MINUTES. October 7, 2009

Transcription

1 NEVADA IRRIGATION DISTRICT BOARD OF DIRECTORS MINUTES The Board of Directors of the Nevada Irrigation District convened in regular session at the District's main office located at 1036 W. Main Street, Grass Valley, on the 7th day of October, 2009 at 9:00 a.m. Present were John H. Drew, President; W. Scott Miller, Vice-President; Nancy Weber, Jim Bachman and Nick Wilcox, Directors. Staff members present included Ron Nelson, General Manager; Tim Crough, Assistant General Manager; Marie G. Owens, Finance Manager/Treasurer; Gary King, Chief Engineer; John Kirk, Maintenance Manager; Jeff Meith, District Counsel; and Lisa Francis Tassone, Board Secretary. The Minutes of the regular meeting and the special meeting held September 23, 2009 were approved as submitted. PUBLIC COMMENT - Merritt Larry Merritt stated that he addressed the Board earlier this year regarding a situation when he was attacked by dogs along the Canal. He received a notice from Animal Control that the dog owner that beat him up has moved with his dogs to Sutter County. SURPLUS EQUIPMENT Declared the following property as surplus and authorized the Purchasing Department to sell or dispose of accordingly. M/S/C Weber/Miller FIXED ASSET # DESCRIPTION CAT ENGINE INGERSOLL-RAND AIR COMPRESSOR GMC 5YD DUMP TRUCK 315

2 ¾ TON PICKUP TRAIL KING TILT TRAILER HP MONITOR CASE TRENCHER INGERSOLL-RAND AIR COMPRESSOR GATEWAY MONITOR FORD 5 YD DUMP TRUCK GATEWAY MONITOR CAT EXCAVATOR GATEWAY MONITOR DELL P.C ½ TON PICKUP ¾ TON PICKUP DELL MONITOR DELL P.C DELL P.C DELL P.C DELL P.C ½ TON PICKUP ½ TON PICKUP DELL MONITOR DELL P.C DELL P.C DELL P.C. H YAMAHA SNOWMOBILE (HYDRO - YUBA BEAR) H4828 BOOM TRUCK LIFT BASKET (HYDRO - YUBA BEAR) LOWER CASCADE CANAL / BANNER CASCADE PIPELINE PROJECT List of Construction Contractors and Solicitation of Quotations Director Weber expressed concern about Teichert Construction being included on the list of construction contractors. Last summer, they constructed the Loma Rica waterline near the Nevada County Airport. While working on the Loma Rica Project, they placed a portable toilet in the front yard of one of the residences (about 50 feet from their front door) for the entire length of the summer. There were also problems with the grading. The property owners were up in arms and Teichert did not respond in a positive manner. If Teichert Construction constructs the Lower Cascade Canal / Banner Cascade Pipeline Project (LCCBCPP), the District is headed for disaster. Teichert has already made their mark on the community last summer. She hopes they are not chosen to construct the Project. President Drew stated that this is the first time he has heard about the issues last summer with Teichert Construction and wondered why this was not brought up when the incidences occurred. 316

3 Gary King, Chief Engineer, explained that he believes the situation regarding the portable toilet was rectified very quickly. Teichert Construction dealt with the issues and worked through the Project. The pipeline was installed down Greenhorn Road and the contractor slugged out rocks in a tight, confined area. Teichert Construction performed in a professional manner. There were some complaints from property owners, and these complaints were rectified as soon as possible. Mr. King stated that he expects to have property owners complain when the LCCBCPP construction occurs. He recommends including Teichert Construction on the bid list. Director Weber stated that placing a portable toilet in a front yard is not appropriate. The LCCBCPP is a sensitive Project and the construction contractor selected needs to have that sensitivity. President Drew stated that it would be appropriate that locations of portable toilets be approved by Staff and the effected property owners. Mr. King stated that the portable toilets can be moved each night to another area. Jeff Meith, Legal Counsel, pointed out to the Board that at this time, the list serves as a pre-qualification list for construction contractors that will be allowed to bid on the Project. Director Miller made a motion to approve the list of construction contractors for the Lower Cascade Canal / Banner Cascade Pipeline Project, and authorize Staff to solicit quotations. Director Bachman seconded the motion. Motion passed on the following roll call vote: Division I Division II Division III Division IV Division V No Aye Aye Aye Aye WARRANTS Approved the following warrants: Yuba-Bear Revolving Fund Nos through 22172, inclusive; General Fund Revolving Account Nos through 47931, No being void; Recreation Fund Nos through 2055; and Payroll Direct Deposit and Warrant Nos through 51411, inclusive. M/S/C Miller/Weber 317

