May 7, 2001

Regular Board Meeting

Monday, May 7, 2001

Time: 2:00 P.M.

Place: Board Room

29300 Valley Center Rd.

Valley Center, CA 92082

The Valley Center Municipal Water District Board of Directors’ meeting was called to order by

President Broomell at 2:00 P.M.

Board members present were: Directors Broomell, Armstrong, Polito, Aleshire and Stone. Staff

members present were: General Manager Arant, General Counsel Cowett, District Engineer

Jewell, Director of Operations Dacus, Manager of Accounting Jeffrey, Water Facilities Supervisor

Stetson and Board Secretary Stetson. Spectators present were: Mrs. Johnson, Mr. Ross,

Roadrunner Newspaper, Ms. Moss, North County Times, and others.

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It was concluded from the evaluation that Lake Turner could be available for recreational use

by one or several organizations acting as a consortium of established youth and senior

groups. It is proposed that the organization or consortium would make the decisions about

what facilities would be developed and activities conducted at the lake with the District’s

guidance, minimum financial involvement and ongoing oversight. Development of Lake

Turner for recreational uses would require that:

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• Girls Scouts of America - Use and activities similar to the other groups with an

interest in single troop over-night camping.

Board concurrence with the proposed concept for the use of Lake Turner by a single

organization or consortium comprised of established youth and senior groups was requested

in which staff would then proceed to address issues such as:

~ If a Joint Powers Agreement or consortium is formed, under what legal structure will

it be constituted?

~ What level of planning, environmental documentation and regulatory approvals will

be required prior to moving forward?

~ What level of support would be provided by the District initially, and then the level of

ongoing financial and staff support, responsibility and involvement to be provided?

President Broomell voiced that the District’s highest priority is to provide reliable and safe

water and sewer services in a cost effective manner. As such, development of recreational

uses at Lake Turner should not interfere with construction and operation of a power plant that

has been proposed in this area which could provide direct access to electricity for pumping

at Betsworth Pump Station at a reduced price.

Director Aleshire stated that many youth organizations jointly participate in projects and there

is a lot of mutual relationships and support of one another. The organizations that have

indicated an interest in utilizing Lake Turner for recreational purposes are eager to coordinate

efforts for a successful partnership. Director Aleshire noted that an opportunity exists to

assist children in their development by providing a site for youth organizations to conduct

various outdoor activities which can be accommodated on the Lake Turner property. Director

Aleshire voiced that, as public servants in the community, the Board has an obligation to

facilitate the use of Lake Turner by established youth groups.

Director Stone concurred with Director Aleshire’s comments concerning recreational uses at

Lake Turner with the contingency that there be no increase in the District’s commodity rate

to the customers to fund this endeavor.

President Broomell stated that, upon formation of a consortium of the organizations that will

utilize the lake and coordination of the activities, the Valley Center Community Services

District could be requested to reconsider overseeing recreation at Lake Turner.

The proposal for youth groups’ usage of Lake Turner does not anticipate the District staffing

to interface with the consortium but that the consortium’s government structure, such as its

Board of Directors, will take the lead to coordinate all of the activities with only a general

oversight by the District. Also, no significant expenditure by the District is anticipated.

Some improvements that may need to be addressed by the District are grading of a road,

parking area and provisions for water and electricity. Other facilities/improvements are

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expected to be provided by the groups utilizing the lake. Some improvements could be

undertaken as projects for badges and by those striving for eagle scout. Mrs. LaVonne

Johnson, girl scout troop leader in Valley Center, addressed the Board to encourage the use

of Lake Turner by youth groups as proposed stating that many envisioned activities for her

troop could be carried out at the lake site. She further clarified that it is a girl scout policy that

for outdoor activities there is 1 adult for every 3 girls.

3. Update on the Power Plant Proposal:

A presentation by representatives of California Power Partners had been given at the

April 16

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• Aqueous Ammonia - A Risk Management Prevention Program will be required as

ammonia will be stored on site.

• Waste streams - The plant will be a zero discharge facility.

• Restroom facilities - Restroom facilities and on-site disposal will be required as the

power plant employees will be on site at all times.

Construction of a power plant on District property is exempt per the Government Code from

all County building and zoning ordinances. As such, a Major Use Permit or building permit

will not be required. A permit would need to be issued by the Energy Commission. Due to

the complexity of siting a power plant, staff will be seeking assistance from an energy

consultant. A formal proposal from the California Power Partners will be presented to the

Board following their detailed analysis of the proposed plant sites.

