Tuesday, May 12, 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, MAY 12, 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:	Director Jones
Also Present:	C. Charles Evans, General Manager/Secretary Chip Wullbrandt, District Counsel Tom Mosby, Engineering Manager Evalyn Kerman, Business Manager Cathy Muneio, Secretary Doug Brown, Stradling, Yocca, Carlson & Rauth Joan Wells David Houston, Salomon Smith Barney Dan Eidelson Gary Paudler Carolee Krieger H. J. Muller, Jr. Linda Cable, SBB&T Sally Kinsell Melinda Burns, Santa Barbara News Press

During public forum Carolee Krieger asked several questions regarding the District’s projections on the cost of the State Water Project. She also questioned why Solvang’s costs for the State Water Project cost more per acre foot than this District’s.

Gary Paudler, a customer at 201 Greenwell, said he had been without water for 10 weeks since the pipeline on Greenwell Avenue had been damaged during the recent storms. The District was transporting tanks of water to him at no cost but he stated that it was very inconvenient. Counsel Wullbrandt said that the County had not been able to repair the hillside in that area due to the continuing rains and the District could not repair the main until the hillside is stabilized. Gary Paudler asked if something could be done temporarily. Director Puddicombe made a suggestion that the District put a temporary above ground pvc pipeline on Greenwell to get water to this residence until the County stabilizes the hillside and the main can be repaired and possibly moved. President Puddicombe asked that Mr. Paudler meet with the Engineering Manager to resolve this matter.

REVIEW OF COMMENTS FROM PUBLIC MEETING
AND RESPONSE TO CAROLEE KRIEGER QUESTIONS

The Board reviewed comments from the public meeting on May 11th and the responses to Carolee Krieger’s questions asked at the Special Board Meeting held on April 28, 1998 that were included in the Board packet. Ms. Krieger requested clarification on some of the answers to her questions.

CONSIDERATION OF DISTRICT'S CAPITAL PROGRAM
FINANCING AND APPROVAL OF PRELIMINARY OFFICIAL
STATEMENT AND LEGAL DOCUMENTS

The Board discussed the two proposals for the financing of the Capital Improvement Program. Joan Wells requested that the District put off making a decision on either proposal since the public meeting was held only the day before. It was pointed out that this had been discussed for quite some time prior to the May 11, 1998 public meeting, and that a previous public meeting on the matter had been held in February 1998. Counsel Wullbrandt wanted to make it clear that Glenn Reiter was an independent Financial Consultant, and that he did not in any way work for Salomon Smith Barney because Mr. Reiter was recommending that the Board approve the Salomon Smith Barney proposal. He said that Mr. Reiter was hired to review the two different financing proposals for the Capital Improvement Program that the District was considering.

The Board gave comments on which proposals they preferred. Directors Abel and Wilson indicated they preferred the Santa Barbara Bank and Trust proposal for its flexibility and for the reason that the cost of the loan was less in the long run. Directors Puddicombe and Campbell preferred the Salomon Smith Barney proposal because of the fixed low interest rates, future users would pay their share of the costs of the pipeline replacement program and rates to the customer would not be as high as the Santa Barbara Bank proposal. It was the consensus of the Board that the timing for approving one of the proposals was now in order to not lose the benefit of the market’s low interest rates. Director Abel made a motion to accept the Santa Barbara Bank and Trust proposal. Director Wilson seconded the motion. After further discussion of the pros and cons of each proposal Director Wilson withdrew his second of the proposal. A motion was made by Director Campbell, seconded by Director Wilson and unanimously carried to approve the Salomon Smith Barney current interest bonds, version 2 proposal, and to hire Glenn Reiter for financial consulting services, at a cost not to exceed $12,000.

A recess was called at 4:30 p.m. to go to the Montecito Water District Financing Corporation agenda.

RESOLUTION NO. 1855 AUTHORIZING EXECUTION AND DELIVERY
OF REVENUE CERTIFICATES OF PARTICIPATION AND APPROVING
THE EXECUTION AND DELIVERY OF CERTAIN DOCUMENTS

Director Campbell made a motion to approve Resolution No. 1855 authorizing execution and delivery of the revenue certificates of participation and approving the execution and delivery of certain documents. The motion was seconded by Director Puddicombe. A roll call resulted as follows:

President Puddicombe asked what the next step will be. Mr. Reiter said that the bonds will be sold in about one week at the earliest and that several days prior he will find comparables in the market.

