REGULAR MEETING Minutes

BOARD OF DIRECTORS

MONTECITO WATER DISTRICT

583 San Ysidro Road, Montecito, CAlifornia

TUESDAY, October 16, 2007

2:00 P.M.

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

President Abel 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:

Bob Roebuck, General Manager

Tom Mosby, Engineering Manager

Toni Bailey, Business Manager

Chip Wullbrandt, District Counsel

Alexis Nagle, Finance and Computer Specialist

Lois Werner, Recording Secretary

Guests Present

David Strauss, District Customer

Robert Rauch, Rauch Communication Consultants

2. PUBLIC FORUM

Mr. Strauss asked some questions about water supplies and charges, which were briefly addressed by the General Manager and District Counsel.

3. CONSENT CALENDAR

Following discussion, it was moved by Director Shaikewitz, seconded by Director Morgan, and unanimously carried to approve the Consent Calendar as presented.

4. Time Certain Item — 2:10 p.m.

A. Appeal of Late Charges for Four Seasons Resort, The Biltmore, Account No. 0612111

Director Abel introduced this item from the Appeals Committee. Following Board discussion it was moved by Director Frye, seconded by Director Shaikewitz, and carried by a vote of 4 to 1, with Director Wilson dissenting, to deny the appeal for forgiveness of the late charge on Account No. 0612111.

5. Cachuma MATTERS

A. CACHUMA CONSERVATION RELEASE BOARD MEETING OF September 24, 2007

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

B. CACHUMA OPERATION AND MAINTENANCE BOARD MEETING OF September 24, 2007

Director Abel reported on the subject meeting.

6. Legal MATTERS

A. Recent and Pending Legal Matters REview (Oral)

Mr. Wullbrandt reported on legal matters of interest to the Board.

7. District Business Report

A. Water Sales Report for September 2007

Ms Bailey presented this report and answered Directors’ questions.

B. August 2007 Revenue and Expense Report

Ms Bailey presented this report and answered Directors’ questions.

C. Recommendation for Auditor Contract

Ms Bailey presented this report. Following discussion, it was moved by Director Morgan, seconded by Director Wilson, and unanimously carried to approve a contract with Poindexter & Company to perform the District’s independent financial audit for the next three years at a cost of $17,255 per year, with an additional $1,980 for each year that a Single Audit is required. Director Morgan suggested that the Board form an Audit Committee for the next audit.

D. New Utility Billing and Financial Software

Ms Nagle presented this item in a PowerPoint presentation and she and Ms Bailey answered Directors’ questions. Following discussion, it was moved by Director Morgan, seconded by Director Wilson, and unanimously carried to approve the purchase of Incode utility billing and financial software from Tyler Technologies Company and finance it with a capital lease over a 60-month period for $2,880 per month; appropriate an additional $6,528 from the operating reserves for this project; and appropriate $20,000 from operating reserves for conversion of the District’s existing data to a format compatible with the new software.

8. district Operations Report

A. Ortega Reservoir Project Status Report (Oral)

Mr. Mosby presented the status report on the Ortega Reservoir Project and answered Directors’ questions.

B. Department of Safety of Dams – Annual Inspection Report

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

C. San Ysidro Reservoir Abandonment/Quitclaim and Grant of Easement

It was moved by Director Frye, seconded by Director Morgan, and unanimously carried to:

1. approve the permanent abandonment of San Ysidro Reservoir;

2. quitclaim District use of the reservoir site to the current property owner, Nigel Copley;

3. authorize the General Manager to execute an agreement between the property owner and the District to quitclaim and release all interest and District liability in the reservoir site, structure, and abandoned District pipelines to the property owner in accordance with the terms and conditions of the agreement, final order No. 928 and judgment no. 15589 stipulation;

4. appropriate funding in the estimated amount of $4,500 for distribution system changes, minor reservoir alterations required in the permanent reservoir agreement between District and the property owner (appropriating funds from the 1998A bond); and

5. accept the new property ingress and egress and water pipeline and facilities easement from the property owner for the new operational distribution system improvements over the property owner’s land.

