen, Del Rey Oaks; Carmelita Garcia, Pacific Grove; David Pendergrass, Sand City; Vice Mayor Kenneth Talmage, served as the alternate in place of Director Jason Burnett, Carmel. Others: Interim Executive Director, John Dunn; Deputy City Manager Administrative Services, Daphne Hodgson; Deputy City Manager Resource Management, Diana Ingersoll; Rick Riedl; Tim OHalloran; 3. PLEDGE OF ALLEGIANCE Director Garcia led the attendees in the Pledge of Allegiance. 4. REPORTS FROM MEMBERS OF THE AUTHORITY BOARD AND STAFF A. Update of Errors & Omissions Insurance. Deputy City Manager- Administrative Services, of the City of Seaside, Daphne Hodgson, presented the report on the price quotes for insurance coverage for the MPRWA. She informed the Authority that the SLIP program has agreed to insure the Authority and some general liability coverage which includes automobile and fire. The quote for the $5 million policy and $1000 deductable is $2950.00. President Della Sala opened and closed the floor for public comment. B. Consider Designating Legal Counsel for Continuity Purposes. President Della Sala stated Russ McLaughlin, is the Attorney of Records for the Water Authority. For continuity purposes, an Attorney is needed to ensure the Authority adheres to the policies and rules as mandated by law. A Request for Proposal (RFP) is an option to

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consider or the Authority can utilize the services of the City Attorney from each of the six cities. President Della Sala asked Monterey City Attorney Christine Davi for her suggestion or opinion in the matter. She stated the Authority is governed by the City of Seaside, which the City of Seaside is a General Law City. For the Charter Cities, a RFP can be sent out and the RFPs can be evaluated for recommendation. She stated she would research and check the procedures the City of Seaside has in terms of recruiting for professional legal services. As an alternative, she suggested the Authority can continue the same rotation that she and Don Freeman currently have but that it would eventually become a conflict of interest if the Authority held a meeting at the City of Pacific Grove. President Della Sala requested Mrs. Davi to research the requirements the City of Seaside has for a RFP in regards to seeking legal counsel and present her findings and recommendations at the next meeting. President Della Sala opened the meeting to public comment. A member from the public asked the Board to keep tax payers money on their mind. Thru her observation, she has noticed the County spends an enormous amount of money on legal fees. Bill Hood suggested the Authority consider rotating their City Attorneys to help save costs. President Della Sala closed public comment. Reports from Members of the Authority Board President Della Sala offered to hold the PUC hearings at the Monterey Conference Center at no charge. There were no reports from staff. 5. RECEIVE REPORT FROM TAC AND PROVIDE DIRECTION AS NEEDED A. RFP for Potential Consultants to Evaluate The Three Proposals. MPRWA TAC Committee Chair, Bill Reichmuth, provided a draft copy of the RFP report to the Board in which he presented the highlighted changes that were made. The changes are: Page 413, Item 3, the Schedule/Calendar of Events; Page 413 section 4.1, The Primary point

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of contact name was changed; Page 513 Initial Scoping and Constraint Analysis; and page 613 section 5.5, Workshop and Presentation. Not included in the RFP draft report is the letter submitted by Seaside Interim City Manager, John Dunn, dated 6/12/12. Chairman Reichmuth stated there are 11 notations on the letter and the TAC Committee found no issues or changes to address. The letter will be incorporated on the next RFP draft for review. Christine Davi informed the Authority that the PUC is holding a technical workshop tentatively scheduled for July 26th and 27th. She was asked by Russ McLaughlin to inform the Authority to push the JPA selection to July 16th in order to allow time and for the consultant to attend the workshop, participate and garner information. President Della Sala opened the meeting to public comment. Nelson Vega suggested adding a type of insurance in the event there is a catastrophe, such as a drought, the policy would cover reserves. George Schroeder spoke on behalf of the Peoples Project, requesting the full RFP report be posted on their website rather than just the essential parts since the consultants are being referred to their website. President Della Sala closed public comment. Mr. Reichmuth answered questions and addressed the concerns under item 5 A. His final recommendation to the Authority is to allow TAC to make the necessary changes on the RFP and omit the topic on governance. M/S/C (DE LA SALLA/EDELEN) motion to refer RFP to TAC with the necessary changes. MOTION CARRIED (6-0-0-0) B. Other TAC matters. MPRWA TAC Committee Chair, Bill Reichmuth, informed the Authority they are developing a risk grid. He reported there has been a lot of discussion on the Peoples Project wanting to work directly with TAC and will be a future agenda item to discuss and take action.

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Mr. Reichmuth announced that he is resigning from the Committee in July due to surgery. TAC member John Narigi clarified he is an independent individual. President Della Sala opened the meeting to public comment. Ralph Rubio suggested that the Board consider holding a special meeting in order to review and approve the RFP before it is sent out. Dale Heikaus asked the Authority not to express their personal opinions on the 3 Desal proposals but rather focus what is best for the community. Tom Rowley, representing the Monterey Taxpayers Association, commended the Board for doing a great job. President Della Sala closed public comment. 6. PUBLIC COMMENT FOR ITEMS NOT ON THE AGENDA President Della Sala stated a letter, addressed to the Water Authority, was sent by Bob Braur, Chair of the Water Supply and Gene Vernon, Chair of the Public Outreach for the Monterey Peninsula Water Management District. The letter read out loud was in reference to the Monterey Water District Supply Committee meeting proposed for Tuesday, June 19th at 10:00 a.m. inviting 2 members of the MPRWA to attend the meeting. President Della Sala stated an Ad Hoc Committee will be appointed for 2 members to attend the meeting. President Della Sala opened the meeting to public comment. Nelson Vega asked the Authority to consider the comments and suggestions made by Mr. Del Piero. Nader Agha asked the board to take into consideration tax payers money before making any final decisions.