4 DS CANAL FLUME REPLACEMENT PROJECT Certifying the Final Environmental Impact Report and Approving the Project (Res. No ) Tonia Tabucchi Herrera, Associate Engineer, respectfully requested that the Board proceed with adopting Resolution No Staff had received and reviewed a letter from Stephan Volker on September 22, 2009, in which no new evidence had been presented. Director Weber stated that there were no responses to her concerns about wells. She continues to be concerned about the wells in the area. She stated that Legal Counsel had stated that the amount of shotcrete would not make a difference to the wells, but there are existing leaks that have nothing to do with shotcrete. The District is devaluing properties if the wells are affected. She would like see the District proceed in a respectful manner to those whose property is being altered, by making them whole by providing them water, not for free, but guaranteeing the supply they already had. Ms. Herrera stated that Staff contacted Holdredge & Kull and EMKO to evaluate the seepage issues. They determined that the seepage was not significant. Director Weber asked if they had conducted a study. Ms. Herrera stated that the determination was made based on their expertise. Director Weber asked if they visited the well site. Gary King, Chief Engineer, explained that as presented in the Environmental Impact Report (EIR) by experts in both hydrogeology and the underground issues, this is no new information. The issues have been addressed in the EIR by two professionals a hydrogeologist and a local geologist. They both have indicated that the seepage is not a significant issue and it is anticipated that there will be no adverse effect to the wells. Director Weber inquired if a property owner experiences a diminished supply with their well, what the recourse would be. Mr. King stated that this would be up to the Board. Director Weber referenced Appendix S which is the study from the Lower Cascade Canal / Banner Cascade Pipeline Project (LCCBCPP) and was included in Stephan Volker s letter. The study was conducted by HydroFocus and they found that in wells 1,320 feet downslope of a canal, there would be a 50 percent recharge. She stated that there is an influence that is not being recognized, and it needs to be recognized. Mr. King explained that Staff has recognized all of the public comments and the comments from the Board members in the responses included in the EIR. The information Director Weber just provided would be defined as new information. Additionally, Staff has addressed all of the information from the public hearing. 318

5 Director Weber stated that the information she provided is not new information. Staff accompanied her a year and half to two years ago to visit some sites. There was an awareness of a well that might be affected. Mr. King stated that Director Weber s information was not brought up during the public hearing. Director Weber asked if Staff would bring this information up if they were aware of it. Mr. King stated that the issue has been formally addressed by using professionals (a hydrogeologist and a geologist). Mr. King does not have expertise in this area and he depends on the professionals and their qualifications. Director Miller stated that the District had defined in the lawsuit and settlement pertaining to the LCCBCPP that the District would attend to wells. Criteria were established, and the District decided to extend the attention to wells beyond the participants of the lawsuit and to those property owners along the Project route. Jeff Meith, Legal Counsel, pointed out that the situation Director Miller is referring to on the LCCBCPP had to do with the major pipeline excavation and installation and access to the domestic water system. The philosophy is fact driven, and the facts are very unique. On the canal side, the original plan was to remove the canal. What was being dealt with was what amount of water could keep the canal in service as a distribution lateral and how monitoring and checking the canal would be effected. In this particular situation (DS Canal), the conclusion is that there is no change in the canal from the standpoint of seepage. The only area being hard lined is the limited area on each end of the flume. Director Weber submitted a photograph to the Board members that was taken in August The photograph was taken at Flume #23 representing a leak. She stated that there was vegetation underneath that probably went the full irrigation season, so there is regeneration from that much of a leak. Director Miller made a motion to adopt Resolution No (Certifying the Adequacy of the Final Environmental Impact Report and Approving the DS Canal Flume Replacement Project). Director Bachman seconded the motion. Trevor Robbins, property owner near Flume #19, read a letter signed by Trevor and Sue Robbins into the record: We respectfully respond to your Staff s September 29 report. Contrary to your Staff Report and its attachments, the information presented by our attorney Stephen Volker in his September 22, 2009 comment letter included new evidence of Project impacts that must be considered and fully evaluated prior to any decision to approve the Project, and on which the public should have ample opportunity to comment. 319

