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, JULY 7, 1998

CALL TO ORDER AND ROLL CALL

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

EMERGENCY RESOLUTION NO. 1862 ADDING ITEMS TO AGENDA

Director Puddicombe noted that several items had arisen subsequent to the agenda being posted upon which action was necessary at this meeting. A motion was made by Director Wilson, seconded by Director Abel and unanimously carried to approve Resolution No. 1862 adding the following items to the agenda; 1) to name a 2nd Vice President because the President and Vice President were going to be away for the July 21, 1998 Board meeting; 2) change the schedule for the Finance Committee recommendation regarding the January 1, 1999 water rate and service charge review from the 2nd meeting in September to the 2nd meeting in October; and 3) the East Mountain Drive Pump Station letter from Burden Trust and our response. A roll call vote resulted as follows:

• AYES: Directors Abel, Jones, Puddicombe, Wilson
• NOES: None
• ABSENT: Director Campbell
• ABSTAIN: None

NAME 2ND VICE PRESIDENT

A motion was made by Director Wilson, seconded by Director Jones and unanimously carried to appoint Jan Abel as second vice-president.

MEETING SCHEDULE FOR POSSIBLE JANUARY 1, 1999
WATER RATE AND SERVICE CHARGE INCREASE

There was a discussion on whether or not to change the agenda item for consideration of water rate and service charge review from the second meeting in September to the second meeting in October. A motion was made by Director Jones, seconded by Director Abel and unanimously carried to do the following:

1) The Finance Committee consider a review of rates and charges which would include a review of fixed revenues and fixed expenses;

2) Any fixed revenue increases could be at a more rapid rate than shown in the Bond Financing;

3) A review of District financial reporting with Director Campbell’s suggestions consistent with generally accepted accounting principles; and

4) The Finance Committee provide the Board with written progress report at the second meeting in August and September so the Board will be up to date with finance issues.

EAST MOUNTAIN DRIVE PUMP STATION LETTER

The Engineering Manager explained that the District had been negotiating with the Burden Trust for additional funding to cover costs above the initially agreed estimate. He said that at the last Board meeting the Board had approved the project contingent upon the Burden Trust funding an additional $70,000 in construction costs over the original engineer’s estimate of $330,000, with the District funding the purchase of an emergency generator in the estimated amount of $40,000. He said that the Burden Trust did not believe that this was an equitable sharing of the project costs and requested additional information from the District on the costs above the agreed $330,000. Further discussions were held between the District and Burden Trust about sharing the costs equally, and the District Engineer recommended the District agree to split the total estimated additional project expense of $110,000 by funding $55,000 (which would be $15,000 in addition to the generator). Mr. Kelly was to have a formal written response by Friday, July 10, 1998 confirming that the Burden Trust would fund the remaining $55,000. A motion was made by Director Wilson to approve the award of bid and notice to proceed to Lash Construction, the qualified low bidder for the East Mountain Drive Pump Station project, subject to the following:

1. Receipt of formal written notice from the Burden Trust confirming their commitment to pay an additional $55,000 for the construction of the East Mountain Drive pump station. The $55,000 includes one half payment for the combined $70,000 bid cost increase and the $40,000 estimated generator cost.

2. Approve and allocate District funding for one half share of the total estimated $110,000 increasing the District’s commitment by $15,000 to the construction of the East Mountain Drive pump station. The previous additional commitment by the District for this project is noted to include the procurement of the emergency generator. All funds allocated towards this project by the District will be taken from the 1998A bond capital program. The motion was seconded by Director Abel and unanimously carried.

MINUTES OF JUNE 18 AND JUNE 23, 1998 BOARD MEETINGS

There were several suggested changes to the minutes of June 18, 1998. A motion was made by Director Wilson, seconded by Director Abel and unanimously carried to approve the minutes of June 18, 1998 as amended. There were several suggested changes to the minutes of June 23, 1998. A motion was made by Director Wilson, seconded by Director Jones and unanimously carried to approve the minutes of June 23, 1998 as amended.

WATER PRODUCTION REPORT FOR JUNE

The Board reviewed the water production report for June which was 461 AF.

REPORT ON DISTRIBUTION UPGRADE PROJECTS

The Board reviewed the report on the Distribution System and Fire Flow Upgrade and Capital program. It was noted that this was the staff’s proposal on how to report the water availability charge program and general expenditures for the main proposal program. Progress is listed in dollars. The Engineering Manager said that progress is listed in dollar amount but that it the Board so chooses he could show it in percent of completion on the report.

MONTECITO ASSOCIATION REPORT

Director Wilson said that the Montecito Association had not yet met but that the July 4th festivities were very successful.

