MPRWA Agenda Packet 03-27-14

8/12/2019 MPRWA Agenda Packet 03-27-14

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AgendaMonterey Peninsula Regional Water Authority (MPRWA)

Regular Meeting

5:30 PM, Thursday, March 27, 2014

Seaside City Hall440 Harcourt Ave

Seaside, California

ROLL CALL

PLEDGE OF ALLEGIANCE

REPORTS FROM BOARD DIRECTORS AND STAFF

PUBLIC COMMENTSPUBLIC COMMENTS allows you, the public, to speak for a maximum of three minutes on anysubject which is within the jurisdiction of the MPRWA and which is not on the agenda. Any personor group desiring to bring an item to the attention of the Authority may do so by addressing theAuthority during Public Comments or by addressing a letter of explanation to: MPRWA, Attn:Monterey City Clerk, 580 Pacific St, Monterey, CA 93940. The appropriate staff person will contactthe sender concerning the details.

AGENDA ITEMS

1. Consider Taking A Position on Monterey Peninsula Water Management District Measure"O" (Discussion/Action) - Staff

ADJOURNMENT

The Monterey Peninsula Regional Water Authority is committed to include the disabled in all ofits services, programs and activities. For disabled access, dial 711 to use the California RelayService (CRS) to speak to staff at the Monterey City Clerks Office, the Principal Office of theAuthority. CRS offers free text-to-speech, speech-to-speech, and Spanish-language services24 hours a day, 7 days a week. If you require a hearing amplification device to attend ameeting, dial 711 to use CRS to talk to staff at the Monterey City Clerks Office at(831) 646-3935 to coordinate use of a device or for information on an agenda.

Agenda related writings or documents provided to the MPRWA are available for publicinspection during the meeting or may be requested from the Monterey City Clerks Office at 580Pacific St, Room 6, Monterey, CA 93940. This agenda is posted in compliance with CaliforniaGovernment Code Section 54954.2(a) or Section 54956.


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Monterey Peninsula Regional Water AuthorityAgenda Report

Date: March 27, 2014

Item No: 1.

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FROM: Executive Director Cullem

SUBJECT: Consider Taking A Position on Monterey Peninsula Water Management District

Measure "O" (Discussion/Action)

RECOMMENDATION:

It is recommended that the Monterey Peninsula Regional Water Authority (MPRWA) discuss,revise and/or vote on Resolution 2014-02 which pertains to Measure O.

DISCUSSION:

At its meeting of March 13, 2014, the Water Authority discussed the subject of the acquisition of

Cal Am assets by a public agency, in particular, whether or not the Authority wanted to

commission a study of the issue in advance of a decision on taking a position on Measure O

(attached?????) which will be before the voters on June 3, 2014.

After much public testimony and discussion, the Water Authority concluded the issue to be

appropriate for its consideration in light of section 2.2 of the Joint Exercise of Powers

Agreement because of the measures potential impact upon the timely completion of the

Monterey Peninsula Water Supply Project (MPWSP). Furthermore, the Authority determined

that there was insufficient time to complete a study and that the members of the Authority had

sufficient knowledge of the issue to enable them to take a position on Measure O.

The Water Authority considers the MPWSP to be the best option available to satisfy State Water

Resources Control Board Cease and Desist Order CDO 2009-60, which requires Cal-Am to

reduce its water extraction from the Carmel River by two-thirds no later than December 31,

2016.

The Water Authority considered the two most pertinent arguments in favor of Measure O,

namely an assumed lower cost of water to ratepayers, and more responsive and transparentgovernance expected with a publically owned water agency.

The Authority also considered the two most significant arguments against Measure O, namely,

now is not the time, and Cal Am has indicated its assets are not for sale.

During its discussions on March 3rd, the Authority noted that it is not opposedto the eventual

public ownership of Cal-Am assets, however now is a particularly bad time to force the issue.


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The Community is currently seeking a two-year extension of the CDO deadline. Unfortunately,

Measure O may set up a costly and divisive confrontation between and amongst the various

private and governmental groups that labored last year to craft the two Settlement Agreements

now before the CPUC.

Unfortunately, the CPUC and the State Water Resources Control Agency, in light of their

sensitivity to any implication that public or political support for the MPWSP might be

fragmenting, could easily use Measure O as an excuse not to approve the CDO deadline

extension, arguing that the Peninsula still cannot come to agreement on a water solution.

The Authority also noted that a takeover of Cal Am assets, especially if contested, will take

years to accomplish. In the interim, a contested takeover is likely to negatively impact bond

funding in the commercial markets, significantly increasing the costs of financing the Desal

facilities.

Following its deliberations on March 3

rd

, the Water Authority expressed opposition to MeasureO, particularly because of its bad timing, and directed staff to return the issue for a Board

decision at its next meeting.

