Agenda

Monterey Peninsula Regional Water Authority (MPRWA)

Regular Meeting

7:00 PM, Thursday, January 24, 2013
Few Memorial Hall of Records
Council Chamber
Monterey, California

ROLL CALL

PLEDGE OF ALLEGIANCE

APPROVAL OF MINUTES

1. January 10, 2013

PUBLIC COMMENTS
PUBLIC COMMENTS allows you, the public, to speak for a maximum of three minutes on any
subject 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 the
Authority 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 contact
the sender concerning the details.

AGENDA ITEMS

2. Approve Contract for Executive Director Services with the City of Monterey
(Discussion/Action)

3. Review and Discuss Project Evaluation Matrix Submissions by the TAC, Monterey
Peninsula Water Management District and SPI Consultants (Information/Discussion)

4. Discuss Draft Governance Proposal and Provide Direction to Staff
(Information/Discussion/Action)

ADJOURNMENT



The Monterey Peninsula Regional Water Authority is committed to include the disabled in all of
its services, programs and activities. For disabled access, dial 711 to use the California Relay
Service (CRS) to speak to staff at the Monterey City Clerks Office, the Principal Office of the
Authority. 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 attend a
meeting, dial 711 to use CRS to talk to staff at the Monterey City Clerks Office at
(831) 646-3935 to coordinate use of a device or for information on an agenda.

Agenda related writings or documents provided to the MPRWA are available for public
inspection during the meeting or may be requested from the Monterey City Clerks Office at 580
Pacific St, Room 6, Monterey, CA 93940. This agenda is posted in compliance with California
Government Code Section 54954.2(a) or Section 54956.




MI NUTES
MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA)
Regular Meeting
6:00 PM, Thursday, January 10, 2013
FEW MEMORIAL HALL OF RECORDS
MONTEREY, CALIFORNIA

Directors Present: Burnett, Edelen, Kampe, Pendergrass, Rubio, Della Sala

Directors Absent: None

Staff Present: Interim Executive Director, Legal Counsel, Clerk to the Authority

ROLL CALL

PLEDGE OF ALLEGIANCE

REPORTS FROM BOARD DIRECTORS AND STAFF

Director Burnett reported that he will be traveling to Sacramento next week to meet with
representatives from The State Water Resources Quality Control Board. Director Rubio
reported on a meeting he had with a Cal Am representative regarding a general issues update
since he took office in November. Interim Executive Director Meurer reported on the hiring
status of the Executive Director position. The Authority gave instructions that the selected
person would become an employee of City of Monterey and to facilitate that, the City needs to
create a position, which will be on the January 15, 2013 City Council agenda. If approved, risk
management will need to be resolved. This position is not in the Authority adopted budget but is
on the agenda this evening. Appointment can be made when the position administration is
resolved.

PUBLIC COMMENTS

President Della Sala invited public comments for items not on the agenda. Nelson Vega
expressed concern about new TAC appointments from the farm interest. David Armanasco
spoke representing Deep Water Desal to inform the Authority that the project received
confirmation from California State Lands Commission the contract was executed and there
have been discussions about becoming a lead agency for CEQA studies. Bill Hood questioned
continued discussions regarding governance asking what the Authority is trying to accomplish.
Tom Rowley speaking as a citizen, spoke about the January 2, 2013 City of Monterey City
Council meeting indicating the action taken was not fully understood by the councilmembers
and encouraged a review of the minutes before the resolution was formalized. Sue McCloud
requested documents be published with enough time for the public to review them prior to the
meeting. Safwat Malek spoke to Mr. Rowleys comments requesting the Authority to focus on
both lowest cost water as well as ownership. With no further requests to speak, President Della
Sala closed public comment and spoke to Mr. Hoods comment indicating the Authority is
seeking the most cost effective project to deliver water before the cease and desist order is in
effect and ownership of the plant has not been determined by this body. He also reiterated that
the Authority has not made a recommendation to endorse one project but hopes to before the
February 22, 2013 deadline. Director Edelen commented about published research about the
benefits of public vs. private ownership. The results showed ownership was inconclusive made
no significant difference.

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Regular Meeting Minutes - Thursday, January 10, 2013
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APPROVAL OF MINUTES

1. December 27, 2012
Action: Approved

On a motion by Director Rubio, seconded by Director Pendergrass and carried by the following
vote, the MPRWA approved the October 15, 2012 minutes:
AYES: 6 DIRECTORS: Burnett, Edelen, Kampe, Pendergrass, Rubio, Della
Sala
NOES: 0 DIRECTORS: None
ABSENT: 0 DIRECTORS: None
ABSTAIN: 0 DIRECTORS: None
RECUSED: 0 DIRECTORS: None

AGENDA ITEMS

2. Receive Budget Update and Authorize Changes to the July 27, 2012 Adopted Budget
Action: Discussed, Authorized and Passed Resolution 13-001

Interim Director Meurer presented the report and verbalized the needs for requesting the
budget adjustments based on the Authoritys additional requests for services. The largest cost
items are that of the Executive Director position and legal services. The total amended budget
will require an increase of $172,000 and distributed by allocations previously established based
on water usage. Draft staff reports were sent to the City managers and no comments were
returned. Staff will forward action taken tonight to the member City Managers for additional
appropriation if necessary.

Mr. Meurer indicated that if the County of Monterey is added to the JPA the allocations would
change, however since they have not been formally adopted, their portion cannot be included in
their assessment. Mr. Meurer answered questions from the Directors.

President Della Sala opened the item for public comment. Nelson Vega questioned how long
the Authority expects expenses for this Authority to be incurred. Mr. Meurer responded to this
question that the answer will be driven by which project is selected and what is the ultimate
governance of that project. President Della Sala also responded that the Authority will move
forward and take necessary steps to avoid duplication of efforts until the Authority is no longer
needed. With no more requests to speak, President Della Sala closed public comment.

