Tuesday, April 21, 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, APRIL 21, 1998

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

Present:	Directors Abel, Campbell, Jones,Puddicombe Wilson
Absent:	None
Also Present:	C. Charles Evans, General Manager/Secretary Chip Wullbrandt, District Counsel David Van Horne, Counsel Evalyn Kerman, Business Manager Jerry Paley, Financial Specialist Cathy Muneio, Secretary Frances Weismiller

Director Abel suggested several changes to the minutes. A motion was made by Director Wilson, seconded by Director Campbell and unanimously carried to approve the amended minutes of April 7, 1998.

The General Manager reviewed with the Board the water sales reports for March. The General Manager reported that sales were 18% under budget and that rainfall this year was at an all time high.

The General Manager reviewed with the Board the water works operations report for March. He said that the District was receiving free surplus water since Cachuma was continuing to spill. He also reported that the difference in the District’s water sales versus water production had not been resolved. He said that a new meter is being installed at the South Portal and that this may help with the variance.

A motion was made by Director Wilson, seconded by Director Campbell and unanimously carried to ratify the April 8, 1998 transfer of $450,000 from the District’s LAIF/General Capital Repair & Replacement/Operations fund account to the District’s Santa Barbara Bank & Trust operational account.

The Board discussed the bills for payment for the month of March. A motion was made by Director Campbell, seconded by Director Abel and unanimously carried to approve the bills for payment for the month of March.

During public forum Frances Weismiller, a District customer, said that she had heard a rumor that the District was going bankrupt due to the high cost of state water. President Puddicombe stated emphatically that this was not the case. Director Campbell reviewed with Ms. Weismiller the cash flow report in which it showed the District would have a projected net gain of $834,000 by the end of this fiscal year.

Director Wilson gave the Montecito Association meeting report. He said that the responsibilities of the Highway Patrol and the Sheriff’s Department were defined.

The General Manager said that the report from the District Financial Consultant was not yet complete so this item was continued until the April 28th meeting.

The General Manager stated that the finance proposal from SBB&T was not yet complete and that he would have it before the April 28th meeting at which time the Board may consider this proposal. SBB&T said that they would like to offer a proposal for all of the financing that the District is proposing. The General Manager said that this type of loan does not appear to be as attractive as the other type of financing due to potentially higher interest rates. The Finance Committee requested that staff further evaluate this and that it be placed on the next agenda.

Director Jones said that Glen Reiter was asked to review the Solomon Smith Barney proposal and that the Board may consider having him review the SBB&T proposal. Director Campbell said that staff was asked to prepare a side by side comparison of both proposals, and that the SBB&T and Solomon Smith Barney financing proposals are being reviewed by Reiter Lowry and analyzed by staff. The General Manager explained that one of the reasons that no report was included in the Board packet was because discussions had not yet been completed with Solomon Smith Barney. He said that in order to do the financing with Solomon Smith Barney the District will need to form a financing corporation. Director Wilson requested a thorough staff report with the next Board packets and that an executive summary would be helpful. It was the consensus of the Board to have a meeting on April 28th and have Glen Reiter, the Financial Consultant and Dave Houston from Solomon Smith Barney attend. The Board discussed dates for having a public meeting to give the public an opportunity to comment on these proposals. Director Campbell said that Bond Counsel should attend the meeting. It was the consensus of the Board to have a public meeting on May 11, 1998 and a Special Board meeting on May 12, 1998.

The Business Manager explained that the District has been evaluating the District’s potential problems regarding the year 2000 computer hardware and software. Computers that have not been modified for the year 2000 will either revert to January 1, 1900 or January 1, 1980. Director Wilson made a motion to approve Datastream’s proposal for upgrading the HP9000 minicomputer operating system, and changing the software programs at a cost of $18,810, and to appropriate $18,810 from the General Capital Repair and Replacement Reserve Fund. The motion was seconded by Director Puddicombe and carried unanimously.

