Thursday, June 18, 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, JUNE 18, 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 Glenn Reiter, Reiter & Lowry Consultants Bob Rauch, Rauch Communications Martin Rauch, Rauch Communications Evalyn Kerman, Business Manager Cathy Muneio, Secretary Ray Stokes, CCWA Arve R. Sjovold Marshall Ackerman Harry Edmondson Joan Kerns John H. Lincoln Alan N. Smith Bob & Jean Fogquet Jim I. Myerly Sam S. Smith Ted Phenix Joann Tanner Rounds M. G. Sturgeon Frederick Corey Tom Dickson Tom Sciacca Christy Venable JoAnn Lewis Lorie Smith Laura Evans Maria Herold Richard C. Smith Harry & Leslie Hovey Dan Eidelson Don Iselin Lee Silverman H. J. Muller, Jr. Sam Frye Sally Rauch Eva Masin Susan Chapman John Kerman Mr. J. Murchison Cathy Mitchell Ron and Jill Dexter Joan Wells Carolee Kreiger

President Puddicombe welcomed the public and introduced the Board of Directors as well as the staff and expert panel consisting of Glenn Reiter, District Financial Consultant, and Ray Stokes, Controller of Central Coast Water Authority. He also welcomed Bob Rauch, Moderator, and his assistant Martin Rauch. President Puddicombe stated that no action would be taken during this meeting and he turned over the meeting to Bob Rauch.

Bob Rauch reviewed the agenda and the program with the public. He stated the program would be presented then a short break would be scheduled. After the break questions submitted on cards would be answered followed by verbal questions. He stated that there would be another Board meeting on June 23rd at which time the Board will consider adoption of the 1998-99 budget.

Bob Rauch introduced the General Manager who gave a brief history of the District. He explained that most of the mains were constructed in the 1920’s and were in need of replacement and that requires money. He explained that many costly events have led up to the present time, such as supply challenges, water rights issues, studies on Jameson and the retrofitting of Bradbury Dam at Cachuma.

Bob Rauch introduced the Financial Consultant, Glenn Reiter. Mr. Reiter reviewed a variety of funding tools and the attitudes of people regarding public funding. He discussed revenues, long term financing, key costs and reserves. He explained that general obligation bonds were the traditional way to fund public facilities and that bank loans are better for short term borrowing. He explained that the bonds the District recently had financed will be used for specific projects which are stated in the agreement and that there will be a separate fund for these monies.

Bob Rauch introduced the Business Manager. She reviewed with the public the proposed budget for 1998-99. She said that the sale of the Buell property was included in the next fiscal budget, but that this was an unusual event and the proceeds would be transferred to reserves and would not be an ongoing revenue. She said that the major expenditure for the District was water supply and that expenditures were less than revenues this year. She reviewed the next four years’ budget expenses and said that the District will keep in compliance with all debt coverage obligations. She said that more details will be given at the June 23rd meeting.

The Financial Consultant spoke further about finances and explained that reserves were built up in 1997 and 1998 but then dropped substantially when the first and last payments to the CCWA were paid in June 1998. He said that the District expects modest rate increases over the next 22 years and compared rates of other districts in the area with Montecito’s rates, with Montecito being in the middle. He also said that water is cheap compared to other commodities and that water is a necessity.

Bob Rauch called for a 15 minute break at which time he asked the public to write down any questions and said they would be collected and answered by the appropriate person after the break.

Questions that were written on cards by the public were read by Bob Rauch and answered by District staff and consultants.

Mr. and Mrs. Hovey each gave brief comments that the District is being well managed and commented about the favorable bond financing.

Carolee Krieger and Arve Sjovold presented their views on State Water costs and asked that questions be answered regarding these costs by Ray Stokes. Bob Rauch allowed fifteen minutes for this and then stated that the meeting would close.

Bob Rauch closed his portion of the meeting at 6:30 p.m. and the Board adjourned at that time. Mr. Rauch stated that anyone who had additional questions regarding the State Water costs could stay and discuss this with Ray Stokes.

Bob Rauch closed his portion of the meeting at 6:30 p.m. and the Board adjourned at that time.

Note: The agenda for this meeting was posted at the front counter and on the outside front wall at the Montecito Water District on June 12,1998.