Several suggested changes were made by Director Abel to the minutes of April 21, 1998. A motion was made by Director Campbell, seconded by Director Wilson and unanimously carried to approve the minutes as amended.

APRIL WATER PRODUCTION, WATER SALES, WATER OPERATIONS,
INVESTMENT OF DISTRICT FUNDS AND BILLS FOR PAYMENT

A motion was made to approve the water production report, water sales report, water operations report, investment of District funds and bills for payment, and the report on the Distribution System and Fire Flow Upgrade Program and Water Availability Charge funds. The motion was seconded by Director Campbell and carried unanimously.

Director Abel moved to authorize the write-off of receivables totaling $313.57. The motion was seconded by Director Wilson. The motion carried unanimously.

NOTICE REGARDING PROPOSED RESOLUTION RELATIVE
TO EXEMPTION FROM PROPOSITION 4 SPENDING LIMITATIONS

The notice regarding the proposed resolution relative to exemption from Proposition 4 spending limitations was read into the record, as follows: "A resolution will be presented to the Board for adoption at a regular Board meeting of June 2, 1998" (later changed to June 3, 1998), "which resolution shall establish that the District’s various user fees, rates and charges for fiscal year 1998-99 do not exceed the costs reasonably borne by the District for providing the services for which the fees, rates and charges were made."

A motion was made by Director Campbell, seconded by Director Wilson and unanimously carried to select MacFarlane, Faletti & Company for the District audit dated June 30, 1998, 1999 and 2000.

The Board reviewed the letter from CCRB to the Board of Directors of the District inviting Board members to a fisheries meeting on May 27, 1998. Director Abel encouraged the entire Board to attend.

Director Campbell moved to approve the agreement with COMB for the construction of the new Lambert Road Cachuma turnout. The motion was seconded by Director Wilson and carried unanimously.

The Engineering Manager asked that the item regarding the request for cost sharing of the water main construction for Cima Del Mundo subdivision (formerly Jesuit property) be continued since a new proposal was expected.

SPECIAL CAPITAL PROJECTS: JAMESON LAKE, SILT SURVEY,
JUNCAL DAM WALKWAY, DOULTON TUNNEL, SOUTH PORTAL PIPELINE

The Board discussed the proposed special capital projects. The projects included the Jameson Lake silt survey, repair of the Juncal Dam walkway, and the Doulton Tunnel South Portal pipeline replacement. President Puddicombe said that the Operations Committee had reviewed these projects and recommended they be approved. A motion was made by Director Wilson to 1) approve a new silt survey at Jameson Lake by Martin, Northart and Spencer at a cost not to exceed $8,750, and appropriate this amount from the General Capital Repair and Replacement Reserve Fund, 2) approve the proposed Juncal Dam walkway project on a time and material basis at an estimated cost of $100,000, with funds to be provided by the Water Availability Charge Funds, and 3) approve the South Portal pipeline replacement on a time and material basis at an estimate cost of $12,700, with funds to be provided by the Water Availability Charge Funds. The motion was seconded by Director Puddicombe. The motion carried unanimously.

The Engineering Manager reported that the District had re-examined the scope of work associated with the Parra Grande water main replacement and had determined that the original estimation of 1,650 feet should be changed to 900 feet. He explained that the Parra Grande Lane water main was once an important transmission main for delivery of Jameson Lake water to the lower portion of the District, but with the upgrading of certain pump stations and other mains this pipeline no longer serves that function. The District is now trying to increase the water service area from its Cachuma turnout pump stations which will reduce demand on the Jameson Lake source. A motion was made by Director Abel, seconded by Director Puddicombe and unanimously carried to approve the downsizing of the Parra Grande main replacement for the estimated cost of $164,500 to $93,500.