ATTACHMENT:

1. DRAFT Resolution 2014-02

2. Full Text of Measure O

3. Public Comment Received


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MPRWA RESOLUTION NO. 14-___

A RESOLUTION OF THEMONTEREY PENINSULA REGIONAL WATER AUTHORITY

EXPRESSING OPPOSITION TO MEASURE O, THE MONTEREY PENINSULA

WATER SYSTEM LOCAL OWNERSHIP AND COST SAVINGS INITIATIVE

WHEREAS, the purpose of the Monterey Peninsula Regional Water Authority(MPRWA) is to ensure the timely development, financing, construction, operation,repair, and maintenance of one or more Water Projects and to ensure governance thatis directly accountable to the water users; and

WHEREAS,timely development means that a safe and reliable supply of water isavailable to replace water supplies lost because of the Seaside Basin Decision, and dueto State Water Resources Control Board WR Order 2009-60 which requires CaliforniaAmerican Water Company (Cal Am) to reduce its pumping from the Carmel River Basin

by approximately two thirds (2/3) by December 31, 2016; and

WHEREAS, the MPRWA has actively participated in crafting delicatecompromises in the settlement agreements between and amongst numerousinterveners in the California Public Utilities Commission (CPUC) consideration of Cal-Am application A.12-04-019 which proposes to build a Monterey Peninsula WaterSupply Project (MPWSP) including a desalination plant (desal); and

WHEREAS, regulatory and legal restraints preclude the completion on theMPWSP by December 31, 2016 necessitating an extension of the Cease and Desistorder (CDO) deadline in order to avoid devastating State-mandated water rationing thatis projected to result in the loss of approximately $1 billion in economic activity and 6000

jobs within Monterey County; and

WHEREAS, the State Water Resources Board staff has expressed itsunwillingness to support an extension unless the Monterey Peninsula community,residents, businesses, agencies, and Cal Am remain united and committed to theMPWSP since it is the best opportunity the community has ever had to secure timelydevelopment of a water project; and

WHEREAS,Senate Bill (SB) 936, special legislation to greatly reduce costs tothe ratepayers by halving Cal Ams equity position in the desal plant and providingpublic funding for the project, is sensitive to any indication that the community isfragmenting in its support for the MPWSP; and

WHEREAS, unity of effort requires the Monterey Peninsula Water ManagementDistrict (MPWMD) and Cal Am to work closely together, especially through theGovernance Committee, to secure project approvals and funding, and to ensuregovernance that is directly accountable to the ratepayers; and


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WHEREAS, Measure O provides no methodology for timely development of awater project, provides no source of financing for a takeover of Cal Ams system,speculates that a takeover is certain to result in less expensive water and fails to allowratepayers an opportunity to vote for or against a takeover once actual costs have beenestablished; and

WHEREAS, Measure Os timing could not have been worse as it is a divisiveissue that may disrupt the MPWSP settlement process and poses a high probability ofunraveling cooperation between the MPWMD and Cal Am, undermining theGovernance Committee, and dividing the community; and

WHEREAS,pursuit of a Cal Am takeover at this critical time is likely to furtherconvince the State Water Resources Control Board that the Peninsula Cities will neverbe able to resolve their water problems making an extension of the December 31, 2016CDO deadline ever more difficult to obtain; and

WHEREAS, the possible acquisition of Cal Am assets should be pursued in aless confrontational manner than required by Measure O and initiated only after theMPWSP is fully operational.

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors of theMPRWA takes a position opposed to Measure O based upon the findings outlinedabove.

PASSED AND ADOPTED BY THE MONTEREY PENINSULA REGIONALWATER AUTHORITY this ____day of ____ 2014, by the following vote:

AYES: 0 DIRECTORS:NOES: 0 DIRECTORS:ABSENT: 0 DIRECTORS:ABSTAIN: 0 DIRECTORS:

APPROVED:

ATTEST:

Chuck Della Sala, President

Clerk to the Authority


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DISCLAIMER: THIS IS THE TEXT SUBMITTED BY PUBLIC WATER NOW TO

THE MONTEREY COUNTY ELECTIONS DEPARTMENT AND DOWNLOADED

FROM THE PUBLIC WATER NOW WEBSITE.

