Thursday, February 26, 1998

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 TUESDAY, FEBRUARY 26, 1998

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

Present:	Directors Abel, Campbell, Puddicombe Wilson
Absent:	None
Also Present:	C. Charles Evans, General Manager/Secretary Chip Wullbrandt, District Counsel Cathy Muneio, Secretary Dave Houston, Smith Barney David Van Horne, Price, Postel & Parma

CONSIDERATION OF LONG RANGE CAPITAL PLAN AND
FINANCING AND RESOLUTION NO. 1851 AND 1852
REGARDING DISTRICT RATES AND FEES

President Puddicombe asked the General Manager to discuss the comments made at the public hearing. The General Manager noted that there was a very low turnout at the meeting which was reassuring in that District customers believe that the District will act prudently. He discussed the individual comments from the public that were presented in the staff memorandum of February 26, 1998. David Yawitz and Carol Valentine were opposed to the financing and Dan Iselin, Dick Nordlund and Sam Frye spoke in favor of it at this time. David Yawitz commented that the capital program appeared to be needed and that it should be financed on a "pay as you go" basis.

Director Campbell made a motion to approve the long-term District capital program and the proposed District finance plan presented to the public on February 24, 1998, and directed Smith Barney to prepare documents for financing of the projects identified therein which will require a borrowing in 1998 of approximately $14.32 million through 2008. There was a great deal of discussion regarding the matter. The motion was seconded by Director Wilson, and was approved on a 3-2 vote with Directors Campbell, Puddicombe and Wilson being in favor and Director Jones and Abel opposed. The Board agreed by consensus that the matter would be presented to the public by the Public Information and Finance Committees to further the public’s understanding and acceptance prior to the time it comes back to the Board with the documents being prepared by Smith Barney for approval. The Public Information Committee will prepare the outline of how the matter will be presented to the public.

The Board discussed the proposed Resolution No. 1851 which would eliminate the domestic account multi-tier rates and the multi-unit domestic rate and would increase monthly water service charges 15 percent effective April 1, 1998. A motion was made by Director Campbell to adopt the Resolution. It was seconded by Director Puddicombe and failed with a 2-3 vote with Director Campbell and Puddicombe in favor and Directors Abel, Jones and Wilson opposed.

Director Abel made a motion to divide the question regarding the resolution. The motion was seconded by Director Campbell and the motion carried unanimously.

A motion was made by Director Abel to approve the new Resolution No. 1851 which would eliminate the domestic account multi-tier water rates and the multi-unit domestic rate and amending a portion of section 3 of Resolution No. 1837 dated July 1, 1997, to be effective April 1, 1998. The motion was seconded by Director Campbell. The

A motion was made by Director Campbell to adopt Resolution No. 1852 adopting a 15% increase in the monthly water service charges and amending a portion of Section 3 of Resolution No. 1837 dated July 1, 1998, to be effective April 1, 1998. The motion was seconded by Director Puddicombe. The resolution was approved with a vote of 4-1 with the following roll call vote:

The Board went into closed session at 5:45 p.m. When the Board returned to open session at 7:05 p.m. it was noted that no reportable action was taken.

Note: The agenda for this meeting was posted at the front counter and outside front wall at the Montecito Water District on February 20, 1998.