Agenda

Monterey Peninsula Regional Water Authority (MPRWA)

Director's Meeting

7:00 PM, Thursday, January 11, 2018

Council Chambers
580 Pacific Street, Monterey
Monterey, California

CALL TO ORDER

ROLL CALL

PLEDGE OF ALLEGIANCE

REPORTS FROM BOARD DIRECTORS AND STAFF

PUBLIC COMMENTS
PUBLIC COMMENTS allows you, the public, to speak for a maximum of three minutes on any
subject which is within the jurisdiction of the MPRWA and which is not on the agenda. Any person
or group desiring to bring an item to the attention of the Authority may do so by addressing the
Authority 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 contact
the sender concerning the details.

CONSENT AGENDA
CONSENT AGENDA consists of those items which are routine and for which a staff
recommendation has been prepared. A member of the public or MPRWA Director may request
that an item be placed on the regular agenda for further discussion

1. Approve Minutes from June 22, 2017 - Romero

2. Approve Minutes from September 18, 2017 - Romero

3. Approve Minutes from November 11, 2017 - Romero

4. Approve Minutes from December 14, 2017 - Romero

5. Approve and File Authority Checks Through December 31, 2017 - Romero/Cullem

6. Receive the Audit Report for FY 2016-2017 and Authorize an Extension of the Audit
Contract with McGilloway, Ray, Brown, & Kaufman for FY 2017-2018 and FY 2018-2019 -
Cullem

***End of Consent Agenda***

 Thursday, January 11, 2018

AGENDA ITEMS

7. Receive an Update on the Summary Project Schedule for the Monterey Peninsula Water
Supply Project, Status of Test Well Operation and Pipeline Construction - Cook

8. Receive Report, Discuss, and Provided Direction on Issues Being Discussed at the
Settlement Meetings - Cullem

9. Receive Report, Discuss, and Approve an Increase in the FY 2017-2018 Budget to

Provide for Additional Special Counsel Services and Technical Support Services and
Authorize Utilization of Not-to-Exceed $40,000 from the Reserve Account - Cullem

ADJOURNMENT

The City of Monterey is committed to including the disabled in all of its services, programs and
activities. In compliance with the Americans with Disabilities Act, if you need special assistance
to participate in this meeting, please contact the City Clerk’s Office at (831) 646-3935.
Notification 30 hours prior to the meeting will enable the City to make reasonable arrangements
to ensure accessibility to this meeting [28 CFR 35.102-35.104 ADA Title II]. Later requests will
be accommodated to the extent feasible. For communication-related assistance, dial 711 to use
the California Relay Service (CRS) to speak to City offices. CRS offers free text-to-speech, speech-
to-speech, and Spanish-language services 24 hours a day, 7 days a week. If you require a hearing
amplification device to attend a meeting, dial 711 to use CRS to talk to the City Clerk's Office at
(831) 646-3935 to coordinate use of a device.

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

2
 M I N U TE S
MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA)
Director's Special Meeting
7:00 PM, Thursday, June 22, 2017
MONTEREY COUNCIL CHAMBERS
580 PACIFIC STREET, MONTEREY
MONTEREY, CALIFORNIA

Directors Present: Director Carbone, Director Edelen, President Kampe, Director Roberson
Directors Absent: Director Dallas, Director Rubio

Staff Present: Legal Counsel Don Freeman, Exective Director Cullem, Clerk Romero

CALL TO ORDER

President Kampe called the meeting to order at 7:00 pm.

ROLL CALL

PLEDGE OF ALLEGIANCE

REPORTS FROM BOARD DIRECTORS AND STAFF

Executive Director Cullem said that the Technical Advisory Committee (TAC) hasn't had a
meeting in a few months while they are waiting for Geosyntec's analysis of the draft
environmental impact review (DEIR) comments.

PUBLIC COMMENTS

None

PUBLIC COMMENT:

• George Riley, TAC Member, said that he has suggestions based on Russ McGlothlin's
recommendations for the Authority to address. His recommendations were distributed to
the board as public comment.

• Tom Rowley, Monterey Peninsula Taxpayers Authority (MPTA), spoke about a water
user fee instituted by the Water Management District, and in return receives a kickback
from California American Water (Cal Am) for charging these fees.

• Ron Chessire, resident, said he sat on the water management district years ago and at
that time they discussed water needs but things have changed since then. He
encouraged the Authority to think about the needs of the community.
 MPRWA Minutes Thursday, June 22, 2017

CONSENT AGENDA

1. Staff requests Board input on possible disputed issues with respect to the Cal Am application
for the Monterey Peninsula Water Supply Project (MPWSP), as requested by the CPUC ALJ,
and authorization for the President and Vice-President to represent the Board in discussions
and/or negotiations with other interveners in seeking additional settlement agreements or in
preparing one or more Joint Statements of Issues
Action: Authorized President and Vice President to represent the Board in discussions
and/or negotiations with other interveners in seeking additional settlement agreements
or in preparing one or more Joint Statements of Issues

President Kampe said that the Administrative Law Judge (ALJ) for the California Public Utilities
Commission proceeding for the Monterey Peninsula Water Supply Project (MPWSP) has
issued an order requesting that the intervening parties identify issues for a further evidentiary
hearing, which will be held before June 30, and the comment period will end July 11. He
reported the ALJ has identified the following subjects as those potentially needing further
evidentiary submission:

Ø Cost estimates

Ø Financing details

Ø Demand forecasts and project sizing

Ø Solar panels as a project power supply

Ø Feasibility of modularizing elements of the project

He continued that Special Legal Counsel, Russ McGlothlin, has given recommendations for the
Authority to address which are outlined in attachment 3 of the packet. Executive Director
Cullem requested that the Authority give input and allow the President and Vice President to
represent the Authority in all future discussions and or negotiations.

Director Edelen said he supports the President and Vice President to represent the Authority
and submit testimony to the CPUC. He suggested starting off with a statement about the
negative effects of not having the water supply project, then state why it's so important so the
CPUC will see that the goal is to secure a water supply for the Peninsula. Director Roberson
agreed that the President should represent the Authority, but said he is perplexed why the
CPUC ALJ is bringing up issues with the MPWSP. He questioned why the issues aren't being
addressed by the DEIR comments. President Kampe clarified that the issues the ALJ wants
addressed are not environmental issues, which are covered by the DEIR. He added that the
ALJ is trying to do his due diligence to have the contending parties to speak to each other.

Legal Counsel Freeman said that the ALJ wants to compile all of the information now to prevent
issues down the road (7:28pm). Director Roberson commented that it sounds as though the
ALJ is trying to avoid potential lawsuits by getting information up front.

President Kampe said it's important for the MPRWA to have a voice for the public on the issues
that the ALJ is requesting additional information on. Director Roberson asked if the ALJ wants a
unified response from the settling parties, and President Kampe confirmed this.

Monterey Peninsula Regional Water Authority

Director's Meeting Minutes - Thursday, June 22, 2017
2
MPRWA Minutes Thursday, June 22, 2017

PUBLIC COMMENTS:

• Tom Rowley, MPTA, said he heard the EIR will not be approved until December. He
said that he agrees with the ALJ wanting to get as much information to prevent lawsuits.
He said that the Authority should make their voice be heard and participate in this
process.

