MINUTES - WEDNESDAY, NOVEMBER 25, 1997

MINUTES OF A REGULAR MEETING
of the
BOARD OF DIRECTORS OF THE MONTECITO WATER DISTRICT
held at the
DISTRICT BOARD ROOM

583 SAN YSIDRO ROAD, MONTECITO, CALIFORNIA
at 3:00 p.m. on WEDNESDAY, NOVEMBER 25, 1997

Present:	Directors Abel (arrived at 4:50 p.m.after jury duty), Campbell, Muller, Puddicombe and Wilson
Absent:	None
Also Present:	C. Charles Evans, General Manager/Secretary Chip Wullbrandt, District Counsel Evalyn Kerman, Business Manager Jerry Paley, Financial Specialist Cathy Muneio, Secretary Bob Jones David Yawitz Carol Valentine David Houston, Smith Barney Wynne Richards, Smith Barney

Several suggested changes were made to the minutes. A motion was made by Director Puddicombe, seconded by Director Wilson and unanimously carried to approve the amended minutes of November 5, 1997.

The Board reviewed the water sales reports for October 1997. The Board reviewed the October 1997 water operations report.

A motion was made by Director Wilson, seconded by Director Puddicombe and unanimously carried to ratify the November 19, 1997 transfer of $250,000 from the District’s Montecito Bank & Trust operational account to the District’s LAIF/General Capital Repair & Replacement/Operations fund account.

A motion was made by Director Campbell, seconded by Director Puddicombe and unanimously carried to approve the payment of bills for the month of October 1997.

Director Wilson said there was nothing to report regarding the Montecito Association.

The General Manager explained that Carpinteria Valley Water District and Montecito Water District are each responsible for 50 percent of the treatment activities at the Ortega Reservoir. He said that Charles Hamilton, General Manager for the Carpinteria Valley Water District is prepared to pay the full study costs to cover the Ortega Reservoir and then come back to the District with a proposal for its participation in this project at a later date. The General Manager said that he would recommend that the District pay its full share from the beginning in order to provide input and review the proposal as it is developed. Director Puddicombe moved to approve the participation with Carpinteria Valley Water District in studies regarding the possible covering of Ortega Reservoir; approve the expenditure of $2,075, or one-quarter of the total cost for a feasibility study; the expenditure of $1,250 for a study by Montgomery Watson to determine that covering Ortega Reservoir is an eligible cost for use of CCWA excess contingency funds; and appropriate $3,325 from the General Capital Repair and Replacement Reserve Fund for this work. The motion was seconded by Director Campbell. The motion carried unanimously.

The General Manger explained that there were two different options for using the ACWA-USA electric service at the District facilities. When the District originally received information on this it was indicated that the individual service connections must use 20 kw or more. The District has now been informed that 50 kw or more may be necessary to be used per service connection. Director Wilson moved to table this item until more information is received. The motion was seconded by Director Puddicombe. The motion carried unanimously.

President Muller reported that the seismic safety work was on schedule and will be completed barring any complications by the end of November, and that the cost is expected to be under budget.

The General Manager reported that the status of SWRCB Board Order 94-5 studies were progressing. The vegetation monitoring studies are not quite completed. A draft report has been completed to determine if Santa Ynez River vegetation below the dam is impacted by Cachuma Project releases. He said that this report will determine that there is no noticeable impact and hopefully that no additional studies will be needed. The General Manager also reported that the water quality workplan study is progressing. He said that John Bredehoeft and the water quality steering committee are evaluating water quality models prepared by Tim Durbin for Lompoc and the USGS to determine if there is any impact on water quality in the Lompoc Basin as the result of the Cachuma Project or from agriculture or leaching from local shale deposits. The results will be part of the SWRCB Order 94-5 year 2000 studies.

Counsel Wullbrandt reported he was appointed to the Governor’s Watershed Protection Council Advisory Committee. Jim Branham, Undersecretary of the Natural Resources, would like to use the Central Coast Region as a test case in the steelhead endangered species listing studies. The USBR will be consulting with NMFS regarding endangered species

Director Campbell reported on the Special Districts Association meeting of October 27, 1997. He said that the main topic of discussion was the 3 percent administrative fee the County charges to Special Districts.

Director Campbell had nothing to report regarding the California LAFCO meeting of November 5, 1997.

President Muller reported on the COMB meeting of November 17, 1997. He said the issue of Gary Ricks representing COMB regarding the Lompoc lawsuit was discussed. He also said that a proposal to develop a Borrow Ahead Policy had been approved.

Director Puddicombe reported on the ACWA/JPIA conference of November 17 and 18, 1997. One item that was discussed was having the directors of districts certified as to their competence to serve as a director. Directors would receive points for attending continuing education classes.

Director Wilson reported on the ACWA-USA meeting of November 18, 1997 and he said that there was a summary included in the Board packet. He said that the only issue that was the result of this meeting was that the 20 kw per service connection was changed to 50 kw per service connection.

Director Puddicombe reported on the ACWA conference of November 19-21, 1997. He said that Director Abel had been elected President of ACWA Region 5.

Director Puddicombe reported on the Operations Committee meeting. He said the Riven Rock request to connect directly to the District’s system for fire protection was discussed. Jim Langhorne of the Montecito Fire District, Tom Bollay of Riven Rock and the Water District met to discuss this request. The Riven Rock Board will need to approve the installation of approximately 600 feet of 8" main into the meter on Riven Rock Road. Other lines will serve as fire lines. The Committee gave conceptual approval for Riven Rock to build this new line and then to have it dedicated back to the District. Currently the Riven Rock community does not have adequate fire hydrant services. This item was continued until Riven Rock obtains approval for this proposal.

Director Campbell reported that the Finance Committee items would be discussed separately.

The General Manager reported that the District newsletter would be coming out by the middle of December.

President Muller said that Water Marketing had not met and there was nothing new to report regarding this item.

It was said that the Ad Hoc Committee items would be discussed later on the agenda. The Board reviewed the 1997-98 quarterly budget report.

CCWA will be considering at its next Board meeting the creation of a debt coverage reserve fund. The Business Manager said that the deposit of funds maintained at CCWA would enable the District to always meet the debt ratio coverage required for the CCWA bonds. If a decision is made in December by CCWA to deposit funds in this reserve then it can be used this year or rolled over for next year. The actual District payment will be $233,000 to the Rate Coverage Fund. Director Puddicombe made a motion to approve the deposit of $690,000 and transfer the existing $265,000 prepayment into the Rate Coverage Fund. The motion was seconded by Director Campbell. The motion carried 3-1, with Director Wilson opposed.

Director Wilson moved to accept the quarterly report on the District investment policy. It was seconded by Director Campbell. The motion carried unanimously.

The District Budget review began with an introduction and overview by President Muller. The General Manager reviewed the District’s budget for the fiscal year 1997/98 and introduced Dave Houston of Smith Barney who presented their debt restructuring analysis and thirty year projections. At 6:05 p.m. the Board adjourned for dinner. At 6:35 p.m. it reconvened and completed discussions by 8:10 p.m. The Board provided the following comments: Some debt restructuring appears to be necessary, that any restructuring should minimize to the extent possible any taxable borrowing, that non taxable borrowing for District capital projects should be included, and that the District should consider appropriate changes in rates and charges, potentially including elimination of Tier I of the residential water rate in favor of a single rate at the level of the current Tier II.

Note: The agenda for this meeting was posted at the front counter and outside front wall at the Montecito Water District on November 21, 1997.