On a motion by Director Edelen, seconded by Director Burnett and carried by the following
vote, the MPRWA agreed with the staff recommendation and authorized changes to the July
27, 2012 adopted budget and passed resolution 13-001.
AYES: 6 DIRECTORS: Burnett, Edelen, Kampe, Pendergrass, Rubio,
Della Sala
NOES: 0 DIRECTORS: None
ABSENT: 0 DIRECTORS: None
ABSTAIN: 0 DIRECTORS: None
RECUSED: 0 DIRECTORS: None
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Regular Meeting Minutes - Thursday, January 10, 2013
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3. Discuss and Provide Direction on Modifications to the October 1, 2012 Governance and
Financing Proposal
Action: Discussed and Approved

Director Burnett delivered a recap of the process the Authority involved to attain public
participation in the governance of the Cal Am project. The purpose tonight was to see if the ad
hoc committee is fulfilling the goals of the Authority. The Ad Hoc committee recommends
formulating the proposal into a tier two advice letter, to be submitted by Cal Am to the PUC
which, if not responded to within 30 days, it goes into effect. Director Burnett answered
questions of the Authority.

Director Edelen questioned what aspects of the proposal Cal Am is opposed to. Director
Burnett responded that there are no deal breakers but noted changes made from the previous
proposal including the approval of change orders over $1 million moved to Category B. Also,
provisions for confidentiality agreements were not taken out because it does not enable us to
have transparency to the public. The Authority goal will be to have many of the provisions of
public agencies apply to ensure transparency.

Director Pendergrass expressed concerns about the category B issue that Cal Am can exercise
a veto right. President Della Sala clarified that they do not have veto power in elements outside
of category B. Director Burnett justified some level of veto rights that responsibility must contain
a level of authority to facilitate and deliver as well as to be held accountable for the
responsibility.

Director Kampe questioned the level of governance during the operations phase, then
questioned what the process is for assigning categories for undefined or unknown products.
What the methodology is for identifying and dealing with the unanticipated. Director Burnett
confirmed it is only through the design-build phase and indicated the goal is to have the
Authority facilitate this period only and then disband.

President Della Sala opened the item for public comment. Bill Hood talked about the impact of
the perception of what the Authority is discussing and indicated the Authority is devoting too
much time to a project that will be more expensive. He then commented that the message is not
being communicated in an understandable way to the public but appears to focus too much on
Cal Am instead of other viable alternatives. Nelson Vega spoke to the fact that the responsibility
of the PUC is to govern. He then reminded the Authority of the voter turnout that declined the
public ownership of water. Dale Haikus spoke against having a veto clause. Rudy Fischer
spoke to section B6, aesthetic attributes indicating it is an unnecessary category and agreed
with Mayor Pendergrass regarding the veto option and encouraged a decision to be made
about facility sizing. Doug Wilhelm requested the Authority to consider an agreement similar to
the Poseidon project. Safwat Malek expressed his desire and position for public ownership. Jim
Cullem encouraged the Authority to ask the CPUC to demand the option to buy the facility at
the end of the construction. President Della Sala closed public comment and Director Burnett
responded to each comment made by the public then brought the discussion back to the board.

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Regular Meeting Minutes - Thursday, January 10, 2013
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Director Kampe expressed a need for a timely disagreement resolution process to keep the
process moving but allows all parties to specify details, especially for unforeseen topics. The
Authority agreed to include language on the unforeseen items, will attempt to forecast others
the governance committee will have charge over and will attempt to reword the veto issue.

Director Rubio indicated a true public partnership would be significantly different and since we
are not adding our own risk we must inject ourselves into the private project. He encouraged
the issue of facility sizing to be decided before hand and thanked the Ad Hoc committee
Directors for all their work and efforts on this document. He agreed that the word veto has
negative connotation although the intent is good. President Della Sala closed discussion on the
governance aspect and opened discussion on the financing portion of the agenda item.

Director Burnett discussed the position of the Authority that if there was public financing
available, the PUC should require Cal Am to utilize those funds. The public financing option for
the Cal Am project would proceed based on the following principles:

It cannot make the project more expensive
It cannot delay the project
Public financing would not create an adverse affect on ratepayer communities outside of
the Monterey Peninsula
There be no share holder effects except reduced shareholder equity
There be no need for a Cal Am specific credit rating
There be no change to the debt equity ratio
There be no change to the authorized rate of return, authorized by the PUC

Director Rubio questioned the ability to participate financially and if that will impact the
proposed governance structure. Director Burnett responded that a public contribution would be
important because ratepayers stand to save a significant amount of money with the public
contribution. Kampe questioned where the money will come from and what the repayment
expectation will be and indicated there should be a clear record of recovery of costs.

Carmel Alternate Director and Ad Hoc Committee member Ken Talmage responded that the
stranded costs will be taken care of by the surcharge. The public financing does not come into
play until after the high risk period and assured the Directors that this conversation is why the
Authority has authorized hiring a Financial Consultant. The financing discussion drives the
governance discussion.

President Della Sala invited public comment on the financing portion of the agenda item.
Nelson Vega suggested that the system be set up that those that use the most water should
pay the most. With no further requests to speak, President Della Sala closed public comment.

Director Burnett explained the importance of instilling a backstop into the agreement in the
event Cal Am becomes bankrupt. If the funding agency is not able to service the bonds, it will
take on the credit rating of Cal am, instead instilling a backstop will vie down the interest rate to
a public agency interest level.



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Monterey Peninsula Regional Water Authority
Regular Meeting Minutes - Thursday, January 10, 2013
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On a motion by Director Rubio, seconded by Director Kampe and passed by the following vote,
the MPRWA approved to presented guiding principles with two amendments, remove the item
about the stock holders, add the item about the debt service based on a user fee on the water
bill but backstopped.

AYES: 6 DIRECTORS: Burnett, Edelen, Kampe, Pendergrass,
Rubio, Della Sala
NOES: 0 DIRECTORS: None
ABSENT: 0 DIRECTORS: None
ABSTAIN: 0 DIRECTORS: None
RECUSED: 0 DIRECTORS: None


4. Accept and Review Final Report: Evaluation of Seawater Desalination Projects
Action: Accepted Report

Director Burnett reported that the TAC reviewed the item and comments received were
regarding the financial tables including the revenue requirements and the cost per acre foot and
requested the Authority receive the report. President Della Sala opened public comment on the
agenda item and with no requests to speak and no discussion from the Directors, closed public
comment and proceeded to the next agenda item.


5. Authorize Expenditure for Professional Agreement for Financial Services
Action: Authorized and Passed Resolution 13-002

Legal counsel Freeman indicated adopting the resolution will memorialize the action taken at
the December 24, 2012 meeting to approve a professional services agreement. President Della
Sala opened public comment on item number five and had no requests to speak.