6 While the Staff Report asserts that an alternative that utilizes the existing structure to expand the canal is not feasible, there is no evidence to support that conclusion. In fact, at the Board meeting on September 23, 2009 in response to my comments, Director Miller asserted that an engineering feasibility report determined that this alternative was not feasible. However, when we sent a Public Records Act request to NID for that document, they specifically said that no such document exists. I have attached the response we received from NID, expressly stating that no engineering report was completed. Therefore, there is no support for their erroneous conclusion that building a new flume in the existing structure is not possible. The Staff Report failed to address the 1924 Report of the District s Engineer to NID on the Proposed Irrigation District. That document clearly shows that NID lacks the rights necessary to implement the Project. Page 199 states that the plans provide for the construction of timber bents, supported on concrete pedestals which will be framed for... the ultimate required capacity. The ultimate capacity of the canal refers to both the size and character of the canal. The size of the canal is limited to the size at the time of development, contrary to the proposed Project. The character of the canal is limited to the wooden structure, which is an integral part of our community and mining history. Furthermore, the report specifically states that the structures proposed for the distribution ditches will be constructed of concrete and timber. Therefore, it is clear that NID s current property rights do not extend to the proposed Project. In its letter dated September 30, 2009, NID consultant Jones & Stokes responds to our September 22 comments. Staff Report, Attachment 1. However, that response ignores our new evidence of problems with the Project that were not discussed in the FEIR including evidence of seepage, of new species in areas impacted by the Project, and of water rights problems that should have been addressed in the Draft EIR. Jones & Stokes also fails to respond to our documentation that the impacts of temporary stoppages during the non-irrigation season, like those relied upon in the FEIR, are far less severe than the impacts of stoppages during the irrigation season. The Jones & Stokes response is flat wrong in claiming the canal does not provide significant seepage. Staff Report, Attachment 1. It claims that the 1924 study relied upon in our Comments is countered effectively by the site-specific analysis. This is simply untrue. Neither NID nor Jones & Stokes provides any evidence to support their claim that NID was mistaken in concluding previously that seepage occurs in the NID canals. 320

7 The Jones & Stokes response also provides new information about the bypass pipes that may be necessary for Flumes 13 and 19. While these bypass pipes would only be temporary, they are integral to the Project, and it is clear from the continuing provision of new information that the FEIR did not adequately analyze these pipes. Jones & Stokes response mistakenly claims that the Project need not be consistent with Nevada County s General Plan policies, relying on Lawler v. City of Redding, (1992) 7 Cal. App. 4 th 778. The court in Lawler addressed Government Code section 65402(b). We rely on Government Code section 65402(c), which is applicable to local agencies such as NID. The Jones & Stokes response also fails to excuse the FEIR s inadequate discussion of growth-inducing impacts and inadequate mitigation measures. The second letter relied upon in the Staff Report, drafted by the Minasian firm, claims that NID has additional quantities of water available under other rights. But Minasian provides no documentation of these claimed water rights or any discussion of where they may be reviewed. Asserting that NID has available water rights but refusing to allow the public to review any documentation of them is a clear violation of CEQA s public review requirement. CEQA Guidelines, Section 15087(c)(5). Minasian admits that it is unable to explain why we were unable to locate these rights at the State Water Board. Minasian does not even claim that those documents are actually there or that Minasian has been able to locate them. Our September 22 Comments presented new information that should be analyzed. The Jones & Stokes and Minasian responses fail to acknowledge, much less respond, to this new information. NID s decision on the Project should be postponed until this information has been thoroughly reviewed and the public has had an opportunity to comment, as required by CEQA. Thank you for considering our comments. Director Miller referenced page 295 of the Board of Directors minutes of the September 23, 2009 meeting. He did not quote an outside source. What he stated was that he read the EIR, and in the EIR, Mr. Robbins attorney questioned placing the pipe in the existing flume. His question was addressed in the responses to comments. Dennis Manyak, resident in Nevada City, stated that he is not an attorney and he does not know all of the laws. With regard to easements, he will be learning more about the law. From what he has learned, an easement is a two-way thing. The District draws benefits from the easement they are allowed to run water across his property, and 321

8 they can maintain their facilities. Mr. Manyak receives the aesthetic value of the construction of the facilities and the water seepage. When this Project happens, despite the letter that was written by the doctor in Sacramento, there will be damages on his property, and he will be burdened. If the Board makes the regretful decision to accept this thing, we ll probably be in court after the damages have happened. He is left with having to do the studies himself. He is going to do the well pump-down test on his well, and the studies of the seepage into his mine, and he will take extensive photographs of the aesthetic losses that he will be losing and the unaesthetics that he will be gaining. This will have to go before a court and a judge because the District will not do the studies he has asked for for three years. He will be damaged. He will be burdened, and we ll see you guys in court. Sue Robbins, property owner near Flume #19, clarified Director Miller s recent comments, by stating that everyone was present at the same hearing. What she heard Director Miller to say and look to the Engineering Department was that was a good idea, but we did a feasibility study on that concept, didn t we, and we understood it wouldn t work, right? and the Engineering Department agreed. So, Director Miller referred to some study which does not exist, and that was the point. Director Miller stated that he prefaced his statement by saying he had spent the entire weekend reading the report (the EIR). Allan Eberhart stated that he would like to follow up on the direction Director Weber was going with regard to those who have wells in close proximity to District canals. The property owners comfort level would probably be a lot higher if the Board had a policy that showed there was some mechanism to address issues such as these when they come up. As the District moves forward, there is probably going to more proposals for efficiencies on District canals and delivery systems. The concerns about wells will come before the Board again and again. It would be most helpful if the public knew that there was a process that the Board had put into place that would allow these issues to be addressed in a fair and equitable manner. Director Wilcox stated that there are seepage issues and water right issues. He will not address the water right issues because he actually understands them and does not believe there is a problem. The seepage issues relating to District canals are real issues. He appreciated Mr. Volker and the Robbins including the study by HydroFocus because Director Wilcox thought it was an excellent report. The conclusions were pretty much as he would have expected. He does not think anybody denies the fact that seepage occurs from canals. He believes that seepage does recharge local wells to some extent. In this particular case, for this Project, the amount of encasement proposed is very, very small. He is comfortable with the assertion that the impacts from seepage on this Project are less than significant. What is being proposed is a few feet of gunite on the aprons of these flumes, and he does not believe that compared to the overall length of the canal, which remains the same, that these impacts will be significant. He is certainly prepared to vote in favor of the Project. 322

