Wednesday, June 3, 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 3, 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 3:30 p.m.), Puddicombe, Wilson
Absent:	Director Jones
Also Present:	C. Charles Evans, General Manager/Secretary Chip Wullbrandt, District Counsel Cathy Muneio, Secretary

A motion was made by Director Wilson, seconded by Director Puddicombe and unanimously carried to approve the minutes of the May 11, 1998 9:00 a.m. meeting. A motion was made by Director Abel, seconded by Director Wilson and unanimously carried to approve the minutes of the May 12, 1998 Board meeting, as presented. The Board reviewed the minutes of the Montecito Water District Financing Corporation. The General Manager said these minutes will be presented for approval at the next annual meeting of the Financing Corporation.

Director Wilson suggested several changes to the minutes of the May 11, 1998 meeting held at 2:00 p.m. A motion was made by Director Abel, seconded by Director Wilson and unanimously carried to approve the minutes of the May 11, 1998 2:00 p.m. meeting.

The General Manager reviewed with the Board the production report for the month of May. He said that 329 AF of water had been produced and that this figure was up from the past several months, but that production was below the budgeted amount for the month.

A motion was made by Director Wilson, seconded by Director Puddicombe and unanimously carried to ratify the May 7, 1998 transfer of $400,000 from the District’s Santa Barbara Bank & Trust operational account to the District’s LAIF/General Capital Repair & Replacement/ Operations fund account and the June 1, 1998 transfer of $3,300,000 from the District’s LAIF/General Capital Repair & Replacement/Operations fund account to the District’s Santa Barbara Bank and Trust operational account.

The Board discussed the monthly report on the Distribution System Upgrade Program. Director Wilson asked that the Montecito Fire Protection District be shown as the entity reimbursing the District for the fire hydrant upgrade program.

Director Wilson said that the Montecito Association had not met although he had attended a land use field trip to the Jesuit property. The General Manager said that the District will be receiving a new proposal for water service from this customer.

Director Campbell made a motion to ratify the response to the Water Conservation Plan Annual Update Letter. The motion was seconded by Director Puddicombe. The motion carried 3-0-1, with Director Wilson abstaining.

The General Manager explained that ACWA/JPIA has returned to a self-insured, pooled program for workers’ compensation. He said that the rates are lower than any other program the District might use. JPIA recommended the District adopt a resolution which would allow the State to issue Consent to Self Insure Certificates. A motion was made by Director Campbell to adopt Resolution No. 1856 authorizing application to the Director of Industrial Relations, State of California, for a Certificate of Consent to self-insure workers’ compensation liabilities on a pooled basis. The motion was seconded by Director Puddicombe. A roll call resulted as follows:

The General Manager reviewed with the Board the nine month financial statements and budget report. He said the District had an operating gain of $2.3 million. Director Campbell said that staff was doing a good job of keeping legal costs down. President Puddicombe stated that even though this was an El Nino year, the District had sold 48 AF more water in the first nine months than the previous year.

The Board reviewed the third quarter investment report and found the District to be in compliance with its investment policy.

Director Puddicombe said this report shows that the District has the ability to meet expenses for the next six months.

The General Manager explained that the Capital Cost Recovery Fee is adjusted on an annual basis using an adopted formula. This is automatically done when the budget is adopted. The General Manager said it had been reviewed by the Finance Committee and it was recommended that the connection fee not be adjusted at this time. The recommendation of the Finance Committee.

The General Manager reported that the bond financing was completed on May 27, 1998 and that the District would be funded on June 11th. Director Abel asked that the bonds restricted rate be changed from 5.25% to 5.24% to reflect the correct rate. President Puddicombe said that a letter had been sent to Dan Masnada saying that projects will be funded from new money and not from CCWA funds.

The Board reviewed the memorandum from CCWA regarding continuing disclosure defaults and remedies.

The General Manager explained that a District customer had come before the Board at the previous meeting and requested help in restoring service to his property on Greenwell on a line that was damaged during the last storms. The District plans to partially restore the Greenwell water main to a point below the slide which would restore the customer’s meter. It was stated that this work was scheduled for June 2, 1998.

Director Abel was unable to attend the COMB meeting of May 18, 1998 so Director Wilson attended this meeting as second alternate. A motion was made by Director Campbell, seconded by Director Puddicombe and unanimously carried to ratify the appointment of Director Wilson as second alternate to COMB. Director Wilson reported that he had discussed the possibility of a strategic plan to be completed, with Director Abel as a participant. He said it had been well received. He said he informed the other members that he would not approve the adoption of the building budget until the amount of needed office space was determined through the strategic plan. He said the Goleta representative said that at the previous COMB meeting $9,000 was approved for starting the office building. He said it was agreed that the budget would not be adopted until the next meeting, but that COMB is proceeding ahead with the design of the office building. Director Wilson said that the Santa Ynez ID#1 Board had not yet approved the COMB budget, but that the COMB budget needs to be approved by July 1. He said it was suggested that this strategic plan would look at combining CCWA, CCRB and COMB. He said that there was positive feedback from every member except the Goleta Water District. Director Wilson said that the hiring of COMB Counsel was continued until the next meeting. Counsel Wullbrandt said that there was no proposal for how conflicts management would be handled if Don Boden were hired.

Director Abel gave a report on the CCRB meeting of May 27, 1998. She said that it had been a single item agenda on the MOU fisheries studies report. Jean Baldrige and Ramona Swensen with Entrix gave a presentation on these studies. Jean Baldrige said these studies were being done to be presented to the State Board in the year 2000. Director Abel said questions were asked regarding these studies and Jean Baldrige answered them very knowledgeably.

President Puddicombe gave a report on the CCWA meeting. He said that two valves had been put in near Nipomo. CCWA staff will not consider providing water to any entity from those valves. They will consider emergency release valves controlled by CCWA. He said there was a discussion on the concerns that the transformer may have been wired incorrectly where a person had died working on this transformer. He said that if the plans were not correct that the worker had lost his life unnecessarily.

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

Director Campbell reported that much of the information discussed at the Finance Committee meeting had already been discussed under other items on the agenda. He said that the Finance Committee has discussed the meter exchange program. Director Campbell said the CCWA Investment Policy had been discussed and that the principals seem pretty sound. He said that CCWA has a greater portfolio diversity.

Director Campbell stated that he would like to see a simple question and answer informational sheet on the District’s finances and the costs involved with the State Water Project. Director Campbell’s concern was that that information was not consistent between CCWA and the District on the costs associated with the State Water Project. It was stated that that was because the District was requested to give answers prematurely before all information was received. Director Abel said that a preparational meeting was going to be held on June 11th at 10:00 a.m. with Bob Rauch who would be the mediator at the public meeting on June 18, 1998. Counsel Wullbrandt said that the whole Board could attend this committee meeting as long as the agenda was properly posted.

Director Abel passed out recent articles relative to water issues and reported on ACWA Region 5 activities. She said that AB 2368 was strongly opposed by ACWA and that member agencies were encouraged to write letters opposing this. Director Abel also reported that ACWA USA was having trouble with start up problems. Counsel Wullbrandt reported that the Torkelson bill was discussed and that letters should be written to Assemblyman Firestone and Senator O’Connell with President Puddicombe’s signature opposing this bill. This bill has been directed primarily to Los Angeles County. The Board also discussed the date for the meetings to prepare for the public meeting on June 18.

Director Wilson requested that the Board place on the agenda a discussion of preparing an update of the 30 year plan.

The Board went into closed session at 5:45 p.m. When the Board returned to open session at 6:15 p.m., it was reported that no action was 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.