On a motion by Director Kampe, and seconded by Director Pendergrass and approved by the
following vote, the MPRWA approved the resolution as written authorizing expenditures for a
professional agreement for financial services and adopted resolution 13-002.

AYES: 6 DIRECTORS: Burnett, Edelen, Kampe, Pendergrass,
Rubio, Della Sala
NOES: 0 DIRECTORS: None
ABSENT: 0 DIRECTORS: None
ABSTAIN: 0 DIRECTORS: None
RECUSED: 0 DIRECTORS: None

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Monterey Peninsula Regional Water Authority
Regular Meeting Minutes - Thursday, January 10, 2013
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6. Review TAC Recommendation of State Water Board Memo Regarding Water Rights and
Provide Direction
Action: Discussed and Tabled

Director Burnett introduced the item indicating the TAC discussed the memo, including how the
agricultural community is dissatisfied and points to Tim Durbins testimony as well as the
Salinas Valley Water Coalition letter. He reported that Supervisor Potter offered to convene a
regular meeting with representation between the Peninsula and the agricultural community to
work through the water rights issues. Director Burnett urged the Authority to be careful about
involvement in the water right issue and thinks Supervisor Potter is well suited to take a lead
role. Director Burnett is not recommending any action at this time.

President Della Sala opened public comment on this item. Tom Rowley spoke to his
dissatisfaction with the PUC order of operations and processes and indicated that the water
rights need to be resolved before any project can be approved. Pursuing a project without water
rights in place will result in legal action before approval can be given, but should be looking at
which project misses the deadline by the least. Nelson Vega spoke in support of Mr. Rowleys
comments about water rights and urged looking for an alternate source of water. With no further
requests to speak, President Della Sala closed public comment.

On a motion by Director Rubio and seconded by Director Edelen, the MPRWA agreed to table
this item.
AYES: 6 DIRECTORS: Burnett, Edelen, Kampe, Pendergrass,
Rubio, Della Sala
NOES: 0 DIRECTORS: None
ABSENT: 0 DIRECTORS: None
ABSTAIN: 0 DIRECTORS: None
RECUSED: 0 DIRECTORS: None

7. Discuss and Provide Direction Regarding Framework for Decision Making for the February 22,
2013 Public Utilities Commission Testimony on Desalination Project
Action: Discussed and Provided Direction

Director Burnett introduced the item indicating that in order to direct staff in the testimony to the
PUC on February 22, 2013 the Authority must make a decision on which project to endorse. He
said great information is available and there has been great interaction from the public. By
using the draft matrix as a tool, the Authority may be able to more easily compare the different
projects in order to make an informed decision. Director Burnett requested feedback on the
matrix to ensure all needed information is addressed. The Matrix lists the three projects with the
criteria and variables for each project and can be completed with information provided by
Authority hired consultants as well as other recent reports.

President Della Sala requested TAC member Bill Reichmuth review the document categories
for completeness, then opened the item for public comment.
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Monterey Peninsula Regional Water Authority
Regular Meeting Minutes - Thursday, January 10, 2013
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Nelson Vega suggested putting things into a decision tree. Categorize them in a form that will
eliminate undesirable projects and questioned if Deep Water Desal was still a viable project.
Tom Rowley suggested that all land use agencies should be represented on the water
management district and the Authority should request reconfiguration to include direct
representation from the six peninsula cities and the county. Ken Talmage recommended it
should also include a risk assessment and indicates a judgment call is based on the
assessment of both the risks and the assumptions. Rudy Fischer encouraged the Authority to
have an alternate plan in the event the Cal Am project fails and encouraged the review of all
projects to be able to take advantage of as an alternate. Sue McCloud questioned the purpose
of the document and said it is not do the projects justice due to its brevity, specifically for
permitting, assuming no lawsuits. She then questioned the status of the Peoples Moss Landing
Desal project and asked if that changes the SPI report. Tom Frutchey spoke to Ms. McClouds
question indicating there is no new management of the Peoples project, but the decision is to
be made tomorrow. With no further requests to speak, President Della Sala closed public
comment.

The Directors discussed the process for filling out the matrix and making a decision. Interim
Director Meurer advised that there will be no correct answer and that each project should have
the opportunity to make their case before the Authority and the public. The process to allow the
public to speak will be almost as important as the decision itself. Director Rubio spoke in
support of Meurers comments.

Mr. Talmage suggested that there are three versions of the matrix that be completed. One by
the TAC, one by the SPI Consultant and one by the MPWMD. With the magnitude of the
decision, it will be important to receive data from the three sources. Mr. Talmages suggestion
was approved unanimously by the Authority. Director Burnett indicated they will request the
matrix to be reviewed and returned by January 22, 2014.

ADJOURNMENT

With no further business on this agenda President Della Sala adjourned the meeting at 10:05
p.m.

ATTEST:





Lesley Milton, Clerk of the Authority MPRWA President

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Monterey Peninsula Regional Water Authority
Agenda Report

Date: January 24, 2013
Item No: 2.


08/12


FROM: Interim Executive Director Meurer
Prepared By: Clerk to the Authority Milton


SUBJECT: Adopt a Resolution Authorizing a Contract with the City of Monterey for Executive
Director Services

RECOMMENDATION:

That the Authority adopt a Resolution authorizing a contract for employment services with the
City of Monterey who, with input from the Authority Directors, selected Bill Reichmuth as an
employee and is willing to appoint him as Executive Director to the Monterey Peninsula
Regional Water Authority (MPRWA).

POLICY IMPLICATIONS:

This recommendation, in part, supports the MPRWA Joint Powers agreement and mission to
ensure the timely development, financing, construction, operation, repair, and maintenance of
one or more water supply projects to replace pending lost water supplies and to ensure that the
governance of such projects includes representation that is directly accountable to the Cities
residents that are served by such projects and to undertake any additional related or ancillary
actions.

FISCAL IMPLICATIONS:

The revised Fiscal Year 2012-13 budget approved on January 10, 2012 included a line item
budget for the professional services of an Executive Director. This position will be an employee
of the City of Monterey and the Authority will contract for services, not to exceed $72,588 for FY
2012-13.


