Tuesday, April 7, 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 7, 1998

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

Present:	Directors Abel, Campbell (arrived at 4:30 p.m.), 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 Cathy Muneio, Secretary

A motion was made by Director Abel, seconded by Director Wilson and unanimously carried to approve the minutes of March 17, 1998.

The General Manager reviewed with the Board the water production report for March, 1998. He stated that most of the water produced came from the Doulton Tunnel.

A motion was made by Director Wilson, seconded by Director Abel and unanimously carried to ratify the March 23, 1998 transfer of $250,000 from the District LAIF/General Capital Repair & Replacement/Operations fund account to the District’s Montecito Bank and Trust operational account.

The Board reviewed with the General Manager the report on the distribution system upgrade program. President Puddicombe requested that the next report include dollars spent for water treatment consultant costs. The General Manager stated that this year 24 new hydrants had been installed this year and the District was reimbursed by the Montecito Fire Protection District for them. A large amount of work is scheduled to be completed during the next three months.

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

The Board discussed changing the State Water Project method of accounting from the equity method to the cost method. The Business Manager stated that several districts had already made this change and that the State Water Project cost was the only intangible item on the District’s balance sheet. Director Abel made a motion to report, beginning with the financial statement for the fiscal year 1997-98 the State Water Project costs using the cost method in accordance with generally accepted accounting principles. The motion was seconded by Director Wilson. The motion carried unanimously.

The Board discussed the Safe Driving Program Policy that had been recommended by ACWA/JPIA. President Puddicombe preferred that a change be made that would have the Board, instead of the President, take appropriate action to avoid liability exposure in regards to Directors driving. Director Wilson made a motion to approve the Policy for the Safe Driving Program with the recommended changes. The motion was seconded by Director Jones. The motion carried unanimously.

The Board had requested that the Finance Committee review the policy for existing District delinquent accounts and collection efforts of overdue payments. The Business Manager stated that Santa Ynez ID No. 1 was the only local District that had rental property accounts remain in the owners name, and that she felt the District’s current method of collection of payments worked well. Director Wilson made a motion to approve continuing the existing District delinquent accounts policy and to approve the District collection efforts of overdue payments policy. The motion was seconded by Director Abel. The motion carried unanimously.

The General Manager explained that the District is required to notify CCWA every two years whether or not the District would like to reduce its State Water "Table A" entitlement. The Board said that this water may be needed in the future if the next several years are dry years. A motion was made by Director Wilson, seconded by Director Abel and unanimously carried to approve no Table A entitlement reduction for the next two years commencing with January 1, 1999.

Due to a higher interest rate charged to the District by CCWA than the District can currently obtain, staff recommended that the District reimburse the loan from the CCWA contingency funds for the pump station and Bradbury Dam Repair work. A motion was made by Director Campbell, seconded by Director Wilson and unanimously carried to reimburse $445,447.55 plus interest accrued to CCWA to repay monies authorized to fund the District pump station upgrades and the Bradbury Dam modifications, and to appropriate $446,340 from the General Capital Repair and Replacement Reserve fund for the repayment.

A motion was made by Director Abel, seconded by Director Campbell and unanimously carried to ratify the 1998-99 CCRB budget.

A motion was made by Director Campbell, seconded by Director Abel and unanimously carried to approve a contribution of $244 for the cooperative water awareness month campaign.

The General Manager said the Board by consensus had asked that proposals be solicited for consideration of a consultant to evaluate the Bond Underwriter. The Finance Committee reviewed two proposals, one from Reiter Lowry Consultants for $1,851 and the other from Fieldman, Rolapp & Associates at a cost not to exceed $5,000. A motion was made by Director Wilson and seconded by Director Campbell to; 1) ratify Reiter Lowry Consultants as a Financial Advisor to evaluate the bond financing costs and whether the form of bond financing is competitive at a cost not to exceed $1,851; and 2) appropriate $1,851 from the General Capital Repair and Replacement Reserve fund for payment of this work. Director Abel said that she would have trouble supporting this because she felt that this consultant was unnecessary and that the same goal could be achieved by the Board asking Salomon Smith Barney for their rationale for their structuring and pricing and to provide for our review Solomon Smith Barney’s last ten or fifteen financings that were similar to ours. She said that Solomon Smith Barney has an excellent reputation and, due to recent mergers, is now the largest financial institution in the world. Director Jones was in agreement with Director Abel. Director Campbell said he did not feel he had enough expertise to know whether Smith Barney’s proposal was the best deal for the District. President Puddicombe said he would like an experienced firm to review the capital financing proposal by Solomon Smith Barney. The Board continued this item until after the closed session since Legal Counsel had arrived.

The Board went into closed session to confer with legal counsel regarding the purchase of the Buell Reservoir property. When the Board returned to open session at 5:17 p.m. it was reported no action had been taken.

The Board returned to the discussion on the engagement of a bond financial consultant, and a vote was called for. The motion passed 3-2 with Directors Campbell, Puddicombe and Wilson in favor of this motion and Directors Abel and Jones opposed.

The Board discussed the recent storm disaster when a number of District customers suffered damage to their properties and lost a substantial amount of water. A motion was made by Director Campbell, seconded by Director Wilson and unanimously carried to approve authorizing the General Manager to consider and approve if appropriate, adjusting charges for this water loss provided that a written description of the damage and copies of invoices for repairs are submitted, along with an estimate of the water loss. A bill stuffer will be sent out with the next bills notifying a customer that if they had a substantial amount of water loss during the month of February that was storm related, the District would consider adjusting charges for this water.