9 Director Wilcox agreed with Mr. Eberhart regarding the wells being an issue that the District needs to address. In terms of seepage, Director Wilcox sees this as more of a California Environmental Quality Act (CEQA) issue than a water right issue. If seepage is reduced from canals, then there is a potential impact under CEQA. However, he does not believe that there is an impact regarding water rights. Property owners who divert from wells are acting essentially as overlying riparians. They have a right to divert underground water that enters their well, and that water would have to be derived from riparian sources which would be local run-off. If that water is provided as seepage from a canal, that water is essentially foreign in place and foreign in time. The property owners that have wells cannot actually claim a right to that seepage. However, there is potential damage. He feels that the way to address this is if there is potentially significant impact on seepage, this needs to be identified and mitigated. Those property owners should then have an opportunity to obtain water from the District and this would be water that they would have to pay for because they have no right to the water for free. In a long term scenario, if canals are being encased, the property owners that might be impacted should have a right to purchase water from the District. In this case, he believes the impacts are less than significant. Director Miller referenced the letter from Minasian attached to the Staff Report on this matter. Mr. Meith stated that there is no new information introduced into comments that has not been addressed in the Final EIR. Motion passed on the following roll call vote: Division I Division II Division III Division IV Division V No Aye Aye Aye Aye Director Weber stated that in almost eleven years that she has been on this Board, she has seen repeating patterns with these big projects. The District actually represents all of these tax payers the people who have the project in their area, and the people who need the water downstream. It is important that all people are dealt with respect because the District is a public agency, and this is part of the District s mission to deliver water to people. It is also a part of the District s unstated mission that people s property is not damaged. The repeating pattern that she sees is that the District is going to do a project (she used the LCCBCPP as an example) and run this large pipe down the road, but the District would not provide water. There was a win-win possibility in this situation. The win for the residences was that they would receive water after potential litigation. In the beginning, if the District had been respectful, and had offered water, the process would have been different. In the future, she wondered if the opportunity to provide the property owners with water would be possible. She is also concerned about the destruction to habitat as the canals are encased. She has 323

10 requested a plan for what canals will be encased and what canals will not, and to receive community input on this matter. Unfortunately, she represents the area where most of the projects occur, and she is seen as having a negative viewpoint. The people who protest are seen as having a negative viewpoint as well. They are really only trying to protect their property, and she is only trying to protect her constituents. She stated that the next large encasement project is along the Newtown Canal. The District needs to take the approach of a win-win orientation. If a property owner has a well that works before the District starts construction, and if there is damage done by the District to these wells, the District needs to provide water for these property owners to purchase. She urged the Board to be more respectful of the people who are putting up with the District s projects. REGIONAL WATER SUPPLY PROJECT CITY OF LINCOLN / NEVADA IRRIGATION DISTRICT / PLACER COUNTY WATER AGENCY Status Update on Scope of Work for the Project Brian Powell, Special Projects Manager, provided information to the Board on the Regional Water Supply Project, as recommended by the Engineering Committee. The planning and pre-design phase for the Project is near complete and under budget. Not much has changed in terms of the alignment or the facility locations. The treatment plant layout has been developed, reservoirs have been more defined and detailed in their structure, and the environmental constraints have been developed for the entire Project as the District enters the Environmental Impact Report (EIR) phase which is the next phase of the Project. The scope of work proposes partnering between the District and Placer County Water Agency (PCWA). In 2004, PCWA was consulted about joining forces with the District on a joint water treatment plant concept. At that time, there was not consensus about proceeding with this concept. In 2005, a Siting Study was prepared. Prior to the EIR, the concept of evaluating potential options was introduced. This concept would investigate the options that would be available in partnering with PCWA to evaluate providing raw and treated water to the North Placer County, North Auburn, Auburn area and Lincoln area. Some of the potential options throughout this region could include PCWA serving the Sheridan area through the Valley View Water Treatment Plant. Another option would include serving the City of Lincoln s needs within the District boundaries through PCWA s future Ophir Water Treatment Plant. The scope of work prepared by ECO:LOGIC would evaluate possible alternatives to obtain the main goal of providing treated water to the City of Lincoln within District boundaries, and to potential District customers in the soft service area within the District s boundaries. The California Environmental Quality Act (CEQA) process for the Regional Water Supply Project requires that alternatives to the proposed Project be evaluated. The concept of routing through the Ophir Water Treatment Plant would need to be investigated in the EIR. By completing this analysis now, the District would be proactive and this would help facilitate the CEQA process as the District moves forward. 324