ENVIRONMENTAL DETERMINATION:

The proposed action is not a project as defined by the California Environmental Quality Act.


ALTERNATIVES CONSIDERED:

The Authority could chose not to execute this contract but the ability of member City Managers
to act as Executive Director to facilitate the operations of the Authority has proven to be less
efficient due to their current obligations and time capacity.

MPRWA Meeting, 1/24/2013 , tem No. 2., tem Page 1, Packet Page 9




DISCUSSION:


The City of Monterey managed the recruitment process for the MPRWA Executive Director
position. The City received 17 applications. The City transmitted the applications to an Ad Hoc
committee of Mayor Garcia and Mayor Pendergrass for review. The Ad Hoc committee
recommended three (3) applicants to be considered by the full Authority. The Authority
interviewed the three (3) candidates on October 8, 2012. At that time, the Authority decided not
to proceed with hiring an Executive Director. At the December 24, 2012 meeting, the Authority
directed staff to again proceed with hiring an Executive Director and requested a member city to
sponsor the position as an employee and to contract for services, similar to the current
agreement with the City of Monterey for clerk services. The City of Monterey facilitated this
request, approving an amendment to their Position Control List to add the Water Authority
Executive Director position to their part-time salary schedule. As confirmed by both MPRWA
and the City of Monterey, this position will be an employee of the City of Monterey and the
Authority will contract with the City of Monterey for this service.

At the January 10, 2013 meeting the Authority amended the Fiscal Year 2012-13 budget to
include expenses for the position.

The proposed budget of the Executive Director is provided below.

Executive Director Cost Breakdown

$105.20 Benefited Wage Per Hour
600 Hours Budgeted Through June 30, 2013
$63,120 Total Wages
$9,468 Administrative, Travel and Meeting Expenses (15%)
$72,588

The Authority will reimburse the City of Monterey for the expenses as listed above. The
Executive Director compensation will be $100.00 per hour for actual hours worked. The purpose
of this arrangement is to allow the individual to fall under the City of Monterey current policies
and premiums. This will eliminate additional costs to the Authority for these same services.


City Manager Meurer, fulfilling the position of Interim Executive Director for the Authority, has
facilitated the recruitment process of the Executive Director position and, with input from the
Authority Directors, has appointed Bill Reichmuth. It is recommended that the Authority approve
a Resolution authorizing the Authority to enter into the contract with the City of Monterey for
Executive Director services.

Attachments: 1. Resolution

c: President Della Sala
Legal Counsel Freeman
Interim Executive Director and TAC Chair Burnett
MPRWA Meeting, 1/24/2013 , tem No. 2., tem Page 2, Packet Page 10
RESOLUTION NO. __-___ C.S.


A RESOLUTION OF THE MONTEREY PENINSULA
REGIONAL WATER AUTHORITY

APPROVE CONTRACT FOR EXECUTIVE DIRECTOR SERVICES
WITH THE CITY OF MONTEREY

WHEREAS, the City of Monterey is a member city of the Monterey Peninsula Regional
Water Authority; and

WHEREAS, the MPRWA has authorized the need for having a dedicated Executive Director
dedicated the the MPRWA and has requested that a member city sponsor the position of Executive
Director as an employee of their agency and contract for services to the MPRWA; and

WHEREAS, the City of Monterey has agreed to provide the services of Executive Director to
the MPRWA; and

WHEREAS, the President and MPRWA Directors have reviewed the contract and agrees to
its terms and conditions; and

WHEREAS, the cost of retaining the Executive Director services is not to exceed $72,500.00
for fiscal year 2012-13 and additional expenses will be incurred according to the budget adopted by
the Authority on January 10, 2013 and referred to in Exhibit A.

NOW, THEREFORE, BE IT RESOLVED that the President is hereby authorized to execute
on behalf of the MPRWA a contract with the City of Monterey for Executive Director Services for the
MPRWA.

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


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


APPROVED:



ATTEST:


Chuck Della Sala, President



Clerk to the Authority

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EXHIBIT A

SCOPE OF SERVICES/PAYMENT PROVISIONS
EXECUTIVE DIRECTOR SERVICES

I. City of Monterey to Provide the Following:

A. Executive Director Duties and Services- Policy Functions

Work to prepare agendas and packets for Board & TAC meetings
Prepare recommendations on policy matters and action items
Respond to Authority requests for information or agenda items
Keep press/media informed of MPRWA actions
Address requests for information or statements by public or media as appropriate
Coordinate with Chair of the Technical Advisory Committee regarding board delegations and
placing TAC matters before the Authority for consideration/action

B. Administrative Functions

Serve as liaison to the City Mangers of the member cities
Maintain listing of forthcoming CPUC workshops and hearings, assist Authority in developing
positions and instructing their representatives
Coordinate with legal services so board requests are met in a timely way
Work with agency proving clerk services for agenda management, recordation of minutes,
maintenance of records, complying with Public records act requests, and related matters
Coordinate with the designated fiscal agent, on financial matters, and coordinate with the
Authority Treasurer to maintain accounts of MPRWA
Prepare budget necessary to support agencys ability to perform functions
Maintain list of contracts approved by the MPRWA
Develop policy binder of all board adopted policies
Develop programs as necessary to implement policy direction of Board
Maintain working files as necessary to administer the core functions
Arrange for places for regular and special meetings of MPRWA, unless delegated to another
party
Protect, maintain and keep inventory of MPRWA property and equipment
Schedule meetings of such Committees (Regular and Ad HOC) as the MPRWA have created,
and coordinate with Chair to see that the work of MPRWA proceeds
Performs other duties as required to best ensure the smooth operation of MPRWA

C. Miscellaneous Services Performed by City of Monterey:

Payroll Services for Monterey employee(s) providing these services
Tracking of employee hours and resultant costs of services provided
Invoices requesting payment for services are to be submitted on a monthly basis by the City of
Monterey to the designated fiscal agency

II. MPRWA to Provide the Following:

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Reimbursement to the City of Monterey shall be made within thirty (30) days after receipt of
invoice


III. Executive Director Rate and Budget

Executive Director Expenses

$105.20 Benefited Wage Per Hour
600 Hours Budgeted Through June 30, 2013*
$63,120 Total Wages
$9,468 Administrative, Travel and Meeting Expenses (15%)
$72,588

*Note - MPRWA budget is based on a fiscal year. A revised budget for the Executive Director position may
be created for fiscal year 2013-14.
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Monterey Peninsula Regional Water Authority
Agenda Report

Date: January 24, 2013
Item No: 3.


