Proposed Staff Recommendation Consent Calendar for March 24, 2016

Transcription

1 Proposed Staff Recommendation Consent Calendar for March 24, 2016 ADMINISTRATION AND FINANCE COMMITTEE 9-1. Monthly Treasurer s Report on Investments and Cash Flow. Note and file monthly Treasurer s Report Approve the Recommended Debt Management Activities. A) Authorize the issuance of Water Revenue Refunding Bonds Series 2016A to refund certain outstanding long-term debt to yield debt service savings. a. Adopt a resolution authorizing the issuance of Water Revenue Refunding Bonds, Series 2016A, for the purpose of refunding certain existing longterm debt; and authorize the Director Finance to utilize a negotiated method of sale. b. Approve the forms of financing documents for the refunding bond issuances including the Preliminary Official Statement for the Series 2016A Bonds. c. Approve the selection of the underwriting team and US Bank as trustee. B) Authorize the issuance of Subordinate Lien Water Revenue Refunding Bonds, Series 2016S-1 to replace the maturing Subordinate Lien Water Revenue Refunding Bonds, Series 2011S-1. a. Adopt a resolution authorizing the issuance of Subordinate Lien Water Revenue Refunding Bonds, Series 2016S-1, in an aggregate principal amount not to exceed $90 million for the purpose of a portion of outstanding tax-exempt commercial paper; authorize the payment of Series 2011S-1 Bonds with commercial paper notes; and authorize a negotiated method of sale for the issuance. b. Approve the forms of financing documents for the refunding bond issuances including the Preliminary Official Statement for the 2016S-1 Bonds. c. Approve the selection of the underwriting team and US Bank as trustee. C) Adopt a resolution authorizing the increase in the size of the Extendable Commercial Paper (ECP) program to $100M and authorizing and approving certain actions in connection herewith. a. Approve the selection of Bank of America/Merrill Lynch, J.P. Morgan and Morgan Stanley to serve as dealers on the Series 1 ECP.

2 b. Increase the aggregate principal amount of short-term revenue certificates (including Series 1 ECP Notes) authorized at any time to be outstanding to $450,000,000. c. Approve the forms of financing documents including an Offering Memorandum. LEGISLATION, CONSERVATION AND OUTREACH COMMITTEE 9-3. Adopt positions on various state and federal bills. A) Adopt a position of Support on AB 1928 (Campos), relating to irrigation system performance standards and labeling requirements. B) Adopt a position of Support on AB 2022 (Gordon), relating to advanced purified demonstration drinking water for educational purposes. C) Adopt a position of Support if Amended on AB 2040 (Melendez), relating to outdoor water efficiency improvement tax credits. D) Adopt a position of Support on AB 2438 (Waldron), relating to CEQA exemptions for recycled water pipelines. E) Adopt a position of Oppose on AB 2801 (Gallagher), relating to statutes of limitations on validation actions. F) Adopt a position of Support on ACA 8 (Bloom), relating to vote threshold for local agency bonded indebtedness ballot measures. G) Adopt a position of Support and Seek Amendments on SB 919 (Hertzberg), relating to renewable energy rates and tariffs for local water supply development facilities. H) Adopt a position of Support on SB 927 (Anderson), relating to director elections within the Fallbrook Public Utility District. I) Adopt a position of Support on SB 1173 (Hertzberg), relating to indoor plumbing fixture standards. J) Adopt a position of Support on H.R (Huffman), relating to federal tax exemptions for water conservation rebates. K) Adopt a position of Support and Seek Amendments on S (Feinstein), relating to short-term and long-term drought relief provisions for California. 2

3 9-4. Proposed Amendment to Sponsored Legislation AB 2515 (Weber). Approve proposed amendment to sponsored legislation AB 2515 (Weber) to require the implementation of any future drought emergency on a county-by-county or regional basis, giving specific consideration to the facts and circumstances prevailing within the county or region. WATER PLANNING COMMITTEE 9-5. Modify Shortage Management Actions in Response to Securing Drought-Resilient Supply Credits under State Water Resources Control Board Emergency Regulation for Statewide Urban Water Conservation. In response to obtaining the drought-resilient supply credits, staff recommends approval of Ordinance No , which contains the following actions: a. Rescind Ordinance No , An Ordinance of the Board of Directors of the San Diego County Water Authority Allocating Water Pursuant to the Water Authority s Drought Management Plan, Imposing Additional Requirements upon Water Authority Member Agencies Relating to the Use and Conservation of Water, and Establishing Penalties for Violations of Allocations and Requirements; and b. Continue the current provisions that address member agency municipal and industrial and Transitional Special Agricultural Water Rate supply allocations and penalty assessment for fiscal year 2016; and c. Continue the Mandatory Supply Cutback Stage (Stage III) of the Water Authority s Water Shortage and Drought Response Plan; and d. Rescind the July 2014 notification of a Regional Drought Response Level 2, Drought Alert condition. ENGINEERING AND OPERATIONS COMMITTEE 9-6. Procurement contract for a new 23.5-ton mobile crane truck. Authorize the General Manager to award a contract to San Diego Freightliner for the purchase of a 23.5-ton mobile crane truck for a total not-to-exceed amount of $266, Notice of Completion for the San Vicente Marina Facilities project. Authorize the General Manager to accept the San Vicente Marina Facilities project as complete, record the Notice of Completion, and release funds held in retention to Pulice Construction, Inc. following the expiration of the retention period. 3

4 LEGISLATION, CONSERVATION AND OUTREACH COMMITTEE REVISED AGENDA FOR MARCH 24, 2016 Gary Croucher Chair Christy Guerin Vice Chair Fern Steiner Vice Chair David Barnum Ed Gallo Matt Hall Frank Hilliker Jim Madaffer Ron Morrison Mark Muir Jose Preciado Dave Roberts Elsa Saxod Yen Tu 1. Roll call determination of quorum. 2. Additions to agenda (Government Code Section (b)). 3. Public comment opportunities for members of the public to address the Committee on matters within the Committee s jurisdiction. 4. Chair s report. 4-A Directors comments. I. CONSENT CALENDAR 1. Adopt positions on various state and federal bills. Staff recommendation: 1-A Adopt a position of Support on AB 1928 (Campos), relating to irrigation system performance standards and labeling requirements. Ivy Ridderbusch 1-B Adopt a position of Support on AB 2022 (Gordon), relating to advanced purified demonstration drinking water for educational purposes. 1-C Adopt a position of Support if Amended on AB 2040 (Melendez), relating to outdoor water efficiency improvement tax credits. 1-D Adopt a position of Support on AB 2438 (Waldron), relating to CEQA exemptions for recycled water pipelines.

5 1-E Adopt a position of Oppose on AB 2801 (Gallagher), relating to statutes of limitations on validation actions. 1-F Adopt a position of Support on ACA 8 (Bloom), relating to vote threshold for local agency bonded indebtedness ballot measures. 1-G Adopt a position of Support and Seek Amendments on SB 919 (Hertzberg), relating to renewable energy rates and tariffs for local water supply development facilities. 1-H Adopt a position of Support on SB 927 (Anderson), relating to director elections within the Fallbrook Public Utility District. 1-I Adopt a position of Support on SB 1173 (Hertzberg), relating to indoor plumbing fixture standards. 1-J Adopt a position of Support on H.R (Huffman), relating to federal tax exemptions for water conservation rebates. 1-K Adopt a position of Support and Seek Amendments on S (Feinstein), relating to short-term and long-term drought relief provisions for California. (Action) II. ACTION/DISCUSSION/PRESENTATION 1. Legislative issues. 1-A Washington report by Ken Carpi. (Written report only) (Supplemental materials) 1-B Sacramento report by Bob Giroux Lang, Hansen, O Malley & Miller 1-C Proposed Amendment to Sponsored Legislation AB 2515 (Weber). Staff recommendation: Approve proposed amendment to sponsored legislation AB 2515 (Weber) to require the implementation of any future drought emergency on a countyby-county or regional basis, giving specific consideration to the facts and circumstances prevailing within the county or region. (Action) Dennis Cushman Public Opinion Poll Content. (Discussion) Mike Lee

6 3. Drought Response Communications and Outreach Update. (Presentation) Jason Foster III. INFORMATION 1. Small Contractor Outreach and Opportunities Program (SCOOP) Committee Quarterly Report. Teresa Penunuri 2. Quarterly report on Public Outreach and Conservation activities. Jason Foster 3. Quarterly Water Conservation Garden Report. John Linden 4. Status Report on Legislation and Legislative Positions. Ivy Ridderbusch 5. Government Relations Update. Ivy Ridderbusch IV. CLOSED SESSION V. ADJOURNMENT Melinda Cogle Clerk of the Board NOTE: This meeting is called as a Legislation, Conservation, and Outreach Committee meeting. Because a quorum of the Board may be present, the meeting is also noticed as a Board meeting. Members of the Board who are not members of the Committee may participate in the meeting pursuant to Section (g) of the Authority Administrative Code (Recodified). All items on the agenda, including information items, may be deliberated and become subject to action. All public documents provided to the committee or Board for this meeting including materials related to an item on this agenda and submitted to the Board of Directors within 72 hours prior to this meeting may be reviewed at the San Diego County Water Authority headquarters located at 4677 Overland Avenue, San Diego, CA at the reception desk during normal business hours.

7 March 22, 2016 Randy Record and Members of the Board of Directors Metropolitan Water District of Southern California P.O.Box Los Angeles, CA RE: Final Demand for Financial Planning Model Dear Chair Record and Board Members: First, however tardy, we appreciate that MWD is beginning to provide some additional information regarding its proposed rates and charges for calendar years 2017 and 2018, including information posted on the web site and made available on March 20, 2016, in response to the Water Authority's Public Records Act request. While we are still in the process of reviewing this information, a preliminary review by our staff and consultants indicates that the material that has been provided still does not show -- as MWD must -- how MWD has set its rates and charges, much less that MWD complies with governing cost of service requirements. Many of the documents are either redundant (i.e., contain the same material and level of detail as other documents) or do not even appear relevant to review of MWD's cost of service methodology. For board members who may not be aware of the role and importance of the financial planning model used by MWD, it contains the bases and formulae that spell out in precise detail several data sets and the implementing procedures that take those data sets and use them to determine the price of water and other services provided by MWD. There is nothing "unique" about the rate setting process at MWD or services provided by MWD; it is required to conform to the same cost of service principles and legal requirements as any other California water agency. Contrary to the statement made by MWD's General Counsel during today's Finance and Insurance Committee/Budget and Rates Workshop #4 meeting, the Court in the Water Authority rate litigation did not make any ruling on the merits of whether MWD's financial planning model is "proprietary" or a "trade secret," as claimed by MWD. We can conceive of no basis for a governmental agency such as MWD to refuse to disclose to its customers -- or even its own board of directors -- the precise methodology and data that it uses to set its rates. Without full disclosure, MWD cannot possibly carry its burdens, not only of disclosure, but of proof that its rates comply with applicable law. Indeed, MWD has not even

8 Chairman Record and Members of the Board March 22, 2016 Page 2 shown that it is pricing water and services the way it says it is pricing them. Basically, MWD is saying, just trust us; but that's not good enough to meet California legal requirements, let alone the transparency required of public agencies and board member public servants entrusted with ratepayer dollars. We are asking again, in the hope of avoiding litigation over failure to disclose this public information, that MWD voluntarily make available to its customers its financial planning model showing how it prices the services it sells those customers -- MWD's 26 member public agencies -- and the almost 19 million ratepayers they serve. Sincerely, Dennis A. Cushman Assistant General Manager CC: San Diego County Water Authority Board of Directors Jeff Kightlinger, MWD General Manager Marcia Scully, MWD General Counsel Maureen Stapleton, Water Authority General Manager Mark Hattam, Water Authority General Counsel

9 March 23, 2016 Attention: Imported Water Committee Metropolitan Water District Delegates Report (Discussion) Background This report summarizes key discussions held and actions taken at the Metropolitan Water District (MWD) committee and Board meetings, as reported by the MWD Delegates. The MWD committees and Board met on March 7 and 8, 2016, and will meet next on April 11 and 12. Discussion Key actions at this month s MWD Board meetings included: 1) adopting a short-term revenue certificate resolution to authorize the issuance of up to $400 million in debt; 2) authorizing the purchase of five Delta Islands; and 3) authorizing agreements for the design of the demonstration plant and feasibility studies of the delivery system for a potential recycled water program with the Los Angeles County Sanitation Districts. The Board also held a combined public hearing for MWD s proposed rates and charges and suspension of the ad valorem tax rate limitation. In addition, the Board received presentations on MWD s proposed 2017 and 2018 budget and rates, and water surplus and drought management report. MWD s Biennial Budget and Rate Setting Update The Board continued its discussion of MWD s proposed fiscal year 2017 and 2018 budget and associated calendar years 2017 and 218 rates and changes. 1 The majority of this discussion focused on staff s recommended new fixed treated water charge that would recover about 38 percent of MWD s treatment costs. As proposed, the fixed treated water charge would be proportional to the higher of member agencies average treated water purchases between 1998 and 2007, or rolling 10-year average. 2 The Board s budget and rates discussion is summarized in Attachment 1. At the Board s March 8 meeting, it held a combined public hearing for its proposed calendar years 2017 and 2018 rates and charges, and suspension of the ad valorem tax rate limitation for fiscal years 2017 and At the hearing, 18 speakers 4 opposed MWD s proposed rates and/or expressed concerns with MWD s lack of transparency and accountability. The Water Authority provided testimony opposing the proposed rates, charges, and suspension of the ad valorem tax rate limitation (Attachment 2). Attachment 1 includes a summary of the public hearing. 1 For more information on MWD s proposed biennial budget and rates, see the memo Metropolitan Water District s Proposed Budget and Rates for 2017 and 2018 found in the February 2016 Water Authority Board Packet on pages : 2 For more information on MWD s proposed fixed treated water charge, see the memo Metropolitan Water District s Fixed Treatment Charge Discussion found in the March 2016 Water Authority Board packet on pages : 3 Section of the MWD Act limits the type of debts MWD s ad valorem tax revenues may fund, and its tax rate declines as these debts are paid off. However, the Act allows the suspension of the tax rate limitation if the MWD Board finds it essential to the fiscal integrity of MWD. 4 In addition to the Water Authority s testimony, the majority of speakers identified themselves as from the Los Angeles County with four from Ventura County (one spoke during the Finance and Insurance Committee meeting).