On a motion by Director Edelen, seconded by Director Carbone, and carried by the following
vote, the Monterey Peninsula Regional Water Authority Authorized the President and Vice-
President to represent the Board in discussions and/or negotiations with other interveners in
seeking additional settlement agreements or in preparing one or more Joint Statements of
Issues with respect to the Cal Am application for the Monterey Peninsula Water Supply Project
(MPWSP), as requested by the CPUC ALJ,:

AYES: 4 DIRECTORS: Carbone, Edelen, Roberson, Kampe

NOES: 0 DIRECTORS: None
ABSENT: 2 DIRECTORS: Dallas? Rubio?
ABSTAIN: 0 DIRECTORS: None
RECUSED: 0 DIRECTORS: None

ADJOURNMENT

President Kampe adjourned the meeting in honor of Ron Pasquale at 7:41pm.

ATTEST:

Nova Romero, Clerk of the Authority MPRWA President

Monterey Peninsula Regional Water Authority

Director's Meeting Minutes - Thursday, June 22, 2017
3
 M I N U TE S
MONTEREY PENINSULA REGIONAL WATER AUTHORITY (MPRWA)
Director's Meeting
7:00 PM, Thursday, November 9, 2017
COUNCIL CHAMBERS
580 PACIFIC STREET, MONTEREY
MONTEREY, CALIFORNIA

Directors Present: Director Carbone, Director Dallas, Director Edelen, Director Roberson,
Director Rubio, President Kampe
Directors Absent: None

Staff Present: Executive Director Cullem, Legal Counsel Freeman, Clerk Romero

CALL TO ORDER

ROLL CALL

All Directors present.

PLEDGE OF ALLEGIANCE

REPORTS FROM BOARD DIRECTORS AND STAFF

Executive Director Cullem note there was an additional invoice from Special Legal Counsel
Brownstein, an updated check amount total was distributed at the dais. He also stated that in
the agenda report for Item #5 the cease and desist order (CDO) number should be corrected to
"CDO 2016-0016". President Kampe announced that he attended the California Public Utilities
Commission (CPUC) hearings.

PUBLIC COMMENTS

• Tom Rowley, Monterey Peninsula Taxpayers Association (MPTA), said that the joint
meeting with Monterey Peninsula Water Management District (MPWMD) and MPRWA
was very enlightening, especially the comments from the public and from the board
members. He said he'd like to see representatives from all cities on the water
management board be involved.

CONSENT AGENDA

1. Approve Minutes from August 10, 2017

On a motion by Director Edelen, seconded by Director Carbone, and carried by the following
vote, the Monterey Peninsula Regional Water Authority Approved the Consent Agenda, with the
typographical correction to item #5:

AYES: 6 DIRECTORS: Carbone, Dallas, Edelen, Roberson, Rubio, Kampe

NOES: 0 DIRECTORS: None
ABSENT: 0 DIRECTORS: None
ABSTAIN: 0 DIRECTORS: None
RECUSED: 0 DIRECTORS: None
 MPRWA Minutes Thursday, November 9, 2017

2. Approve and File Authority Checks Through October 31, 2017

Action: Approved

3. Receive Copies of Testimony Presented to the California Public Utilities Commission (CPUC)
by the Water Authority and by Monterey One Water (Previous PCA) in October and November
2017
Action: Received report

4. Receive Update on the CPUC Schedule

Action: Received update

***End of Consent Agenda***

AGENDA ITEMS

5. Receive Report and TAC Input, Discuss, and Provide Staff Direction on the Marina Coast Water
District (MCWD) Letters to the Monterey Peninsula Water Management District (MPWMD) and
the Seaside Groundwater Basin Water Master on Sept 27, 2017 Concerning Possible Sale of
MCWD Water to Assist in Meeting CDO 2016-0060 Requirements
Action: Received report and TAC input; discussed; came to a consensus that the
MPWSP will continue to be supported as a long term solution but stay open to other
options if they do not hinder the progress of the desal plant.

President Kampe opened up public comment on item #5.

PUBLIC COMMENT:

• Norm Groot, Executive Director of the Monterey Farm Bureau, commented on a number
of issues with the source water anticipated for Pure Water Monterey (PWM) expansion.
He said he will email his comments to the board.

• Tom Rowley, MPTA, said there is shortage of water in the north end of the County.

• Gary Cursio, Monterey County Hospitality Association, voiced his opinion that the water
supply portfolio must include adequate size desal plant, despite what other activists may
believe. He said he hopes the Authority will help move the project forward.

• Paul Bruno, resident, said he hopes that the Authority continues to stay on track toward
the desal plant construction and not get sidetracked by other projects.

• Jodi Hansen, resident, thanked the Authority for their support of the water project
portfolio and would like to see the desal project continue to move forward.

• John Narigi, Chair of Coalition of Peninsula Businesses, said that the Marina Coast
Water District (MCWD) has the most to gain if the desal plant never happens and are
doing their best to stop the project from happening. He added that the only guaranteed
source of water is the desal plant and has a long term solution.

• Ian Crooks, Cal Am, said there is not enough source water to expand PWM or to meet
the demand. He said that MPWMD thinks that the amount of water in 2014 is the
amount that the peninsula needs for the next 40 years which is short sighted.

Monterey Peninsula Regional Water Authority

Director's Meeting Minutes - Thursday, November 9, 2017
2
 MPRWA Minutes Thursday, November 9, 2017

Russ McGlothlin, Special Legal Counsel, was called via speakerphone and gave an overview of
the sale of MCWD water and his opinion on how to proceed with the offer. He said there is risk
with every option, but it's beneficial to listen to the other options with MCWD, and noted there is
support from the CPUC to expand PWM.

President Kampe said that if there is a possibility of an expansion of PWM and sale of water by
MCWD the Authority is open to hearing about those options as long as it doesn't hinder the
desal project.

Legal Counsel Freeman added that the goal of these discussions should be that MCWD won't
litigate and that be clearly negotiated. MCWD must agree to not litigate to derail the "3 legged
stool" portfolio approach to the water supply project.

Direction was given to staff, no formal motion or vote made on this item.

6. Receive an Update on the Summary Project Schedule for the Monterey Peninsula Water
Supply Project, and Status of Test Well Operation and Pipeline Construction
Action: Received update; discussed

Chris Cook gave an update on the MPWSP, test wells, and the pipeline construction. He
answered questions of the board.

PUBLIC COMMENT:

• Tom Rowley, MPTA, said that he would still like to hear the real cost of Ground Water
Replenishment (GWR).

• Ian Crooks, Cal Am, PWM costs provided by the Pollution Control Agency (PCA) are not
the true cost because it doesn't factor in water delivery.

ADJOURNMENT

President Kampe adjourned the meeting at 8:59pm.

ATTEST:

Nova Romero, Clerk of the Authority MPRWA President

Monterey Peninsula Regional Water Authority

Director's Meeting Minutes - Thursday, November 9, 2017
3
Monterey Peninsula Regional Water Authority Date: January 11, 2018
Agenda Report Item No: 5.

FROM: Authority Clerk Romero

SUBJECT: Approval and File Authority Checks through December 31, 2017

RECOMMENDATION:

It is recommended that the Authority approve and file the accounts payable payments made
during the period December 1, 2017, through December 31, 2017, with total payments for the
above referenced period of $8,702.50 from the general fund account and authorize the Directors
to sign for such checks.

DISCUSSION:

At its meeting on September 12, 2013, the Authority Board approved a staff recommendation to
provide the Directors a listing of financial obligations since the last report for inspection and
confirmation. Each invoiced expense has been reviewed and approved by the Executive Director
and Finance personnel prior to payment to insure that it conforms to the approved budget.
The following checks are hereby submitted to the Authority for inspection and confirmation:
• $1,200 -- AMP, televised meetings 8/10 – 11/9
• $5,002.50 – Invoice 11/1/17 – 11/30/17 Cullem Management Services, LLC
• $2,500 – Don Freeman December retainer

The bank balance as of December 31, 2017, is sufficient cover the above checks therefore, staff
is recommending approval.
Monterey Peninsula Regional Water Authority Date: January 11, 2018
Agenda Report Item No: 6.