08/12


FROM: Interim Executive Director Meurer
Prepared By: Clerk to the Authority Milton


SUBJECT: Discuss Project Decision Matrix and Provide Recommendations to the Authority


DISCUSSION:


There is no agenda report for this item. The Authority will receive a completed decision matrix
from the TAC as well as the Authority contracted consultant to use as a tool for policy and
decision making regarding selecting a desalination facility to endorse.

The attached matrix was approved by the Authority at the January 10, 2013 meeting.

MPRWA Meeting, 1/24/2013 , tem No. 3., tem Page 1, Packet Page 15
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MPRWA Meeting, 1/24/2013 , tem No. 3., tem Page 2, Packet Page 16
Monterey Peninsula Regional Water Authority
Agenda Report

Date: January 24, 2013
Item No: 4.


08/12


FROM: Clerk of the Authority



SUBJECT: Discuss Draft Governance Proposal and Provide Direction to Staff

DISCUSSION:

There is no written report for this item at this time. An oral report and discussion will take place
at the meeting regarding updates to the attached version.



ATTACHMENT: Draft Governance Proposal (Current as of 1/23/13)
MPRWA Meeting, 1/24/2013 , tem No. 4., tem Page 1, Packet Page 17
MPRWA Draft (January 10, 2013)

1
AGREEMENT TO FORM THE MONTEREY PENINSULA WATER SUPPLY PROJECT GOVERNANCE
COMMITTEE

This AGREEMENT TO FORM THE MONTEREY PENINSULA WATER SUPPLY PROJECT
GOVERNANCE COMMITTEE (Agreement) is made and entered into as of __ of February, 2013, by
and among the MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA), the
MONTEREY PENINSULA WATER MANAGEMENT DISTRICT (MPWMD), the COUNTY OF
MONTEREY (County), and the CALIFORNIA AMERICAN WATER COMPANY (Cal-Am) The
MPRWA, the MPWMD, the County, and Cal-Am are sometimes referred to herein as a Party, and
collectively as the Parties.

I. Formation of Governance Committee
Pursuant to the terms of this Agreement, the Parties hereby form the Monterey Peninsula Water Supply
Project Governance Committee (Governance Committee) comprised of representatives of the
MPRWA, the MPWMD, the County, and Cal-Am to ensure efficient and effective public input into the
development and operation of the Monterey Peninsula Water Supply Project (Project). Cal-Ams entry
into this Agreement is expressly conditioned upon its legal obligations to abide by the orders and decision
of the California Public Utilities Commission (CPUC), and therefore, to the extent the CPUC issues any
order or decision that conflicts with any provision of this Agreement, Cal-Am shall be relieved of any
obligation to abide by the conflicting provision herein.

II. Definitions [Rich Svindland to assist with Defintions]
A. Application A.12-04-019
B. ASR Infrastructure
C. Cal-Am Notification. The time when Cal-Am notifies the Governance Committee that a
matter is ready for consideration, consultation, or action by the Governance Committee as provided
herein, and as further defined within Section __.
D. Contracts e.g. design and build, engineering, etc. contracts for desalination plant (DB),
intake wells (likely DB), product and raw pipelines (DBB), ASR wells (DBB), terminal reservoir and ASR
pump station (DBB).
E. County of Monterey
F. CPCN
G. Brine Discharge Infrastructure
H. Desalination Infrastructure
I. Desalination Project [note definition needs to be broad enough to incorporate all aspects
of the Project for which the GC desires input. Definition will likely incorporate other defined terms]
J. Design-Build Contract
K. Design Build Contractor
L. GWR Project
M. MPRWA
MPRWA Meeting, 1/24/2013 , tem No. 4., tem Page 2, Packet Page 18
MPRWA Draft (January 10, 2013)

2
N. MPWMD
O. Product Water Pipeline
P. Source Water Infrastructure
Q. Terminal Reservoir
III. Membership and Voting
Each of the public entities will be represented on the Governance Committee by one elected member and
one alternate who shall also be an elected official. Cal Am shall be represented by the President of Cal-
Am or the Presidents designee. The Governance Committee shall appoint a Chair and Vice-Chair
from the primary (non-alternate) elected officials appointed to the Governance Committee. Each of the
public entity representative members shall have a single equal vote in decision-making. Cal-Am shall not
have a vote for purposes of the issuance of decisions or recommendations by the Governance
Committee. However, Cal-Am shall, unless it abstains from doing so, state its preference with respect to
any decision made by the Governance Committee (the Cal-Am Preference) at the time that any
decision is made by the Governance Committee and the Cal-Am Preference shall be recorded within the
meeting minutes together with a summary of any explanation provided by Cal-Am for the Cal-Am
Preference.

IV. Powers
A. Purpose. The purpose and function of the Governance Committee shall be to: (i) consult
with, advise, and in some circumstances, provide direction, to Cal-Am and the design-build firm selected
for the Desalination Project concerning the design, permitting, construction, operations, maintenance,
repairs, and replacements of the components of the Desalination Project; and (ii) serve as the entity
which Cal-Am regularly updates as to Desalination Project status and issues. The members of the
Governance Committee shall diligently consider all matters and cause the Governance Committee to
timely and promptly issue decisions or recommendations brought before it as provided pursuant to the
terms of this Agreement.
B. Waiver of Action. Upon motion and affirmative vote of the Governance Committee, the
Governance Committee may choose to waive its right to issue a decision or recommendations with
respect to any matter for which the Governance Committee is afforded such right herein. The purpose of
the Governance Committees right to waive its right to make any specified decision or recommendation
herein is to empower the Governance Committee to avoid issuing any decision or recommendation,
which, in its determination, would violate any law, unreasonably delay efforts to develop water supplies
for the Monterey Peninsula, or otherwise compromise the public interest.
V. Governance Committee Action; Procedures
A. Matters Subject to Governance Committee Action. Matters for consideration,
consultation, decision, or recommendation by the Governance Committee shall be divided among three
categories, with varying processes for consultation, recommendations, and/or decision-making, as
follows:
Category A: The Governance Committee makes the decision respecting the matter after
receipt of a written recommendation from Cal-Am, and upon issuance of its decision, the
Governance Committee provides a written explanation of the reasons for its decision to Cal-Am
within seven (7) calendar days of its decision. Thereafter, Cal-Am complies with the determination
issued by the Governance Committee so long as the decision is consistent with the terms of this
Agreement. However, notwithstanding any provision of this Agreement, for any matter covered by
Category A that relates to an action which may cause either a direct physical change in the
MPRWA Meeting, 1/24/2013 , tem No. 4., tem Page 3, Packet Page 19
MPRWA Draft (January 10, 2013)