10 Imported Water Committee March 23, 2016 Page 2 of 3 MWD s Financial Management The Board adopted the Master Subordinate Resolution and First Supplemental Subordinate Resolution. The resolutions allow MWD to issuance debt that incorporates a hard put structure, which, according to staff, appeals to a broader investor group and will lower MWD s debt costs. Additionally, the Board authorized the sale and issues of short-term revenue certificates. This action allows MWD to borrow up to $400 million from two banks. The certificates will be used to backfill MWD s unrestricted reserves, which will be depleted when MWD begins managing the amount disputed in the Water Authority s rate litigation separately from these reserves. The Water Authority Delegates opposed this item. 5 Attachment 3 provides more details on these two actions. Bay-Delta Islands Purchase During the Real Property and Asset Management Committee meeting, the Board received an opensession report on the potential benefits from purchasing properties in the Sacramento-San Joaquin Bay- Delta known as the Delta Wetlands Properties. After the presentation, the committee further discussed the purchase of these properties in closed session. Out of committee, all but two of the committee members present Directors Hogan and Dake (Los Angeles) supported purchasing the properties. During MWD s Board meeting, Chair Record (Eastern) made a friendly amendment to the committee s recommendation to allow the Board another opportunity to review the purchase at a special Board meeting on April 26. Director Paskett (Los Angeles) made a substitute motion to defer action on the purchase until MWD s April 12 Board meeting. The Water Authority s Delegates supported Paskett s motion, which narrowly failed. Ultimately, the Board approved the committee s recommendation, which the Delegates opposed. More information on the Board s consideration of this item is in Attachment 4. Water Surplus and Demand Management Report Staff presented on MWD s projected supply and demand balance under two State Water Project (SWP) Table A allocations: 30 and 50 percent. Under a 30 percent SWP allocation (the allocation at the time of the presentation), 6 and assuming projected 2016 sales of 1.52 million acre-feet, MWD would need to draw about 70,000 acre-feet from storage to fill the supply gap. Under a 50 percent SWP allocation, using the same sales projection, MWD anticipates it would store 320,000 acre-feet. A 50 percent allocation would increase MWD s projected end-of-year storage reserves to 1.2 million acre-feet. MWD reported that there are several factors that may impact its projected supplies and demands including: Colorado River agricultural adjustments; transfers and exchanges availability; Los Angeles Aqueduct production; implementation of MWD s Water Supply Allocation Plan; storage take limits based on Lake Mead s elevation; and the final SWP allocation. Overview Overall, the Water Authority Delegation supported seven of the 10 of the action items approved by the MWD Board. Director Tu recused herself, due to a potential conflict of interest concern, on the item related to MWD s potential recycled water program with LACSD while the rest of the Delegates opposed this item. Attachment 5 is the Delegates noticing MWD of the Water Authority s nonliability and disclaimer of financial or contract responsibility associated with the program, as well as its intention to seek recovery of illegal rates used to fund the program. The Board approved final 5 The Delegates opposition letter can be found here: 07_WA_Delegate_ltr_re_MWD_Memo_8-2_Revenue_Certificates.pdf 6 Subsequent to MWD s committee and Board meetings, the Department of Water Resources increased the SWP allocation to 45 percent.

11 Imported Water Committee March 23, 2016 Page 3 of 3 agreement terms for a seasonal fallowing pilot program with the Bard Water District, and entering into memorandum of agreements for with four of MWD s unions for a three-year, $1.2 million incentive payment program for employees assigned to MWD s remote facilities at the Iron Mountain, Eagle Mountain, and Hinds Pumping Plants. Attachment 6 is a copy of MWD s March 2016 committee and Board meeting agendas and summary report. Prepared by: Liz Mendelson-Goossens, Water Resources Specialist Reviewed by: Communications and Legislation Committee by Keith Lewinger and Yen Tu Engineering and Operations Committee by Fern Steiner Finance and Insurance Committee by Keith Lewinger Legal and Claims Committee by Fern Steiner and Yen Tu Organization, Personnel and Technology Committee by Michael Hogan Real Property and Asset Management Committee by Michael Hogan Water Planning and Stewardship Committee by Keith Lewinger and Fern Steiner Attachment 1: Discussion Summary of MWD s Third Budget Workshop Attachment 2: Water Authority testimony on MWD s proposed rates, changes, and suspension of the ad valorem tax rate limitation dated March 8, 2016 Attachment 3: Discussion Summary of MWD s Financial Management Attachment 4: Discussion Summary of MWD s Authorization to Purchase Bay-Delta Islands Attachment 5: Water Authority Delegates letter related to MWD s potential recycled water program with the Los Angeles County Sanitation Districts dated March 5, 2016 Attachment 6: MWD s committee and Board meeting agendas and Board summary, dated March 7 and 8, 2016

12 Attachment 1 Page 1 of 5 Discussion Summary of MWD s Third Budget Workshop At its March Finance and Insurance Committee (F&I Committee) meeting, MWD held its third workshop for its 2017 and 2018 budget process. Prior to staff s presentation related to MWD s proposed budget and rates, a representative from the city of Camarillo opposed MWD s recommended fixed treated water charge. The proposed charge would set member agencies share of the fixed treated water charge proportional to their respective average MWD treated water purchases from 1998 through 2007, or a 10-year rolling period, whichever is higher. 1 Camarillo s representative said the proposed charge would act as a disincentive for local resources development. Following this comment, MWD staff provided the same presentation it gave at the next day s public hearing on proposed calendar years 2017 and 2018 rates and charges and suspension of the ad valorem tax rate limitation for fiscal years 2017 and MWD reviewed the purpose of the ad valorem tax, which is to recover the costs associated with its outstanding general obligation bonds and certain State Water Project (SWP) debt (Burns Porter bonds). 2 MWD s ad valorem tax rate is scheduled to decline as these debts are paid-off; however, MWD may suspend the tax rate limitation and maintain it at its current level should the Board find it essential to MWD s fiscal integrity. According to staff, maintaining the tax rate 3 is essential to MWD s fiscal integrity because it better balances the ratio of fixed revenues to fixed costs, 4 helps fund continually increasing SWP costs, mitigates future rate increase, and provides financial flexibility. Also, MWD described its proposed rate increases, which would result in an overall increase of 4 percent in each year. However, individual rate components are decreasing and increasing at far different rates, and the impact to individual member agencies will depend on which MWD services they use. 5 MWD s consultant, Raftelis Financial Consulting (RFC), presented two additional fixed treated water charges to the two it provided in February. The two new charges sought to recover the portion of the treated water cost MWD says are associated with standby and demand services based on either 10- or 20-year rolling averages. 1 RFC described the rolling 20-year average option as a compromise between staff s recommendation (which would result in permanent, or floor treatment payments that agencies cannot avoid) and the 10-year rolling average option, because it would still incentivize local supply development but also allow MWD to recover its investment in treatment capacity. Responding to concerns that the recommended fixed treated water charge would establish a minimum fixed treated charge in perpetuity, RFC 1 For more information on MWD s proposed fixed treated water charge, see the memo Metropolitan Water District s Fixed Treatment Charge Discussion found in the March 2016 Water Authority Board packet on pages : 2 For more information on the ad valorem tax rate limitation, see the memo Metropolitan Water District Program Report found in the March 2016 Water Authority Board packet on pages : 3 The tax rate is currently percent and if maintained, MWD estimates would cost $14 annually for a single family home assessed at $400, While MWD says it is suspending the tax rate limitation to increase fixed revenues, it is also reducing its fixed charges, the Readiness-To-Serve (RTS) and Capacity charges. 5 For more information on MWD proposed budget, rates, and charges, see the memo Metropolitan Water District s Proposed Budget and Rates for 2017 and 2018 found in the February 2016 Water Authority Board packet on pages :

13 Attachment 1 Page 2 of 5 said that by having the minimum, MWD s hope was to encourage discussion. RFC added that member agencies that do not require demand and standby service have an opportunity to move out from under the minimum. Later, in response to Director Ramos (Burbank), RFC said that under the recommended charge an agency could escape the minimum by disconnecting from MWD s treated water system so that MWD is no longer providing standby capacity. Lewinger said he understood the Board could change the charge, but that there is no guarantee that an agency will not be stuck with a minimum payment. RFC responded by encouraging MWD and its member agencies to begin discussions about future treated water needs and capital investments. In response to Director McKenney (Municipal Water District of Orange County), Chief Financial Officer Breaux said that staff will look for a sense of how the Board feels about the recommended fixed treated water charge at the March 22 special meeting of the F&I Committee. McKenney commented that he felt the discussion about the charge is incomplete. Breaux reflected that a lot of discussion had occurred with the member agency managers and that the Board can continue discussions today. Later, Director Lewinger questioned if the Board could adopt a fixed treated water charge, since MWD failed to present information on the charge in its memo on proposed rates and charges for the public hearing. Assistant General Counsel Beatty opined that the presentations and materials given to the Board and the presentation planned for the following day s public hearing serve as providing information to the public, and is legally sufficient. Director Blois (Calleguas) said that on the surface, his agency would be the single biggest winner if MWD adopted staff s recommended fixed treated water charge. However, after more analysis, Blois said that this benefit is short termed, and the minimum floor imposed by the recommended charge would serve as a disincentive for its purveyors to pursue local projects. The simple solution, to balance between encouraging local supply development and paying for MWD s stranded treatment investments, Blois suggested, is to base the charge on a 10-year rolling average. Later, Lewinger agreed with Blois that basing the fixed charge on a 20-year rolling average would stymy local resource development; Director Paskett (Los Angeles) also agreed. Since his agency invested in its treatment facilities about 35 years ago, Director Faessel (Anaheim) said the 20-year rolling average option would be a very, very difficult message to deliver to [Anaheim s] ratepayers. Lewinger requested that in addition to considering a fixed charge to recover treatment costs, MWD also look at recovering some of its more expensive supply costs through a fixed charge. He pointed out that the issues being discussed related to treatment costs are no different than what MWD faces with water supply expenses. Lewinger requested information on the percentage of fixed costs related to MWD s supply system. Later, he also asked if MWD invested in treated water capacity for agencies that historically did not purchase treated water. (If MWD made these investments, then the proposed fixed charge fails to allocate these costs to agencies that have not purchased treated water.) Agreeing with Blois and Lewinger, Director Wunderlich (Beverly Hills) also questioned how staff determined that 60 percent of Capital Investment Plan (CIP) expenditures should be

14 Attachment 1 Page 3 of 5 PAYGo-funded. 6 Breaux s replied that this PAYGo level was chosen to balance rate increases with MWD s past and planned CIP investments related to replacement and refurbishment activities to keep rates stable and to keep [MWD s] financial flexibility. Director Steiner sought clarification on why MWD s two fixed charges, the RTS and Capacity charges, are proposed to decrease in Staff replied that these charges currently only recover capital financing costs related to MWD s debt service and PAYGo. Since MWD s fiscal year 2017 budgeted PAYGo is declining to 60 percent (from 100 percent in fiscal year 2016), 7 less revenue from these charges is needed to cover the lower PAYGo expenses, according to staff. Steiner pointed out that staff s presentation showed fiscal year 2016 PAYGo at $99 million while the proposed fiscal year 2017 PAYGo is $120 million. Staff said the fiscal year 2016 PAYGo amount excluded amounts used to finance MWD s purchase of properties in the Palo Verde Irrigation District (PVID). 8 Returning to the recommended fixed treated water charge, McKenney asked for more information about the fixed charge s components. Breaux said the components are based on MWD s existing cost-of-service approach and RFC added that a cost-of service methodology was used. Clarifying his question, McKenney asked if there are various elements, such as debt service, incorporated in the fixed charge and if all elements are treated the same. RFC assured that the charge has a sound technical standpoint and recovers 38 percent of MWD s treated costs related to demand and standby services; RFC further commented that with 91 percent of the treatment costs being fixed, this fixed charge proposal is a good place to start. In response to Director Steiner, RFC said that demand costs relate to meeting peak demands on a weekly basis because MWD measures peak demands over a week versus a peak hour [or] peak day. 9 While, according to RFC, standby costs relate to capital investments MWD made to provide treated water service to meet member agencies dry-year or emergency demands. In response to Director Tu, RFC said that it did not return this month with a fixed treated water charge that included peaking. According to RFC, incorporating peaking behavior into the recommended charge did not swing the results in a material fashion because for most agencies the impact on their costs was less than 10 percent. Even if the impact is small, Tu said cost-ofservice principles might require peaking-related costs to be recovered through a charge that is not based on a standby cost recovery method. RFC replied that member agencies peaking behavior is strongly correlated to annual treated water sales and, therefore, by default, peaking is being considered. Later, Steiner requested that staff include alternatives incorporating peaking next time the fixed treated water charge options are presented to the Board. 6 PAYGo, or Pay-As-You-Go, is the use of current fiscal year cash revenues to fund CIP expenditures. 7 Although MWD budgeted to fully cash fund its CIP in fiscal year 2016, in December 2015, MWD issued $250 million in debt to reimburse, or pay for, CIP expenses in fiscal years 2015 through 2017 that were, or planned to be, cash-funded. MWD reported that about $201million of this debt will be used for fiscal year 2016 CIP costs (budgeted at $268 million but recently projected to be $225 million). 8 In July 2015, the Board authorized the purchase of properties in PVID for a total cost of about $264 million. MWD said $164 million of this purchase would be funded with cash budgeted for replacement and refurbishment activities. 9 One of MWD s fixed charges, the Capacity Charge, intends to recover costs for providing peaking service and is based on the highest summer day demand over a three-year rolling period.

15 Attachment 1 Page 4 of 5 Director Hogan questioned if staff s recommendation that creates a permanent minimum treated water payment meets cost-of-service principles. In response, RFC said the charge is structured to ensure agencies driving past treatment investments pay for the investments made for them and agencies with increasing treated water purchases also pay for these previous investments. Steiner pointed out that MWD made significant investments in its treated water system after 2007 such as through its Oxidation Retrofit Program. Using the 1998 though 2007 base period for MWD s fixed treated water charge fails to properly capture and allocate those costs, Steiner said. Lewinger said that MWD has unrealized demands resulting from member agencies investments in both local supplies and treatment options. The recommended charge fails to account for the reduction in treated water demands stemming from local supply development and shifts the cost of the capacity built to meet projected demands to agencies that invested in local treatment plants. RFC said that Lewinger s point is not significant to the analysis of the fixed treated water charge. Wunderlich suggested that some agencies may be developing local supplies, which reduces their treated water purchases, while other agencies have lower treated water demands due to investments in local treatment options. Kightlinger agreed that those conditions are reducing treated water demands, but said that most likely the largest impact on treated water demands result from demographic shifts. More specifically, Kightlinger said that population growth slowed in areas like the Inland Empire by roughly 40 percent in 2007 and Most of the facilities were built to meet this projected growth, Kightlinger reported. Historically MWD planned for abundance, according to Director Dick (Municipal Water District of Orange County), who expressed his support that MWD continue to do so. Kightlinger also assured the committee that these assets will be grown into but just at a slower rate due to changed demographics. Later, Director Peterson (Las Virgenes) said that MWD overbuilt Skinner and probably Jensen too, but he thinks their capacities will eventually be used. Stating that everybody is different and how everyone is treated is different, Peterson voiced support for staff s recommendation suggesting it would offer some form of equity in this agency. Lewinger questioned MWD s obligation to provide treated water, suggesting that the Board decided to offer this service. Referencing the Blue Ribbon Task Force report, Lewinger said that MWD was warned that it was incurring significant capital costs from its treatment plants without securing commitments from its member agencies to pay for these investments. 10 Wunderlich reflected that not all member agencies are able to receive untreated water and questioned how MWD determines which agencies are able to purchase untreated water. General Manager Kightlinger said that historically MWD worked closely with its member agencies to determine needed facilities and some agencies made the decision through this coordinated process to only take treated MWD water. Wunderlich asked who incurs the costs of the untreated water delivery system; Kightlinger replied that MWD pays for delivery systems to its member agencies borders. 10 The timing, scope and extent of New Demand Charge investments and payments are not synchronized, forcing Metropolitan to unilaterally forecast future demand and initiate projects, rather than secure up-front commitments from agencies that want additional system capacity improvements. This strategy commits current resources without guaranteeing the future revenues to pay for new investments. Blue Ribbon Task Force Report at page 16.

