Tuesday, November 17, 1998

MINUTES OF A REGULAR MEETING
of the
BOARD OF DIRECTORS OF THE MONTECITO WATER DISTRICT
held at the
MONTECITO FIRE PROTECTION DISTRICT BOARD ROOM
595 SAN YSIDRO ROAD, MONTECITO, CALIFORNIA
at 3:00 p.m. on TUESDAY, NOVEMBER 17, 1998

The meeting was called to order by Vice President Campbell at 3:00 p.m.
Those in attendance were:

Present:	Directors Abel, Campbell, Jones, Wilson
Absent:	Puddicombe
Also Present:	C. Charles Evans, General Manager/Secretary Tom Mosby, Engineering Manager Evalyn Kerman, Business Manager/Assistant Secretary Jerry Paley, Finance Specialist Chip Wullbrandt, District Counsel Jim Clyne Lauren Cummins Roy Cummins Harry Edmonson Dan Eidelson Sam Frye Charles Hamilton George Herold Maria Herold June Holroyd Geoffrey Holroyd Harry Hovey Joan Kerns Carolee Krieger Dave Novis Bill Raymond

PUBLIC HEARING TO CONSIDER ADOPTION OF RESOLUTION NO. 1868 RELATIVE TO DISTRICT FEES AND CHARGES

Vice President Campbell welcomed the public to the District meeting, noting that there was actually three different public hearings on the agenda. He mentioned that although no decisions would be made by the Board at this meeting, items two and four would be considered at the Special Board meeting on November 23, 1998, and item three would be considered at a Board meeting on November 18, 1998. Additionally, he reviewed the procedures for the meeting. Vice President Campbell opened the public hearing to consider adoption of Resolution No. 1868 relative to District fees and charges at 3:05 p.m. He asked the staff to review the report that had been available for 45 days at the District front counter. Vice President Campbell introduced the General Manager who presented the staff report and the proposed resolution.

The General Manager reviewed the 30 year District financial plan that was adopted by the Board on February 26, 1998. This financial plan also included a long-term capital replacement and improvement plan and the accompanying projected increases in rates and charges. The current proposal includes a 5% increase for water rates for all rate categories except commercial and agricultural. The commercial rate was proposed to have no change and the agricultural rate is proposed to increase to $1.29 per hcf, which is a little more than 5% . Service charges are proposed to be increased 15% plus meter equivalency. Also increases are proposed for charges for fire hydrant meters and private fire hydrants. Mr. Evans said there will be a special Board meeting on Nov. 23 when the Board will consider the proposed changes in rates and charges with consideration of public input.

The District staff report includes a comparison between water rates and service charges with other nearby water districts.

Vice President Campbell asked the Board for any questions or comments. Director Wilson commented that the Board Finance Committee supports the increases because they would prefer to schedule main replacements and large capital projects on a "Pay-as-you-go" basis in the future as compared to borrowing funds.

District Counsel stated that the District complied with the notification procedures for Proposition 218 for this public hearing, but that the District’s charges are not subject to Proposition 218. It was noted that the District gave more public notice than is legally required.

Joan Kerns and Bill Raymond each asked questions for clarification in regards to the staff report. Carolee Kreiger asked about fixed charges and the projection of increased fixed charges. Joan Kerns read a letter to the Board and stated that nationwide less water is being used while the population is increasing. Carolee Kreiger suggested selling permanent entitlement to decrease the burden of the State Water payments due on the community. Jim Clyne, with the agricultural rate for two acres of crops, commented that his water bill had increased from $2.25 to $2.70 per hcf for the first 12 units, and he thought increases are actually greater than the District is proposing. Sam Frye from Petan commented on meter equivalency. Mr. Frye did not feel charging service charges based on equivalency is fair and feels it would be more fair if the increased revenue in service charges were shared by all meter sizes, or an additional $7 per month per meter. He said he believed that the change in charges are a penalty for some based on higher flows. However, he felt the increase in the agricultural water rate was fair. Vice President Campbell mentioned that the District’s intent was to keep increases modest. He reviewed comments from the public at hearings earlier this year which were to increase the rates and charges so the District will not have to borrow funds in the future. Counsel Wullbrandt commented that the Board had already authorized the sale of 500 acre-feet The District has a Water Marketing Committee actively seeking sales opportunities.