FROM: Executive Director Cullem

SUBJECT: Receive the Audit Report for FY 2016-2017 and Authorize an Extension of the
Audit Contract with McGilloway, Ray, Brown, & Kaufman for FY 2017-2018 and
FY 2018-2019

RECOMMENDATION:

It is recommended that the MPRWA receive and approve the audit report for Fiscal Year 2016-
2017 and authorize the Executive Director to seek a two year extension of the Kaufman
contract.

DISCUSSION:

Following an informal solicitation for proposals in 2013, the Executive Director selected
Kaufman for the FY 2012-2014 audits. The Water Authority was briefed on the selection at its
meeting of October 10th. The contract was executed on October 31, 2013.

Kaufman developed extensive experience with the Authority’s financial system, and has done
an excellent job in conducting the audits, and providing direction and guidance that has greatly
improved the Authority's system of financial accountability. Accordingly, the Authority extended
the contract for FY 2014-2015, FY 2015-2016, and FY 2016-2017.

The FY 2016-2017 audit results were presented to the Authority Finance Committee on January
3, 2018 and the committee approved the audit report. The audit documents are at attachment A
for Board consideration.

The 3-year proposal submitted by Kaufman in 2013 is now complete. In 2017, the City of
Monterey, as part of its contract to provide financial support services for the Water Authority,
obtained quotes for providing future audit services to the Authority that were several times as
expensive as Kaufman. In light of the excellent job done by Kaufman and the Monterey
experience, the Executive Director recommends that the Board approve a two-year extension
with Kaufman, provided the new quotes in the judgment of the Executive Director are in the best
interests of the public and the Authority.

FISCAL IMPACTS:

Based on previous proposals from Kaufman, the Executive Director expects quotes for the next
two years to be consistent and cost-effective.

ATTACHMENTS:

A-Fiscal Year 2016-2017 Audit Documents

№06/12
 ATTACHMENT A

MONTEREY PENINSULA REGIONAL

WATER AUTHORITY

FINANCIAL STATEMENTS
with
INDEPENDENT AUDITOR’S REPORT

YEAR ENDED JUNE 30, 2017

MCGILLOWAY, RAY, BROWN & KAUFMAN

ACCOUNTANTS & CONSULTANTS
 ATTACHMENT A

TABLE OF CONTENTS

Page

Independent Auditor’s Report 1

Management’s Discussion and Analysis 3

(Required Supplementary Information)

Basic Financial statements

Statement of Net Position 7
Statement of Revenues, Expenses and Changes in Net Position 8
Statement of Cash Flows 9
Notes to Financial Statements 10
 ATTACHMENT A

2511 Garden Road 379 West Market Street 3478 Buskirk Avenue
Suite A180 Salinas, CA 93901 Suite A1000
Monterey, CA 93904-5301 831-424-2737 Pleasant Hill, CA 94523
831-373-3337 Fax 831-424-7936 831-373-3337
Fax 831-373-3437 Fax 831-373-3437

INDEPENDENT AUDITOR'S REPORT

The Board of Directors

of Monterey Peninsula Regional Water Authority
Monterey, California

We have audited the accompanying financial statements of the Monterey Peninsula Regional
Water Authority (the “Authority”), as of and for the year ended June 30, 2017, and the related
notes to the financial statements, which collectively comprise the Authority’s basic financial
statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with accounting principles generally accepted in the United States of America; this
includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of financial statements that are free from material misstatement,
whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States
of America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,
including the assessment of the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express
no such opinion. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of significant accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.

Daniel M. McGilloway, Jr., CPA, CVA | Gerald C. Ray, CPA | Patricia M. Kaufman, CPA, CGMA | Larry W. Rollins, CPA | Jesus Montemayor, CPA

Sarita C. Shannon, CPA | Whitney Ernest, CPA | Devvyn MacBeth, CPA | Smriti Shrestha, CPA
 ATTACHMENT A

Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of the Monterey Peninsula Regional Water Authority as of June 30, 2017
and the changes in its financial position and its cash flows for the year then ended, in accordance
with accounting principles generally accepted in the United States of America.

Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis on pages 3 through 5 be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is
required by the Governmental Accounting Standards Board, who considers it to be an essential
part of financial reporting for placing the basic financial statements in an appropriate operational,
economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s
responses to our inquiries, the basic financial statements, and other knowledge we obtained
during our audit of the basic financial statements. We do not express an opinion or provide any
assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.

McGilloway, Ray, Brown & Kaufman

Salinas, California
December 21, 2017

2
 MONTEREY PENINSULA REGIONAL WATER AUTHORITY ATTACHMENT A
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2017

This section of the Authority’s annual financial report presents our discussion and analysis of the
Authority’s financial position and changes in financial position as of and for the fiscal year
ended June 30, 2017. The Management’s Discussion and Analysis (MD&A) should be read in
conjunction with the Authority’s basic financial statements and the related notes to the financial
statements, which immediately follow this section.
Financial Highlights
 Operating revenues increase by $153,000 to $290,000 or 111.7%, due to the timely
payment by Monterey County of its annual fair-share contribution as opposed to the late
payment last fiscal year.
 Operating expenses decreased by $150,887 to $220,858 or -40.6%, primarily due to
reduced expenditures in the Special Counsel account.
 Total assets increased by $105,293 to $203,900 or 106.8% primarily due to under
expenditure in the Special Counsel budget.
 Total liabilities increased by $36,151 to $37,272 or 3224.9% primarily due to an increase
in accounts payable at year end.
 The Authority’s net position increased by $69,142 to $166,628 or 70.9% as a result of
under expenditures in current year operations due to the extensive delays by the CPUC in
completing the EIR/EIS which slowed the entire MPWSP project.

Using This Annual Report

This annual report consists of three sections: Management’s Discussion and Analysis; Financial
Statements; and Notes to Basic Financial Statements, that explain in more detail some of the
information in the Financial Statements.
Required Financial Statements
The Statement of Net Position includes the Authority’s assets and liabilities and provides
information about the nature and amounts of investments in resources (assets) and nature and
extent of obligations (liabilities) with the difference between them being reported as net position.
It also provides the basis for computing the rates of return, evaluating the capital structure of the
Authority, and assessing the liquidity and financial flexibility of the Authority.
The Statement of Revenues, Expenses, and Changes in Net Position presents the changes in net
position from one reporting period to another by accounting for revenues and expenses and
measuring the financial results of operations. This statement measures the profitability of the
Authority’s operations over the past year and can be used to determine whether the Authority has
successfully recovered all of its costs through its user fees and other charges.
The Statement of Cash Flows provides information about the Authority’s cash receipts, cash
payments, and net changes in cash and cash equivalents resulting from operating, investing, and
capital and non-capital financing activities. It also provides information regarding sources of
cash, uses of cash, and changes in cash balances during the reporting period.
Notes to the financial statements include information essential to understanding the above
statements, such as the Authority’s significant accounting policies and information about certain
financial statement accounts.