16 Attachment 1 Page 5 of 5 Paskett questioned why MWD would bring forward a proposal for a fixed treated water charge when it seems as if the finances for this agency are strong. Kightlinger replied that staff presented this charge for Board consideration based on directors requests from the last budget setting cycle and indication that some directors would like to have a vote on this charge. Breaux added that MWD can recover all its treated water costs through the existing volumetric Treatment Surcharge, but the issue is who pays for the treatment costs. Due to time constraints F&I Committee Chair Barbre deferred the Capital Investment Plan (CIP) budget to the next workshop on March 22. The following day, MWD held a public hearing on its proposed rates and charges for calendar years 2017 and 2018, and the recommendation to suspend the tax rate limitation in both fiscal years 2017 and During the hearing, 18 speakers addressed the MWD Board. 11 Calleguas Municipal Water District s general manager and representatives from two of its subagencies (Camrosa Water District and Ventura County Public Works Agency) expressed opposition to the recommended treated water charge. They opposed the recommended charge because it would create a minimum payment and act as a disincentive for local supply development. Water Authority Assistant General Manager Cushman provided testimony on behalf of the Water Authority opposing MWD s proposed rates and charges, including the recommended fixed treated water charge, and proposal to suspend the tax rate limitation. He pointed out that before the public hearing, MWD failed to provide the budget and cost of service information necessary to understand how MWD developed and allocated its proposed rates, charges, and tax rate limitation suspension. Additionally, MWD indicated it will allocate its proposed rates and charges based on the same methodology that was found to violate California law and the State Constitution by the Superior Court, Cushman said. 12 Speakers from the Los Angeles Water Keeper, Food and Water Watch, Alliance of California for Community Empowerment, and two members of the public (from Los Angeles and Beverly Hills) opposed MWD s proposed rates, charges, and tax rate limit suspension due to concerns with MWD s transparency and that MWD would use the funds from the increased rates and tax rate limit suspension to finance the California WaterFix. Three Los Angeles city residents, a city of Bell resident, and a city of Carson resident voiced concerns about MWD s transparency and the financial burden that the proposed rates, charges, and tax rate limit suspension would place on ratepayers. For similar reasons, a Pasadena resident opposed MWD s proposed rates, charges, and tax rate limit suspension and agreed with Cushman s testimony. The final speaker expressed concern with MWD s lack of accountability. 11 During the March public hearing 17 speakers addressed the MWD Board and another speaker addressed the Finance and Insurance Committee at its meeting the previous day. 12 A copy of Cushman s testimony can be found here:

17 Attachment 2, Page 1 of 1 March 8, 2016 MWD Board of Directors Testimony of Dennis Cushman, Assistant General Manager, San Diego County Water Authority To Metropolitan Water District of Southern California Public Hearing to Consider Suspension of Tax Rate Limitations under MWD Act Section and Proposed Water Rates and Charges for Calendar Years 2017 and 2018 Good afternoon, Chairman Record and members of the board. I m Dennis Cushman, assistant general manager of the San Diego County Water Authority, speaking on behalf of the Water Authority. As a first order of business, I would like to submit into today's record a letter of today's date addressed to the Clerk of the Board, with attachments, including CDs numbered one through seven and titled Submittal of Information into Administrative Record of rate-setting for calendar years 2017 and Turning to the proposed budget and rates, it is simply not possible to understand how MWD has allocated the costs contained in its proposed budget for calendar years 2017 and 2018, or whether the proposed rates and charges -- including a potential fixed treatment charge which is not even included in this month s 9-dash-2 proposed rates and charges -- are based on cost-causation, as required under California law and the Constitution. To do this, MWD must make available budget detail and the financial planning model it uses to assign its costs and set rates. But MWD's staff and attorneys have flatly refused to provide necessary budget detail or MWD's financial planning model to the board of directors and the member agencies. It is, unfortunately, characteristic of this agency s lack of transparency that it was necessary for the Water Authority to demand this information under the California Public Records Act. While MWD has not released a cost of service report let alone an independent study -- to support its proposed rates, MWD staff has indicated that costs are being allocated under the very same methodology that the Superior Court has determined violates California law and the Constitution. On that basis, and for the record, the Water Authority opposes the rates, as proposed, for 2017 and The Water Authority's board members have submitted many detailed letters describing the concerns the Water Authority has about suspension of the tax rate limitation under MWD Act Section Given the magnitude of ratepayer money MWD has collected in excess of this board's adopted budget over the past two years -- more than a half-billion dollars -- the Water Authority does not believe it is possible to claim, credibly, that collection of even more tax revenue is "essential" to MWD's "fiscal integrity." With this proposed action, MWD will raise approximately $157 million more than it would have under the tax limitation imposed by the Legislature. The Water Authority opposes suspension of the tax rate limitations contained in Section of the MWD Act. This year s budget and rate-setting process fails the transparency test. We believe MWD does all of its member agencies and the public a disservice by playing "hide the ball" in its rate-setting process. In the long run, there is nothing to be gained, but much to be lost by continued refusals to make essential financial information available to this board, the member agencies and the public. Thank you. 1

18 Attachment 3 Page 1 of 2 Discussion Summary of MWD s Financial Management During its March 2016 meeting, the Finance and Insurance Committee (F&I Committee) considered two items related to debt issuance. The first item was staff s recommendation to adopt the Master Subordinate Resolution and First Supplemental Subordinate Resolution. 1 Following staff s presentation, F&I Committee Chair Barbre (Municipal Water District of Orange County) asked if these resolutions are needed because MWD was having trouble finding somebody to buy [its] debt. Staff replied affirmatively, further explaining that SIFMA Index bond investors are reluctant to purchase MWD s bonds under the existing structure, which does not require a hard put. Chief Financial Officer Breaux added that with the recommended resolutions, MWD may be able to obtain debt at lower total costs by broadening its investor base. Breaux dismissed Director Lewinger s concerns that Wall Street is indicating that MWD s bonds are not as favorable as they once were; Breaux said that the investors risk management advisors may not allow investments in bonds with soft puts. Barbre commented that investors usually seek MWD bonds to have top notch portfolios. Echoing Barbre s comments, Breaux said MWD bonds are very highly rated. Director Paskett (Los Angeles) requested that staff provide an example of how adopting these resolutions would result in cost savings. Breaux offered the example of MWD s SIFMA Index notes, saying that if the debt was $100 million, under the new structure, MWD could save about $50,000 annually. Following this discussion, the committee approved the resolutions with one committee member Lewinger opposing the item. The Board subsequently approved this item. Under the second item, staff sought authorization to adopt a short-term certification resolution and to issue up to $400 million of short-term revenue certificates with can be refunded over a three-year term. Staff recommended the Board issue certificates with two banks (RBC Financial and U.S. Bank), that allow MWD to borrow up to $200 million from each bank, to cover the shortfall created from moving the disputed amount in the Water Authority s rate litigation out of MWD s unrestricted reserves. 2 Staff reported MWD may use the certificates also for construction, operations and maintenance, and water purchase expenses. Responding to Director Steiner, Breaux said the certificates may also be used to purchase land. In response to questions from Director McKenney (Municipal Water District of Orange County), Breaux said that the two banks were selected based on fees, rates, and terms. Some banks were not interested in working with MWD, which Breaux attributed to these banks being limited in the types of expenditures they could carry on their balance sheets. Replying to Lewinger, Breaux clarified that the $400 million certificates are in addition to the $400 million in commercial paper that MWD already has authority to issue. Lewinger questioned why MWD is not using the existing commercial paper authorization since it does not have any outstanding commercial paper. Breaux said the certificates allow MWD to borrow as 1 For more information on the resolution, see the memo Metropolitan Water District Program Report found in the March 2016 Water Authority Board packet on pages : 2 As part of the budget recommendation, MWD plans to start managing the disputed amount apart from its unrestricted reserves as required under the Water Authority-MWD Exchange Agreement.

19 Attachment 3 Page 2 of 2 needed and it is more cost effective than issuing commercial paper. However, later, in response to a question from Barbre, Breaux said that the cost of issuing commercial paper and using certificates would be about the same. In addition to issuing additional debt, Lewinger offered a third option to manage MWD s finances: reduce expenditures. Breaux did not consider this suggestion a viable option, because it would require reducing MWD s budget by more than $250 million. If MWD reduced expenditures to the extent possible and maintained the rates as proposed, Lewinger surmised that MWD could reduce the amount of debt it would issue. Breaux said that MWD would have to look at the cost of service implications to understand how reducing certain expenditures would impact its need to issue debt. Expressing his opposition to staff s recommendation, Lewinger pointed out that over the past few years MWD spent more than $800 million of over-collected revenues on unbudgeted expenses. MWD s unbudgeted spending and other ad hoc financial management practices are the result of MWD s lack of a long range finance plan. Also, MWD failed to manage the amount disputed in the rate litigation separately from its reserves. These actions resulted in MWD not having enough money in its unrestricted reserves to meet its debt service coverage in its bond covenants, and meet its Board adopted minimum reserve level. Using debt to backfill the hole in the reserves essentially means MWD spent the disputed amount to fund unbudgeted expenditures (the largest of which is the approximate $390 million for turf rebates). Breaux insisted that the certificates are not needed for operating expenses, but rather are a contingent liability based on a lawsuit that requires [MWD] to set this money aside in a separate account, which was done all along. Disagreeing with Breaux, Lewinger reflected that the amount disputed in the rate litigation, which was already paid by the Water Authority s ratepayers, should have been set aside in an account separate from MWD s unrestricted reserves a long time ago and by failing to do so, MWD spent this money on unbudgeted items. General Manager Kightlinger disagreed with Lewinger and called his statements completely false. Director Wunderlich (Beverly Hills) offered his understanding that the certificates would be used to maintain the disputed amount in a separate account. Ultimately the committee approved staff s recommendation, with Lewinger opposing it. During MWD s Board meeting, the Delegates opposed this item because had MWD maintained the disputed amount separately as required in the Water Authority-MWD exchange agreement and not spent this amount on unbudgeted programs and costs, MWD would not need to issue debt. The Delegates expressed their opposition in a letter, 3 which also articulated their concerns that MWD continues to operate without a long range financial plan, and pointed out that staff failed to present options other than issuing debt, such as reducing expenditures or using its commercial paper authorization, to meet financial commitments. 3 The Delegates letter can be found here: 07_WA_Delegate_ltr_re_MWD_Memo_8-2_Revenue_Certificates.pdf

20 Discussion Summary of MWD s Authorization to Purchase Bay-Delta Islands Attachment 4 Page 1 of 2 At MWD s March 2016 Real Property and Asset Management Committee (RP&AM Committee) meeting, staff provided a brief open session presentation (before entering closed session) on its recommendation to authorize the General Manager to purchase approximately 20,000 acres of land from Delta Wetlands Properties. MWD first received a report on the opportunity to purchase, or acquire the option to purchase, these properties in the Sacramento-San Joaquin Bay- Delta (Delta) in September This month s open session presentation reviewed the locations of the properties, which consist of portions, or all, of five Delta islands: Webb Tract, Bacon Island, Bouldin Island, Holland Tract, and Chipps Island. Also, the presentation reviewed potential benefits from owning the properties as related to the State Water Project (SWP), scientific research, and advancing a long-term sustainable solution for the Delta. Examples of these benefits include: Tidal wetlands restoration; Water quality enhancement; Opportunities for Delta artesian conditions and food web research; Subsidence mitigation and reversal; Development of carbon credits (to sell via the State s carbon market); Development of water transfers (via crop idling); Facilitation of emergency pathway construction (if needed); and Facilitation of California WaterFix construction and mitigation activities. A portion of the committee discussion occurred in open session. Director Peterson (Las Virgenes) sought to understand the difference between a tract and an island. Director McKenney (Municipal Water District of Orange County) asked if MWD would be responsible for preventing levee failure. Staff commented that details of the risks should be discussed in closed session, but said in general the levees are in good shape and if MWD purchased the properties, it would ensure that the levees are maintained properly to control salinity intrusion into the SWP delivery system. Staff also reported that two of these islands, Holland and Webb tracts, are part of a group of Delta islands that the State considers critical to protecting the SWP s export capability. The State has a program to maintain these islands levees to safeguard water exports. In response to questions from Director Dake (Los Angeles), staff said the SWP contractors are responsible for 8,000 acres of tidal wetland restoration required under the current Biological Opinions. Chairman Record (Eastern) asked about the amount of water MWD may potentially transfer through a land idling program on these islands. Staff replied that according to a Department of Water Resources protocol developed in 2009, one-half acre-foot of water per acre of idled land can be transferred. Director Lewinger pointed out that the benefits of purchasing the islands presented by staff apply to all SWP and Central Valley Project contractors. He questioned why MWD would purchase the islands alone rather than with a consortium of contractors. Staff responded that those details 1 For more information on these properties and MWD s consideration of purchasing them, see the memo Metropolitan Water District s Consideration of Delta Wetlands Properties found in the March 2016 Water Authority Board Packet on pages :

21 Attachment 4 Page 2 of 2 would be discussed further in closed session, but pointed out that about 50 percent of the SWP bills are paid by MWD. Echoing staff s comments that MWD has a big financial stake in SWP costs, Peterson also pointed out that carbon sequestration is another potential benefit from purchasing the islands. The committee then entered closed session. Following its closed session, the committee approved staff s recommendation to authorize entering into an agreement to purchase the islands. Two committee members present, Hogan and Dake, opposed staff s recommendation. Later, at MWD s Board meeting, Record made a friendly amendment to the committee s recommendation to offer the Board the ability to take another bite at it at a Special Board Meeting on April 26. Lewinger questioned the benefit of this motion given MWD would agree to a 60-day escrow with limited conditions to release MWD from escrow without forfeiting the escrow deposit. Clarifying his motion, Record said staff would present any information found during escrow to the Board at this special meeting, during which the Board may decide not to proceed with the purchase and lose the escrow deposit. Seeking to allow the Board more time to consider the information provided by staff at the RP&AM Committee, Director Paskett (Los Angeles) made a substitute motion to postpone Board action until its April 12 meeting. The Delegates supported the substitute motion, which failed, gaining percent support (50-plus percent is required for passage). Directors Barbre (Municipal Water District of Orange County) and McKenney expressed support for Record s motion. Barbre added that this is a good project for all of us and MWD is laying the foundation for the future. Echoing support for Record s motion, Director Ramos (Burbank) commented that MWD did its due diligence, and that a lot of information was presented at the RP&AM Committee including various reasons why MWD may wish to purchase these properties. (Earlier in the Board meeting, during the public hearing, six members of the public expressed opposition to the California WaterFix with two speakers one from Food and Water Watch and the other a Beverly Hills resident specifically opposed the purchase of the Delta Islands.) The Board approved the committee s recommendation, including Record s amendment, with percent support. All members present from both the Water Authority and Los Angeles delegations, as well as Directors Abdo (Santa Monica) and Vasquez (Central Basin), opposed the motion while four Board members Directors Apodaca (Central Basin), De Jesus (Three Valleys), Friedman (Glendale), and Wunderlich (Beverly Hills) who supported Paskett s substitute motion to defer action, supported the Committee s recommendation. Following the vote on this item, Director Touhey (Upper San Gabriel) responded to some of the comments made during the public hearing. He suggested that new water projects are needed to provide water for Southern California s growing population and insinuated that those who oppose such projects are anti-birth or anti-immigrant. Adding that there is more than one straw in Northern California, Touhey said that he is pretty sure that L.A. is still keeping its Los Angeles Aqueduct to import Eastern Sierra supplies. He cautioned against the mentality that one straw is wrong, but another straw, since it serves us, is okay.

