Wednesday, February 12, 2014

Board of Directors Monterey Peninsula Water Management District AGENDA February 13, 2014 Featuring ADOPT PLAN FOR SUBMISSION AND REVIEW OF ARGUMENTS FOR OR AGAINST THE MONTEREY PENINSULA WATER SYSTEM LOCAL OWNERSHIP AND COST SAVING INITIATIVE

ABSTRACT: The Board of Directors Monterey Peninsula Water Management District is scheduled to conduct a Regular Meeting on AGENDA February 13, 2014. Agenda Items featured include CONSIDER AUTHORIZATION TO INCREASE BUDGET FOR GROUNDWATER REPLENISHMENT PROJECT (GWR), CONSIDER EXPENDITURE OF FUNDS TO AMEND AN AGREEMENT WITH SCHAAF AND WHEELER CONSULTING CIVIL ENGINEERS TO EVALUATE THE BLANCO DRAIN AS A SOURCE OF SUPPLY FOR THE GROUNDWATER REPLENISHMENT PROJECT, CONSIDER RECOMMENDATION TO THE BOARD TO AMEND COST SHARING AGREEMENT WITH DEEPWATER DESAL and ADOPT PLAN FOR SUBMISSION AND REVIEW OF ARGUMENTS. Importantly, with regard to Agenda Item ADOPT PLAN FOR SUBMISSION AND REVIEW OF ARGUMENTS: RECOMMENDATION: The Public Outreach Committee recommends the Board of Directors (a) adopt a neutral policy with respect to arguments for, against, and rebuttals with respect to the Initiative and (b) assign District staff and General Counsel responsibility for receiving from outside parties and conveying to the County Registrar the arguments for, against, and rebuttals. Links to relevant documents are provided.


Regular Meeting
Board of Directors
Monterey Peninsula Water Management District
******************
Thursday, February 13, 2014
7:00 PM – Regular Board Meeting

Conference Room, Monterey Peninsula Water Management District

5 Harris Court, Bldg G, Monterey, CA

Staff notes for the 7 PM agenda items will be available on the District web site at http://www.mpwmd.dst.ca.us/asd/board/boardpacket/2014/2014.htm by 5 PM on Friday, February 7, 2014
ITEM:
CONSENT CALENDAR

3.


Meeting Date:
February 13, 2014

Budgeted: 

No


From:
David J. Stoldt,
Program/
Groundwater Replenishment Project

General Manager
Line Item No.:    
1-5-1

Prepared By:

Suresh Prasad
Cost Estimate:
$1,118,781 (75% of  budget increase)

General Counsel Approval: N/A
Committee Recommendation: The Administrative Committee reviewed this item on January 21, 2014 and recommended moving this item to be considered by the Board of Directors. The Water Supply Committee reviewed this item on February 4, 2014 and recommended approval 3-0, subject to certain considerations discussed below.

CEQA Compliance:  N/A

SUMMARY:  At its June 17, 2013 meeting, MPWMD Board adopted Fiscal Year (FY) 2013-2014 budget which included $2,717,500 for GWR.  This budgeted amount represented 75% of the total GWR expenditure for FY 2013-2014.  The other 25% of the project cost is funded by Monterey Regional Water Pollution Control Agency (MRWPCA).  Grants are also used to fund a portion of the project.

Based on recommendations made by the project’s Independent Advisory Panel, expansion in scope of project components, and the acceleration of certain project activities, new mid-year budget estimates were developed by MRWPCA, resulting in a need to increase the GWR FY 2013-2014 budget by an additional $1,557,714.  This increase includes estimates from MRWPCA attached as Exhibit 3-A

This budget adjustment was approved by the MRWPCA Board on January 27th.  It was recommended for approval by the District’s Water Supply Planning Committee 3-0 at its meeting February 5th.  The Water Supply Planning Committee approval was conditioned on expected reductions in the “Internal Labor” and “Public Outreach” budgets, as well as the expectation that certain expenditures for Public Outreach would be deferred until source water contract negotiations make demonstrable progress.   MRWPCA has since made recommended reductions and increases, for a net reduction from the approved amount, to a new amount of $1,389,714 as shown in Exhibit 3-B.