The Board indicated some displeasure regarding the award given to Melinda Burns of the Santa Barbara News-Press from the Water Education Foundation. Directors Abel and Jones said that even though they were not happy with the award incident that the Water Education Foundation plays a key role in educating the public on water matters. Further discussion followed and several alternate actions were considered, but no action was taken. This item was continued until the May 12th Special Board meeting. It was noted that this matter will be the subject of the Water Education Foundation Board of Directors meeting at the ACWA meeting on May 7-8. Some of the District directors will attend that meeting.

SUPPORT OF C. CHARLES EVANS -
CENTRAL COAST REGIONAL WATER QUALITY CONTROL BOARD

A motion was made by Director Wilson, seconded by Director Abel and unanimously carried to have the District write a letter of support for C. Charles Evans to be confirmed as a member of the Central Coast Regional Water Quality Control Board.

Director Abel gave the report for the CCRB meeting held on April 15, 1998. She said that the Board packets included the legal and technical reports. Counsel Wullbrandt reported on the meeting that had taken place regarding AB2182. Director Abel reported that a budget adjustment was made on the 1997-98 Budget for the biological assessment for the fisheries operation. Director Abel said that the next CCRB meeting will be held on May 27 at 1:00 p.m. at the City Council chambers. There will be a presentation by Jean Baldrige about the alternatives fisheries plan, and directors of all member units will be invited to attend.

Since several Directors were going to be away from the community for the second regular meeting in May, it was the consensus of the Board to skip this meeting.

The General Manager gave the report for the COMB meeting held on April 20, 1998. He said that the COMB Board had authorized $9,000 for the architect to prepare plans for the new office building. Counsel Wullbrandt said that the Budget was introduced which included funds for approx. $500,000 to build this building. Director Jones said that COMB had received five new applications for the COMB Counsel position and that a motion was made to appoint Don Boden as the new COMB Counsel, but that Director Jones had told the other COMB directors that he would like to discuss this with the MWD Directors before voting. The General Manager said that Mr. Boden is Counsel for La Cumbre Mutual Water District and that they discussed that he did not have a direct conflict of interest but a possible conflict of interest. Don Boden agreed to sign an agreement that if there is an area of conflict he will step aside from either COMB or La Cumbre Mutual Water District. It was mentioned that Don Boden does not represent a member unit of COMB. Director Campbell made a motion to advise the MWD COMB representative to cast a no vote without detail on obtaining Don Boden as the new COMB counsel. The motion was seconded by Director Puddicombe. The motion carried unanimously.

Director Wilson gave the Special Districts Association Meeting report of April 20, 1998. He said that the Association had approved new bylaws. It was also agreed that the annual meeting will be held at the Zaca Inn. He said the speaker was a representative from the engineering firm of Martin Northart and Spencer and that he reported on Goleta Water District’s 42" pipe that was destroyed in the last storms and how they assisted in getting FEMA funds. He indicated that if small Districts need assistance in engineering in getting FEMA’s agreement and payment help, can be obtained at a fairly inexpensive price. Director Wilson said they also discussed reimbursement of future costs.

Director Puddicombe said that the Operations Committee had not met so there was nothing to report.

Director Campbell said that the Finance Committee was recommending that the District contract for another three year period with the current auditors, which has given the District a reasonable bid.

Director Abel said the newsletter should be received by District customers by the beginning of the following week. She also reported that at the ACWA Conference on May 6, Region 5 would be presenting an encore of their September 1997 about "Achieving a Consensus Based Approach to Species Management". She also requested that the Directors come and support ACWA Region 5’s meeting at the conference. She said that the meeting would feature a panel on the THM issue and how agencies have shaped the story.

The Board went into closed session at 5:55 p.m.. When the Board returned to open session at 6:00 p.m., it was reported that no action had been taken.

Note: The agenda for this meeting was posted at the front counter and on the front wall at the Montecito Water District on April 17, 1998.