22 Attachment 5, Page 1 of 20 March 5, 2016 Randy Record and Members of the Board of Directors Metropolitan Water District of Southern California P.O.Box Los Angeles, CA RE: Board Memo Adopt resolution supporting Metropolitan s application for funding from the State Water Resources Control Board s Water Recycling Funding Program, and for acceptance of potential funding; and authorize two agreements for Metropolitan s potential regional recycled water supply program: (1) agreement with MWH Americas, Inc. in an amount not to exceed $1.2 million for design of the demonstration-scale recycled water treatment plant; and (2) agreement with Black & Veatch Corporation, Inc. in an amount not to exceed $1.9 million to conduct feasibility studies of the recycled water delivery system (Approps and 15493) - OPPOSE; NOTICE OF NON-LIABILITY AND DISCLAIMER OF FINANCIAL OR CONTRACT RESPONSIBILITY ASSOCIATED WITH BOARD MEMO 8 3; RESERVATION OF RIGHTS; AND NOTICE OF INTENT TO SEEK RECOVERY OF ILLEGAL RATES AND FURTHER AWARD OF PREJUDGMENT INTEREST Chair Record and Members of the Board: Copies of our November 9, 2015 and September 20, 2015 letters regarding MWD's "potential" regional recycled water supply program are attached and incorporated herein by reference. MWD is knowingly funding this project with illegal rates; any purported contracts are void or voidable. The Water Authority expressly disclaims any direct or indirect financial or contractual responsibility for this project and hereby gives MWD, its member agencies, rating agencies and all persons NOTICE OF ITS INTENT TO SEEK RECOVERY OF ILLEGAL RATES AND FURTHER AWARD OF PREJUDGMENT INTEREST AND ATTORNEYS FEES AND COSTS. Since the date of our last November 9, 2015 letter, the MWD Board voted to adopt the 2015 Integrated Resources Plan Update (2015 IRP), in spite of the fact that the Board had not deliberated core planning and policy issues associated with the 2015 IRP, including water supply development "targets," cost and affordability. Another copy of our January 10, 2016 letter on the 2015 IRP is also attached. Among other things, our letter questioned the 2015 IRP's water demand projections - upon which this spending decision is purportedly based - which are

23 Attachment 5, Page 2 of 20 Chairman Record and Members of the Board March 5, 2016 Page 2 inconsistent with available data that evidence a declining demand for MWD water. Moreover, the technical data supporting the 2015 IRP's water supply development "targets" did not even include this project or its multi-billion-dollar price tag. The Board is being asked during this rate setting cycle to consider a fixed charge to pay for unused treatment capacity, because staff projections of the demand for treated water did not materialize. The Board should take the time now to review real data and talk about the issues that should have been discussed before the water supply development targets of the 2015 IRP were established and adopted by the Board, because staff is once again overstating the future demand for MWD water. Sincerely, Michael T. Hogan Director Keith Lewinger Director Fern Steiner Director Attachments 1. September 20, 2015 Letter to MWD re Board Memo 9-1 (potential regional recycled water supply program) 2. November 9, 2015 Letter to MWD re Board Memo 8-3 (LACSD) 3. January 10, 2016 Letter to MWD re Board Memo 8-3 (2015 IRP)

24 Attachment 5, Page 3 of 20 Attachment 1 September 20, 2015 Randy Record and Members of the Board of Directors Metropolitan Water District of Southern California P.O. Box Los Angeles, CA RE: Board Memo 9 1: Potential Regional Recycled Water Supply Program Chair Record and Members of the Board: The staff recommendation set forth in Board Memo 9 1, to create a new recycled water supply program, is premature because the MWD board has not yet completed indeed, it has hardly begun the process of updating MWD s Integrated Resources Plan (IRP). Without current information and an analysis of available supplies and demand, the board cannot know whether this water supply is needed by MWD or whether it is preferred to other available water supplies. MWD and its member agencies are also currently updating their respective urban water management plans. These plans will provide vital information regarding water supply and demand forecasts necessary to evaluate the need for MWD to incur costs to develop additional water supplies. Among many other changed circumstances that must be evaluated, it is likely that the demand for MWD water will be less than in the last IRP. This is to be expected given the most recent updated population projections by the Southern California Association of Governments and San Diego Association of Governments, and all of the long term water conservation measures that have been implemented in response to the drought. New MWD projects of any kind should follow, not precede, these planning processes and be evaluated in the context of all alternatives. Later, or as part of the IRP planning process, we request that staff analyze and bring back to the board the following issues and information. Proposed Regional Recycled Water Supply Program Recycled water supply and reuse projects already exist throughout the MWD service area with more on the drawing board. These projects, including the Orange County project noted in the board memo, have been created through the formation of joint powers authorities

25 Chair Record and Members of the Board September 20, 2015 Page 2 Attachment 5, Page 4 of 20 Attachment 1 and paid for by local ratepayers who benefit from the development of local water supplies. The Water Authority supports local water supply development and believes that it will continue to grow as a percentage of the Southern California water supply portfolio even if no subsidies are provided by MWD. Indeed, local agencies developing these projects often cite the current and anticipated future cost of MWD water as a principal motivation to develop local water supplies including recycled water projects. We do not understand and the Board Memo does not explain why MWD believes a new recycled water program is necessary or why MWD believes it should become a "partner" in projects that involve multiple local agencies and parties and legal and financial risks that MWD is in no position to control or manage. In fact, Board Memo 9 1 does not describe a new MWD program;" rather, it describes a specific potential project with specific parties. If staff intends to recommend the creation of a new MWD water supply program, then it should outline the need for the program, how it will be consistent with the updated IRP (once that process is concluded) and how it would differ from the current Local Resources Program which provides funding but does not involve MWD becoming a "partner" in local water supply projects. Staff should also identify a source of funding other than the existing rates that have been declared illegal by the San Francisco Superior Court. We request that a cost of service analysis be conducted to identify which agencies will benefit in order to determine how the costs of this project should be allocated before it is presented to the MWD board for approval. It is abundantly clear from numerous recent cases that the mere declaration of regional benefit is insufficient to justify the imposition of regional water rate increases to pay for a project that will benefit some but not all member agencies. Partnership with Los Angeles County Sanitation District For the reasons described above, we do not believe that the form of the operating entity here, a proposed partnership, changes the responsibility MWD has in setting rates and charges for the services it provides. In order to evaluate the proposed project either as a stand alone or in the context of the IRP, we ask that staff provide a written analysis addressing the following questions: 1) What are the projected capital and operating costs over the project life? 2) What is the marginal cost per acre foot and how does that compare to other projects that could be developed to meet MWD resource targets? 3) What service category will the costs be allocated to? And how will MWD price the water?

26 Chair Record and Members of the Board September 20, 2015 Page 3 Attachment 5, Page 5 of 20 Attachment 1 4) Who are the project beneficiaries? 5) What benefits have been identified for each of the parties (for example, avoided cost of additional outfall capacity). 6) How does the project rank in relationship to other water resource alternatives MWD has with respect to cost, reliability, and environmental and legal risks? 7) What groundwater basins would be recharged by the project water? 8) Are the relevant groundwater basins adjudicated? If so, will the judgments be amended to allow MWD to have the right to store and withdraw water? 9) What is the plan for how the water would be made available or stored in normal, dry, and wet years? Will MWD control that decision? 10) What are the other legal constraints associated with the groundwater basins that must be addressed to ensure MWD has the ability to withdraw the water? 11) Who will own the project? Who will own the project water? 12) What rate increases are anticipated over the project life to pay for and operate the project? 13) How many agencies, cities and third parties have existing water rights in the groundwater basins? 14) Who will bear the cost of any environmental challenges? 15) Who will bear the cost of any rate challenges? Finally, similar to several other memos, Board Memo 9 1 was not available with the regular board mailing. MWD s consistent late delivery of a majority of the board reports makes it extremely difficult for our staff to provide the technical support necessary for our deliberation of MWD staff recommendations. We renew past requests that board memoranda be distributed at least seven days in advance of MWD board meetings. Sincerely, Michael T. Hogan Director Keith Lewinger Director Fern Steiner Director Yen C. Tu Director

27 Attachment 5, Page 6 of 20 Attachment 2 November 9, 2015 Randy Record and Members of the Board Metropolitan Water District of Southern California P.O. Box Los Angeles, CA RE: Board Memo 8 3: Appropriate $15 million; and authorize: 1) agreement with County Sanitation District No. 2 of Los Angeles County for development of a potential regional recycled water supply program; and (2) design of a demonstration scale recycled water treatment plant OPPOSE; NOTICE OF NONLIABILITY AND DISCLAIMER OF FINANCIAL OR CONTRACT RESPONSIBILITY ASSOCIATED WITH BOARD MEMO 8 3; RESERVATION OF RIGHTS; AND NOTICE OF INTENT TO SEEK RECOVERY OF ILLEGAL RATES AND FURTHER AWARD OF PREJUDGMENT INTEREST Chair Record and Members of the Board: The Water Authority supports the development of recycled water and other local water supply projects, but OPPOSES Board Memo 8 3 because MWD has failed to conduct a cost of service study to support MWD s allocation of the costs of the regional recycled water supply program and demonstration project described in Board Memo 8 3. It is apparent from the Board Memo that any water supply developed from the Board Memo 8 3 program will benefit the Sanitation Districts of Los Angeles County and their member agency customers within the Sanitation District Joint Outfall service area; groundwater basins that may be replenished by water produced by the Board Memo 8 3 program (which may or may not be MWD member agencies); and potentially, some mix of MWD member agencies. However, based on the information provided in the Board Memo, it does not appear that the San Diego County Water Authority is among the agency customers where a direct or indirect benefit may be demonstrated in relation to the costs that will be incurred to implement this program. The bald statement in Board Memo 8 3 that these supplies will augment regional supplies for MWD s service area is not sufficient to support the allocation of these costs to all MWD member agencies. Accordingly, the Water Authority: 1. OPPOSES Board Memo 8 3; 2. Hereby gives MWD and all persons NOTICE OF ITS NONLIABILITY AND DISCLAIMER OF ANY FINANCIAL OR CONTRACT RESPONSIBILITY ASSOCIATED WITH BOARD MEMO 8 3;

28 Char Record and Members of the Board November 9, 2015 Page 2 Attachment 5, Page 7 of 20 Attachment 2 3. RESERVES ALL RIGHTS TO CHALLENGE THE BOARD ACTION AND EXPENDITURES PURSUANT TO BOARD MEMO 8 3; and 4. Gives MWD, its member agencies and all persons NOTICE OF ITS INTENT TO SEEK RECOVERY OF ILLEGAL RATES AND FURTHER AWARD OF PREJUDGMENT INTEREST. MWD has claimed in the Water Authority s rate cases that every MWD board member has a fiduciary duty to expressly inform MWD of its objections to MWD board actions and expenditures at the time of the board action, or be found later to have waived their agency s right to object. Without accepting MWD's waiver argument (we do not), we do wish to be very clear with MWD, the Sanitation Districts and their respective member agencies, that the Water Authority will seek recovery of any all rates and charges imposed upon it by MWD in connection with the Board Memo 8 3 program, and an award of prejudgment interest. At this point, MWD is well aware of its legal obligations to set rates according to cost of service and respective benefits from the costs MWD is incurring and will incur, but simply continues to refuse to do so. As noted at the beginning of this letter, the Water Authority supports the many recycled water plans that have already been developed and are developing within the MWD service area. However, we have many serious concerns about Board Memo 8 3. In addition to the illegal cost allocation to MWD member agencies, MWD is assuming an unprecedented share of project costs along with a host of regulatory, environmental and legal obligations that may be expected, in the hundreds of millions and potentially billions of dollars. We raised a number of other issues in our September 20, 2015 letter on Board Memo 9 1; however, MWD did not provide any response to our questions and concerns and they are not addressed in Board Memo 8 3. Sincerely, Michael T. Hogan Director Keith Lewinger Director Fern Steiner Director Yen C. Tu Director Attachment: September 20, 2015 Water Authority Delegates letter on Board Memo 9 1 cc: Water Authority Board of Directors Los Angeles Sanitation District and member agencies MWD Member Agency Governing Boards

29 Attachment 5, Page 8 of 20 Attachment 2 September 20, 2015 Randy Record and Members of the Board of Directors Metropolitan Water District of Southern California P.O. Box Los Angeles, CA RE: Board Memo 9 1: Potential Regional Recycled Water Supply Program Chair Record and Members of the Board: The staff recommendation set forth in Board Memo 9 1, to create a new recycled water supply program, is premature because the MWD board has not yet completed indeed, it has hardly begun the process of updating MWD s Integrated Resources Plan (IRP). Without current information and an analysis of available supplies and demand, the board cannot know whether this water supply is needed by MWD or whether it is preferred to other available water supplies. MWD and its member agencies are also currently updating their respective urban water management plans. These plans will provide vital information regarding water supply and demand forecasts necessary to evaluate the need for MWD to incur costs to develop additional water supplies. Among many other changed circumstances that must be evaluated, it is likely that the demand for MWD water will be less than in the last IRP. This is to be expected given the most recent updated population projections by the Southern California Association of Governments and San Diego Association of Governments, and all of the long term water conservation measures that have been implemented in response to the drought. New MWD projects of any kind should follow, not precede, these planning processes and be evaluated in the context of all alternatives. Later, or as part of the IRP planning process, we request that staff analyze and bring back to the board the following issues and information. Proposed Regional Recycled Water Supply Program Recycled water supply and reuse projects already exist throughout the MWD service area with more on the drawing board. These projects, including the Orange County project noted in the board memo, have been created through the formation of joint powers authorities

30 Chair Record and Members of the Board September 20, 2015 Page 2 Attachment 5, Page 9 of 20 Attachment 2 and paid for by local ratepayers who benefit from the development of local water supplies. The Water Authority supports local water supply development and believes that it will continue to grow as a percentage of the Southern California water supply portfolio even if no subsidies are provided by MWD. Indeed, local agencies developing these projects often cite the current and anticipated future cost of MWD water as a principal motivation to develop local water supplies including recycled water projects. We do not understand and the Board Memo does not explain why MWD believes a new recycled water program is necessary or why MWD believes it should become a "partner" in projects that involve multiple local agencies and parties and legal and financial risks that MWD is in no position to control or manage. In fact, Board Memo 9 1 does not describe a new MWD program;" rather, it describes a specific potential project with specific parties. If staff intends to recommend the creation of a new MWD water supply program, then it should outline the need for the program, how it will be consistent with the updated IRP (once that process is concluded) and how it would differ from the current Local Resources Program which provides funding but does not involve MWD becoming a "partner" in local water supply projects. Staff should also identify a source of funding other than the existing rates that have been declared illegal by the San Francisco Superior Court. We request that a cost of service analysis be conducted to identify which agencies will benefit in order to determine how the costs of this project should be allocated before it is presented to the MWD board for approval. It is abundantly clear from numerous recent cases that the mere declaration of regional benefit is insufficient to justify the imposition of regional water rate increases to pay for a project that will benefit some but not all member agencies. Partnership with Los Angeles County Sanitation District For the reasons described above, we do not believe that the form of the operating entity here, a proposed partnership, changes the responsibility MWD has in setting rates and charges for the services it provides. In order to evaluate the proposed project either as a stand alone or in the context of the IRP, we ask that staff provide a written analysis addressing the following questions: 1) What are the projected capital and operating costs over the project life? 2) What is the marginal cost per acre foot and how does that compare to other projects that could be developed to meet MWD resource targets? 3) What service category will the costs be allocated to? And how will MWD price the water?

