REGULAR MEETING Minutes

BOARD OF DIRECTORS

MONTECITO WATER DISTRICT

583 San Ysidro Road, Montecito, California

TUESDAY, July 15, 2008

2:00 P.M.

1. CALL TO ORDER, ROLL CALL, DETERMINATION OF QUORUM

President Shaikewitz called the meeting to order at 2:00 p.m.

Directors Present:

Directors Jan E. Abel, Samuel Frye, W. Douglas Morgan, Richard Shaikewitz, and Larry Wilson

Directors Absent:

None

Staff Present:

Tom Mosby, General Manager

Toni Bailey, Business Manager

Karl Meier, Engineering Manager

Chip Wullbrandt, District Counsel

Lois Werner, Recording Secretary

Guests Present

Ted Buergey, Montecito resident, not MWD customer

John Denver, MWD customer

Diredre Hanssen, MWD customer

David Strauss, MWD customer

Ken Marshall, Dudek Associates

2. PUBLIC FORUM

Mr. Buergey, Mr. Denver, Ms Hanssen, and Mr. Strauss had questions and comments about the proposed new Conservation Rate Structure.

There were no other members of the public present who wished to speak on items not on the agenda.

3. Time Certain Item; 2:00 p.m.

A. PUBLIC HEARING: PROPOSED WATER DISTRIBUTION SYSTEM AND FIRE FLOW UPGRADE PROGRAM, PROPOSED Funding, AND ANY OBJECTIONS OR PROTESTS TO THE PROPOSED CHARGE AND REPORT

Status Report on Water Availability Charge Program and 1998-A Bond Capital Projects

1. Resolution No. 2046 Establishing Water Availability Charge for 2008/09 to Finance Water Distribution System and Fire Flow Upgrade Program and Consideration of Report Establishing Water Availability Charge for 2008/09

President Shaikewitz stated the purpose of the public hearing and requested that Mr. Mosby present the staff report.

Following the staff report, President Shaikewitz opened the hearing for public comments and protests at 2:45 p.m. There were no members of the public present to register protests.

There being no public comment, President Shaikewitz closed the public hearing at 2:48 p.m. and asked if the Board wished to take action on Resolution No. 2046.

It was moved by Director Abel, seconded by Director Morgan, and carried by the following roll-call vote to approve Resolution No. 2046 as presented:

AYES: Directors Abel, Frye, Morgan, Shaikewitz, and Wilson

NOES: None

ABSTAIN: None

ABSENT: None

4. CONSENT CALENDAR

Following discussion, it was moved by Director Abel, seconded by Director Frye, and unanimously carried to approve the Consent Calendar as amended.

5. Time Certain Item — 2:30 p.m.

A. APPEAL BY Mr. James Wolfe / Account No. 1211271

Mr. Wolfe was not present, although he had been supplied with the agenda and staff report. Director Abel, as a member of the Appeals Committee, presented the Appeals Committee’s recommendation to deny the appeal and the Committee’s rationale. Mr. Wullbrandt noted that, if the tiered rate is implemented, the current policy should probably be revisited to determine what rate would be applied to lost water. Following discussion, it was moved by Director Frye, seconded by Director Abel, and unanimously carried to deny Mr. Wolfe’s appeal for adjustment to his April water bill of $3,375.38.

6. Cachuma MATTERS

A. CACHUMA CONSERVATION RELEASE BOARD MEETING OF June 23, 2008

Director Abel reported on the subject meeting and called Directors’ attention to the material presented in their agenda packets.

B. CACHUMA OPERATION AND MAINTENANCE BOARD MEETINGs OF June 23, 2008

Director Abel reported on the subject meeting, at which the COMB budget was approved. She reported that a formal letter is being sent to Supervisor Carbajal and the Board of Supervisors regarding the quagga mussel threat and pending legislation which clarifies the responsibility of the County.

7. LEGAL MATTERS

A. Recent and Pending Legal Matters REview – Oral Report

Mr. Wullbrandt had no legal matters to report to the Board.

B. Correction to Prop 218 Notice of Public Hearing

Mr. Mosby introduced this item and he and Mr. Wullbrandt answered Directors’ questions. Following discussion, it was moved by Director Frye, seconded by Director Morgan, and unanimously carried to draft a correction notice for the agricultural classification graphic on the Notice of Public Hearing and send it as soon as possible to all agricultural customers.

8. Board Of Directors

A. Presentation of Resolution No. 2044 to Daniel Rodriguez

This item was continued to the next meeting.

B. Discussion of July 10 Public Meeting

President Shaikewitz introduced this item and the Board discussed the public input received at the subject meeting. Several members of the public were present to comment and ask questions on the information presented at the July 10 meeting. Director Frye remarked on a suggestion that was made at one of the public meetings of using any increased revenues generated from the higher users to reward those who conserve with incentives, rebates, etc. Ms Bailey explained how District’s increased expenses affected the proposed water rates.