3
environment, or a reasonably foreseeable indirect physical change in the environment, as defined
by section 21065 of the California Public Resources Code, no decision shall be made by the
Governance Committee as to the subject matter unless and until such time as the action has
been subject to review by an appropriate agency in accordance with the California Environmental
Quality Act (CEQA). The foregoing provision shall not be construed as an agreement or
determination by or among any of the Parties that CEQA applies to any action of the Governance
Committee. This Agreement is itself not a project as defined by section 15378 of the CEQA
Guidelines (California Code of Regulations, Title 14, Chapter 3) because it is an organizational
activity that will not result in direct or indirect physical changes in the environment and this
Agreement makes no commitment to any project.
Category B: The Governance Committee makes a recommendation respecting the
matter after receipt of a written recommendation from Cal-Am. However, Cal-Am may determine,
at its sole discretion, whether or not to follow the Governance Committees recommendation,
provided that if Cal-Am chooses not to follow the recommendation, Cal-Am shall provide a written
explanation of Cal-Ams reasons for its decision not to follow the recommendation within ten (10)
calendar days of the issuance of the Governance Committees recommendation. Further, should
Cal-Am choose not to follow the advice of the Governance Committee, then any Party may raise
the issue for review by the CPUC during Cal-Ams next general rate case.

Category C: Cal-Am makes the decision respecting the matter after receiving advice
from the Governance Committee. Cal-Am need not issue a written explanation for its decision,
although should Cal-Am choose not to follow the advice of the Governance Committee, then any
Party may raise the issue for review by the CPUC during Cal-Ams next general rate case.

B. Procedure for Cal-Am Notification. Whenever Cal-Am is presented with, or becomes
aware of, a matter that falls within any of the subjects identified herein for consideration, consultation, or
action by the Governance Committee that is ripe for presentation to the Governance Committee, Cal-Am
shall promptly notify the Chair of the Governance Committee (Cal-Am Notification), who shall schedule
the matter for consideration by the Governance Committee. For purposes of this agreement, a matter
shall be deemed ripe for presentation to the Governance Committee at such time as the subject matter is
ready for a decision which shall materially impact any financial, design, aesthetic, function, or scheduling
aspect of the Project, as it relates to the subject matter. Unless a different period is specified herein, for
all matters for which a decision or recommendation is to be made by the Governance Committee ,the
Governance Committee shall issue its decision/recommendation within ten (10) calendar days of receipt
of the Cal-Am Notification. In the event that the Governance Committee determines that it requires more
than the prescribed time period provided for in this Agreement to act on any matter that is the subject of
the Cal-Am notification, the Chair of the Governance Committee may request an extension of time by
written request to Cal-Am, and Cal-Am shall cooperate in good faith with the Governance Committee to
set an alternative deadline for action on the subject matter to the extent that said extension does not
unreasonably delay the Project or otherwise compromise the public interest. So as to avoid undue delay,
in the event the Governance Committee fails to make any decision or provide any recommendation upon
any matter brought before it (including all Category A decisions) on or before the expiration of the
prescribed period for action by the Governance Committee (or the period of any extension agreed to by
Cal-Am),or if the Governance Committee affirmatively waives it right to make a decision or
recommendation respecting a matter before it, then Cal-Am may make the subject decision without a
decision or recommendation, as applicable, by the Governance Committee.
C. Procedure for Presentation of a Matter Upon Request of the Governance Committee;
Action Upon a Presentation. Upon reasonable advance, written notice, the Governance Committee may
request that Cal-Am present to the Governance Committee the status of any matter that is set forth in any
of the three categories for decision, recommendation, or consultation established below, together with an
explanation of any pending or soon-to-be-pending decisions or options concerning the subject matter. In
the event Cal-Am believes that a presentation to the Governance Committee pertaining to the subject
matter at that time would unreasonably delay the Project or otherwise compromise the public interest,
Cal-Am shall provide a written explanation to the Governance Committee, within ten (10) calendar days of
MPRWA Meeting, 1/24/2013 , tem No. 4., tem Page 4, Packet Page 20
MPRWA Draft (January 10, 2013)

4
the Governance Committees aforementioned written notice to Cal-Am, that explains the reasons
supporting Cal-Ams determination. Upon issuance of a such a written explanation by Cal-Am, a
presentation pertaining to the subject matter shall not be required at that time. If a presentation is made
by Cal-Am to the Governance Committee upon request of the Governance Committee, as provided for in
this Section, then within ten (10) calendar days of that presentation, the Governance Committee may
issue any recommendation concerning the subject matter to Cal-Am. Cal-Am may determine, at its sole
discretion, whether or not to follow the recommendation, provided that if Cal-Am chooses not to follow the
recommendation and the subject matter is a matter covered by either Category A or Category B, Cal-Am
shall, within ten (10) calendar days of the issuance of the Governance Committees recommendation,
provide a written explanation of the reasons for Cal-Ams decision not to follow the recommendation. If
the subject matter is a matter covered by Category C below, Cal-Am need not issue a written explanation
of Cal-Ams reasons for its decision not to follow the recommendation.
D. Categories for Matters Subject to Governance Committee Action. Matters for
consideration, consultation, decision, or recommendation by the Governance Committee shall be divided
among the following three categories as follows:
Category A