31 Chair Record and Members of the Board September 20, 2015 Page 3 Attachment 5, Page 10 of 20 Attachment 2 4) Who are the project beneficiaries? 5) What benefits have been identified for each of the parties (for example, avoided cost of additional outfall capacity). 6) How does the project rank in relationship to other water resource alternatives MWD has with respect to cost, reliability, and environmental and legal risks? 7) What groundwater basins would be recharged by the project water? 8) Are the relevant groundwater basins adjudicated? If so, will the judgments be amended to allow MWD to have the right to store and withdraw water? 9) What is the plan for how the water would be made available or stored in normal, dry, and wet years? Will MWD control that decision? 10) What are the other legal constraints associated with the groundwater basins that must be addressed to ensure MWD has the ability to withdraw the water? 11) Who will own the project? Who will own the project water? 12) What rate increases are anticipated over the project life to pay for and operate the project? 13) How many agencies, cities and third parties have existing water rights in the groundwater basins? 14) Who will bear the cost of any environmental challenges? 15) Who will bear the cost of any rate challenges? Finally, similar to several other memos, Board Memo 9 1 was not available with the regular board mailing. MWD s consistent late delivery of a majority of the board reports makes it extremely difficult for our staff to provide the technical support necessary for our deliberation of MWD staff recommendations. We renew past requests that board memoranda be distributed at least seven days in advance of MWD board meetings. Sincerely, Michael T. Hogan Director Keith Lewinger Director Fern Steiner Director Yen C. Tu Director

32 Attachment 5, Page 11 of 20 Attachment 3 January 10, 2016 Randy Record and Members of the Board of Directors Metropolitan Water District of Southern California P.O. Box Los Angeles, CA RE: Board Memo 8-3: Adopt the 2015 Integrated Water Resources Plan Update - REQUEST TO DEFER BOARD ACTION ADOPTING 2015 IRP UPDATE, OR IN THE ALTERNATIVE, OPPOSE Dear Chairman Record and Board Members: The Water Authority supports action by the Board to receive and file, and defer adoption of, the Draft 2015 Integrated Water Resources Plan (IRP) Update and Appendices (Attachments 1 and 2 to Board Memo 8-3), presented to the Board at its December 2015 board meeting, as well as the 2015 IRP Technical Update Issue Paper Addendum, presented to the Board at its October 2015 board meeting (collectively, these documents are referred to in this letter as the staff "Technical Report"). This action would be consistent with the 2015 IRP update process that has previously and consistently been described by MWD staff to the Board as a "two-part process" that would include not only the Technical Report from staff (but instead now presented as the final proposed 2015 IRP Update), but also a subsequent board process that would include "resource policy issues discussion" prior to adoption of the 2015 IRP Update. i We do not support adoption of the Draft 2015 IRP Update at this time because the MWD Board of Directors is only now beginning the Phase 2 process of reviewing the technical data prepared by staff and deliberating the core planning and policy issues associated with the update and adoption of the IRP. At the board policy level, this review should certainly include deliberation of MWD's reliability and water supply development "targets," because those targets greatly impact the cost and affordability of MWD Water. The purpose of the Board's review should be to ensure that the IRP accomplishes the six objectives established by the Board in 1996, and carried forward since that time, namely, Acknowledge environmental and institutional constraints; and ensure: Reliability; Affordability; ii Water quality; Diversity; and Flexibility

33 Attachment 5, Page 12 of 20 Attachment 3 With this set of policy objectives in mind, we wanted to share some preliminary observations at the "50,000 foot view," before the Board reviews the technical data and has an opportunity to discuss policy issues and the assumptions staff has made in the draft 2016 IRP Update, at a workshop or next board meeting. Except where otherwise specifically noted, all analyses contained in this letter are based on the data included in the IRP or taken from other MWD documentary sources. These preliminary observations do not signify agreement with all of the stated assumptions, conclusions and recommendations by staff in the Technical Report, which should more properly be within the province of the Board of Directors during this Phase 2 process. We request board discussion, and further staff analysis as directed by the Board, of the following issues: 1. Demand for MWD Water. The Technical Report projects an increased demand for MWD Water that is not supported by the underlying data, which evidences instead a declining demand for MWD Water. See Attachment 1. It is critical that the Board consider the near and long term implications of the declining demand for MWD Water over time and how the IRP should be adapted now to plan for it. iii 2. Likelihood of success of member agency projects. The Technical Report understates existing and near-term local water supply development that will further and permanently reduce demand for MWD Water. See Attachment 2. The supply "gap" in the Technical Report iv is driven in large measure by the assumption for planning purposes that all but 20,000 acre-feet (AF) of local water supply projects that are not currently under construction will fail to be implemented. This includes projects that are currently in the full design phase with funds appropriated or at the advanced planning stage with completed certified environmental review. In addition to seven projects within the Water Authority's service area which will be implemented, MWD assumes projects being developed by the following agencies will fail: City of Beverly Hills; City of Torrance; Los Angeles Department of Water and Power; Inland Empire Utility Agency; Upper San Gabriel Valley MWD; Eastern MWD; Municipal Water District of Orange County (MWDOC)/Orange County Water District; and Calleguas MWD The Technical Report and proposed IRP should "adapt" now to account for the likely success of these projects, or, at a minimum, factor in some percentage of the yield that will be developed. v If only 50% of the yield from these projects - currently at the advanced planning stage with completed design, funding and/or certified environmental review - is realized, the Technical Report understates local water supply coming on line by more than 100,000 AF annually. This number does not take into account the almost 500,000 AF of additional yield from projects currently under feasibility investigation or in the conceptual planning phase. See Technical Report at Attachment 2, Appendix 5 at pages A.5-1-A.5-13.

34 Attachment 5, Page 13 of 20 Attachment 3 3. State Water Project. The Technical Report hardwires a "worst case" assumption regarding the yield of the State Water Project (SWP) that is premature at best, assuming a sudden 400,000 AF reduction of SWP supplies in 2020 based on speculation what regulatory action may be taken (and which MWD would presumably object to). It is, again, the staff's assumption that drives creation of a supply "gap." MWD should identify the factors driving the potential magnitude and timing of a potential SWP export reduction, monitor these factors to see if and when they may occur and define thresholds that when reached would trigger action -by MWD and/or its member agencies to address the risk. 4. Colorado River. MWD has made substantial investments in Colorado River supplies recently; however, only a small portion of the supplies have been included in The Technical Report's forecast of Colorado River Aqueduct supplies. See Technical Report, Attachment 1 at page 3-27, stating that "flexible" supplies including the PVID program and Intentionally Created Surplus are not included in the forecast. As with the SWP, the IRP should present a risk assessment identifying the factors that will impact the magnitude and timing of restrictions on the availability of Colorado River water and the risk of the factors being triggered. 5. LACSD project. The Technical Report has not included or accounted for the water supply proposed to be developed by MWD and the Los Angeles County Sanitation Districts (LACSD) to meet groundwater replenishment demand in Los Angeles, Orange counties and San Bernardino. MWD's groundwater production numbers should be updated to include this water supply which staff has indicated is being developed to meet the water replenishment needs of the Los Angeles, Orange County and San Bernardino groundwater agencies. 6. Reliability objective. The Technical Report continues to use an outdated reliability goal, planning to meet 100% of retail water demands under all hydrologic conditions; this objective is outdated at best and should be changed now by the Board as part of the 2015 IRP Update to be more in line with the state's and MWD's own water conservation ethic, state law and standards. 7. Affordability objective. The Technical Report's "do nothing" approach to analyzing MWD Water demand, coupled with its "do everything PLUS" water supply planning strategy, fails to take the Board's affordability objective into account. The IRP's "belt and suspenders" planning strategy which the Technical Report "builds on," should be reconsidered by the Board against declining MWD Water sales and increasing local water supply development. Can our ratepayers afford for MWD to plan 100% water supply reliability (under "core resources" strategy or "IRP Approach") plus 500,000 or 200,000 AF ("uncertainty" or "buffer" supply) plus "Foundational" or "Future Supply Actions? At the very least, the Board should be presented with an affordability analysis. vi If the IRP is truly adaptive, as it should be, there is no justification for spending ratepayer money now on projects and programs that may never be necessary and may ultimately end up as stranded investments. 8. Adaptive management. Although the Technical Report calls for an "adaptive management strategy," there is no consideration of phasing investments or identifying "triggers" (for example, a planned local project fails to be developed) that would allow MWD to truly "adapt" in order to avoid unnecessary costs, expenditures, and stranded assets. The strategy described in the

35 Attachment 5, Page 14 of 20 Attachment 3 Technical Report is a "do-everything-and-more" strategy that is inconsistent with the Board's affordability objective. 9. Impact of higher MWD Water rates. The Technical Report's discussion of MWD Water demand fails to take into account the inevitable impact of higher MWD rates and charges across a shrinking sales base due to declining sales and demand for MWD Water. Significant MWD Water rate increases are inevitable given the approach recommended in the Technical Report and those higher rates increases will continue to dampen demand for MWD water sales. Higher MWD rates will increase the economic incentive for the development of local water supplies such as is already occurring. See Attachment Stranded costs. The IRP Update should analyze and factor in the risk of stranded investments resulting from the reduced demand for MWD Water and rising MWD Water rates being spread across a shrinking ratepayer base. Conclusion An IRP that does not consider and incorporate actual available data and affordability creates a material risk that MWD investments will be made on illusionary foundations. Ultimately, this Board of Directors will be accountable to the public and ratepayers we serve. We sincerely hope that the Board will insist upon having an opportunity to deliberate these and many other issues and questions that should be addressed in the previously planned Phase 2 of the IRP process. Sincerely, Michael T. Hogan Director Keith Lewinger Director Fern Steiner Director Yen C. Tu Director Attachment 1: Demand for MWD Water Attachment 2: Examples of member agency water projects not included by staff in calculation of demand for MWD Water i From the beginning of the 2016 IRP Update process, MWD staff said that it would be a two-part process, with the Technical Report scheduled for adoption in January See April 8, 2015 Member Agency Kick-off Workshop RE 2015 Integrated Water Resources Plan Update ("final IRP Technical Update Report" for Board consideration scheduled for adoption in January 2016 [not the IRP itself]). More recently, see where several of the policy issues raised by the Board are outlined for future board discussion. The Board's policy discussion should not be limited to issues relating to "implementation" of the staff's IRP. Nor is there any reason why the IRP needs to be adopted now, prior to the Phase 2 board deliberations. ii Affordability is not addressed anywhere in the Technical Report or Attachments 1 and 2 to the 2015 Draft IRP and Appendices. iii The Technical Report notes the importance of identifying and accounting for "changed circumstances" (e.g., Technical Report at Attachment 1, page v: "The 2015 IRP Update focuses on

36 Attachment 5, Page 15 of 20 Attachment 3 ascertaining how conditions have changed in the region since the last IRP update in 2010"), but fails to identify or account for the most material change that has occurred, namely, the fact that local water supply development is widely viewed as both more reliable and now, cost-effective when contrasted with the present and anticipated future cost of MWD Water. See Attachment 2 statements by various member agencies seeking support for local projects. The Technical Report appears to acknowledge this, at least indirectly, by noting that if the California WaterFix is implemented, it may need to seek "new markets" for this water supply. Technical Report at Attachment 1, page vi ("[t]he potential completion of the California WaterFix and a modernized water system in the Delta, for example, would create a new physical ability to move additional supplies in average and above-average years. In addition to providing water for storage management, this could also create opportunities for new markets and partnerships." The Water Authority questions this premise and believes that MWD's legal obligation and mission is to provide its own service area and ratepayers with supplemental water, not to develop it for sale to others and not to protect unidentified "broad public interests" that do not pay MWD's rates and charges (see Technical Report at Attachment 1, page vii ("MWD's baseline imported supplies has proven to be a highly costeffective investment that protects broad public interests as well as Southland ratepayers"). This is also an issue that warrants further examination in the context of the LACSD project where MWD proposes to pay 100% of project costs and assume substantial risks in order to develop a water supply with respect to which member agencies of the LACSD would have a right of first refusal. See Board Memo 8-3, November 2015 MWD Board meeting. Ultimately, MWD must link its rates to the agencies that are benefitting from the costs MWD is incurring (i.e., it must show" cost causation"). iv The Technical Report states that, "[t]hrough the 2015 IRP Update process, foreseeable challenges and risk scenarios were identified that point to the potential of 200,000 AF of additional water conservation and local supplies needed to address these risks." Technical Report at Attachment 1, page iv. However, this "gap" results in part from the planning assumption that more than 200,000 AF of local projects and conservation measures will fail to be implemented (see Technical Report, Attachment 1, Table 3-5 making clear that supply projections only include projects that are currently producing water or are under construction). The "gap" is also the result of the planning assumption that SWP supplies will be reduced by 400,000 AF; and, because the analysis also fails to include the 168,000 AF of supply for groundwater replenishment from the LACSD project. v The Technical Report emphasizes MWD's engagement with member agencies but does not explain why or if member agency staff and Board members agreed that it is reasonable to assume for planning purposes that the local projects listed on Attachment 2 would likely fail to be implemented. It isn't possible to reconcile this assumption with the presentations member agencies have made to their respective communities and ratepayers seeking approval and funding of these local projects and the actual progress that is being made toward implementation. vi The Technical Report describes Future Supply Actions spending as including "exploring the feasibility of new local supply options, investing in water-saving technologies, acquiring land and proposing ways to reduce regulatory impediments to supply development." Staff needs to explain why these actions and spending projects would not already be included in the 100% supply reliability PLUS "buffer" supply. Given this lack of definition or any standard for triggering Foundational Actions spending, it is apparent that the Technical Report isn't a "plan" at all, but is rather, a blank check that could not possibly be a rational basis for establishing MWD's revenue requirements.