STATUS OF U.P.R.R. RIGHT OF WAY CONSTRUCTION ACCESS AND
EASEMENTS AND PADARO LANE AND POSILIPO LANE

The Board discussed the status of the U.P.R.R. right of way easement and construction access. The District submitted an application for a construction access and right of way easement over the railroad property at Posilipo Lane and Padaro Lane to replace the undersized pipelines associated with water system improvements. The District has had operating pipelines at these two locations since the 1930’s and the proposed improvements should not further encumber the railroad property. With this in mind the District requested Counsel prepare a cost estimate to initiate and complete condemnation proceedings against the railroad. The Engineering Manager asked for direction from the Board on how to proceed with this. A motion was made by Director Campbell, seconded by Director Wilson and unanimously carried to hire an appraiser not to exceed $5,000.

The Board discussed the request by Linda Blitz regarding the former portion of the Buell Reservoir property that the District had sold to Ms. Blitz. She requested that the District remove the restriction as conveyed in the grant deed which restricted the use of this property to landscaping, underground utility lines, and septic systems. Since the remaining portion of the District’s property is in escrow and because this sale may be compromised, a motion was made by Director Campbell, seconded by Director Wilson and unanimously carried to deny the request of Linda Blitz to remove the covenants, conditions and restrictions conveyed by the grant deed.

A motion was made by Director Abel, seconded by Director Wilson and unanimously carried to approve the subscription for the Water Education Foundation for $210.

The General Manager reported that at the COMB meeting of April 20, 1998 background information was circulated regarding Don Boden, the new proposed COMB Counsel. COMB was in the process of negotiating his hourly rate and a conflict agreement since he is La Cumbre Mutual Water District’s Counsel. President Puddicombe asked if the Board had authorized its COMB representative to vote against Mr. Boden at the last meeting. The General Manager said that was the case, but COMB had circulated background information on Mr. Boden which was submitted for Board review. The Board affirmed its earlier position regarding Mr. Boden. The Board also discussed that the COMB Board had authorized $9,000 for a second contract with the designer to complete the design work for building the new office at the COMB headquarters. The Board discussed having the COMB headquarters house Scott Engblom, the fishery biologist under contract to CCRB. This led into a discussion that CCRB meetings could take place at the COMB headquarters, and that eventually they could possibly become one agency. In order for the Board to determine what would be the best for all these agencies Counsel Wullbrandt suggested that COMB and CCRB may want to do a strategic management plan. President Puddicombe asked whether CCWA would be a good entity to merge COMB with. Director Campbell made a motion to approve the COMB budget with the caveat that construction funds not be committed for the new headquarters building until a strategic plan is completed to determine how the headquarters site will be used and how the various agencies are going to function, including those who have joint responsibilities between COMB and CCRB, and that the strategic plan also address how the facilities will be used and how the activities of staff and CCRB will be housed, and to have Director Abel, who is the CCRB representative and COMB alternate representative, work on this issue. The motion was seconded by Director Wilson and carried unanimously.

President Puddicombe said that the CCWA report was included in the Board packet.

Director Wilson reported that at the Santa Barbara Water Purveyors meeting of April 24, 1998 a plaque was given to President Puddicombe for his excellent service, and the bylaws were approved.

The General Manager said that at the Cachuma Renewal Fund Advisory Committee meeting of April 28, 1998 they had agreed to fund the fisheries studies for the next year.

President Puddicombe said that since all the directors had attend the ACWA/JPIA conference of May 4-5 and the ACWA conference of May 6-8, there was no need for a further report and that if Director

Wilson had any questions he could ask any of the Board members. Director Abel also reported on the meeting at ACWA Region 5 meeting that discussed the Bay Delta issues. She said that Bruce Babbitt had attended this meeting.

President Puddicombe said that everything had been discussed regarding the Operations Committee under separate items.

Director Campbell said everything had already been discussed regarding the Finance Committee.

Director Abel reported that a bouquet of flowers to show the Board’s sympathy for a family death had been sent to Director Campbell. He expressed his gratitude. There was nothing in addition to report regarding the Public Information Committee.

The Board went into closed session at 6:45 p.m. When the Board returned to open session at 6:50 p.m. it was stated 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 May 8, 1998.