LETTER TO US FOREST SERVICE REGARDING OPERATING
CRITERIA FOR FOX AND ALDER CREEK DIVERSIONS

The General Manager reviewed with the Board the letter to the U.S. Forest Service regarding the operating criteria for the Fox and Alder Creek diversions that explained the rationale for extending the creek diversions beyond April 1. Cachuma may spill through the end of June and the District should divert water at Fox and Alder Creeks during this period.

The Engineering Manager discussed with the Board the 1997 USFS Fox and Alder Creeks Habitat Survey Report Challenge Cost Share Agreement Work. He said that the Forest Service had not complied with the conditions and scope of the work associated with the Challenge Cost Share agreement.

The Engineering Manager reported on the status of the Greenwell Avenue main repair work. He said that the owner of the property where the slide occurred had performed illegal grading work which in turn may have caused the slide and pipeline damage during the recent storm. The identification of repair needs for this work has been submitted to FEMA. District Counsel said that the County wants to prosecute the property owner in this matter. President Puddicombe asked if the main could be moved to another place. The Engineering Manager said that this was possible but would take time. Counsel said that he may be coming back to the Board at the next meeting regarding a possible lawsuit relative to this issue.

RESOLUTION NO. 1854 DESIGNATING AGENT
FOR MAKING APPLICATION FOR FEMA REIMBURSEMENT

A motion was made by Director Jones to adopt Resolution No. 1854 designating the agent for making application to FEMA, namely the General Manager, Business Manager and Engineering Manager. It was seconded by Director Wilson. The motion carried with a roll call vote as follows:

The General Manager said that due to weather the seismic work had been suspended, but the new contract for the spillway strengthening had been let. Director Abel inquired about the office construction. The General Manager said that COMB had looked at the City property as an alternative site to be considered for an office. Director Abel inquired about the status of finding new COMB counsel. Counsel Wullbrandt said that the only new applications for the COMB Counsel position received were from Don Vickers and Tom Stone. Counsel Wullbrandt said his application for the position is still on file.

Director Abel reported on the CCRB meeting of March 18, 1998. She said that the Budget for 1998-99 was approved and an additional payment of fees that SYRWCD ID#1 had previously paid was approved for reimbursement. Director Abel said the Board packet included reports on CCRB legal and technical issues. Counsel Wullbrandt reported on the Section 7 consultation with NMFS. He said that due to additional hydrology studies being completed, the biological assessment will not be completed by the end of March. Counsel Wullbrandt is proposing that Rusty Fairly, representing the Chair of the Regional Water Quality Control Board, become more involved in the steelhead consultation matter. He also said that an Assembly committee consideration of AB 2182 legislation directing the Department of Fish and Game to provide protection of endangered species at Bradbury Dam but while ensuring the continued water conservation storage is scheduled for April 14.

Director Abel reported on the ACWA meeting of March 20, 1998. She stated that there were several action items regarding an award for Water Leadership and a memorial resolution. She said that the day before the ACWA Board of Director meeting there had been a strategic planning retreat. She said that during the last five years ACWA had restructured its Board from a 106 member Board to a 33 member Board and reorganized on a regional basis rather than by type of District under the Vision 2000 Plan. Director Abel said they discussed what Vision 2000 had called for, what we have done, and where we’re headed. She will report on the written recommendations that resulted from the retreat as soon as they become available. She said that the next Board meeting will be at the end of May. She said that all members of ACWA have the option to petition to switch regions if they would like to.

Director Wilson reported on the Special Districts Association meeting of March 23, 1998. He reported that the meeting was primarily regarding EMID’s receipt of tax monies from the county, and how the County Administrative offices is making the county much more competitive with profit centers.

President Puddicombe said that there was a written report included in the Board packet on the CCWA meeting of March 26, 1998.

President Puddicombe said the entire Board along with the General Manager had attended the Southern Steelhead Conference of March 27, 1998 so it was not necessary to give an oral report.

Director Abel reported on the ACWA Region 5 meeting of March 30, 1998. She said that there was information shared at this meeting on the Calfed Bay-Delta Program and she had a copy of the Phase II Interim Report and Executive Summary of the Program if anyone was interested in borrowing them. She said that Counsel Wullbrandt was a moderator for the panel on the Governor’s $1.3 billion Water Management Bond and she asked him to give the highlights of this panel discussion. He said Mike Kahoe said several times that if a District has projects it wants to fund it should get a list of projects along with cost estimates for grant money and send them to Mike Kahoe, Senator O’Connell and Assemblyman Firestone. There is a limit to the amount of debt that the State of California can issue and so they back into how much money is left to get to that debt limit and what are the other things we want to have bonds for. The other two are schools and prisons and then they decide how much the voters will be willing to spend for these various things. Director Abel said that the issue that Region 5 members are most interested in is water quality, as shown in the recent Region 5 survey. The General Manager talked to Bill Mills regarding $170,000,000 for proposed Bay Delta funding. There is some concern that Congress will appropriate these funds instead to clean up the Salton Sea. Region 5 will be meeting at the spring ACWA conference. Director Abel said that there will be two Region 5 issue panels during the ACWA conference, one regarding "How to Achieve a Consensus-Based Approach to Species Management" and one about "The THM Issue and How Agencies Shaped the Story".

Director Campbell reported on the Water Law Conference of April 2-3, 1998, and said that the issue of water quality took the focus. They discussed why districts are going to need substantial legal advice on these types of issues.

Director Abel reported on the Public Information Committee meeting. She said the newsletter is complete and will be reviewed the following day. There was a discussion on the award given to Melinda Burns by the Water Education Foundation. President Puddicombe said that CCWA had withdrawn its support due to this.

Note: The agenda for this meeting was posted at the front counter and outside front wall at the Montecito Water District on April 3, 1998.