RATIFICATION OF AWARD OF BID FOR RAISING VALVE CANS
FOLLOWING PAVING OF EAST VALLEY ROAD

The Engineering Manager reported that the recent paving by CALTRANs had buried about 90 District valves and that the District needed to raise these valves immediately in the case of a main break. A motion was made by Director Jones, seconded by Director Abel and unanimously carried to authorize a contract for the readjustment of valve cans along the recently paved Highway 192 to Blois Construction in the amount of $16,200. The recent paving project also affected the Montecito Sanitary District and both Districts agreed to share in the responsibility of providing traffic control.

REPORT ON FINAL STORM 1995 FEMA REIMBURSEMENT

The Business Manager reported that the final payment had been received by FEMA for the 1995 storm damages. The total received was $166,000.

REPORT ON 1998 STORM DAMAGE FEMA REIMBURSEMENT

The Board reviewed the 1998 storm damage report. President Puddicombe said that the Greenwell main was already completed and that the pipeline would be in service the following day.

REPAYMENT OF SBB&T TRUST LOAN

The Business Manager explained that the District 1998A bonds had been issued which interest charges lower than the SBB&T loan. In order to avoid additional commitment fees to SBB&T, this loan should be repaid. A motion was made by Director Wilson, seconded by Director Abel and unanimously carried to refinance the Santa Barbara Bank & Trust loan totaling $465,698.50, including accrued interest, with funds from the 1998A Bond project funds since both borrowing were earmarked for the main replacement program.

DRAFT RECOVERY PLAN FOR ARROYO TOAD

The Engineering Manager reported that the Draft Recovery Plan for the Arroyo Toad was completed. Counsel Wullbrandt asked the Board for authorization to consult with Jean Baldrige on this plan and that he would get an estimate of the costs for appropriation. A motion was made by Director Wilson, seconded by Director Abel and unanimously carried to get a proposal from Jean Baldrige to prepare comments on this plan and return to the Board with that proposal for appropriation of funds.

RATIFICATION OF DOWNSIZING BARKER PASS
PUMP STATION IMPROVEMENTS

The Engineering Manager said that he would like approval to modify the Barker Pass pump station improvement project and that the estimated cost was now $30,000 as opposed to the original estimate of $180,000. He said that with other improvements being made at Romero Reservoir, the pumping capacity would still remain high. He said that the District would eliminate the confined space concerns at the Barker Pass pump station with the improvements. A motion was made by Director Wilson, seconded by Director Puddicombe and unanimously carried to approve the downsizing of the Barker Pass pump station.

REPORT ON CHALLENGE SHARE AGREEMENT WITH USFS

The report on the Challenge Share Agreement with the U.S. Forest Service was continued until the August 4, 1998 Board meeting. Director Abel asked for a staff report on the current agreement and what the Forest Service had agreed to perform and what the District has received.

SWEEP AUTHORIZATION FOR 1998A BONDS TRUST ACCOUNT

The Business Manager explained that the Sweep authorization was to authorize the Trustee to invest funds that are not invested in LAIF. A motion was made by Director Wilson, seconded by Director Puddicombe and unanimously carried to authorize the U. S. Trust Company of California, N.A. to invest any cash in the "Federated Securities Corporation Fund."

MEMBERSHIP IN MONTECITO ASSOCIATION

A motion was made by Director Wilson, seconded by Director Jones and unanimously carried to approve that the District continue to support the Montecito Association by renewing its annual membership at the Guardian level of $250 for 1998.

VERBAL REPORT ON MEETINGS

CCWA MEETING OF JUNE 25, 1998

President Puddicombe reported on the recent CCWA meeting and stated that there was a written report for CCWA included in the Board packet.

LAFCO MEETING OF JULY 2, 1998

Director Campbell was not present to give a report on the LAFCO meeting of July 2, 1998.

COMMITTEE REPORTS

OPERATIONS

President Puddicombe said that there was no Operations Committee meeting to report on.

FINANCE

Director Wilson stated that the Finance Committee had met and all topics had been covered on the agenda already.

PUBLIC INFORMATION

Director Abel reported on the ACWA Board meeting at Region 5. She said that a joint meeting of Regions 5 & 7 is being planned and that this meeting will be of interest because the topics will include those pertaining to primarily urban and agricultural districts.

WATER MARKETING

President Puddicombe said that the Water Marketing committee had not met.

WATER AVAILABILITY CHARGE PUBLIC MEETING SCHEDULE

There was a discussion on whether to change the public meeting on the Water Availability Charge from July 21, 1998 because Directors Puddicombe and Campbell will be unavailable for this meeting. The Board concluded the date should not be changed. So the date was kept.

CLOSED SESSION

The Board went into closed session at 5:30 p.m concerning Carpinteria County Water District, et al v. Department of Water Resources.. When the Board returned to open session at 5:46 p.m. it was stated that direction had been given to Counsel concerning settlement of the District’s lawsuit with DWR.

ADJOURNMENT

The meeting was adjourned at 5:46 p.m.

Respectfully submitted,

___________________________
Evalyn S. Kerman, Asst. Secretary

Approved:

____________________________
Robert W. Puddicombe, President

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

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