1) This matter concerns the GWR Recommendation, which specifically is whether Cal-Am shall:
(i) pursue a water purchase agreement with the MRWPCA for the purchase of water from the
GWR Project, and consequently Cal-Am shall develop a smaller desalination facility with a
capacity of approximately 6.4 MGD; or (ii) forgo the pursuit of a water purchase agreement with
MRWPCA for the GWR Project, and consequently Cal-Am shall develop a larger desalination
facility with a capacity of approximately 9.6 MGD. If the GWR Recommendation becomes ripe for
decision before a CPCN is issued upon Application A.12-04-019, the Governance Committee
shall not issue any binding decision concerning the GWR Recommendation. If the GWR
Recommendation becomes ripe for decision after a CPCN is issued upon Application A.12-04-
019, the Governance Committee shall decide whether Cal-Am shall adopt the GWR Project or
not, which decision shall then be subject to CPUC approval or rejection pursuant the procedure
specified herein. The Governance Committee shall make this decision based upon the criteria
attached hereto as Exhibit A. The decision shall be made within sixty (60) calendar days from the
Cal-Am Notification concerning this matter. The decision issued by the Governance Committee
shall be submitted by Cal-Am to the CPUC for approval or rejection pursuant to a Tier 2 Advice
Letter (or at the direction of the CPUC, an alternate form of submission) within ten (10) calendar
days of the decisions issuance by the Governance Committee for the CPUCs review and
approval.

2) Select a Certified Value Engineer (to facilitate and report on the proposed value engineering for
the Desalination Project), with consideration given to any recommended engineer submitted by
any member of the Governance Committee;

3) Subsequent to the issuance of the CPCN and subsequent to the selection of the design-build
contractor for the Desalination Project, issue decisions concerning the Desalination Projects
aesthetics consistent with community values, if the decision would in the opinion of the design-
build contractor, have no adverse financial impact on the cost of the Desalination Project; and

4) Subsequent to the issuance of the CPCN and subsequent to the selection of the design-build
contractor for the Desalination Project, issue decisions concerning procurement of alternative
(non-PG&E) energy supplies for the Desalination Project, including waste-to-energy, so long as
such decisions result in lowering the Desalination Projects estimated unit price for power.

Category B

1) Recommend qualifications and selection criteria for the Contracts not previously executed for the
Project;
MPRWA Meeting, 1/24/2013 , tem No. 4., tem Page 5, Packet Page 21
MPRWA Draft (January 10, 2013)

5
2) Recommend which professionals to be retained under the Contracts after review and evaluation
of proposals from qualified contractors for the Contracts. The Governance Committee and its
members shall maintain the confidentiality of all proposals, bids, [and other documents] [Need to
address confidentiality concers]];
3) Review and issue recommendations concerning significant changes to the Project at key stages
of the design process, including:
Basis of Design
30% Design
60% Design
Value Engineering
90% Design, and
Final Design
As used in this paragraph, significant changes to the Project shall include _______________
4) Establish a community outreach program, including a plan and budget for community outreach to
be included within the CPCN, and issue decisions concerning the same;
5) Recommend the Desalination Projects aesthetic attributes and design consistent with community
values if not covered by Section A(3) above;
6) Coordinate with Cal-Am with respect to resolution of issues concerning the use of the MRWPCAs
ocean outfall and issue recommendations concerning the same;
7) Review and recommend whether to adopt any value engineering recommendations issued by the
Value Engineer;
8) Review and recommend whether to approve any major change order pertaining to any
component or components of the Desalination Project, if the change order exceeds $1 million;
and
Category C

1) Cal-Am shall monitor the design, engineering, and permitting of all elements of the Desalination
Project, and report on such monitoring to the Governance Committee on a quarterly basis. The
Governance Committee shall discuss Cal-Ams quarterly report and issue recommendations to
Cal-Am pertaining to the Desalination Project;

2) Review contract terms relating to the Contracts. [Cal-Am deletes financial contracts. Cal-Am
limits to construction contracts Cal Am recommends that if there are terms the public agencies
believe should be in the financial contracts then the public agencies should recommend such
terms in their CPUC testimony, but Cal-Am does not intend to negotiate terms for financial
contracts, which it states are largely preset by CPUC, SRF terms, or American Water for
American Water debt. Requires further discussion.];

3) Preparation and quarterly update of an overall construction budget for the Desalination Project;

4) Review and acceptance of a detailed plan for acceptance testing, including follow-up reporting;

5) Annually review the Desalination Project operations and maintenance budget and rate impacts;
and

6) Coordinate with Cal-Am with respect to local and regional permit requirements.
MPRWA Meeting, 1/24/2013 , tem No. 4., tem Page 6, Packet Page 22
MPRWA Draft (January 10, 2013)

6
7) [Cal-AM adds Provide the Governance Committee with quarterly progress reports during major
design milestones (i.e., 30% design, 60% design, 90% design, and final design) and information
on any material challenges to the Project Design.]

E. Additional Matters. If agreed by all members of the Governance Committee, including
Cal-Am, additional matters not provided for herein, may be added to Category A for decision by the
Governance Committee or to Category B for recommendation from the Governance Committee.
Additional matters may also be added to Category C for Cal-Am consultation with the Governance
Committee upon affirmative vote of the Governance Committee unless Cal-Am determines that the
addition of the matter to Category C would unreasonably delay the Project or otherwise compromise the
public interest. In the event Cal-Am determines that a matter affirmed by the Governance Committee for
addition to Category C should not be so added, Cal-Am shall issue a written explanation to the
Governance Committee within ten (10) calendar days of the Governance Committees vote to add the
matter to Category C that explains the reasons supporting Cal-Ams determination.
VI. Meetings and Action of the Governance Committee; Agendas and Minutes
A. Meetings. Meetings of the Governance Committee shall be held at the office of the
MPWMD and may be called by the Governance Committees Chair or Vice-Chair. Governance
Committee meetings shall be conducted in compliance with the Ralph M. Brown Act (Government Code
sections 54950, et seq.). The Board may use teleconferencing in connection with any meeting in
conformance with and to the extent authorized by applicable law. The following shall be the order of
business of all meetings of the Governance Committee:
1. Call to Order
2. Roll Call.
3. Pledge of Allegiance
4. Public Comment
5. Report from Governance Committee Members
6. Approval of Minutes of the Previous Meeting
7. Agenda Items
8. Adjournment
B. Action by the Governance Committee. All resolutions of the Governance Committee
shall be in writing, signed by the Chair. All other actions of the Governance Committee shall be by motion
recorded in written minutes.
C. Agendas and Minutes. Agendas and minutes of the meetings of the Governance
Committee shall be taken, maintained, and distributed by a designated staff member of the MPWMD.
VII. Quorum and Affirmative Action of the Governance Committee
To constitute a quorum at all meetings of the Governance Committee for the transaction of
business, the representative or alternate public representative of each of the Governance Committee s
public entities must be present in person or represented by proxy. Action by the Governance Committee
shall require the affirmative vote of at least two of the public entity representatives.
VIII. Submission of Project Information to the Governance Committee; Project Inspections
Concurrent with Cal-Ams submission of [describe financial reports] to the CPUC, Cal-Am shall provide a
copy of the documents filed with the CPUC to the Chair of the Governance Committee. The Chair may
notice a meeting on his or her own initiative, or upon the request of any member of the Governance
Committee to review any financial matter addressed by the documents. Cal-Am, upon request of the
Chair of the Governance Committee, shall be afforded an opportunity to provide a presentation or any
oral explanation relating to the noticed financial matter. Further, upon reasonable advanced notice, any
MPRWA Meeting, 1/24/2013 , tem No. 4., tem Page 7, Packet Page 23
MPRWA Draft (January 10, 2013)