TITLE: THE MONTEREY PENINSULA WATERSERVICE LOCAL OWNERSHIP AND COSTSAVINGS INITIATIVE

To the Board of Directors of the Monterey Peninsula Water

Management District:We, the undersigned, registered and qualified voters of the Monterey

Peninsula Water Management District (District), present to the Board

of Directors this petition and request that the following proposed

Ordinance (Measure) be submitted to the registered and qualified

voters of the District for their adoption or rejection at the earliest regular

or special election for which it qualifies pursuant to Section 1405 of the

California Elections Code. The full text of the Measure is as follows:

The people of the Monterey Peninsula Water Management District doordain as follows:Title: The Monterey Peninsula Water System Local Ownership and

Cost Savings InitiativeSection IName

This Measure shall be designated as the Monterey Peninsula WaterSystem Local Ownership and Cost Savings Initiative.Section IIPurpose


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The purpose of the Measure is to ensure the long-term sustainability,

reliability, cost-effectiveness and quality of water service within the

Monterey Peninsula Water Management District as a whole, to lower

the cost of monthly service to rate-payers, to promote sound water

management measures, and to establish public ownership of watersystem assets, by establishing regulations requiring the District to take

affirmative action, to the extent financially feasible, to acquire the water

system assets owned and operated by the California American Water

Company that currently provide water service to the District and its

ratepayers.Section IIIFindings1. Water service in the Monterey Peninsula is currently supplied by

the California American Water Company (Cal Am), a private, investor-

owned utility that acquired the current water system beginning in 1966.2. Due in substantial part to Cal Ams long history of failure in

responsibly developing and competently managing the water resources

under its control, the Monterey Peninsula currently suffers from an

insufficient and unreliable supply of potable water. In 1995, for

example, the State Water Resources Control Board ordered Cal Am to

cease diverting water from the Carmel River after years of irresponsible

over-pumping and unlawful diversions. Likewise, in 2007 a State

Superior Court ordered Cal Am to restrict its pumping from the Seaside

Groundwater Basin in an effort to protect the aquifer from over-drafting

by Cal Am. Moreover, under Cal Ams ownership and management, the

San Clemente Dam water storage facility has deteriorated to the extent

that it is now useless and will be removed at the ratepayers expense.3. Cal Am has initiated three new water supply projects since the

1990s, all of which have failed, most recently in 2011. As a result,

stranded costs in excess of $35 million have been incurred and

approved by the California Public Utilities Commission (CPUC) to be


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passed on to current ratepayers. None of these stranded costs have

been assumed by Cal Am or its investors.4. Cal Am ratepayers have historically endured paying rates for

water service that far exceed the state average. In fact, Cal Ams ratesare among the highest in the state for service populations of

comparable size. They are also extremely unpredictable: from mid-

2010 to mid-2013 Cal Am added new water charges over 25 times, an

average of once every 45 days. Over the same period, Tier 2 and Tier

3 residential rates increased 117 percent, or about 35 percent each

year. Rapidly changing and increasing rates alarm ratepayers, with no

relief in sight.5. As a result of CPUC regulatory practices, Cal Am can only

increase its profits based on how much money it invests. This

investment return-based model inherently shortchanges ratepayers by

giving Cal Am little or no incentive to pursue viable non-revenue

generating alternatives to develop or enhance water supply in Monterey

Peninsula.

6. Approximately 85 percent of the nations water service

consumers receive their water from public water providers. According

to a national survey conducted by Food and Water Watch, customers of

for-profit water companies pay on average 33 percent higher rates for

service than customers of public providers.

7. The ratepayers overriding urgent need for new reliable and

affordable water sources is best met through the Monterey Peninsula

Water Management District (District), whose primary duty is to benefit

the citizens of the District, and not the profitability each projectrepresents to the investors of a for-profit water monopoly.8. The District was established in 1977 by the Monterey Peninsula

Water Management District Law (District Law), which charges the

District with the integrated management of the ground and surface


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water resources in the Monterey Peninsula area. The District retains

broad powers under the District Law to do any and every lawful act

necessary in order that sufficient water may be available for the present

or future beneficial use or uses of the lands or inhabitants within the

district.

9. The District Law likewise grants the District broad powers to

acquire public or private water systems necessary or proper to carry out

the purposes of the Law, and expressly grants the District the power of

eminent domain to do so.10. The voters of the District assert that the District should, as soon

as practicable and to the extent permitted by law, pursue the acquisitionof Cal Ams water system assets and infrastructure in order to deliver

maximum value to ratepayers in perpetuity. Such public ownership of

the water system not only will remove Cal Ams current for-profit,

investor-driven bias, but will also eliminate the excessive fees, costly

procedures, and burdensome jurisdictional control of the CPUC over

water service on the Monterey Peninsula.Section IV An Ordinance of the Monterey Peninsula Water

Management District.The following Rule 19.8 shall be added to theMonterey Peninsula

Water Management District, Rules and Regulations, Regulation I,

General Provisions:Rule 19.8. Policy of Pursuing Public Ownership of Monterey Peninsula