3
 MONTEREY PENINSULA REGIONAL WATER AUTHORITY ATTACHMENT A
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2017

Authority’s Financial Analysis

Net Position
A summary of the Authority’s Condensed Statement of Net Position is presented in Table 1
below.
Net Position may serve over time as an indicator of an Authority’s financial position. In the case
of this Authority, assets exceeded liabilities by $166,628 as of June 30, 2017.
The Authority’s current financial position is the product of the net result of revenues and
expenses.
Table 1
CONDENSED STATEMENT OF NET POSITION
Year ended June 30, Change
2017 2016 Amount Percent
ASSETS
Cash and cash equivalents $ 203,900 $ 7,947 $ 195,953 2465.7%
Accounts receivable - 88,160 (88,160) -100.0%
Prepaid expense - 2,500 (2,500) -100.0%
Total assets 203,900 98,607 105,293 106.8%
LIABILITIES
Accounts payable 36,151 - 36,151 100.0%
Unearned revenue 1,121 1,121 - 0.0%
Total liabilities 37,272 1,121 36,151 3224.9%
NET POSITION
Unrestricted 166,628 97,486 69,142 70.9%
Total net position $ 166,628 $ 97,486 $ 69,142 70.9%

Changes in Net Position

The following table represents a summary of the Statement of Revenues, Expenses and Changes
in Net Position.
Table 2
CONDENSED STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET POSITION
Year ended June 30, Change
2017 2016 Amount Percent
Operating revenues $ 290,000 $ 137,000 $ 153,000 111.7%
Operating expenses 220,858 371,745 (150,887) -40.6%
Change in net position $ 69,142 $ (234,745) $ 303,887 -129.5%

4
 MONTEREY PENINSULA REGIONAL WATER AUTHORITY ATTACHMENT A
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2017

Budget
The Authority’s governing body adopted a budget as an operating plan. Budgetary basis financial
statements are not presented because there is no legal requirement to do so.
On June 9, 2016, the Authority adopted a budget of $290,000 for the fiscal year ended June 30,
2017, with fair-share contributions requested from each member city as well as from Monterey
County.
Factors Bearing on the Authority’s Future
During fiscal year ended June 30, 2017, the focus of the Authority remained on keeping the
Community united in seeking water supply projects that could come as close as possible to the
Cease and Desist Order (CDO) 2016-0016. The CDO against Cal-Am is intended to eliminate
Cal-Am’s overdrafting of water from the Carmel River. The CDO 2016-0016 is a revision to
earlier CDO 2009-0060, by which the State Water Resources Control Board (SWRCB) approved
a 5-year extension of the earlier deadline to a new date of December 31, 2021.
In particular, the Authority focused on efforts to obtain regulatory approvals and permits for Cal-
Am's Monterey Peninsula Water Supply project (MPWSP), and the Pollution Control Agency
Ground Water Replenishment (GWR) project which has moved forward more rapidly than the
Desal project. The Authority will be focused on the success of the GWR project in light of the
fact that GWR is now identified as an early milestone condition in the revised CDO. The
Authority continued to provide transparency in its deliberations, insuring accountable elected
officials retain oversight of new water supply projects for the Peninsula, maximizing public
participation, and retaining a policy position that best served the needs of Peninsula residents.
The Updated Policy Position Statement, which was approved by the Board on December 8,
2016, simplified the basic conditions that any project must satisfy to receive Authority support.
However, since the Cal-Am Desal project continues to be the front-runner, the Authority Board
continues to support it. The future of the Authority depends upon how successful it can be in
keeping the six Peninsula cities and Monterey County working together, focused on those
components of the portfolio water solution which comply with the basic conditions of its
Updated Policy Position Statement.
To that end, the Authority again approved a revised work plan for the fiscal year which includes
a variety of prioritized tasks. The priority 1 tasks were:
 Assist in the timely review of the re-circulated draft Environmental Impact
Report/Statement (DEIR/DEIS) and California Public Utilities Commission’s (CPUC)
Certification of the final EIR/EIS
 Completion of post-settlement activities and follow-up with settling parties regarding Cal-
Am’s CPUC application for the MPWSP with the objective of Cal-Am receiving a
Certificate for Public Convenience and Necessity (CPCN) by June 30, 2018
 Support Cal-Am in its effort to secure permits related to the MPWSP after the CPCN
 Work on a post MPWSP water allocation plan
 Contribute to Settlement Agreement Updates
 Work with the Monterey Peninsula Water Management District to insure that Cal-Am and
the community satisfy the requirements and milestones in the amended CDO

5
 MONTEREY PENINSULA REGIONAL WATER AUTHORITY ATTACHMENT A
MANAGEMENT’S DISCUSSION AND ANALYSIS
JUNE 30, 2017

Request for Information

This financial report is designed to provide citizens and taxpayers with a general overview of the
Authority’s finances and to demonstrate the Authority’s accountability for money it receives. If
you have any questions about this report or need any additional information, please contact the
Authority’s Executive Director, James Cullem, via telephone at 831-241-8503, or email at
j.ecull@comcast.net.

6
 ATTACHMENT A
MONTEREY PENINSULA REGIONAL WATER AUTHORITY
STATEMENT OF NET POSITION
JUNE 30, 2017

ASSETS
Cash and cash equivalents $ 203,900
Total assets 203,900
LIABILITIES
Accounts payable 36,151
Unearned revenue 1,121
Total liabilities 37,272
NET POSITION
Unrestricted 166,628
Total net position $ 166,628

The accompanying notes are an integral part of these financial statements.

7
 ATTACHMENT A
MONTEREY PENINSULA REGIONAL WATER AUTHORITY
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
FOR THE YEAR ENDED JUNE 30, 2017

OPERATING REVENUES
Membership fees $ 290,000
Total operating revenue 290,000

OPERATING EXPENSES
Administration and clerical services 92,022
Legal services 93,473
Contract services 28,706
Insurance 6,616
Other expenses 41
Total operating expenses 220,858
Operating income/change in net position 69,142
Net position, beginning of year 97,486
Net position, end of year $ 166,628

The accompanying notes are an integral part of these financial statements.

8
 ATTACHMENT A
MONTEREY PENINSULA REGIONAL WATER AUTHORITY
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED JUNE 30, 2017

Cash Flows from Operating Activities

Cash received from membership fees $ 378,160
Cash payments to consultants and suppliers
of goods and services (182,207)
Net cash provided (used) by operating activities 195,953
Net increase in cash and cash equivalents 195,953
Cash and cash equivalents, beginning of year 7,947
Cash and cash equivalents, end of year $ 203,900

Reconciliation of operating income to net cash

provided (used) by operating activities
Operating income $ 69,142
Adjustments to reconcile operating income to net cash
provided (used) by operating activities
(Increase) decrease in accounts receivables 88,160
(Increase) decrease in prepaid expense 2,500
Increase (decrease) in accounts payable 36,151
Net cash provided (used) by operating activities $ 195,953

The accompanying notes are an integral part of these financial statements.