37 Attachment 5, Page 16 of 20 Attachment 3 Attachment 1 - Demand for MWD Water The IRP's projection of increased demand for MWD Water is not supported by MWD's own data, which evidences instead, a declining demand for MWD Water IRP Projections (million AF) Retail Demand after Conservation Local Supply MWD Water Demand Cumulative Increase MWD Demand The retail demand and local supply numbers are taken from the Technical Report, Attachment 1, Draft 2015 IRP Update, Table ES-1. The resulting calculation of MWD Water Demand is simply a mathematical calculation. 2. Retail demand as calculated by MWD assumes only 50% compliance with Model Water Efficient Landscape Ordinance (MWELO). 3. MWD does not include in its calculation of local supply any of the Water Authority's independent Colorado River water supplies (280,000 AF over time); it also assumes only 20,000 AF of member agency local projects will be successfully implemented. IRP Projections (million AF) adjusted only for San Diego's Colorado River water Retail Demand after Conservation Local Supply MWD Water Demand Cumulative Increase MWD Demand Local supply corrected to include Water Authority s actual independent Colorado River supplies over time pursuant to fully executed agreements. IRP Projections (million AF) adjusted for San Diego's Colorado River Water and 50% yield from member agency projects that are currently in full design with funds appropriated or at the advanced planning stage with certified environmental review complete Retail Demand after Conservation Local Supply % yield of Member Agencies MWD Water Demand Cumulative Increase MWD Demand

38 Attachment 5, Page 17 of 20 Attachment 3 The Technical Report and other historical MWD documents confirm that MWD Water sales are on a long-term declining trend that is no longer based on hydrology but on the development of local water supplies that will permanently replace and reduce demand for MWD Water 2,650,000 Historical MWD Water Sales 2,450,000 2,250,000 Acre Feet 2,050,000 1,850,000 1,650,000 1,450,000 1,250, Fiscal Year Ending

39 Attachment 5, Page 18 of 20 Attachment 3 Attachment 2 Examples of member agency projects not included by staff in calculation of demand for MWD Water Member Agency City of Beverly Hills Calleguas MWD Eastern MWD Status of Member Agency Project Feasibility Project Groundwater development- 2,000 AF Status: Water Enterprise Plan- Adopted July 2015 Through a variety of projects and measures including groundwater development, the City has the potential to decrease its MWD purchases from the current 12,495 AFY to approximately 8,485 AFY by 2024/25. This amounts to a 4,010 AF (32 percent) reduction of the City's demand for MWD Water. t_ v2.pdf Advanced Planning (EIR/EIS Certified) Projects North Pleasant Valley Desalter- 7,300 AF Feasibility Projects 2 projects 7,800 AF Status: Calleguas is working with several agencies and the City of Oxnard to develop additional water supplies and reclaim brackish groundwater. These projects are in various stages of development with the largest being the EIR certified North Pleasant Valley Desalter. It is also building a regional salinity management pipeline in phases. Phase 1 is completed and Phase 2 is in design and, according to the Los Angeles Regional Water Quality Control Board, expected to be completed within the next permitting cycle in Municipal_Water_District/PublicNoticeCalleguasRSMPAmendment.pdf Full Design & Appropriated Funds Project Perris Desalter II, 4,000 AF Feasibility Project Indirect Potable Reuse- 24,070 AF Status: Perris Desalter scheduled for bid advertise, November 2016 (9/8/2015 Eastern Presentation)

40 Attachment 5, Page 19 of 20 Attachment 3 Inland Empire Utility Agency LADWP MWDOC City of Santa Monica IPR shown to be less expensive than MWD supplies, according to 8/20/2014 Eastern MWD presentation. page 15 Advanced Planning (EIR/EIS Certified) Projects IEUA Regional Recycled Water Distribution System- 20,000 AF Status: IEUA s Ten-year Capital Improvement Plan identifies immediate and long term capital projects (including pipelines) needed to utilize 100% of the region s projected recycled water supplies, increasing recycled water deliveries from approximately 37,000 to 55,000 by Full Design & Appropriated Funds Projects Terminal Island Water Reclamation- 7,880 AF Advanced Planning (EIR/EIS Certified) Projects Downtown and Sepulveda Expansion- 2,600 AF; Tujunga Well Treatment- 24,000 AF Feasibility Projects 9 projects-32,865 AF Conceptual Projects 4 projects -38,270 AF Status: From 11/20/2015 Presentation by David Pettijohn to Los Angeles Chamber of Commerce: Plans to reduce MWD purchases by 145,000 AF Increase Groundwater by 45,535 AF 40,000 AF Water Transfers 25,000 AF Stormwater Capture 50,451 Increased Water Reclamation %20LA%20Chamber%20Presentation% %20final.pdf Advanced Planning (EIR/EIS Certified) Projects Huntington Beach Seawater Desalination Project- 56,000 AF Status: Decision from Coastal Commission expected within 2 months Plans to eliminate the purchase of MWD Water Status: The following is the first two paragraphs of the City s Water Sustainability Master Plan: The City of Santa Monica (City) supplies imported and local water to approximately 91,000 residents

41 Attachment 5, Page 20 of 20 Attachment 3 covering an area of approximately 8 square miles. Looking to its future, the City hopes to eliminate its reliability on imported water by addressing the challenge of existing groundwater quality, identifying new sources of local water supply, and more effectively reduce and manage its water demands. With an adopted goal of water self-sufficiency achieved by eliminating reliance on Metropolitan Water District of Southern California (MWD) supply by 2020, the City of Santa Monica retained Kennedy/Jenks Consultants to develop an integrated Sustainable Water Master Plan (SWMP). This SWMP combines relevant components of existing plans with an evaluation of a broad range of water supply and demand management options to assist the City in meeting its goals. This plan has been prepared with the objective of developing a comprehensive document to define supply and demand management options to cost effectively reduce future water demands and enhance local water supply production capabilities. City of Torrance Upper San Gabriel Valley MWD Western MWD Full Design & Appropriated Funds Projects Madrona Desalter Expansion- 2,400 AF Status: Received $3.9 Prop 84 funds and $3.0 M Prop. 50 funding. Estimated Completion Full Design & Appropriated Funds Projects Direct Reuse- 2 projects 730 AF Indirect Reuse Replenishment- 10,000 AF Status: Upper District adopted an Indirect Reuse Action Plan in 2011 which set forth specific tasks to complete the Indirect Reuse Replenishment Project. It has received $790,000 in grants to date to further the project. According to MWD the project is scheduled to be on-line in Feasibility Projects Rancho California Reclamation Expansion/Demineralization Western AG- 13,800 AF Status: Scheduled for 2018 completion, according to MWD. Link to Rancho California Water Facilities Master Plan:

42 Attachment 6, Page 1 of 29 F&I Committee B. Barbre, Chair R. Wunderlich, V. Chair R. Apodaca S. Blois G. Dake D. Dear D. De Jesus S. Faessel C. Kurtz K. Lewinger M. Martinez L. McKenney L. Paskett M. Ramos M. Touhey Finance and Insurance Committee/Budget and Rates Workshop #3 Meeting with Board of Directors* March 7, :00 a.m. -- Room Monday, March 7, 2016 Meeting Schedule 7:00-8:00 a.m. Rm Dirs. Computer Training 9:00 a.m. Rm F&I 11:00 a.m. Rm WP&S 12:30 p.m. Rm E&O 1:30 p.m. Rm C&L 2:00 p.m. Board Room Training MWD Headquarters Building 700 N. Alameda Street Los Angeles, CA * The Metropolitan Water District s Finance and Insurance Committee meeting is noticed as a joint committee meeting with the Board of Directors for the purpose of compliance with the Brown Act. Members of the Board who are not assigned to the Finance and Insurance Committee may attend and participate as members of the Board, whether or not a quorum of the Board is present. In order to preserve the function of the committee as advisory to the Board, members of the Board who are not assigned to the Finance and Insurance Committee will not vote on matters before the Finance and Insurance Committee. 1. Opportunity for members of the public to address the committee on matters within the committee's jurisdiction (As required by Gov. Code Section (a)) 2. Approval of the Minutes of the meeting of the Finance and Insurance Committee held February 8, CONSENT CALENDAR ITEMS ACTION None 4. OTHER BOARD ITEMS ACTION 8-1 Adopt Master Subordinate Resolution authorizing the issuance of subordinate water revenue bonds and other forms of indebtedness; and adopt the First Supplemental Subordinate Resolution to the Master Subordinate Resolution authorizing the issuance of subordinate water revenue refunding bonds. (F&I) Date of Notice: February 25, 2016

43 Attachment 6, Page 2 of 29 Finance and Insurance Committee March 7, 2016 Agenda Page 2 Recommendation: Option #1: Adopt the CEQA determination that the proposed action is not defined as a project and is not subject to CEQA, and a. Adopt the Master Subordinate Resolution authorizing the issuance of subordinate water revenue bonds to finance any legal purpose of the District and providing the terms and conditions for the issuance of said bonds, as contained in Attachment 1 to the board letter; and b. Adopt the First Supplemental Subordinate Resolution to the Master Subordinate Resolution authorizing the issuance of subordinate water revenue refunding bonds, providing the terms and conditions of such bonds and authorizing the approval of other related documents, as contained in Attachment 2 to the board letter. 8-2 Adopt Short-Term Revenue Certificate Resolution authorizing the sale and issuance from time to time of up to $400 million of short-term revenue certificates and providing for credit facilities and trust agreements. (F&I) Recommendation: Option #1: Adopt the CEQA determination that the proposed action is not defined as a project and is not subject to CEQA, and adopt the Short-Term Certificates Resolution authorizing the sale and issuance from time to time of up to $400 million of short-term revenue certificates and providing for credit facilities and trust agreements, as contained in Attachment 1 to the board letter. 5. BOARD INFORMATION ITEMS 9-2 Proposed revenue requirements for fiscal years 2016/17 and 2017/18 and proposed water rates and charges for calendar years 2017 and 2018 to meet revenue requirements. (F&I) 6. COMMITTEE ITEMS a. Oral report on investment activities 7. MANAGEMENT REPORT a. Chief Financial Officer s report Date of Notice: February 25, 2016

44 Attachment 6, Page 3 of 29 Finance and Insurance Committee March 7, 2016 Agenda Page 3 8. BUDGET AND RATES WORKSHOP #3 a. Proposed biennial budget and revenue requirements for fiscal years 2016/17 and 2017/18, and ten-year forecast b. Proposed rates and charges for calendar years 2017 and 2018 to meet revenue requirements c. Proposed Capital Investment Plan d. Follow-up on questions from Workshop #2 9. FOLLOW-UP ITEMS None 10. FUTURE AGENDA ITEMS 11. ADJOURNMENT NOTE: At the discretion of the committee, all items appearing on this agenda, whether or not expressly listed for action, may be deliberated and may be subject to action by the committee. This committee reviews items and makes a recommendation for final action to the full Board of Directors. Final action will be taken by the Board of Directors. Agendas for the meeting of the Board of Directors may be obtained from the Board Executive Secretary. This committee will not take any final action that is binding on the Board, even when a quorum of the Board is present. Writings relating to open session agenda items distributed to Directors less than 72 hours prior to a regular meeting are available for public inspection at Metropolitan's Headquarters Building and on Metropolitan's Web site Requests for a disability related modification or accommodation, including auxiliary aids or services, in order to attend or participate in a meeting should be made to the Board Executive Secretary in advance of the meeting to ensure availability of the requested service or accommodation. Date of Notice: February 25, 2016

45 Attachment 6, Page 4 of 29 \ WP&S Committee D. De Jesus, Chair R. Atwater, Vice Chair J. Abdo L. Ackerman M. Camacho L. Dick G. Gray K. Lewinger J. Morris L. Paskett G. Peterson J. Quiñonez F. Steiner M. Touhey R. Wunderlich Water Planning and Stewardship Committee Meeting with Board of Directors* March 7, :00 a.m. Room Monday, March 7, 2016 Meeting Schedule 7:00-8:00 a.m. Rm Dirs. Computer Training 9:00 a.m. Rm F&I 11:00 a.m. Rm WP&S 12:30 p.m. Rm E&O 1:30 p.m. Rm C&L 2:00 p.m. Board Room Training MWD Headquarters Building 700 N. Alameda Street Los Angeles, CA * The Metropolitan Water District s Water Planning and Stewardship Committee is noticed as a joint committee meeting with the Board of Directors for the purpose of compliance with the Brown Act. Members of the Board who are not assigned to the Water Planning and Stewardship Committee may attend and participate as members of the Board, whether or not a quorum of the Board is present. In order to preserve the function of the committee as advisory to the Board, members of the Board who are not assigned to the Water Planning and Stewardship Committee will not vote on matters before the Water Planning and Stewardship Committee. 1. Opportunity for members of the public to address the committee on matters within the committee s jurisdiction (As required by Gov. Code Section (a)) 2. Approval of the Minutes of the meeting of the Water Planning and Stewardship Committee held February 8, CONSENT CALENDAR ITEMS ACTION 7-3 Approve revised final terms for the Bard Water District land management and seasonal fallowing pilot program. (WP&S) Recommendation: Option #1: Adopt the CEQA determination that the proposed action was previously determined to be categorically exempt and not subject to CEQA, and that no further environmental analysis or documentation is required, and authorize the revised final terms for the pilot program agreement with Bard Water District and the land management and seasonal fallowing agreements with farmers of farmland in the Bard Unit. Date of Notice: February 25, 2016

46 Attachment 6, Page 5 of 29 Water Planning and Stewardship March 7, 2016 Committee Agenda Page 2 4. OTHER BOARD ITEMS ACTION None 5. BOARD INFORMATION ITEMS 9-1 Options for leasing Metropolitan-owned lands in the Palo Verde valley. (WP&S) 6. COMMITTEE ITEMS a. Conservation update b. Oral report on Water Supply and Drought Management 7. MANAGEMENT REPORTS a. Bay-Delta Matters b. Colorado River Matters c. Water Resource Management Manager's report 8. FOLLOW-UP ITEMS None 9. FUTURE AGENDA ITEMS 10. ADJOURNMENT NOTE: At the discretion of the committee, all items appearing on this agenda, whether or not expressly listed for action, may be deliberated and may be subject to action by the committee. This committee reviews items and makes a recommendation for final action to the full Board of Directors. Final action will be taken by the Board of Directors. Agendas for the meeting of the Board of Directors may be obtained from the Board Executive Secretary. This committee will not take any final action that is binding on the Board, even when a quorum of the Board is present. Writings relating to open session agenda items distributed to Directors less than 72 hours prior to a regular meeting are available for public inspection at Metropolitan's Headquarters Building and on Metropolitan's Web site Requests for a disability related modification or accommodation, including auxiliary aids or services, in order to attend or participate in a meeting should be made to the Board Executive Secretary in advance of the meeting to ensure availability of the requested service or accommodation. Date of Notice: February 25, 2016