4. Status Report on the San Diego County Water Authority’s Rate Reform Process:

The San Diego County Water Authority’s rate reform process is being further analyzed by an

Ad-Hoc Rate Reform Subcommittee of the Authority’s Board in which the allocation of

transportation and customer service costs is being evaluated. The proposed rate structure

has similar characteristics to the rate structure that had been proposed by the Economic

Study Group.

Components of the Authority’s rate structure, as proposed, were reviewed as follows:

Transportation Costs (including debt service on existing facilities and system O&M)

• Allocated as a fixed charge to the member agencies based on an agency’s pro-rata

use of the transportation system.

• System use allocation to be determined by the length of the facilities used and

quantity of water taken based upon the 5-year rolling average of the average demand

during the peak week.

• New system would be phased in over a 5-year period

Non-commodity Revenues (taxes, standby charges, capacity fees) not allocated to the

Emergency Storage Project

• Allocated against an agency’s transportation cost component either on a regional

aggregate basis or an individual agency basis. (The aggregate allocation of noncommodity

revenue would be consistent with the action taken with respect to

financing the Emergency Storage Project.)

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Customer Service Costs

• Allocated as a fixed charge to each member agency based on a 5 or 10 year rolling

average demand.

Adoption of a revised rate structure by the San Diego County Water Authority would result

in the following reduction of costs to the District in its wholesale water costs over the next

20 years:

Non-Commodity Revenue Allocation

Individual Basis Aggregate Basis

Customer Service Costs based $5,722,234 $14,395,020

on a 5-year rolling average

Customer Service Costs based 5,324,383 14,056,318

on a 10-year rolling average

Estimated implementation of the San Diego County Water Authority’s revised rate structure

is: finalization of cost allocation by this spring; determination of reserve levels and financing

for new capital facilities by the summer of 2001; development of contract language,

administrative procedures and accounting and billing procedures by the fall of 2001; and

initiate implementation of a new rate structure over a 5-year phase-in period in January 2002,

with an effective start-up of the rate structure to commence in Fiscal Year 2003-04.

An issue also to be addressed is an agency’s flexibility to choose participation in future

capital improvements such as the Mexican Pipeline. The Authority’s system could develop

whereby an agency chooses its supply; i.e. Metropolitan water deliveries and/or Colorado

River Water via the Mexican Pipeline. Currently, there is support at the San Diego County

Water Authority for a choice of supply.

5. Amendment to the Administrative Code to Increase the Water Service Pump Zone Rates:

Increases in electricity and natural gas costs have depleted the District’s Pumping

Stabilization Reserve, which at the beginning of the fiscal year had a balance of slightly over

$1 million to its projected deficit of almost $1.5 million by the end of Fiscal Year 2000-2001.

A 25% increase in the water service pump zone charges became effective January 31

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6. Confirmation of “Oppose” Position - Senate Bill 350 (Alpert):

Board confirmation of the “oppose” position regarding SB 350 was requested which, as

written, would impose legislative restrictions on the levels and disposition of reserves by the

Metropolitan Water District of Southern California. Senate Bill 350 would usurp independent

local controls as the Legislature would determine what is an adequate reserve level and how

those reserves should be utilized.

Senate Bill 350 has been amended to require that Metropolitan and all member agencies of

Metropolitan develop reserve allocation guidelines and a provision included for a study of the

governance structure of Metropolitan and its member agencies.

7. Review of Miscellaneous Informational Items:

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8. Regional Commission for the Restructuring of Government:

General Counsel Cowett reported he has been attending the meetings of the Regional

Government Efficiency Commission established by State legislation to evaluate

restructuring/consolidation of government in the counties of San Diego in terms of land use,

transportation, and port district functions. A proposal from this Commission is expected to

be made to the Legislature by August which may be placed on a County ballot in either March

or November of 2002. The proposal may consolidate transportation functions of the county.

General Counsel will provide information to staff so that Commissioners can be contacted on

this issue.

9. San Diego County Water Authority’s Board of Directors’ Meeting:

President Broomell reported that at the Authority’s April 26

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10. A Closed Session was called by President Broomell at 3:35 p.m. pursuant to:

• Government Code §54956.9(c), Conference with Legal Counsel - Existing Litigation

Name of case: Sweetwater Authority, et al. v. Dynegy, Inc., et al.

SDSC Case No. GIC 760743

• Government Code §54957.6(a), Employee Performance Evaluation

Title of Position: General Manager

The Regular Board meeting was reconvened at 4:10 p.m. No action was reported.

11.