9
 MONTEREY PENINSULA REGIONAL WATER AUTHORITY ATTACHMENT A
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2017

1. Organization and Summary of Significant Accounting Polices

Organization
The Monterey Peninsula Regional Water Authority (the “Authority”) was formed on February
25, 2012, pursuant to the Joint Exercise of Powers Act, set forth in Chapter 5 of Division 7 of
Title 1 of the Government Code, sections 6500, et seq. The Authority operates as a jointly
governed organization. The participants of the Authority are the cities of Carmel-by-the-Sea,
Del Rey Oaks, Monterey, Pacific Grove, Sand City, Seaside, and the County of Monterey. The
Authority operates under a governing body of six directors, one director from each participant.
The purpose of the Authority is to jointly ensure the timely development, financing, construction,
operation, repair, and maintenance of one or more water projects and ensure that the governance
of such water projects include representation that is directly accountable to the participants’
water uses.
Basis of Accounting, Financial Presentation, and Measurement Focus
The Authority’s basic financial statements have been prepared using the accrual basis of
accounting.
As such, revenue is recognized when earned, and expenses are recognized when they are
incurred.
The Authority reports its activities as a single enterprise fund, which is used to account for
operations that are financed and operated in a manner similar to a private business enterprise.
An enterprise fund distinguishes operating revenues and expenses from non-operating items.
Operating revenues and expenses generally result from providing services and producing and
delivering goods in connection with the proprietary’s fund principal ongoing operations. The
principle operating revenue for the Authority is membership fees from the Authority’s seven
member agencies. Operating expenses for the Authority include the cost of services, and
administrative expenses. All revenues and expenses not meeting this definition are reported as
non-operating revenues and expenses.
The basic financial statements are prepared using an economic resources measurement focus.
This means all assets and liabilities associated with the Authority’s activities are included on the
Statement of Net Position. The Statement of Revenues, Expenses and Changes in Net Position
presents increases (revenues) and decreases (expenses) to total net position.
Accounting Changes
The Authority applies all applicable GASB pronouncements for certain accounting and financial
reporting guidance.
Budget
The Authority annually adopts an operating budget for the ensuing fiscal year effective July 1
with a mid-year review as a financial plan for the year. The governing body adopts said budget
as an operating plan. Budgetary basis financial statements are not presented because the
Authority is not legally required to do so.
Cash and Cash Equivalents
The Authority presents its cash flow statements using the direct method. For purposes of cash
flow presentation, the Authority considers demand deposits with financial institutions to be cash
equivalents.

10
 MONTEREY PENINSULA REGIONAL WATER AUTHORITY ATTACHMENT A
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2017

Accounts Receivable
The primary source of accounts receivable is from membership fees paid annually by the six
member agencies. No allowance is established for membership fees as management considers
them fully collectible. As of June 30, 2017, the Authority had no outstanding receivable balance.
Prepaid Expenses
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid expenses. As of June 30, 2017 the Authority had no prepaid balance.
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate section
for deferred outflows of resources. This separate financial statement element, deferred outflows
of resources, represents a consumption of net position that applies to a future period(s) and so
will not be recognized as an outflow of resources (expenses) until then. For this reporting
period, the Authority has no items that qualify for reporting in this category.
In addition to liabilities, the statement of net position will sometimes report a separate section for
deferred inflows of resources. This separate financial statement element, deferred inflows of
resources, represents an acquisition of net position that applies to a future period(s) and so will
not be recognized as an inflow of resources (revenue) until that time. For this reporting period,
the Authority has no items that qualify for reporting in this category.
Net Position
The statement of net position reports all financial and capital resources. The difference between
assets and liabilities is net position. The Authority’s net position is classified as follows:
Net Investment in Capital Assets – This represents the total investment in capital assets, net of
outstanding debt obligations related to those capital assets. Currently, the Authority does not
have any capital assets or outstanding debt.
Restricted Net Position – This represents amounts that are subject to restrictions that are imposed
by external groups such as creditors, contributors or laws and regulations of other governments
or law through constitutional provisions or enabling legislation. Currently, the Authority does
not have any restrictions on net position.
Unrestricted Net Position – Unrestricted net position includes resources derived from
membership fees.
Revenue Recognition
Revenues are recognized when earned. Revenues for the Authority are recognized when billed
to each of the seven member agencies.
Use of Estimates
Management uses estimates and assumptions in preparing financial statements in accordance
with generally accepted accounting principles. Those estimates and assumptions affect the
reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Accordingly, actual results may differ from these estimates.
2. Cash Held with Financial Institutions
The Authority maintains cash balances at Wells Fargo Bank, N.A, a commercial bank with
branches in Carmel-by-the-Sea, CA with federal depository insurance coverage of $250,000. In
accordance with the applicable federal law and state statutory requirements, public funds are
collateralized for balances above FDIC coverage.
11
 MONTEREY PENINSULA REGIONAL WATER AUTHORITY ATTACHMENT A
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2017

3. Related Parties
The Authority currently contracts out for administrative and clerical services. The administrative
and clerical services contract, between the Authority and the City of Monterey, states that the
Authority is contractually obligated to pay the City of Monterey for administrative and clerical
services with an annual payment rendered at the beginning of each fiscal year. For the fiscal year
ended June 30, 2017, a fee of $26,545 was paid to the City of Monterey for administrative and
clerical services.
This contract is in place to provide the Authority with all necessary services that would
otherwise be handled by an operational staff. As such, the Authority does not retain a staff to
fulfill these duties and does not have payroll or any other related liabilities.
4. Designated Assets
A Reserve Fund has been set aside by the Authority for “emergencies or extenuating
circumstances”. This Reserve Fund is included in unrestricted net position. As of June 30, 2017,
the balance in the reserve fund was $100,000. As required by the Authority’s by-laws,
expenditures from the Reserve Fund require a 70% super-majority vote.
5. Risk Management
The Authority is exposed to various risks of loss related to torts, theft of, damage to, or
destruction of assets; errors and omissions; injuries to employees; employee health claims;
unemployment compensation claims and environmental damage for which the Authority
purchases commercial insurance. There has been no reduction in insurance coverage from the
prior year. Insurance settlements for claims resulting from the risks covered by commercial
insurance have not exceeded the insurance coverage in the past year. The Authority has obtained
coverage from commercial insurance companies.
6. Subsequent Events
Management has performed an analysis of the activities and transactions subsequent to June 30,
2017, to determine the need for any adjustments to and/or disclosures within the audited
financial statements for the year ended June 30, 2017. Management has performed their analysis
through December 21, 2017, the date the financial statements were available to be issued. No
subsequent events as defined by the standard were found.
Subsequent events were evaluated through December 21, 2017, which is the date the financial
statements were available to be issued.

12
Monterey Peninsula Regional Water Authority Date: January 11, 2018
Agenda Report Item No: 7.

FROM: Executive Director Cullem

SUBJECT: Receive an Update on the Summary Project Schedule for the Monterey
Peninsula Water Supply Project, and Status of Test Well Operation and
Pipeline Construction

RECOMMENDATION:

It is recommended that the Water Authority Board receive a report from Cal Am on the
latest "Summary" MPWSP schedule and on the status of the test well operation and
progress on the pipeline construction.

DISCUSSION:

Cal Am will provide the most recent Summary Monterey Peninsula Water Supply
Project (MPWSP) schedule and discuss the status of the test slant well, including status
of the coastal development permit for the well.

Cal Am can also provide an update on the transfer pipeline construction including the
pipe bridge over Highway 68.

Note that regular updates on the MPWSP are available at Cal Am's project web site:
www.watersupplyproject.org.

ATTACHMENTS:

None

№06/12
Monterey Peninsula Regional Water Authority Date: January 11, 2018
Agenda Report Item No: 8.

FROM: Executive Director Cullem

SUBJECT: Receive Report, Discuss, and Provide Direction on Issues Being

Discussed at the Settlement Meetings

RECOMMENDATION:

It is recommended that the Water Authority receive an update on issues under

discussion at the settlement (collaborative) meetings with the MPWSP intervening
parties and provide direction including with respect to the attached motion.

DISCUSSION:

As approved by the Board on Dec 14, 2017, facilitator Marci DuPraw was retained to
participate in "settlement meetings" and assist the interveners in CPUC Proceeding
A.12.04.019, the Monterey Peninsula Water Supply Project (MPWSP), with resolving
remaining conflicts and disagreements. The settlement meetings have previously been
referred to as "collaboration" meetings.