11 The original budget for the Project had included a contingency to cover unforeseen issues. The original contingency was set up in the amount of $600,000. To date, none of this contingency has been used. The cost for the added scope of work would be approximately $150,000 and this cost could be covered with the contingency already established. For reference, the City of Lincoln s Staff does not object to the scope of work or the cost for the additional work. Director Weber asked if the City of Lincoln will pay for half of this cost with the exception of District Staff time. Mr. Powell stated that the existing agreement with the City of Lincoln would be used. Director Bachman asked if PCWA is going to participate also. Mr. Powell stated that PCWA has offered to share in the costs, but Staff feels that the Study would be part of the EIR any way, and at this point, the existing agreement with the City of Lincoln would be utilized. If the analysis determines that using Ophir Water Treatment Plant would be an alternate to the main Project, PCWA would participate in cost sharing at this point. Director Wilcox stated that it is important for the Board to look at this alternative. The Board has an obligation to serve customers within the District s boundary, and the Board has an obligation to all of the District s rate payers and tax payers to do so at the least amount of cost. If this alternative turns out to be the most cost effective alternative to achieve the District s obligation, the Board should look at this very carefully. Director Weber stated that she would appreciate having a summary of costs to date for the District on this Project. She has asked for this before. President Drew inquired if ECO:LOGIC was an automatic on this alternative study. Mr. Powell explained that ECO:LOGIC has the most intimate knowledge of the Project. Staff reviewed their costs and determined that the costs were appropriate. Director Wilcox pointed out that ECO:LOGIC is an engineering firm and they design water treatment plants. They have a vested interest in maximizing their consulting fees. If this utilizes a plan that has already been designed and is on the shelf this may reduce their consulting fees in the end. The District needs to be careful that ECO:LOGIC does not make a recommendation to the District based upon their eventual consulting fees. President Drew stated that ECO:LOGIC is very good and are among the top in the State with contract changes, contract amendments and added costs. He urged Staff to watch the consultants. 325

12 Gary King, Chief Engineer, explained that Phase 1 of the Project was done by ECO:LOGIC. Phase 2 was also done by ECO:LOGIC. However, the CEQA issues are being handled by Jones & Stokes. Staff is very cognizant of doing what is in the best interest of the rate payers. In response to Director Miller s question regarding when the additional scope of work would be completed, Mr. Powell stated that completion is anticipated for the end of 2009 in parallel with the planning and pre-design work. Spencer Short, Mayor of the City of Lincoln, expressed a slight concern. The City s initial goal when they started this process many years ago was to generate a plant that would serve the District s service area within the City of Lincoln and also within the District s soft service area. They have a concern moving forward because this is a late arriving alternative that actually runs contrary to the City s stated goal. The stated goal has been to develop a secondary source of water for those areas within Lincoln. The City had been approached by PCWA in 1998 or 1999 regarding PCWA taking over the entire City of Lincoln. The City did not feel that was in their best interest then, and they do not feel it is in the City s best interest now. It is in the City s best interest to have a fully independent secondary source of water. The City has been partnering with the District and this has been working very well. He would hope that PCWA would pay a third of the share if this alternative is going to move forward. The City would ask that the Board consider the cost to provide water to the District s soft service area. An evaluation of the economics should be done. He also pointed out that the City of Lincoln would be paying about 80 percent of the overall Project. He added that he is speaking for himself today and the Water Committee, not the entire City Council. However, in the past the Council has voted unanimously to support this Project and to support partnering with the District. AUBURN 49 FIRE Relief to Victims Monica Reyes, Customer Account Administrator, presented a recommendation from the Administrative Practices Committee regarding implementing a 60-day grace period with no charges to approximately 63 victims of the Auburn 49 Fire, and then charge these same customers the bi-monthly off rate (currently $24.50 for a 5/8-inch meter) until they begin to consistently use water. Ms. Reyes provided some background. On August 30, 2009, 63 homes in the Auburn area were destroyed by the fire. As of now, those properties still have water, but the water is off at the gate valve on their meters. Many customers wanted the meters locked, but the Fire Department requested that the services remain on so that the water could be used for clean up of the ash and debris. Among those homeowners, there are property owners that used extra water during the fire to help protect their property and the property of their neighbors. At this time, that number is unknown. She has acquired the readings this past week, and none of those properties in the area have a high usage. 326