Water SystemA. It shall be the policy of the District to establish and maintain

public ownership of all water delivery system assets and infrastructure

within its territory, and therefore to acquire, if economically feasible,

preferably through negotiation but through eminent domain if necessary,

all assets of Cal Am, or any successor in interest to Cal Am, within the


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Districts territory, as soon as reasonably practicable for the benefit of

the District as a whole.B. In furtherance of this policy the General Manager shall, within

nine (9) months of the effective date of this Rule 19.8, complete andsubmit to the Board of Directors for acceptance, a Feasibility Analysis

and Acquisition Plan for the acquisition, long-term ownership, and

management by the Monterey Peninsula Water Management District of

Cal Ams assets that provide water service within the District that

together develop, store, transmit and deliver potable water to all users

within District, including but not limited to the following assets: extraction

wells; injection wells; pump stations; piping; storage tanks and

reservoirs; meters and other connections; administrative offices andsupport buildings; rolling vehicle stock; maintenance and operational

equipment (hereafter collectively referred to as the Water System

Assets).

The Feasibility Analysis and Acquisition Plan shall include, but

not necessarily be limited to, the following components.i. An estimate of the costs of acquisition of the Water

System Assets based on an appraisal of their fair market value, together

with any associated legal and administrative costs.ii. A projection of the annual capital and operating costs,

revenues, and savings to ratepayers that would result from the Districts

ownership and management of the Water System Assets.iii. An identification of all potential sources of funds

sufficient to acquire the Water System Assets at the estimatedacquisition cost, including revenue bonds, notes, levies, fees, taxes, and

any other source that the District is authorized by law to procure.

iv. A statement, based on findings of fact set forth in the

body of the Feasibility Analysis and Acquisition Plan, of whether the


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ratepayers within the District as a whole will realize a long-term net

benefit from the Districts acquisition of the Water System Assets, both

in terms of cost-effectiveness and in terms of long term service

reliability.v. A determination, based on the appraised fair market

value of the Water System Assets reported in the Feasibility Analysis

and Acquisition Plan, of the total amount that would constitute just

compensation for the Water System Assets if acquired by the District.vi. A list of tasks or steps that the District, acting through its

Board, the General Manager or other staff or consultants, would be

required by law to take in order to acquire the Water Systems Assetsthrough the exercise of its eminent domain power or otherwise, together

with an estimate of the amount of time required to carry out each task or

step, as well as the associated administrative costs associated with the

carrying out each task or step.C. If the final accepted Feasibility Analysis and Acquisition Plan

concludes that the acquisition and long-term management of the Water

System Assets by the Monterey Peninsula Water Management District

is both feasible and beneficial to ratepayers within the District as a

whole, then the Board shall, as soon as practicable, take all necessary

and proper actions consistent with its powers under the District Law, the

Eminent Domain Law, and any other applicable law or regulation, for the

Monterey Peninsula Water Management District to acquire the Water

System Assets through a negotiated purchase and sale agreement if

possible, or otherwise through eminent domain.

Section V Modification Only By Vote of the PeopleNo provision of this Measure shall be changed, amended, or repealed

except by a vote of the People.Section VI Effective Date; Application.


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The provisions of this Measure shall take effect immediately upon

certification of its passage by the appropriate Election Official. Pending

actions or proposals otherwise governed by this Initiative that have been

initiated by the Board of Directors of the District, but that are not yet final

as of the effective date, or that are the subject of pending legalchallenge, shall be subject to the provisions of this Measure.

Section VII SeverabilityThis Measure shall be broadly construed in order to achieve the

purposes stated in this Measure. If any section, sub-section, sentence,

clause, phrase, part, or portion of this Measure is held to be invalid or

unconstitutional by a final judgment of a court of competent jurisdiction,such decision shall not affect the validity of the remaining portions of the

Measure. The voters of the Monterey Peninsula Water Management

District hereby declare that this Measure, and each section, sub-section,

sentence, clause, phrase, part, or portion thereof would have been

adopted or passed even if one or more sections, sub-sections,

sentences, clauses, phrases, parts, or portions are declared invalid or

unconstitutional. If any provision of this Measure is held invalid as

applied to any person or circumstance, such invalidity shall not affect

any application of this Measure that can be given effect without theinvalid application.

Section VIII Conflicting Ballot MeasuresIn the event that this Measure and another measure or measures

relating to the same or similar subject matter shall appear on the same

election ballot, the provisions of the other measures shall be deemed in

conflict with this measure. In the event that this Measure shall receive agreater number of affirmative votes, the provisions of this Measure shall

prevail in their entirety, and the provisions of the other measure or

measures shall be null and void.


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L esle y M il to n -P ubli c W ate r N ow

F rom : ShernaStewart


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From lorence Roberts


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MPRWA Agenda Packet 03-27-14

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