The meetings have focused on clarifying the key interests (vs positions) of the
intervening parties, establishing ground rules for discussion, and encouraging the
parties to submit specific proposals that would address their concerns. To date, the
major concerns remain the opposition to the desal plant by Marina and the Marina
Coast Water District (MCWD). Marina community values, retention of the Castroville
Community Services District water purchase agreement, impact of the CPUC schedule
on the CDO milestones, and potential modifications to the milestones, were also
identified as key interests.

Also discussed was a motion (attachment A) for an April 2018 hearing before the
CPUC Administrative Law Judge (ALJ) on an analysis by the Water Management
District and Monterey One Water (PCA) concerning potential expansion of Pure Water
Monterey (PWM), subject to continued support of the Salinas Valley Growers. The ALJ
will also be provided cost and schedule impact information on the proposed purchase of
MCWD waste-water entitlements from PWM. This topic was requested by the ALJ in
August last year and an update would be provided in April. A letter from Mayor Joe
Gunter related to the subject is at attachment B.

№06/12
Staff requests the Board provide direction on whether the Water Authority should submit
a "Response to the Motion" by the deadline date of January 24, 2018.

The results of the January 10 settlement meeting, not available at time of authority
packet publication, can be presented verbally at the meeting.

Finally, the parties expressed hope that a settlement agreement can be developed and
be available for presentation to the ALJ at the April hearing.

ATTACHMENTS:

A- Motion for ALJ Hearing in April 2018

B- Letter from Salinas Mayor Joe Gunter ref PWM Expansion- Jan 2, 2018
 ATTACHMENT A

BEFORE THE PUBLIC UTILITIES COMMISSION

OF THE STATE OF CALIFORNIA

Application of California-American
Water Company (U210W) for Approval
A. 12-04-019
of the Monterey Peninsula Water Supply
(Filed April 23, 2012)
Project and Authorization to Recover All
Present and Future Costs in Rates

MOTION OF [LIST PARTIES] FOR ADDITIONAL

EVIDENTIARY HEARINGS

[ADD SIGNATURE BLOCKS]

January 9, 2018
 BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF CALIFORNIA

Application of California-American Water

A. 12-04-019
Company (U210W) for Approval of the
Monterey Peninsula Water Supply Project and (Filed April 23, 2012)
Authorization to Recover All Present and Future
Costs in Rates

MOTION OF [LIST PARTIES] FOR ADDITIONAL EVIDENTIARY

HEARINGS

TO: ASSIGNED COMMISSIONER RANDOLPH AND ASSIGNED ALJS

WEATHERFORD, HAGA, AND HOUCK

Pursuant to Rule 11.1 of the Rules of Practice and Procedure of the California Public

Utilities Commission (the “Commission”), [LIST OF PARTIES] (the “Moving Parties”) hereby

submit this Motion for Additional Evidentiary Hearings. As detailed in this Motion, the

undersigned parties submit that the requested hearing will provide information to the

Commission that will be valuable in evaluating possible solutions to the urgent need for water

supplies on the Monterey Peninsula.

I. INTRODUCTION AND DESCRIPTION OF REQUESTED HEARING

The Commission and the parties to this proceeding have recognized that there is an

urgent need for an alternative water supply to the current diversions from the Carmel River. Most

recently, evidentiary hearings were held in late October into early November, 2017 at which,

among other things, preliminary analyses of possible expansion of the Pure Water Monterey

Groundwater Replenishment Project (“PWM”) project and the sale of water by MCWD for the

-1-
benefit of Cal-Am were considered.1 During those hearings, various parties suggested to the

Commission that additional hearings be held in April 2018 to hear testimony on further analyses

of the PWM expansion and the MCWD sales proposals using criteria similar to the criteria used

by the Commission in D.16-09-021. 2 Similarly, in the Opening Briefs served on December 15,

2017, several parties supported the concept of a short hearing to provide additional information

on alternative supplies.3

At this point, however, no formal request has been made to the Commission.

Accordingly, the Moving Parties respectfully request that the ALJs set the following dates in a

revised procedural schedule:

• Prehearing Conference in Mid-March

• Direct Testimony Late March

• Rebuttal Testimony 10 Calendar Days Thereafter

• Hearing in Mid- to Late-April (approximately 3 days)

• Concurrent Opening Briefs in May with concurrent Reply Briefs one week
later

1
The testimony and hearings were initiated by the August 28, 2017 Assigned
Commissioner and Administrative Law Judge’s Ruling Setting Issues and Schedule for Further
Evidentiary Hearings and Requiring Submission of Supporting Documents. Such ruling directed
the parties to submit testimony on several specific topics including the viability of alternative
water supply from an expansion of the PWM project.
2
See, e.g., Transcript Vol. 21 at 3517:7-19 (R. Svindland for Cal-Am); Transcript Vol.
22 at 3753:1-11 (B. Kampe for Monterey Peninsula Regional Water Authority); Transcript Vol.
24 at 4220:10-22 (D. Stoldt for MPWMD); Transcript Vol. 26 at 4677:17 to 4678:6 (P. Sciuto
for MRWPCA).
3
See, e.g., Opening Brief of MRWPCA, pp. 16-17; Opening Brief of MPRWA, p. 6;
Opening Brief of MPWMD, p.8; Opening Brief of PCL, Sierra Club, and Landwatch, pp. 1, 11-
13, 18.

-2-
II. PURPOSE OF HEARING

The Moving Parties submit that hearings in April 2018 would be valuable to provide

updated information on (a) further evaluation of (i) expansion of the PWM discussed by witness

Paul Sciuto in the November hearings and (ii) MCWD’s water sale proposals as discussed by

witness Keith Van Der Maaten in the November hearings; and (b) ongoing settlement

discussions between the parties. The Moving Parties urge the Commission to accept and

consider this additional information as part of the decision-making process. The Moving Parties

specifically propose to limit the hearings to these topics in order to avoid unnecessary burdening

of the record.

A. A Limited Hearing Would Provide an Opportunity to Further Consider

Expansion of PWM as an Alternative Supply of Water.

On August 28, 2017, the ALJs requested that testimony be presented regarding the

expansion of the existing PWM project as an alternative supply. In testimony submitted by Paul

Sciuto on September 29, 2017, PCA provided as much up-to-date information as possible at the

time on three different scenarios for expansion of the PWM Project.4 Mr. Sciuto testified at the

hearing on November 2, 2017 and the expansion plans were mentioned in numerous briefs filed

on December 15, 2017.5 Some parties have suggested that Mr. Sciuto’s Scenario B, which

would provide for the sale of 2,250 acre-foot per year (“AFY”) in addition to the current 3,500

AFY already subject to a Water Purchase Agreement approved in D.16-09-021, would facilitate

a smaller desalination facility and/or allow for the deferral of the desal project through the

4
Mr. Sciuto’s testimony was admitted into the record as Exhibit PCA-7.
5
See e.g., Opening Brief of MRWPCA, pp. 3-11; Opening Brief of PCL, Sierra Club and
Landwatch, pp.7-13; Opening Brief of MPWMD, pp. 7-8; Opening Brief of MCWD, pp. 13-14;
Opening Brief of City of Marina, pp.23-25; Opening Brief of Surfrider, pp. 21-22; Opening Brief
of MPRWA, pp. 5-6.