The District’s share of this revised increase based on the Cost Sharing Agreement with MRWPCA will be $1,118,781 ($1,042,286 or 75% of the increased budget, plus an additional $76,495 for differential between MPWMD and MRWPCA originally adopted budgets).  The funding for this increase will come from Aquifer Storage Recovery Phase I and Alternate Desalination Project.  Most of the project costs for these two projects have been deferred to FY 2014-2015.  This budget increase will be included in the District’s mid-year budget adjustment slated for February-March Board meeting.

This mid-year adjustment includes costs for outreach activities, water rights related services, and externalities analysis all based on MPWMD recommendations. 

Attached as Exhibit 3-C to this staff report is Amendment 1 to the Cost Sharing Agreement between MPWMD and MRWPCA.  This proposed Amendment addresses MPWMD’s concerns about Monterey Peninsula ratepayers paying for services and benefits to entities outside Cal Am’s Monterey District.  If in the future GWR facilities funded under the Cost Sharing Agreement provide benefits or services to entities outside Cal Am’s Service area, MPWMD would be reimbursed by MRWPCA for such costs.

RECOMMENDATION:  The Water Supply Planning Committee recommends that the Board authorize the increase in budget for Groundwater Replenishment Project of $1,118,781 for Fiscal Year 2013-2014 and approve Amendment 1 to the Cost Sharing Agreement. 

EXHIBITS
3-A         Mid-Year GWR Budget Adjustment - MRWPCA Summary
3-B         Line Item Summary of Budget Adjustments
3-C         Amendment 1 to GWR Cost Sharing Agreement


ITEM:
CONSENT CALENDAR

4.

Meeting Date:
February 13, 2014

Budgeted: 

Yes


From:
David J. Stoldt,
Program/
Augment Water Supply

General Manager
Line Item No.:
1-5-1 / 5-7860.10

Prepared By:
Larry Hampson
Cost Estimate:
$ 40,000

General Counsel Review:  N/A

Committee Recommendation:  The Administrative Committee reviewed this item on February 12, 2014; action taken by the Committee will be reported at the February 13, 2014 Board meeting.

CEQA Compliance:  N/A

SUMMARY:   The Monterey Regional Water Pollution Control Agency (MRWPCA) and the District (MPWMD) are working cooperatively to develop the Monterey Peninsula Groundwater Replenishment (GWR) Project to provide highly treated water from an advanced water treatment plant to the Seaside Groundwater Basin for indirect potable use in the California American Water supply system for the Monterey Peninsula.  Potential source waters for the project include winter stormwater runoff into Lake El Estero in Monterey, City of Salinas treatment plant water, stormwater runoff from an urbanized basin on the south side of Salinas, wastewater from the MRWPCA Regional Treatment Plant, flow diversions in the Reclamation Ditch west of Salinas and flow diversions in the Blanco Drain, which is located west of the City of Salinas between Highway 183 and the Salinas River (see Exhibit 4-A).  Each of these potential sources will be evaluated in accordance with the California Environmental Quality Act in an Environmental Impact Report (EIR).  Diversion of flow from the Blanco Drain has potential environmental benefits to downstream sensitive habitats by removing a portion of the pollutant load in the stream.

MPWMD staff propose to amend an existing agreement with Schaaf and Wheeler, Consulting Civil Engineers.  The amendment would be to expand the existing study of the Reclamation Ditch to include the Blanco Drain watershed.  The Consultant would conduct a hydrologic analysis of flow in the watershed and quantify the potential to divert a portion of the flow into the sanitary sewer collection system near the confluence with the Salinas River.  A final scope of work will be developed prior to executing the amendment and is expected to include similar tasks to the scope of work for the Reclamation Ditch (see Exhibit 4-B). Transfers of source water flowing in known and definite channels, such as in the Blanco Drain, to the GWR Project would be a consumptive use that may require an appropriative permit from the State Water Resources Control Board (SWRCB).

MPWMD desires to retain a qualified consultant to provide hydrologic information that may be used in the GWR Project EIR and for a permit application to the SWRCB.  Tasks include analysis of Blanco Drain watershed flows, potential downstream changes due to diversions, and a preliminary design of facilities to divert flows to the Regional Treatment Plan. MPWMD staff will coordinate project work with MRWPCA, and others as necessary.  Work is expected to take about three months, including reviews by interested agencies.

RECOMMENDATION:  Staff recommends approval of the expenditure of up to $40,000 in budgeted funds for analysis of flow availability for diversion from the Blanco Drain near its confluence with the Salinas River to supply a portion of the source water for the Monterey Regional Water Pollution Control Agency Groundwater Replenishment Project.  The Administrative Committee considered this matter at their February 12, 2014 meeting.  Results of their decision will be reported to the Board of Directors at their February 13, 2014 meeting.