47 Attachment 6, Page 6 of 29 E&O Committee G. Peterson, Chair S. Blois, Vice Chair B. Barbre P. Beard M. Camacho G. Dake D. De Jesus L. Dick S. Faessel D. Galleano R. Lefevre S. Lowenthal J. Morris F. Steiner J. Zurita Engineering and Operations Committee Meeting with Board of Directors* March 7, :30 p.m. -- Room Monday, March 7, 2016 Meeting Schedule 7:00-8:00 a.m. Rm Dirs. Computer Training 9:00 a.m. Rm F&I 11:00 a.m. Rm WP&S 12:30 p.m. Rm E&O 1:30 p.m. Rm C&L 2:00 p.m. Board Room Training MWD Headquarters Building 700 N. Alameda Street Los Angeles, CA * The Metropolitan Water District s Engineering and Operations Committee meeting is noticed as a joint committee meeting with the Board of Directors for the purpose of compliance with the Brown Act. Members of the Board who are not assigned to the Engineering and Operations Committee may attend and participate as members of the Board, whether or not a quorum of the Board is present. In order to preserve the function of the committee as advisory to the Board, members of the Board who are not assigned to the Engineering and Operations Committee will not vote on matters before the Engineering and Operations Committee. 1. Opportunity for members of the public to address the committee on matters within the committee's jurisdiction (As required by Gov. Code Section (a)) 2. Approval of the Minutes of the meeting of the Engineering and Operations Committee held February 8, CONSENT CALENDAR ITEMS ACTION 7-1 Appropriate $620,000; and authorize: (1) design to rehabilitate a blow-off structure on the Orange County Feeder; and (2) increase of $200,000 to an existing agreement with Dudek, for a new not-to-exceed total of $485,000 (Approp ). (E&O) Date of Notice: February 24, 2016

48 Attachment 6, Page 7 of 29 Engineering and Operations March 7, 2016 Committee Agenda Page 2 Recommendation: Option #1: Certify that the Final EIR has been completed in compliance with CEQA and the State CEQA Guidelines; certify that the Board has reviewed and considered the information presented in the Final EIR; certify that the Final EIR reflects the Board s independent judgment and analysis; adopt the Findings of Fact and Mitigation Monitoring and Reporting Program; and a. Appropriate $620,000; b. Authorize final design to rehabilitate a blow-off structure on the Orange County Feeder; and c. Authorize increase of $200,000 to an agreement with Dudek, for a new not-to-exceed total of $485, Appropriate $840,000; and authorize preliminary investigations to rehabilitate the auxiliary power systems at the Colorado River Aqueduct pumping plants (Approp ). (E&O) Recommendation: Option #1: Adopt the CEQA determination that the proposed action is categorically exempt, and a. Appropriate $840,000; and b. Authorize preliminary investigations to rehabilitate the auxiliary power systems at the Colorado River Aqueduct pumping plants. 4. OTHER BOARD ITEMS ACTION 8-3 Adopt resolution supporting Metropolitan s application for funding from the State Water Resources Control Board s Water Recycling Funding Program, and for acceptance of potential funding; and authorize two agreements for Metropolitan s potential regional recycled water supply program: (1) agreement with MWH Americas, Inc., in an amount not to exceed $1.2 million for design of the demonstration-scale recycled water treatment plant; and (2) agreement with Black & Veatch Corporation, Inc. in an amount not to exceed $1.9 million to conduct feasibility studies of the recycled water delivery system (Approps and 15493). (E&O) Date of Notice: February 24, 2016

49 Attachment 6, Page 8 of 29 Engineering and Operations March 7, 2016 Committee Agenda Page 3 Recommendation: Option #1: Adopt the CEQA determination that the proposed actions are not defined as a project and/or are statutorily and categorically exempt, and a. Adopt a resolution supporting Metropolitan s application to SWRCB s Water Recycling Funding Program, and authorize the General Manager to accept potential grant funding or low interest loans, and to enter into an agreement with SWRCB in a form approved by the General Counsel; b. Authorize agreement with MWH Americas, Inc. in an amount not to exceed $1.2 million for design of the demonstration-scale recycled water treatment plant; and c. Authorize agreement with Black & Veatch Corporation, Inc. in an amount not to exceed $1.9 million to conduct initial feasibility studies of the recycled water delivery system. 5. BOARD INFORMATION ITEMS None 6. COMMITTEE ITEMS a. Oral report on security [Conference with Metropolitan Security Manager Derrek Jones or designated agent on threats to public service or facilities; to be heard in closed session pursuant to Gov. Code Section 54957(a)] 7. MANAGEMENT REPORTS a. Water System Operations Manager s report b. Engineering Services Manager s report 8. FOLLOW-UP ITEMS None 9. FUTURE AGENDA ITEMS Date of Notice: February 24, 2016

50 Attachment 6, Page 9 of 29 Engineering and Operations March 7, 2016 Committee Agenda Page ADJOURNMENT NOTE: At the discretion of the committee, all items appearing on this agenda, whether or not expressly listed for action, may be deliberated and may be subject to action by the committee. This committee reviews items and makes a recommendation for final action to the full Board of Directors. Final action will be taken by the Board of Directors. Agendas for the meeting of the Board of Directors may be obtained from the Board Executive Secretary. This committee will not take any final action that is binding on the Board, even when a quorum of the Board is present. Writings relating to open session agenda items distributed to Directors less than 72 hours prior to a regular meeting are available for public inspection at Metropolitan's Headquarters Building and on Metropolitan's Web site Requests for a disability related modification or accommodation, including auxiliary aids or services, in order to attend or participate in a meeting should be made to the Board Executive Secretary in advance of the meeting to ensure availability of the requested service or accommodation. Date of Notice: February 24, 2016

51 Attachment 6, Page 10 of 29 C&L Committee C. Kurtz, Chair G. Gray, Vice Chair J. Abdo L. Ackerman R. Apodaca S. Ballin B. Barbre M. Camacho L. Friedman D. Galleano R. Lefevre K. Lewinger J. Morris J. Murray, Jr. G. Peterson Y. Tu L. Vasquez Communications and Legislation Committee Meeting with Board of Directors* March 7, :30 p.m. -- Room Monday, March 7, 2016 Meeting Schedule 7:00-8:00 a.m. Rm Dirs. Computer Training 9:00 a.m. Rm F&I 11:00 a.m. Rm WP&S 12:30 p.m. Rm E&O 1:30 p.m. Rm C&L 2:00 p.m. Board Room Training MWD Headquarters Building 700 N. Alameda Street Los Angeles, CA * The Metropolitan Water District s Communications and Legislation Committee meeting is noticed as a joint committee meeting with the Board of Directors for the purpose of compliance with the Brown Act. Members of the Board who are not assigned to the Communications and Legislation Committee may attend and participate as members of the Board, whether or not a quorum of the Board is present. In order to preserve the function of the committee as advisory to the Board, members of the Board who are not assigned to the Communications and Legislation Committee will not vote on matters before the Communications and Legislation Committee. 1. Opportunity for members of the public to address the committee on matters within the committee's jurisdiction (As required by Gov. Code Section (a)) 2. Approval of the Minutes of the meeting of the Communications and Legislation Committee held February 8, CONSENT CALENDAR ITEMS ACTION None 4. OTHER BOARD ITEMS ACTION None Date of Notice: February 24, 2016

52 Attachment 6, Page 11 of 29 Communications and Legislation March 7, 2016 Committee Agenda Page 2 5. BOARD INFORMATION ITEMS None 6. COMMITTEE ITEMS a. Report on activities from Washington, D.C. b. Report on activities from Sacramento 7. MANAGEMENT REPORT a. External Affairs Management report 8. FOLLOW-UP ITEMS None 9. FUTURE AGENDA ITEMS 10. ADJOURNMENT NOTE: At the discretion of the committee, all items appearing on this agenda, whether or not expressly listed for action, may be deliberated and may be subject to action by the committee. This committee reviews items and makes a recommendation for final action to the full Board of Directors. Final action will be taken by the Board of Directors. Agendas for the meeting of the Board of Directors may be obtained from the Board Executive Secretary. This committee will not take any final action that is binding on the Board, even when a quorum of the Board is present. Writings relating to open session agenda items distributed to Directors less than 72 hours prior to a regular meeting are available for public inspection at Metropolitan's Headquarters Building and on Metropolitan's Web site Requests for a disability related modification or accommodation, including auxiliary aids or services, in order to attend or participate in a meeting should be made to the Board Executive Secretary in advance of the meeting to ensure availability of the requested service or accommodation. Date of Notice: February 24, 2016

53 Attachment 6, Page 12 of 29 Audit & Ethics Comm. L. Friedman, Chair D. Dear, Vice Chair S. Ballin B. Barbre L. Dick D. Galleano M. Hogan J. Quiñonez R. Wunderlich Ethics Committee Workshop Meeting with Board of Directors* March 7, :00 p.m. -- Board Room Monday, March 7, 2016 Meeting Schedule 7:00-8:00 a.m. Rm Dirs. Computer Training 9:00 a.m. Rm F&I 11:00 a.m. Rm WP&S 12:30 p.m. Rm E&O 1:30 p.m. Rm C&L 2:00 p.m. Board Room Training MWD Headquarters Building 700 N. Alameda Street Los Angeles, CA *The Metropolitan Water District s Ethics Committee Workshop meeting is noticed as a joint meeting with the Board of Directors for the purpose of compliance with the Brown Act. Members of the Board who are not assigned to the Ethics Committee may attend and participate as members of the Board, whether or not a quorum of the Board is present. In order to preserve the function of the committee as advisory to the Board, members of the Board who are not assigned to the Ethics Committee will not vote on matters before the Ethics Committee. 1. Opportunity for members of the public to address the committee on matters within the committee's jurisdiction (As required by Gov. Code Section (a)) 2. COMMITTEE ITEM a. Sexual Harassment Prevention Training 3. ADJOURNMENT NOTE: At the discretion of the committee, all items appearing on this agenda, whether or not expressly listed for action, may be deliberated and may be subject to action by the committee. This committee reviews items and makes a recommendation for final action to the full Board of Directors. Final action will be taken by the Board of Directors. Agendas for the meeting of the Board of Directors may be obtained from the Board Executive Secretary. This committee will not take any final action that is binding on the Board, even when a quorum of the Board is present. Writings relating to open session agenda items distributed to Directors less than 72 hours prior to a regular meeting are available for public inspection at Metropolitan's Headquarters Building and on Metropolitan's Web site Requests for a disability related modification or accommodation, including auxiliary aids or services, in order to attend or participate in a meeting should be made to the Board Executive Secretary in advance of the meeting to ensure availability of the requested service or accommodation. Date of Notice: February 24, 2016

54 Attachment 6, Page 13 of 29 L&C Committee J. Quiñonez, Chair L. McKenney, V. Chair R. Atwater M. Camacho D. Dear L. Dick J. Murray L. Paskett F. Steiner Y. Tu R. Wunderlich Legal and Claims Committee Meeting with Board of Directors* March 8, :00 a.m. -- Room Tuesday, March 8, 2016 Meeting Schedule 7:00-8:00 a.m. Rm Dirs. Computer Training 9:00 a.m. Rm L&C 10:00 a.m. Rm RP&AM 11:00 a.m. Rm OP&T 12:00 p.m. Board Room Board Meeting MWD Headquarters Building 700 N. Alameda Street Los Angeles, CA * The Metropolitan Water District s Legal and Claims Committee meeting is noticed as a joint committee meeting with the Board of Directors for the purpose of compliance with the Brown Act. Members of the Board who are not assigned to the Legal and Claims Committee may participate as members of the Board, whether or not a quorum of the Board is present. In order to preserve the function of the committee as advisory to the Board, members of the Board who are not assigned to the Legal and Claims Committee will not vote on matters before the Legal and Claims Committee. 1. Opportunity for members of the public to address the committee on matters within the committee s jurisdiction (As required by Gov. Code Section (a)) 2. Approval of the Minutes of the meeting of the Legal and Claims Committee held February 9, CONSENT CALENDAR ITEMS ACTION None 4. OTHER BOARD ITEMS ACTION None 5. BOARD INFORMATION ITEMS None Date of Notice: February 24, 2016

55 Attachment 6, Page 14 of 29 Legal and Claims Committee March 8, 2016 Agenda Page 2 6. COMMITTEE ITEMS None 7. MANAGEMENT REPORTS a. General Counsel s report of monthly activities 8. FOLLOW-UP ITEMS None 9. FUTURE AGENDA ITEMS 10. ADJOURNMENT NOTE: At the discretion of the committee, all items appearing on this agenda, whether or not expressly listed for action, may be deliberated and may be subject to action by the committee. This committee reviews items and makes a recommendation for final action to the full Board of Directors. Final action will be taken by the Board of Directors. Agendas for the meeting of the Board of Directors may be obtained from the Board Executive Secretary. This committee will not take any final action that is binding on the Board, even when a quorum of the Board is present. Writings relating to open session agenda items distributed to Directors less than 72 hours prior to a regular meeting are available for public inspection at Metropolitan's Headquarters Building and on Metropolitan's Web site Requests for a disability related modification or accommodation, including auxiliary aids or services, in order to attend or participate in a meeting should be made to the Board Executive Secretary in advance of the meeting to ensure availability of the requested service or accommodation. Date of Notice: February 24, 2016

56 Attachment 6, Page 15 of 29 Real Property and Asset Management December113, 2012 Committee Agenda Page 1 RP&AM Committee M. Camacho, Chair G. Dake, Vice Chair P. Beard D. Dear L. Dick M. Hogan G. Peterson M. Ramos M. Touhey R. Wunderlich REVISED AGENDA Real Property and Asset Management Committee Meeting with Board of Directors* March 8, :00 a.m. -- Room Tuesday, March 8, 2016 Meeting Schedule 7:00-8:00 a.m. Rm Dirs. Computer Training 9:00 a.m. Rm L&C 10:00 a.m. Rm RP&AM 11:00 p.m. Rm OP&T 12:00 p.m. Board Room Board Meeting MWD Headquarters Building 700 N. Alameda Street Los Angeles, CA * The Metropolitan Water District s Real Property and Asset Management Committee meeting is noticed as a joint meeting with the Board of Directors for the purpose of compliance with the Brown Act. Members of the Board who are not assigned to the Real Property and Asset Management Committee may attend and participate as members of the Board, whether or not a quorum of the Board is present. In order to preserve the function of the committee as advisory to the Board, members of the Board who are not assigned to the Real Property and Asset Management Committee will not vote on matters before the Real Property and Asset Management Committee. 1. Opportunity for members of the public to address the committee on matters within the committee s jurisdiction (As required by Gov. Code Section (a)) 2. Approval of the Minutes of the meeting of the Real Property and Asset Management Committee held February 8, CONSENT CALENDAR ITEMS ACTION None Date of Notice: March 4, 2016

57 Attachment 6, Page 16 of 29 Real Property and Asset Management March 8, 2016 Committee Agenda Page 2 4. OTHER BOARD ITEMS ACTION Subject Revised 8-6 Authorize entering into an agreement to purchase or to acquire an option to purchase property from Delta Wetlands Properties in Contra Costa, San Joaquin, and Solano Counties. (RP&AM) [Conference with real property negotiators; Property is approximately 20, acres, identified as Contra Costa County Assessor's Parcel Nos , , , , , , , , , , , , , , , , , , , ; , , , , , , , , , , , , , , , ; San Joaquin County Assessor's Parcel Nos , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ; and Solano County Assessor's Parcel No ; agency negotiators: Jeff Kightlinger, Stephen Arakawa, and Bryan Otake; negotiating parties: Metropolitan and Delta Wetlands Properties; under negotiation: price and terms; to be heard in closed session pursuant to Gov. Code Section ] 5. BOARD INFORMATION ITEMS None 6. COMMITTEE ITEMS None 7. MANAGEMENT REPORT a. Real Property Development and Management Manager's Report Date of Notice: March 4, 2016