-3-
issuance of a conditional CPCN to Cal-Am.6

As testified by PCA witness Sciuto and MPWMD witness Stoldt, PCA and MPWMD

have now approved funding up to $480,000 for additional analyses and entered into contracts

with consultants respecting the potential for PWM expansion, including the technical viability,

likely costs and financial comparisons to the current mix of Desal/PWM, timing, CEQA

compliance, and potential Water Purchase Agreement terms.7 Such further analysis, to be

completed in the first quarter of 2018, will review the proposed expansion of the PWM Project

using the criteria applied in D.16-09-021 by the Commission to determine that the original PWM

project was a viable alternative water supply. In that phase, after hearing testimony

demonstrating that the criteria were met, the Commission issued D.16-09-021 in which it

approved a WPA for 3,500 AFY from PCA to Cal-Am and reduced the size of the desal plant to

6.4 mgd from its original 9.6 mgd.8 A hearing in April will afford an opportunity for the

Commission to receive evidence regarding the results of this effort, which could form the basis

of a more optimal CPCN. PCA and MPWMD anticipate being in a position by March 2018 to

submit testimony on these topics similar to that presented in April 2016 on the original PWM

project.

6
See e.g., Opening Brief of MRWPCA, p.18; Opening Brief of PCL, Sierra Club and
Landwatch, p. 14; Opening Brief of MPWMD, pp. 7-8; Opening Brief of MCWD, pp. 10-11;
Opening Brief of Surfrider, pp. 23-24.
7
Transcript Vol. 26 at 4685 (P. Sciuto for MRWPCA), see also, Opening Brief of
MPWMD, p. 8; Opening Brief of MRWPCA, p. 17,
8
The approval of the WPA by the CPUC met the modified CDO December 31, 2016
milestone adopted in Water Board Order 2016-0040. Such modified milestone was added by
the Water Board as an alternative to issuance by December 31, 2016 of a CPCN for the Cal-Am
desalination facility. As detailed in the Opening Brief (with references to the sworn testimony
of PCL witness Jonas Minton contained in the record as Exhibit SR-12), the Water Board has
indicated that it would consider modification of the CDO September 30, 2018 by the addition of
a milestone tied to PWM Expansion. See Opening Brief of PCL, Sierra Club and Landwatch,
pp. 9-11 for additional discussion of the potential for modification to the CDO.

-4-
 B. A Limited Hearing Would Provide a Similar Opportunity for Additional
Testimony on the Offers by MCWD for Sale of Water.

The ALJs’ August 28, 2017 ruling also specifically requested presentation of testimony

regarding the potential availability of water for purchase from MCWD.9 Testimony from

MCWD’s General Manager, Keith Van Der Maaten provided information on two separate

proposals that MCWD has offered.10 One proposal is for the sale of 700 AFY of MCWD’s

excess potable water supply to the Seaside Basin Watermaster to satisfy Cal-Am’s “payback”

obligation under the Seaside adjudication decision, for an initial renewable term of six years,

thereby enabling Cal-Am to continue taking its full 1,474 AFY Seaside Basin allotment through

2023, or longer if the term of the sale is renewed.11 The second proposal is for the sale of a

portion of MCWD’s unused PWM Project entitlement in the amount of 500 AFY, for an initial

renewable term of ten years.12 This proposal could potentially be expanded to include an

additional 500 AFY of MCWD’s entitlement to PWM Project water, under PWM expansion

Scenario B or C.13

MCWD’s witness, Mr. Van Der Maaten, testified that the MCWD sale proposals could

readily be finalized and implemented well in advance of the next CDO milestone

deadline.14 Complete details of MCWD’s two proposals could be presented for the record in the

requested April hearings. These proposed MCWD water sales could provide valuable help to

Cal-Am in bridging its supply needs and maintaining its CDO compliance and Seaside

adjudication requirements, in the event of any delay or other challenge related to the MPWSP

9
Aug. 28, 2017 Ruling, p. 4 at ¶ 2.c.
10
Mr. Van Der Maaten’s testimony was admitted to the record as Exhibit MCD-36A.
See Ex. MCD-36A, pp. 10-15.
11
Ex. 36A, pp. 13-14; Ex. MCD-44.
12
Ex. 36A, pp. 12-13; Ex. MCD-43, pp. 2-4.
13
Ex. 36A, p. 13; Ex. MCD-43 at p. 3.
14
Ex. 36A, pp. 10-14.

-5-
desalination CPCN proceedings.

C. Hearings Could Support Any Settlement Developments

A secondary purpose of the April hearings would be an opportunity to report on progress

on any settlement to resolve some or all of the issues in this proceeding. All parties are now

participating in a comprehensive settlement effort with regular meetings to be scheduled

approximately every third week through March 2018. To assist in this process, the parties have

retained Dr. Marcelle E. DuPraw, a professional facilitator with the Center for Collaborative

Policy. The Moving Parties hope to reach a mutually acceptable settlement that would guide a

more predictable and expeditious approach to ensuring reliable and sufficient water supplies for

Cal Am’s Monterey Service Area on a near- and long-term basis without protracted litigation.

Although it is too early in the process to establish a likelihood of success, if the parties

succeed, it would be in the interest of all of the Parties and the public at large for the

Commission to receive the settlement and evidentiary submissions concerning the Settlement

before structuring a final CPCN.

III. CONCLUSION

The Moving Parties recognize the protracted process and lengthy hearings to date but

believe there is significant potential here to improve outcomes through the analysis of an

expansion of the PWM Project and MCWD’s sale proposals, and consideration of the settlement

efforts now underway. An additional hearing in April 2018 on the discrete issues identified is

necessary to factor any productive developments from this process into the Commission’s

decision on a CPCN. Therefore, the Moving Parties respectfully request that the motion be

granted and the procedural schedule set forth above be adopted.

-6-
January 9, 2018 Respectfully submitted,

FIRM

By: /s/

For

FIRM

By: /s/

For

FIRM

By: /s/

For

FIRM

By: /s/

For

-7-
 FIRM

By: /s/

For

FIRM

By: /s/

For

FIRM

By: /s/

For

FIRM

By: /s/

For

138040284.3

-8-
 ATTACHMENT B

City of Salinas
OFFICE OFTHE MAYOR.200 Lincoln Avenue. Salinas, Catitornia 9390t . (831) 758-7201 . Fax (831) 758-736S

January 2,2018

The Honorable Mayor Bill Kampe

President, MPRWA
City of Pacific Grove
300 Forest Avenue
Pacific Grove, CA 93950

Dear Mayor Kampe:

As the Mayor of the City of Salinas, I chair the Salinas Valley Groundwater Sustainability Agency
(SVGSA). The City of Salinas is also a member of the Monterey Regional Water Pollution Control
Agency (Monterey One Water). It has come to the City's attention that the Califomia Public
Utilities Commission (CPUC) has requested information to explore options to expand the Regional
Water Pollution Agency's project known as the Pure Water Monterey Groundwater Replenishment
Project as a possible altemative to the desalination project submitted to you by califomia
American Water Company (CalAm) to supply the Monterey Peninsula with water.

I am writing you based on the City's membership on both the GSA and the Water Pollution Control
Agency Boards to inform you that the expansion of the Pure Water Monterey project is not a
feasible altemative to CalAm's desalination plant proposal. In fact, it is quite likely there will be
no water whatsoever available to augment the 3,50O-acre-feet ofrecycled water that the Pure Water
Monterey project has committed to deliver to the Monterey Peninsula.

Based on reports from the Monterey County Water Resource Agency to the Board of Supervisors,
over the last 60 days, it appears that salt water intrusion in the Salinas Valley Groundwater
Basin is continuing to advance inland, further threatening not only the supply of water to Monterey
county's largest industry, agriculture, but also the water supply for the cities near the coast
including the City of Salinas

Any expansion of the Pure Water Monterey project would require the diversion of additional water
from Salinas Valley to the Monterey Peninsula. This water is needed for the Salinas Valley to
address the worsening salt water intrusion problem in the Salinas Valley Groundwater Basin.
Neither the SVGA nor the City ol Salinas would support the diversion of any additional water
beyond the amounts already committed for the 3,500--feet committed to the Monterey Peninsula.