13 Ms. Reyes explained that the grace period would commence with the October 6, 2009 billing. These customers would receive a zero bill. From that point on, they would be charged an off-rate. For a 5/8-inch meter, the amount is $24.50 for every two months. She will monitor the usage over the next several months to ensure that when water is consistently being used, the account will be switched to the on rate. Most of the families will remain in the Auburn area and they intend to rebuild next Spring and Summer. The budgetary impact takes into consideration the assumption of an average use of 10 hundred cubic feet per month for the 60-day grace period. This would result in approximately $3,800 in lost revenue. The District would lose approximately $500 in revenue every two months by charging the off rate of $ Director Weber asked how long the Fire Department would need the water on for clean up. Ms. Reyes explained that two weeks ago, clean up was still taking place. She does not see the water usage being that much, but she will be monitoring these meters. Director Weber stated that she wonders if the District is providing enough relief. She asked if the District can not charge the customer until the property owners, for example, reestablish their lawn. It seems to her that it will take several months before the residents will use water. President Drew pointed out that the Board has the authority to revisit this matter at any time to consider extending the relief. Authorized implementation of a 60-day (bi-monthly) grace period with no charges to approximately 63 victims of the Auburn 49 Fire, and charged these same customers the bi-monthly off rate (currently $24.50 for a 5/8-inch meter). M/S/C Bachman/Miller Meeting recessed at 9:58 a.m. and reconvened at 10:12 a.m. FEDERAL ENERGY REGULATORY COMMISSION (FERC) RELICENSING OF THE YUBA-BEAR HYDROELECTRIC PROJECT Status Report Jim Lynch, HDR DTA, presented the following status report on the Yuba-Bear Hydroelectric Project: Where is the District on Schedule? On schedule for all filings - April 11, 2008: Notice of Intent and Pre-Application Document - September 25, 2008: Proposed Study Plan - January 23, 2009: Revised Study Plan - September 17, 2009: Bi-Annual Study Progress Report (Requested waiver for second Bi-Annual Study Progress Report) 327

14 On schedule for performing 30 of 35 studies ordered by FERC Slightly behind schedule for 5 studies ordered by FERC - Instream Flow - Fish Entrainment - Special Status Amphibians Foothill Yellow Legged Frog (FYLF) Habitat Modeling - Wildlife Bats - Recreation Flow Where is the District on Scope? Generally within scope for all tasks Slight scope creep on 3 studies: - Roads and Trails - Fish Entrainment - Special Status Amphibians (FYLF Habitat Modeling) Scope creep not expected to affect budget Where is the District on Budget? Within overall Fiscal Year 2009 spending forecast of $4.6 million - Current spending for FY 2009 through September: $2.8 million - Updated FY 2009 spending forecast: $4.0 million Estimates of cost saving measures (FY 2009) - Coordination with PG&E on Relicensing effort: ~$1.5 million - Long-term rental/leasing arrangements: $100,000 to $150,000 - District Staff participation has greatly increased team efficiency and lowered overall Project cost Team of 15+ sub-consultants participating in Project, including several small/disadvantaged businesses What is Next in Short-Term? Complete studies and prepare a Final Tech Memo for each study - 30 of the 35 studies scheduled to be complete by March 2010, though some delay is expected for 5 others as previously described - District Staff to review as usual File Initial Study Report in March Progress report, but will include final reports where available - Includes District proposed modifications to FERC ordered studies; Participants may suggest additional studies; FERC makes final decision by May (no disagreements) or July (disagreements) Continue consultations under Section 7 of Endangered Species Act and Section 106 of National Historic Properties Act Agree with Relicensing participants on collaborative process going forward Begin indentifying Project impacts and potential enhancements, and developing Preventative Mitigation and Enhancement (PM&E) measures - FERC wants Draft License Application (due by December 2010) to include all measures as well as implementation plans 328

15 What is Next in Long-Term? Continue collaboration with Relicensing participants regarding studies and PM&E measures Complete first year studies and second year studies, if any, and file a Final Tech Memo for each Make filings: - September 17, 2010: Bi-annual Study Progress Report - December 1, 2010: Draft License Applications - March 6, 2011: Updated Study Report - April 30, 2011: License Application Post-filing process Budget Projection: Actual/Forecasted spending by month: Month HDR DTA (and Sub-Consultant) Spending January 2009 $141,000 February 2009 $128,000 March 2009 $152,000 April 2009 $249,000 May 2009 $336,000 June 2009 $457,000 July 2009 $455,000 August 2009 $407,000 September 2009 $442,000 (Forecast) October 2009 $459,000 (Forecast) November 2009 $467,000 (Forecast) December 2009 $352,000 (Forecast) FY 2009 Total $4,046,000 (Forecast) Gross Revenue Estimate: Estimate is very preliminary and is based on range of expected annual generation and anticipated generation values gigawatt-hours per year (GWh) - $80,000 - $120,000/GWh (2009 $ based on NP15 values Range of expected annual gross revenue - $23 - $38 million per year New Rollins Powerhouse would add additional GWh/year with an annual gross revenue of $1.4 to $2.4 million Actual gross revenue can be significantly affected by annual hydrology, PM&E measures in new license, energy prices at the time the District enters into a Power Purchase Contract and terms of said contract 329