C. Discussion of August 19 public Hearing

President Shaikewitz introduced this item and asked Mr. Wullbrandt to describe the proper procedure for the public hearing and whether the Board was required to vote at the same meeting. The Board discussed the possibility of postponing the vote to a later meeting once they had received public input. Director Abel suggested that the August 19 public hearing be continued to a 6:30 p.m. time certain item on the following day. It was the consensus of the Board that this procedure be followed.

D. Filing Procedure for November Election

President Shaikewitz introduced this item and called the Directors’ attention to the materials from the Elections Office provided in their agenda packets.

9. District Business Report

A. Water Sales Report for June 2008

Ms Bailey presented this item and answered Directors’ questions.

B. May 2008 Revenue and Expense Report

Ms Bailey presented this item and answered Directors’ questions.

C. Claim for Vehicle Damage — John Aspra

Ms Bailey presented this item and answered Directors’ questions. Following discussion, it was moved by Director Abel, seconded by Director Frye, and unanimously carried to reject the claim from Mr. Aspra, advise him of that rejection, and forward the information to the District’s insurance carrier, ACWA/JPIA.

10. District Operations Report

A. San Luis Obispo dry year water purchase program (Supplemental state water Purchase)

Mr. Mosby presented this item and answered Directors’ questions. Following discussion, it was moved by Director Frye, seconded by Director Morgan, and unanimously carried to appropriate funding in the amount of $356,300 from the Rate Stabilization and Water Purchase Reserve for the purchase of supplemental State Water from the 2008 San Luis Obispo Dry Year Water Purchase Program.

B. East Mountain Drive and Ashley Road water main replacement project; recommended Award of Bid

Mr. Meier introduced this item and answered Directors’ questions. Following discussion it was moved by Director Morgan, seconded by Director Frye, and unanimously carried to award the contract for the East Mountain Drive and Ashley Road water main replacement project to Lash Construction in the amount of $522,684.

C. 1510 East Mountain Drive; MWD property and Reservoir Quitclaim agreement and grant of easement

Mr. Mosby introduced this item and answered Directors’ questions.

D. 3091 hidden valley lane; grant of easement

It was moved by Director Frye, seconded by Director Abel, and unanimously carried to accept the signed grant of easement from James Bell for a new, relocated District main at 3091 Hidden Valley Lane for recording.

11. GENERAL MANAGER’S REPORT

A. Monthly Operations Report (Oral)

Mr. Mosby reported on District projects and operations not covered elsewhere in the agenda. He briefly discussed the current state of the Miramar Hotel Project. The Board was joined by Mr. Marshall, who is working on this project for Caruso Associates. The project will go to the Montecito Planning Commission on July 16 and Mr. Mosby will be discussing the water service for this project with the Commission. Mr. Mosby then asked Ms Bailey to report on the progress of the transfer to the new software system.

B. Resolution No. 2045 MAKING THE COMMITMENTS AND PUBLISHING THE REPORT REQUIRED BY CENTRAL COAST WATER AUTHORITY

Mr. Mosby presented this item. President Shaikewitz opened the public hearing for comment at 4:55 p.m. There being no members of the public present to comment on this item, the President closed the public hearing at 4:56 p.m. Following discussion, it was moved by Director Frye, seconded by Director Wilson, and carried by the following roll-call vote to adopt Resolution No. 2045 as presented:

AYES: Directors Abel, Frye, Morgan, Shaikewitz, and Wilson

NOES: None

ABSTAIN: None

ABSENT: None

C. Water Works Operations REport

Mr. Mosby distributed the Water Works Operations Report and answered Directors’ questions.

12. DIRECTOR, COMMITTEE AND STAFF MEETING REPORTS

A. Central Coast Water Authority Meeting Of June 26, 2008

Director Shaikewitz reported on the subject meeting.

B. SANTA BARBARA COUNTY SPECIAL DISTRICTS ASSOCIATION MEETING OF June 23, 2008

Director Wilson reported on the subject meeting.

C. PUBLIC INFORMATION COMMITTEE

Directors Abel reported that the Public Information Committee met before the last public meeting to go over the presentation. They also approved a bill-stuffer for the next bill which will emphasize the August 19 public hearing. A new article for the Montecito Journal was discussed and should be appearing in one of the next issues. The next meeting of the Committee will be at the end of July.

D. OPERATIONS COMMITTEE

Directors Frye and Shaikewitz reported that the activities of the Operations Committee had been covered elsewhere in the meeting.

E. FINANCE COMMITTEE

Directors Morgan and Wilson reported that the activities of the Finance Committee had been covered elsewhere in the meeting.

13. Closed Session

A. Closed Session Pursuant to Government Code Section 54957(b)(1) – General Manager’s Performance Evaluation

The Board adjourned to closed session at 5:15 p.m. to discuss this item.

The Board reconvened to open session at 5:55 p.m. President Shaikewitz reported that no action had been taken.

14. AGENDA ITEM REQUESTS

There were no requests from Directors for items other than regular agenda items for the next regular Board meeting scheduled for August 19, 2008.

15. ADJOURNMENT

There being no further business to come before the MWD Board of Directors, the meeting was adjourned at 5:55 pm.

Approved:

__________________________

Richard Shaikewitz, President

Attest:

__________________________________

Tom Mosby, Secretary