President Della Sala closed public comment. 7. APPROVAL OF MINUTES M/S/C (BACHOFNER/GARCIA) motion to approve May 31, 2012 minutes as amended. MOTION CARRIED 5-0-1 (DE LA SALLA ABSTAIN) -0.

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8. REQUEST FROM MR. GEORGE SCHROEDER/MR. NADER AGHA TO PULL THEIR PROJECT FROM THE TAC EVALUATING PROPOSALS AND REFER THIS PROJECT DIRECTLY TO THE MPRWA BOARD RE: LETTER DATED JUNE 5, 2012. No staff report presented. President Della Sala opened the meeting to public comment. George Schroeder urged the Board to move expeditiously. Nader Agha informed the Board he was invited to attend a TAC meeting and was appalled. He stated Mr. Narigi is the wrong person to be on the committee and that he is one of the reasons he and Mr. Schroeder withdrew. Nelson Vega spoke in opposition of the request. Bill Reichmuth stated the listed comments made by TAC members as stated in the beginning of the letter are true in regards to their personal opinion and stated individuals are entitled to express their personal opinions. He addressed his recommendation in keeping the Peoples Project and asked that the Authority deny the request. Bill Hood disagreed with Mr. Reichmuths statement and stated personal opinions should not be expressed.

President Della Sala closed public comment. M/S/C (EDELEN/PENDERGRASS) motion to deny moving the project from the TAC. MOTION CARRIED (6-0-0-0)

9. DISCUSS FORMULA WEIGHTED VOTE Vice-President Bachofner stated there is no direct representation of the non-incorporated area of the Monterey County for those rate payers. At some point, direct representation will have an impact on the voting structure and as a consequence will also impact the budget. The wording for this item is not to discuss the weighted vote but to discuss the makeup of the Authority. He addressed the other issues from the Seaside Council requested all of the votes be in a weighted fashion and the Authority never had a response to that and therefore, Seaside Council, although with no official policy in place, has requested Bachofner to reopen the discussion with the Board and asked that population be included in the weighted vote formula since it is based only on water usage. He

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suggested the discussion on formula weighted vote can be a future agenda item once the 34% of the non-represented tax payers are appointed direct representation. President Della Sala stated the by laws of the organization, indicating there be one vote from every director unless a weighted vote is requested and if that were to be the case, then the weighted vote would be based on the water usage of each District, which Monterey has 46%. With that responsibility and that weighted vote also comes a big budget. The Authority has the typical formula weighted vote used and without any information, the Authority is not prepared to take any action at this time. President Della Sala opened the meeting to public comment. Ralph Rubio suggested a By Law subcommittee. Tom Rowley urged the Authority to find a representative to sit on the Board. Nelson Vega spoke in favor of the weighted vote. Sue Mcloud requested Vice-President Bachofner to focus on the priorities of the Board.

M/S/C (DELLA SALA/GARCIA) motion to table the item of the formula weighted vote. MOTION CARRIED (6-0-0-0)

10. DISCUSS MEMBERSHIP FEE AS A MEANS OF SUPPORTING OPERATIONS OF JPA

President Della Sala opened and closed the floor for public comment. M/S/C (BACHOFNER/TALMAGE) motion to continue this item to the next regular scheduled June 28, 2012 meeting. MOTION CARRIED (6-0-0-0) 11. DISCUSS BUDGET President Della Sala opened and closed the floor for public comment. M/S/C (DELLA SALA/TALMAGE) motion to continue this item to the next regular scheduled June 28, 2012 meeting. MOTION CARRIED (6-0-0-0) 12. REPORT FROM DON FREEMAN ON PUC HEARING AND UPCOMING PUC DEADLINES Christie Davi presented the report in place of Don Freeman. Russ McLaughlin attended the PUC pre-hearing conference. The Authority

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submitted a statement to the PUC. He emphasized three main points of the conference: 1. A need for a timely project; 2. The project needs to be cost effective; and 3. Tax payer representation. A lot of discussion of comparing Cal-Ams project with alternative projects at the hearing seems to be an indication that testimony and alternative projects will be allowed but its not a guarantee. A proposed schedule has been distributed to the memorandum to revise the RFP to solicit an expert to attend the work shop, which is a technical workshop not legal, to take place on July 26th and 27th. The expert should attend the workshop to participate and evaluate. 13. ITEMS FOR FUTURE AGENDA Membership fee; TAC Composition; Budget 14. DETERMINE TIME AND PLACE OF FUTURE MEETINGS The regular meeting of the Monterey Peninsula Regional Water Authority will be held at 6:00 p.m., at the Seaside City Hall Council Chambers on Thursday, June 28, 2012.

15. ADJOURNMENT The meeting was adjourned at 9:30 p.m. Respectfully submitted,

_______________________________ Marciela Hernandez, Acting Agency Clerk ATTEST:

_____________________________ Chuck Della Sala President