D. 2825 Hidden Valley Lane Water Main Encroachment and Relocation

Mr. Mosby introduced this item and answered Directors’ questions. Mr. Wullbrandt noted that the agreement should be altered to show that District will cap and abandon the existing pipeline in place and install a new pipeline in a different location, rather than move the existing pipeline. Following discussion, it was moved by Director Shaikewitz, seconded by Director Morgan, and unanimously carried to authorize the General Manager to execute the Settlement and Encroachment Agreements between Montecito Water District and Ms Dena L. Chachakos as amended by Counsel.

E. Monthly Water Supply Report

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

F. Juncal Dam 36-Inch Valve REhabilitation Project – Final Report

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

9. GENERAL MANAGER’S REPORT

A. Conservation Plan for Existing Landscapes

Mr. Roebuck introduced this item and answered Directors’ questions. Following discussion it was moved by Director Frye, seconded by Director Wilson, and unanimously carried to approve the scope of work for consulting services from Lynn Rodriguez in the amount of $10,200 plus $700 estimated direct cost to develop and help implement a comprehensive program to help reduce water use of existing landscapes; and appropriate $10,900 from the District’s Operating Reserves to fund development of the Conservation Plan for Existing Landscaping.

B. Time Certain – 3:30 p.m: — Professional Services by Kennedy/Jenks Consultants and Rauch Communication Consultants

Mr. Roebuck and Mr. Rauch introduced this item and answered Directors’ questions. Following discussion it was moved by Director Shaikewitz, seconded by Director Frye and unanimously carried to authorize the General Manager to increase the existing $20,000 purchase order with Kennedy Jenks Consultants by $40,000 to a total of $60,000 and appropriate $40,000 from unrestricted/ undesignated operating reserves to fund this work.

After further discussion, it was moved by Director Morgan, seconded by Director Shaikewitz and unanimously carried to authorize the General Manager to increase the existing $6,000 purchase order with Rauch Communication Consultants by $14,000 to a total initial amount of $20,000 and appropriate $14,000 from unrestricted / undesignated operating reserves to fund a portion of the proposed public outreach plan, with further expenditures to be determined based on the progress of the program.

C. Ongoing Projects Update

Mr. Roebuck brought the Board up to date on ongoing District projects not covered elsewhere in the agenda.

D. Water Works Operations REport

Mr. Roebuck presented this item and he and Mr. Mosby answered Directors’ questions.

---------------------------------------------- Legal Counsel Departs----------------------------------------------

10. DIRECTOR AND STAFF MEETING REPORTS

A. Central Coast Water Agency Meeting of September 27, 2007

General Manager Roebuck reported on the subject meeting, which he attended in Director Shaikewitz’s absence. CCWA honored late MWD Director Robert Puddicombe with the dedication of the meeting room in his name. Director Puddicombe was President of CCWA for many years.

B. SANTA BARBARA COUNTY SPECIAL DISTRICTS ASSOCIATION MEETING OF September 24, 2007

Director Wilson reported on the subject meeting where Andy Caldwell was the speaker.

11. COMMITTEE REPORTS/RECOMMENDATIONS

A. OPERATIONS COMMITTEE

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

B. FINANCE COMMITTEE

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

C. PUBLIC INFORMATION COMMITTEE

1. Montecito Beautification Day

Director Abel passed around a signup sheet for those willing to staff the MWD table for the Montecito Association’s Montecito Beautification Day on November 3, 2007. Director Abel reminded Directors to wear their MWD identification badges while staffing the table.

12. AGENDA ITEM REQUESTS

Director Morgan requested that the formation of an audit committee be considered by the Finance Committee for inclusion on the next Board agenda. There were no further requests from Directors for items other than regular agenda items for the next regular Board meeting scheduled for November 20, 2007.

13. ADJOURNMENT

There being no further business to come before the MWD Board of Directors, the meeting was adjourned at 5:52 pm.

Approved:

__________________________

Jan E. Abel, President

Attest:

__________________________________

Robert L. Roebuck, Secretary