If this item is adopted with the Consent Calendar, the General Manager would be authorized to increase the not-to-exceed amount from $40,000 to a not-to-exceed amount of $80,000 in an existing agreement for services with Schaaf and Wheeler Consulting Civil Engineers.  It is expected that these costs will be included in the overall GWR budget and MPWMD’s share will be 75%.

IMPACTS TO STAFF/RESOURCES:  Funds for this work are identified in the proposed FY 2013-14 Mid-Year Budget adjustment, Program Line Item 1-5-1, Augment Water Supply – Groundwater Replenishment Project.  Schaaf and Wheeler, Consulting Civil Engineers anticipate expenses of $40,000.

BACKGROUND:  The Blanco Drain is an earthen channel used to drain surface runoff and agricultural tile drain water generated in the 6,000 acre watershed.  Blanco Drain water is known to contain pesticides and other contaminants that are the subject of an order from the State Water Resources Control Board (SWRCB) concerning discharges of irrigation and stormwater from certain agricultural operations.  Some consider Blanco Drain water not suitable for irrigation due to the high chloride content.  However, SWRCB may have jurisdiction over the agricultural return flow and storm water flows.  The Blanco Drain is listed as a Clean Water Act Section 303(d) impaired water for the presence of pesticides, nitrates, and sediment. 

EXHIBIT
4-A         Blanco Drain watershed map
4-B         Scope of Work


ITEM:
CONSENT CALENDAR

5.

Meeting Date:
February 13, 2014
Budgeted: 
Yes

From:
David J. Stoldt,
Program/
Alternative Desal Project

General Manager
Line Item No.:     
1-11-1

Prepared By:
David J. Stoldt
Cost Estimate:
Ongoing; Not to exceed $800,000

General Counsel Approval:  N/A
Committee Recommendation:  The Water Supply Planning reviewed this item on February 4, 2014 and recommended approval 3-0. The Administrative Committee reviewed this item on February 12, 2014; action taken by the Committee will be reported at the February 13, 2014 Board meeting.
CEQA Compliance:  N/A

SUMMARY:  The District’s Cost Sharing Agreement with DeepWater Desal LLC has six suspension and termination provisions (Section 8 of the Agreement – see “DISCUSSION” below).  At this time, District staff believes the sixth provision with respect to definitive agreements (Section 6.4 of the Agreement – see “DISCUSSION” below) is at risk of not being satisfied by February 28, 2014 as required under the Agreement.  However, staff met with the DeepWater team and its data center developer on January 22nd and believes sufficient progress is being made on all of the areas, and the February 28, 2014 deadlines should be extended.

At its February 5, 2014 meeting, the Water Supply Planning Committee recommended approval 3-0.  The Administrative Committee reviewed this at its February 12, 2014 meeting.

RECOMMENDATION:  The Water Supply Planning Committee and the Administrative Committee recommend the Board of Directors extend the deadline for definitive agreements under Section 6.4 of the Cost Sharing Agreement with DeepWater Desal LLC to May 30, 2014.

DISCUSSION: The relevant sections of the Agreement are as follows:

“8.  Suspension or Termination of MPWMD Payment Obligation

In addition to enforcing other rights set forth in this Agreement, MPWMD may, in its sole and absolute discretion suspend or cease payments under this Agreement if any of the following issues arise:

·         Progress and/or expenditures made by the Company do not meet MPWMD expectations with respect to Environmental and Permitting Activities, completion of technical studies, development of preliminary design for the CCRWP or Desalination Plant, or the Company has failed to enter into or maintain adequate contracts for rent, insurance, or consultants; or,

·         There has been a failure to identify either a CEQA Lead Agency and  a federal NEPA lead agency within sixty (60) days of Company’s filing a complete application with a state permitting agency;  Identification of federal or state lead agencies shall be evidenced by publication by that lead agency of a Notice of Intent or a Notice of Preparation in compliance with CEQA and  NEPA, as may be applicable; or,

·         MPWMD, in its sole discretion, finds and declares that its Water Supply Charge is limited and not available to fund reimbursement obligations under this Agreement; or,

·         MPWMD, in its sole discretion, within one hundred sixty (160) days of the Effective Date of this Agreement, determines the Company lacks sufficient funds, taking into account funds contributed by MPWMD under this Agreement, to pay Environmental and Permitting Costs and to meet the additional costs anticipated above in the Background, Paragraph B, of this Agreement; or,                 

·         MPWMD, in its sole discretion determines the Company will not have sufficient funds  available for its expenditure on additional technical studies and/or preliminary design related to the CCRWP and Desalination Plant; or,            

·         The Company, on or before February 28, 2014, fails to enter into or maintain, in full effect, the Definitive Agreements described above in section 6.4. 