There was a discussion about the amount of the District’s Capital Cost Recovery Fees as compared to Goleta’s, and how they are calculated.

Director Wilson commented about historical water rates and mentioned he considers that water rates were subsidized in the past and so the District now does not have adequate financial reserves to pay for the deferred maintenance of the distribution system. The replacement program is currently addressing this deferred maintenance.

No other public comments were presented and Vice President Campbell closed the public hearing at 4:10 p.m.

PUBLIC HEARING TO CONSIDER ADOPTION OF THE MONTECITO GROUNDWATER BASIN MANAGEMENT PLAN

Vice President Campbell opened the public hearing to take public comment on the proposed Montecito Groundwater Basin Management Plan at 4:12 p.m. He asked staff to review the report, which it was noted had been available for 45 days at the District front counter. The General Manager mentioned that Resolution 1823, Notice of Intention to adopt a Groundwater Management Plan, was adopted on November 19, 1997 and as determined in AB3030 the plan should be adopted within 2 years of that date. Additionally, this meeting will be continued at the close of public input until November 18, 1998 for possible Board action. The Engineering Manager discussed the history and need for the groundwater management plan. The General Manager introduced Carpinteria Valley Water District General Manager, Charles Hamilton, who represents a neighboring district that shares the eastern section of the District groundwater basin. Vice President Campbell opened the floor for questions from the Board and then the public. Bill Raymond asked a question about the benefits and costs to the private well companies if they participate with the District in the Groundwater Management Plan. The Engineering Manager noted that this plan was just a structure that defined how the District would interact with other users of the groundwater basin. The Engineering Manager noted that currently the District has relationships with some groundwater basin users and monitors 80 wells. The groundwater is at its highest level since records have been kept. The Regional Water Quality Control Board would be the authority that the District would look to for enforcement of degradation to the groundwater basin.

Sam Frye asked about if the groundwater basin was in overdraft, who would determine who gets the water. The Engineering Manager said monitoring occurs twice a year and the purpose of this plan is to avoid an overdraft situation. The plan does not call for meters on wells and only asks for cooperation from all users of the groundwater basin. The District has a multiplicity of water sources. Vice President Campbell asked for any written protests. The Business Manager reported that no written protest had been received by the District.

The public hearing was closed 4:35 p.m. A motion was made by Director Abel, seconded by Director Jones and unanimously carried at 4:36 p.m. to continue the meeting until 3:30 p.m. on Wednesday, November 18, 1998, when the Board will consider the public comment and the adoption of the groundwater management plan.

PUBLIC HEARING TO CONSIDER ADOPTION OF RESOLUTION NO. 1869 RELATIVE TO USE OF DISTRICT STATE WATER SUPPLY TO OFFSET ANY GROUNDWATER BASIN OVERDRAFT

Vice President Campbell opened the public hearing at 4:56 p.m. to take public comments on the proposed Resolution No. 1869 relative to use of the District State Water supply to offset any groundwater basin overdraft. The General Manager gave the history on why the District would now be considering this Resolution. He stated that the District groundwater basin was not in a state of overdraft and, thus, the District has not caused any overdraft. He also said the quality of the water delivered to District customers meets or exceeds all State and Federal water quality requirements, and that the introduction of State Water could have a positive quality effect on groundwater.

The General Manager asked for a minor modification to the Resolution by adding asterisks by long-term and the definition of long-term as five years. Vice President Campbell asked for comments from the Board.

Director Wilson expressed his concerns about encumbering future boards to the decisions and requirements of this Resolution . Counsel

Wullbrandt said it is an enforceable obligation of the District to produce a report annually whether the groundwater basin is in a state of overdraft. Vice President Campbell discussed the environmental degradation effects of overdrafted groundwater basins.

Director Campbell asked for comments from the public. Sam Frye asked if there would ever be a situation that the District would be in a drought and also State Water would not be available and then who would have the rights to the groundwater.

The General Manager mentioned that the adoption of the Groundwater Management Plan would be considered on November 18, 1998 at 3:30 p.m. and adoption of the resolutions on the District rates and charges, and the use of State Water to offset any groundwater basin overdraft, would be considered on November 23, 1998 at 3 p.m.

Note: The agenda for this meeting was posted at the front counter and on the front wall at the Montecito Water District on November 13, 1998.