16 After some discussion with the Board regarding cost saving methods for the Relicensing effort, Mr. Lynch assured the Board that every effort is being made to save the District money during this process BUDGET: Preliminary Water Division Operations and Capital Expenditure Budget Marie G. Owens, Finance Manager/Treasurer, distributed the revised preliminary Water Division Operations and Capital Expenditure Budget incorporating the Administrative Practices Committee s recommendations to the List of Assumptions, and other changes that were discovered as a result of preparing the revised budget. She provided the following presentation: List of Assumptions for the Water Division Budget (changes in italics): Water Operations & Maintenance Payroll Percentage Increase 0% 5% 5% PERS Retirement Rate 17.26% 19.96% 23.31% Health Insurance Percentage Increase 5% 0% 0% Position Changes: Information Systems Operations Maintenance Corrections to Positions Detailed in the Maintenance Department (no change in $). Rate Augmentation Expenditures in Operations and Maintenance $2.42 mil $4.588 mil $2.793 mil Water Capital Cement Hill State Loan % $125K $690K $690K New Certificate of Participation % 0 $1.675 mil $1.675 mil Federal Energy Regulatory Commission (FERC) Relicensing $2.0 mil $ 2.0 mil $ 1.5 mil Fish Screen Now budgeted in 2010 $200K - - * * * 330

17 WATER DIVISION: OPERATIONS & MAINTENANCE - Highlights Each Department Pension Premiums: Pension premiums will decrease in 2010, but will increase in 2011 and 2012 due to notification from CalPERS requesting additional funds to offset market shortfalls. Directors Health Insurance: Overall budget decreased, but added $16,000 from the prior Budget version for Health Reimbursement Arrangement (HRA) accounts. Administration Other Post Employee Benefits (OPEB): Corrected numbers: for 2010, $922,000; for 2011, $954,000; and for 2012, 986,000. Management: Included Management salaries in the Management Budget totals since they were not included in the October 6, 2009 Administrative Practices Committee presentation. Information Services Classifications: One new position is being proposed (Systems Technician). Instead of budgeting for two System Analyst positions, one System Analyst will remain in the budget and the savings from the additional System Analyst position in the previous budget will be used to offset the salary of an additional Systems Technician. If the position is approved, the Temporary Help category will decrease. She informed the Board that the Committee requested that the Systems Technician position be reviewed once the Total Compensation has been completed. Cashiering, Customer Service and Accounting: Budgets are status quo. Engineering Position Change: A Sr. Administrative Assistant position is being proposed to replace the Administrative I/II position. Engineering Health Insurance: A decrease is reflected due to a number of HRA accounts being capped out. Engineering Various Projects: Highlighted those projects are eligible to be reimbursed by the Operating, Repair/Replacement and Rate Stabilization Reserve. Water Operations Classifications: A reduction is being proposed to bring the number of positions from 43.5 to 43. Temporary Help will also be added as a sub-category of Classifications, and will no longer be a separate line item. Maintenance Classifications: A request for the number of authorized positions to be increased from 54 to 60 by replacing higher level budgeted positions with lower level positions. Maintenance Rent and Leases of Equipment: Will experience a 50 percent decrease due to the purchase of equipment. Leasing equipment is rate based; the purchase of equipment is paid for with property taxes. Maintenance Contracts (Facilities and Maintenance): Highlighted those projects eligible for the use of the Operating, Repair/Replacement and Rate Stabilization Reserve money. 331