The Monterey Peninsula needs its own independent supply of water not dependent on water made
available through reclamation ofSalinas Valley groundwater, which is neither a guaranteed source
nor a source that would ever be capable of meeting the water certainty for the long{erm supply
needs ofthe Monterey Peninsula.
 ATTACHMENT B
The Honorable Bill Kampe
Jaruary 2,2018
Page 2

The Monterey Peninsula has suffered for decades from a lack of political leadership to execute
supply solutions. Studying non-existent water from the Salinas Valley Groundwater Basin will
only further delay the solution to the Peninsula's water supply problem. A major practical drought-
proof and secure water supply solution for the Monterey Peninsula is Califomia American Water
Company's desalination plant application currently pending before you. The desalination plant
proposed by CalAm will significantly address the current cease and desist order ofthe State Water
Resource Control Board. I urge that you move forward as expeditiously as possible to complete
your consideration ofthat matter $o that project may move forward.

Sincerely,

Gun ter
Mayor
City of Salinas

Andrew Clarke, Board of Chair, MPWMD via email only to andympwmd@gmail.com

David Stoldt, General Manager, MPWMD via email only to dstoldt@mpwmd.net
Rudy Fischer, Board of Chair, MIW via email only to boardclerk@my l water.org
Ron Stefani, President, CCSD via email only to rjstefani@aol.com
Eric Tynan, General Manager, CCSD via email only to eric@castrovillecsd.org
Nancy lsakson, Board Director, SVWCA to nancy@salinasvalleywatercoalition.org
Norm Croot, Executive Director, MCFB via email only to norm@montereycfb.com
Richard Svindland, President, CAW via email only to Richard.svindland@amwater.com
Ian Crooks, VP Engineering, CAW via email only to ian.crooks@amwatere.com
Monterey Peninsula Regional Water Authority Date: January 11, 2018
Agenda Report Item No: 9.

FROM: Executive Director Cullem

SUBJECT: Receive Report, Discuss, and Approve an Increase in the FY 2017-2018

Budget to Provide for Additional Special Counsel Services and Technical
Support Services and Authorize Utilization of Not-to-Exceed $40,000 from
the Reserve Account

RECOMMENDATION:

It is recommended that the Authority receive an update on the budget, approve funding for
additional legal expenses and technical studies related to CPUC testimony, rebuttal testimony,
participation at CPUC hearings, and settlement negotiations for the period January 1 to June
30, 2018; and approve a transfer of not-to-exceed $40,000 from the Reserve Fund to cover the
additional costs.

DISCUSSION:

As addressed in the budget report of May 11, 2017, involvement in the MPWSP approval
process did, in fact, pick up by mid-FY 2017-2018, including additional special counsel support
from Brownstein and technical support from SPI (Geosyntec). In particular, involvement with the
CPUC process, including two weeks of CPUC hearings in October, the filing of the Authority
legal brief in November, expected additional CPUC hearings in April 2018, and participation in
efforts to facilitate a desal settlement agreement necessitate expenditures for the Special
Counsel that are expected to exceed the budget of $100,000 by the end of the current fiscal
year.

However, at this point, legal costs are expected to remain within the range of expenditures
($80,000-$131,000) estimated in the Brownstein letter of March 30, 2017 (see attachment A).

In addition, extra funding in the order of not-to-exceed $10,000 will be required if the Authority
determines that a contract extension with SPI is needed to support the final CPUC requirements
or the facilitation effort.

To insure adequate budget authority for the additional Special Counsel services through June
30, 2018, the Executive Director has requested a transfer of not-to-exceed $30,000 from the
Reserve Account to the Special Counsel account. To fund the next potential change order with
SPI, a transfer of not-to-exceed $10,000 from the Reserve Account to the Contract Services
Account is also requested.

Note that a 4/5 vote of the Board is required to utilize reserve funds.

BUDGET UPDATE:
If the funding request is approved, the total not-to-exceed amount for the Special Legal Services
component of the budget will increase to $130,000 and the Contract Services component to not-
to-exceed $20,000. The total budget for FY 2017-2018 will increase by $40,000 to $330,000
with a remaining Reserve Fund balance of approximately $60,000.

ATTACHMENTS:
A- Brownstein, Hyatt, Farber, Shreck letter dated March 30, 2017.
ATTACHMENT A

Memorandum

DATE: March 30, 2017

TO: Monterey Peninsula Regional Water Authority

FROM: Russell M. McGlothlin

RE: Estimated 2017-2018 Budget for Legal Services from Brownstein Hyatt Farber
Schreck

You have requested that we estimate the budget for legal services from our firm for fiscal year 2017-
2018. The attached table estimates the 2017-2018 budget for our anticipated representation of the
Monterey Peninsula Regional Water Authority (“Authority”) with respect to the pending application by
California American Water for issuance of a Certificate of Public Convenience and Necessity from the
California Public Utilities Commission (“CPUC Proceeding”) for the proposed Monterey Peninsula
Water Project (Application 12.04.012) and related matters and other Monterey Peninsula water matters
on which we may requested to assist.

Our efforts during the following fiscal year will be focused on the completion of Phase I of the CPUC
Proceeding (i.e., CPUC approval of the desalination project). The significant issues/work with respect to
this effort include amendment of the Large Settlement Agreement, review of the final DEIR/DEIS,
Phase I briefing, likely supplemental hearings, and comments on the proposed decision prior to action
by the Commission. The current schedule for the CPUC Proceeding anticipates the release of a
proposed decision on Phase I in the first half of 2018, which would fall within next year’s legal budget.

The table below estimates the budget for the principal categories of work that we anticipate in 2017-
2018 and is segregated by quarter. Estimated work may move between quarters depending on
schedule of the CPUC Proceeding and other developments. Additional work beyond the matters listed
may necessitate expenditures beyond those estimated below. The variance between the low and high
estimates reflects the inherent uncertainty concerning the scope of necessary work. Where possible
and appropriate, we will seek to coordinate with other entities (e.g., Cal-Am and MPWMD) to ensure
efficient and cost-effective representation.

015621\0002\15569400.1
 Estimated Budget for CPUC A.12.04.019 and SWRCB CDO (July 2017-June 2018)

Task/Matter Quarter Low High

Prepare for and Attend Calls/Meetings with Settling Parties 3 $3,000 $5,000
General Case/Matter Management Issues 3 $7,000 $10,000

Subtotal Q3 2017 $10,000 $15,000

Prepare for and Attend Calls/Meetings with Settling Parties 4 $3,000 $5,000
Review, Correspondence, and Comments re Final DEIR/DEIS 4 $4,000 $7,000
General Case/Matter Management Issues 4 $7,000 $10,000
Subtotal Q4 2017 $14,000 $22,000

Prepare for and Attend Calls/Meetings with Settling Parties 1 $3,000 $5,000
Prepare for and Attend Possible (Not Certain) Supplemental
2 $17,000 $30,000
Hearings
Opening Brief 1 $7,000 $12,000
Reply Brief 1 $5,000 $10,000
General Case/Matter Management Issues 1 $7,000 $10,000
Subtotal Q1 2018 $39,000 $67,000

Prepare for and Attend Calls/Meetings with Settling Parties 2 $3,000 $5,000
Review and Prepare Comments on Proposed Decision 2 $7,000 $12,000
General Case/Matter Management Issues 2 $7,000 $10,000
Subtotal Q1 2018 $17,000 $27,000

Total 2017-2018 $80,000 $131,000

2
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