6.4        Definitive Agreements.  On or before February 28, 2014, the Company shall use its best efforts to enter into the following agreements to facilitate construction and operation of the CCWRP, including the Desalination Plant

·         an option agreement for the Company to purchase  the “Tank Farm” parcel adjacent to the Dynegy Moss Landing Power Plant from Dynegy Moss Landing, LLC, together with easements necessary to construct intake and/or outfall pipelines necessary to operate the CCRWP and the Desalination Plant; and

·         an agreement for the Company to purchase from the City of Salinas sufficient electricity needed to operate the CCRWP and the Desalination Plant; and

·         an agreement in a form reasonably acceptable to MPWMD  for development of intake and outfall pipeline facilities, and data center components for the CCRWP.

In the event the MPWMD Option is still in effect at the time the agreements referenced in this Paragraph are made, such agreements shall expressly recognize and accommodate exercise of the MPWMD Option.”

The DeepWater Team is in negotiation with Dynegy over a purchase agreement for the parcel and easements; its consultant submitted a Municipal Utility Facilities and Financial Study to the City of Salinas in January, which will lead to continued negotiation on agreements for electricity; and there is a data center developer presently in the due diligence phase on the project.  Further, the Tenera Study on impacts of the intake facility has been completed, the Preliminary Environmental Assessment (PEA) is expected to be delivered to the State Lands Commission in March or April followed in May or June with a Notice of Preparation for an environmental impact report.

EXHIBITS
None

23.

Action:  The Board will consider the recommendation of the Public Outreach Committee (a) to adopt a neutral policy with respect to arguments for, against, and rebuttals with respect to the Initiative and (b) to assign District staff and General Counsel responsibility for receiving from outside parties and conveying to the County Registrar the arguments for, against, and rebuttals.







ITEM:
ACTION ITEM

23.

Meeting Date:
February 13, 2014
Budgeted: 
N/A

From:
David J. Stoldt
Program/
N/A

General Manager
Line Item No.:     N/A

Prepared By:
David J. Stoldt
Cost Estimate:
N/A

General Counsel Approval:  N/A
Committee Recommendation:  The Public Outreach Committee reviewed this item on February 6, 2014 and recommended approval.                                                    
CEQA Compliance:  N/A

SUMMARY:  Section 9315 of the California Elections Code provides that Initiative proponents may file a written argument in favor of the ordinance, and the District Board “may submit an argument against the ordinance.”  The Registrar’s office has also confirmed that when the County conducts an election on behalf of a district, arguments and rebuttals fall within section 9162.  Section 9162 (a) provides,

“The board of supervisors or any member or members of the board, or any individual voter who is eligible to vote on the measure, or bona fide association of citizens, or any combination of these voters and associations may file a written argument for or against any county measure. No argument shall exceed 300 words in length. . .”

Section 9162 sets forth the requirements for the length and form of the argument.  Section 9167 allows both parties to submit rebuttal arguments, or to authorize others to prepare, submit or sign rebuttal arguments.

At its February 7, 2014 meeting the Public Outreach Committee recommended that the District not author any arguments in favor or against the Initiative, rather maintain its neutral position and instead continue to execute the required ministerial duties required under the initiative process.  The Committee further recommended that District staff and General Counsel assume responsibility for receiving from outside parties and conveying to the County Registrar the arguments for, against, and rebuttals. 

RECOMMENDATION:  The Public Outreach Committee recommends the Board of Directors (a) adopt a neutral policy with respect to arguments for, against, and rebuttals with respect to the
Initiative and (b) assign District staff and General Counsel responsibility for receiving from outside parties and conveying to the County Registrar the arguments for, against, and rebuttals.

EXHIBITS
None

INFORMATIONAL ITEMS/STAFF REPORTS   The public may address the Board on Information Items and Staff Reports during the Oral Communications portion of the meeting.  Please limit your comments to three minutes. 
24.




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