7
member(s) of the Governance Committee may inspect any physical facility or structure constructed or
being constructed as an element of the Project, and Cal-Am shall provide an employee, consultant, or
other representative, who is knowledgeable of the aspects and elements of the physical facility or
structure, to accompany the member(s) of the Governance Committee during the inspection.
IX. Miscellaneous
A. Further Assurances. The Parties shall execute such further documents and do any and
all such further things as may be necessary to implement and carry out the intent of this Agreement.
B. Construction. The provisions of this Agreement shall be liberally construed to effectuate
its purposes. The language of this Agreement shall be construed simply according to its plain meaning
and shall not be construed for or against any Party, as each Party has participated in the drafting of this
Agreement and had the opportunity to have their counsel review it.
C. Choice of Law. This Agreement shall be governed and construed under the laws of the
State of California, with venue proper only in Monterey County.
D. Severability. If any term or provision of this Agreement is determined to be illegal,
unenforceable, or invalid in whole or in part for any reason, such illegal, unenforceable, or invalid
provision or part thereof, shall be stricken from this Agreement, and such provision shall not effect the
legality, enforceability, or validity of the remainder of this Agreement. If any provision or part of this
Agreement is stricken in accordance with the provisions of this section, then the stricken provision shall
be replaced, to the extent possible, with a legal, enforceable and valid provision that is as similar in
content to the stricken provision as is legally possible.
E. Dispute Resolution. In the event that any dispute arises between two or more of the
Parties relating to this Agreement, or the rights and obligations arising therefrom, the Parties in dispute
shall attempt in good faith to resolve the controversy through informal means. However, if the Parties in
dispute cannot agree upon a resolution of the controversy within thirty (30) calendar days from a Partys
request to submit a depute to dispute resolution, the dispute shall be submitted to mediation prior to
commencement of any arbitration or litigation. The cost of mediation shall be paid in equal proportion
among the Parties in dispute. The mediator shall be either voluntarily agreed to, or appointed by the
Superior Court upon a suit and motion for appointment of a neutral mediator. So long as the parties in
dispute have engaged in mediation as a condition precedent to further proceedings concerning any
dispute, the parties in dispute may mutually agree to resolve any dispute through binding arbitration
which, unless the parties in dispute mutually agree otherwise, shall be administered by the American
Arbitration Association, and absent such a mutual agreement for arbitration, any dispute may be litigated.
F. Attorneys Fees. In any arbitration, lawsuit, or other legal action or proceeding, relating
to the interpretation or enforcement of this Agreement, the prevailing Party(s) shall be entitled to recover
from the other Party(s) in dispute reasonable expenses, attorneys fees and costs.
G. Members to Bear their Own Costs. Each Party shall bear its own costs relating to the
rights and obligations of each Party arising from this Agreement and its participation in the Governance
Committee. Therefore, no Party shall be entitled to any reimbursement from another Party as a result of
any provision of this Agreement.
H. Notices and Communication. Any notice or communication hereunder shall be
deemed sufficient if given by one Party to the other Parties in writing and either delivered in person,
transmitted by electronic mail or facsimile and acknowledgment of receipt is made by the receiving
Party(s), or deposited in the United States mail in a sealed envelope, certified and with postage and
postal charges prepaid, and addressed as follows:
If to Cal-Am: California American Water Company
MPRWA Meeting, 1/24/2013 , tem No. 4., tem Page 8, Packet Page 24
MPRWA Draft (January 10, 2013)

8
Attn: Robert MacLean
1033 B Avenue #200
Coronado, CA 92118
Email: Robert.MacLean@amwater.com

If to MPRWA:
If to MPWMD:
If to County:

or to such other address or to such other person as each Party shall have last designated for receipt of
notices pursuant to this Agreement. Where this Agreement provides for written notices or
communication from Cal-Am to the Governance Committee, such written notice, explanation, or
communication shall be directed to the Chair of the Governance Committee at the address set forth
above for notices to the public entity from which the Chair is appointed, and when provided shall be
deemed provided to all public entity members of the Governance Committee. The effective date of any
written notice, explanation, or communication shall be the earlier of the date of actual receipt,
acknowledgment of receipt, or three days following deposit in the United States mail.
I. Effective Date. This Agreement shall take effect on date first stated above.
J. [Any other miscellaneous provisions?]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first stated above.

[signature page to follow]
MPRWA Meeting, 1/24/2013 , tem No. 4., tem Page 9, Packet Page 25
MPRWA Draft (January 10, 2013)

9

California American Water Company

By:_______________________________
Robert MacLean, President

Agreed as to form:


By:_______________________________
Anthony J. Cerasuolo, Vice President, Legal - Operations

Monterey Peninsula Regional Water
Authority


By:_______________________________
Chuck Della Sala, President

Agreed as to form:


By:_______________________________
Donald Freeman, Authority Counsel

Monterey Peninsula Regional Water
Authority


By:_______________________________
David Pendergrass, Chair

Agreed as to form:


By:_______________________________
David Laredo, District Counsel

County of Monterey

By:_______________________________
Dave Potter, Chair of the Board of Supervisors

Agreed as to form:


By:_______________________________
Charles McKee, County Counsel


MPRWA Meeting, 1/24/2013 , tem No. 4., tem Page 10, Packet Page 26