18 Purchasing and Warehousing Classifications: The Committee requested that the positions of Purchasing Supervisor and Buyer be evaluated with regard to combining the two positions. Purchasing and Warehousing Shotcrete: This is a new line item since Summary by Department Total % Change (without Contingency): For 2010, -.84%; for 2011, 14.31%; and for 2012, -3.70%. Ms. Owens pointed out to the Board that contingencies are funded by reserves. If the Budget needs to be amended by using contingency funds, these funds would be withdrawn from the Operating, Repair/Replacement and Rate Stabilization Reserve because this is also another designated purpose of the reserve. Ms. Owens informed the Board that she will present the Water Division Operations and Capital Revenue Budget at the Board of Directors meeting scheduled for October 21, In order to do so, she needs direction from the Board regarding rates and concurrence from the Board on projects that qualify for the Operating, Repair/Replacement and Rate Stabilization Reserve to determine what the shortfall will be. Options include: A 0 percent rate increase The current 2010 Proposition 218 Notice rates An average in between a 0 percent and the current 2010 Proposition 218 Notice rates Director Miller stated that the Water Rates Committee met earlier this morning. The increase in revenue for a majority of raw water accounts would result in approximately $137,000. The increase in revenue for treated water was approximately $600,000. If there was a 0 percent increase, the District would not receive the additional revenue. He stated that Gary King, Chief Engineer, commented during the Water Rates Committee that the revenue could be invested resulting in a larger number. It would be nice to have some direction from the Board before the Water Rates Committee meets again on October 21, Director Wilcox stated that he is worried about the accumulating debt. The District is talking about borrowing $21 million and paying interest on that. The District also has a 10-year Capital Improvement Program that totals $250 million, so more money will need to be borrowed. He believes the concept is that interest on the District s debt should not come from rates, but property taxes. However, the District is utilizing property taxes to help support rates. Soon the District will run out of funds. Either the District will have to substantially raise rates or dial way back on the long-term project list. He assumes that the projects are on the list because they are necessary. He sees the District getting into serious conflict in the future, so his recommendation would be to raise the rates within the confines of the Proposition 218 Notice, and gradually increase the rates so that the District will not have to raise rates catastrophically in the future and bear the public outrage. 332

19 Director Miller stated that the former Finance Manager did an amazing job by accumulating the District s reserves. Director Wilcox stated that one could also argue that some of the reserves were accumulated by deferring maintenance, and that in the long run, this is not in the District s best interest. Director Wilcox stated that it is his understanding that raw water users pay only 45 percent of the cost, and that treated water customers pay 60 percent of the cost for having water delivered. Director Wilcox reiterated that he is worried about the long-term picture. He would recommend working in the confines of the Proposition 218 notice. Meeting recessed at 12:10 p.m. and reconvened at 12:22 p.m. Ms. Owens suggested to the Board that she prepare the Water Division Operating Revenue Budget based on the Proposition 218 Notice rates for 2010, 2011 and 2012, evaluate the shortfalls so that the Board can make recommendations for the Water Rates Committee to review and discuss at their meeting of October 21, 2009 at 1:30 p.m. Director Weber stated that it is important to remember that projects could be limited so that the District would not have to borrow as much money. She added that there will probably be an increase in hydroelectric revenue that may offset some of the District s capital costs. WATER DIVISION: CAPITAL - Highlights Administration Debt Service: New Certificates of Participation are being budgeted for 2011 in the amount of $1.675 million and for 2012 in the amount of $1.675 million. This borrowing will help pay for the Lower Cascade Canal / Banner Cascade Pipeline Project and several other projects. Management Consulting: A budget of $2 million has been allocated for 2010 and 2011, and $1.5 million has been allocated for 2012 for the Federal Energy Regulatory Commission (FERC) relicensing of the Yuba-Bear Hydroelectric Project. These funds come from the Hydroelectric Relicensing Reserve so there is no impact to the water rate payers. Engineering Purchase of Other Equipment: Three portable generators for pump stations are being budget in the amount of $260,000 for Engineering Community Investment Program: Budgeted $1 million for 2010 and $700,000 for 2011 and

20 Engineering Amortization of Obligations to Developers by Capacity Fees: The Engineering Department has proposed $6.8 million worth of costs identified in the 9- year Capital Master Plan. An arbitrary figure of $677,000 has been amortized for 2010, 2011 and If the projects do not progress, the District will not incur the cost. Water Operations Total Capital Budget: The total budget for 2010 reflects a decrease compared to the total budget for 2009 (2009 = $411,000; 2010 = $343,000). Maintenance Purchase of Heavy Equipment: The amount budget for 2010 is down significantly compared to 2009 (2009 = $450,000; 2010 = $155,000) due to recent budged purchases of heavy equipment. Maintenance Contract Items and Construction: Fish Screens/Passages have been carried over to 2010 in the amount of $200,000. Summary by Department Total % Change (without Contingency): For 2010, %; for 2011, %; and for 2012, -4.83%. Ms. Owens stated that the Operations and Maintenance Budget and the Capital Budget combined total approximately $63 million. Director Wilcox stated that it seems to him that at some point during this process, the Board needs to review the current reserves and what the projected expenditures are to determine how much additional money the District will need to borrow and at what cost. CLOSED SESSION was declared at 12:50 p.m. pursuant to Government Code Section (b)(3)(c) to confer with Legal Counsel Pending Litigation: Claim of Gary Stoddard. MEETING RECONVENED in regular session at 12:55 p.m. There was no action to report from closed session. MEETING ADJOURNED at 12:55 p.m. to reconvene in regular session on October 14, 2009, at 9:00 a.m. at the District's main office located at 1036 W. Main Street, Grass Valley, California. Board Secretary 334

21 Attest a true record of actions had and taken at the above and foregoing meeting our presence thereat and our consent thereto. Director Division I Division II Division III Division IV Division V 335