58 Attachment 6, Page 17 of 29 Real Property and Asset Management March 8, 2016 Committee Agenda Page 3 8. FOLLOW-UP ITEMS None 9. FUTURE AGENDA ITEMS 10. ADJOURNMENT NOTE: At the discretion of the committee, all items appearing on this agenda, whether or not expressly listed for action, may be deliberated and may be subject to action by the committee. This committee reviews items and makes a recommendation for final action to the full Board of Directors. Final action will be taken by the Board of Directors. Agendas for the meeting of the Board of Directors may be obtained from the Board Executive Secretary. This committee will not take any final action that is binding on the Board, even when a quorum of the Board is present. Writings relating to open session agenda items distributed to Directors less than 72 hours prior to a regular meeting are available for public inspection at Metropolitan's Headquarters Building and on Metropolitan's Web site Requests for a disability related modification or accommodation, including auxiliary aids or services, in order to attend or participate in a meeting should be made to the Board Executive Secretary in advance of the meeting to ensure availability of the requested service or accommodation. Date of Notice: March 4, 2016

59 Attachment 6, Page 18 of 29 OP&T Committee J. Murray Jr., Chair M. Camacho, V. Chair S. Ballin B. Barbre S. Faessel L. Friedman G. Gray M. Hogan L. McKenney J. Quiñonez L. Vasquez R. Wunderlich J. Zurita REVISED AGENDA Organization, Personnel and Technology Committee Meeting with Board of Directors* March 8, :00 a.m. -- Room Tuesday, March 8, 2016 Meeting Schedule 7:00-8:00 a.m. Rm Dirs. Computer Training 9:00 a.m. Rm L&C 10:00 a.m. Rm RP&AM 11:00 a.m. Rm OP&T 12:00 p.m. Board Room Board Meeting MWD Headquarters Building 700 N. Alameda Street Los Angeles, CA * The Metropolitan Water District s meeting of the Organization, Personnel and Technology Committee is noticed as a joint committee meeting with the Board of Directors for the purpose of compliance with the Brown Act. Members of the Board who are not assigned to the Organization, Personnel and Technology Committee may participate as members of the Board, whether or not a quorum of the Board is present. In order to preserve the function of the committee as advisory to the Board, members of the Board who are not assigned to the Organization, Personnel and Technology Committee will not vote on matters before the meeting of the Organization, Personnel and Technology Committee. 1. Opportunity for members of the public to address the committee on matters within the committee s jurisdiction (As required by Gov. Code Section (a)) 2. Approval of the Minutes of the meeting of the Organization, Personnel and Technology Committee held February 9, CHAIRMAN S REPORT 4. CONSENT CALENDAR ITEMS -- ACTION None REVISED: Date of Notice: March 2, 2016

60 Attachment 6, Page 19 of 29 Organization, Personnel and March 8, 2016 Technology Committee Agenda Page 2 5. OTHER BOARD ITEMS ACTION Revised 8-4 Approve entering into memorandum of agreements with Metropolitan s four bargaining units for a three-year $1,200,000 incentive payment program for employees assigned to the Iron Mountain, Eagle Mountain and Hinds Pumping Plants. (OP&T) Added Recommendation: Option #1: Adopt the CEQA determination that the proposed actions are not defined as a project and are not subject to CEQA, and authorize the General Manager to enter into memorandums of agreement in excess of $250,000 with Metropolitan s four bargaining units to implement a three-year, $1,200,000 incentive payment program for Remote Location employees according to the provision outlined in the board letter. 6. BOARD INFORMATION ITEMS None 7. COMMITTEE ITEMS a. Information Technology Strategic Plan Quarterly Update Period ending December FOLLOW-UP ITEMS None 9. FUTURE AGENDA ITEMS 10. ADJOURNMENT REVISED: Date of Notice: March 2, 2016

61 Attachment 6, Page 20 of 29 Organization, Personnel and March 8, 2016 Technology Committee Agenda Page 3 NOTE: At the discretion of the committee, all items appearing on this agenda, whether or not expressly listed for action, may be deliberated and may be subject to action by the committee. This committee reviews items and makes a recommendation for final action to the full Board of Directors. Final action will be taken by the Board of Directors. Agendas for the meeting of the Board of Directors may be obtained from the Board Executive Secretary. This committee will not take any final action that is binding on the Board, even when a quorum of the Board is present. Writings relating to open session agenda items distributed to Directors less than 72 hours prior to a regular meeting are available for public inspection at Metropolitan's Headquarters Building and on Metropolitan's Web site Requests for a disability related modification or accommodation, including auxiliary aids or services, in order to attend or participate in a meeting should be made to the Board Executive Secretary in advance of the meeting to ensure availability of the requested service or accommodation. REVISED: Date of Notice: March 2, 2016

62 Attachment 6, Page 21 of 29 REVISION 2 Regular Board Meeting March 8, 2016 Tuesday, March 8, 2016 Meeting Schedule 7:00-8:00 a.m. Rm Dirs. Computer Training 9:00 a.m. Rm L&C 10:00 a.m. Rm RP&AM 11:00 a.m. Rm OP&T 12:00 p.m. Board Room 12:00 p.m. Board Room Board Meeting MWD Headquarters Building 700 N. Alameda Street Los Angeles, CA Call to Order (a) (b) Invocation: Silvia Lanza, Engineer, Engineering Services Group Pledge of Allegiance: Director Donald Galleano 2. Roll Call 3. Determination of a Quorum 4. Opportunity for members of the public to address the Board on matters within the Board s jurisdiction. (As required by Gov. Code (a) PUBLIC HEARING 1. Public hearing to consider suspending the tax rate limitations in Section of the Metropolitan Water District Act to maintain the ad valorem tax rate 2. Comments on proposed water rates and charges for calendar years 2017 and 2018 to meet revenue requirements REVISED: Date of Notice: March 4, 2016

63 Attachment 6, Page 22 of 29 Board Meeting Agenda March 8, 2016 Page 2 5. OTHER MATTERS A. Approval of the Minutes of the Meeting for February 9, (A copy has been mailed to each Director) Any additions, corrections, or omissions B. Report on Directors' events attended at Metropolitan expense for month of February C. Approve committee assignments D. Chairman's Monthly Activity Report 6. DEPARTMENT HEADS' REPORTS A. General Manager's summary of Metropolitan's activities for the month of February B. General Counsel s summary of Legal Department activities for the month of February C. General Auditor s summary of activities for the month of February D. Ethics Officer s summary of activities for the month of February 7. CONSENT CALENDAR ITEMS ACTION 7-1 Appropriate $620,000; and authorize: (1) design to rehabilitate a blow-off structure on the Orange County Feeder; and (2) increase of $200,000 to an existing agreement with Dudek, for a new not-to-exceed total of $485,000 (Approp ). (E&O) REVISED: Date of Notice: March 4, 2016

64 Attachment 6, Page 23 of 29 Board Meeting Agenda March 8, 2016 Page 3 Recommendation: Option #1: Certify that the Final EIR has been completed in compliance with CEQA and the State CEQA Guidelines; certify that the Board has reviewed and considered the information presented in the Final EIR; certify that the Final EIR reflects the Board s independent judgment and analysis; adopt the Findings of Fact and Mitigation Monitoring and Reporting Program; and a. Appropriate $620,000; b. Authorize final design to rehabilitate a blow-off structure on the Orange County Feeder; and c. Authorize increase of $200,000 to an agreement with Dudek, for a new not-to-exceed total of $485, Appropriate $840,000; and authorize preliminary investigations to rehabilitate the auxiliary power systems at the Colorado River Aqueduct pumping plants (Approp ). (E&O) Recommendation: Option #1: Adopt the CEQA determination that the proposed action is categorically exempt, and a. Appropriate $840,000; and b. Authorize preliminary investigations to rehabilitate the auxiliary power systems at the Colorado River Aqueduct pumping plants. 7-3 Approve revised final terms for the Bard Water District land management and seasonal fallowing pilot program. (WP&S) Recommendation: Option #1: Adopt the CEQA determination that the proposed action was previously determined to be categorically exempt and not subject to CEQA, and that no further environmental analysis or documentation is required, and authorize the revised final terms for the pilot program agreement with Bard Water District and the land management and seasonal fallowing agreements with farmers of farmland in the Bard Unit. (END OF CONSENT CALENDAR) REVISED: Date of Notice: March 4, 2016

65 Attachment 6, Page 24 of 29 Board Meeting Agenda March 8, 2016 Page 4 8. OTHER BOARD ITEMS ACTION 8-1 Adopt Master Subordinate Resolution authorizing the issuance of subordinate water revenue bonds and other forms of indebtedness; and adopt the First Supplemental Subordinate Resolution to the Master Subordinate Resolution authorizing the issuance of subordinate water revenue refunding bonds. (F&I) Recommendation: Option #1: Adopt the CEQA determination that the proposed action is not defined as a project and is not subject to CEQA, and a. Adopt the Master Subordinate Resolution authorizing the issuance of subordinate water revenue bonds to finance any legal purpose of the District and providing the terms and conditions for the issuance of said bonds, as contained in Attachment 1 to the board letter; and b. Adopt the First Supplemental Subordinate Resolution to the Master Subordinate Resolution authorizing the issuance of subordinate water revenue refunding bonds, providing the terms and conditions of such bonds and authorizing the approval of other related documents, as contained in Attachment 2 to the board letter. 8-2 Adopt Short-Term Revenue Certificate Resolution authorizing the sale and issuance of up to $400 million of short-term revenue certificates and providing for credit facilities and trust agreements. (F&I) Recommendation: Option #1: Adopt the CEQA determination that the proposed action is not defined as a project and is not subject to CEQA, and adopt the Short-Term Certificates Resolution authorizing the sale and issuance from time to time of up to $400 million of short-term revenue certificates and providing for credit facilities and trust agreements, as contained in Attachment 1 to the board letter. 8-3 Adopt resolution supporting Metropolitan s application for funding from the State Water Resources Control Board s Water Recycling Funding Program, and for acceptance of potential funding; and authorize two agreements for Metropolitan s potential regional recycled water supply program: (1) agreement with MWH Americas, Inc., in an amount not to exceed $1.2 million for design of the demonstration-scale recycled water treatment plant; and (2) agreement with Black & Veatch Corporation, Inc. in an amount not to exceed $1.9 million to conduct feasibility studies of the recycled water delivery system (Approps and 15493). (E&O) REVISED: Date of Notice: March 4, 2016

66 Attachment 6, Page 25 of 29 Board Meeting Agenda March 8, 2016 Page 5 Recommendation: Option #1: Adopt the CEQA determination that the proposed actions are not defined as a project and/or are statutorily and categorically exempt, and a. Adopt a resolution supporting Metropolitan s application to SWRCB s Water Recycling Funding Program, and authorize the General Manager to accept potential grant funding or low interest loans, and to enter into an agreement with SWRCB in a form approved by the General Counsel; b. Authorize agreement with MWH Americas, Inc. in an amount not to exceed $1.2 million for design of the demonstration-scale recycled water treatment plant; and c. Authorize agreement with Black & Veatch Corporation, Inc. in an amount not to exceed $1.9 million to conduct initial feasibility studies of the recycled water delivery system. Revised 8-4 Approve entering into memorandum of agreements with Metropolitan s four bargaining units for a three-year $1,200,000 incentive payment program for employees assigned to the Iron Mountain, Eagle Mountain and Hinds Pumping Plants. (OP&T) Added Recommendation: Option #1: Adopt the CEQA determination that the proposed actions are not defined as a project and are not subject to CEQA, and authorize the General Manager to enter into memorandums of agreement in excess of $250,000 with Metropolitan s four bargaining units to implement a three-year, $1,200,000 incentive payment program for Remote Location employees according to the provision outlined in the board letter. 8-5 Ratify and amend the Executive Committee appropriation of $18 million to $13.9 million; and ratify General Manager s award of a $9.15 million construction contract to J. F. Shea Construction, Inc. for urgent prestressed concrete cylinder pipe repairs on the Sepulveda Feeder (Approp ). REVISED: Date of Notice: March 4, 2016

67 Attachment 6, Page 26 of 29 Board Meeting Agenda March 8, 2016 Page 6 Recommendation: Option #1: Adopt the CEQA determination that the proposed action was previously determined to be statutorily exempt and that no further environmental analysis or documentation is required, and a. Ratify the prior action of the Executive Committee; b. Appropriate $13.9 million; and c. Ratify the General Manager s award of a $9.15 million contract to J. F. Shea Construction, Inc. for urgent PCCP repairs on the Sepulveda Feeder. Subject Revised 8-6 Authorize entering into an agreement to purchase or to acquire an option to purchase property from Delta Wetlands Properties in Contra Costa, San Joaquin, and Solano Counties. (RP&AM) [Conference with real property negotiators; Property is approximately 20, acres, identified as Contra Costa County Assessor's Parcel Nos , , , , , , , , , , , , , , , , , , , ; , , , , , , , , , , , , , , , ; San Joaquin County Assessor's Parcel Nos , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ; and Solano County Assessor's Parcel No ; agency negotiators: Jeff Kightlinger, Stephen Arakawa, and Bryan Otake; negotiating parties: Metropolitan and Delta Wetlands Properties; under negotiation: price and terms; to be heard in closed session pursuant to Gov. Code Section ]) 9. BOARD INFORMATION ITEMS 9-1 Options for leasing Metropolitan-owned lands in the Palo Verde valley. (WP&S) 9-2 Proposed revenue requirements for fiscal years 2016/17 and 2017/18 and proposed water rates and charges for calendar years 2017 and 2018 to meet revenue requirements. (F&I) REVISED: Date of Notice: March 4, 2016

68 Attachment 6, Page 27 of 29 Board Meeting Agenda March 8, 2016 Page FOLLOW-UP ITEMS None 11. FUTURE AGENDA ITEMS 12. ADJOURNMENT NOTE: At the discretion of the Board, all items appearing on this agenda and all committee agendas, whether or not expressly listed for action, may be deliberated and may be subject to action by the Board. Each agenda item with a committee designation will be considered and a recommendation may be made by one or more committees prior to consideration and final action by the full Board of Directors. The committee designation appears in parentheses at the end of the description of the agenda item e.g., (E&O, F&I). Committee agendas may be obtained from the Board Executive Secretary. Writings relating to open session agenda items distributed to Directors less than 72 hours prior to a regular meeting are available for public inspection at Metropolitan's Headquarters Building and on Metropolitan's Web site Requests for a disability related modification or accommodation, including auxiliary aids or services, in order to attend or participate in a meeting should be made to the Board Executive Secretary in advance of the meeting to ensure availability of the requested service or accommodation. REVISED: Date of Notice: March 4, 2016

69 Attachment 6, Page 28 of 29 Summary Report for The Metropolitan Water District of Southern California Board Meeting March 8, 2016 COMMITTEE ASSIGNMENTS None. (Agenda Item 5C) FINANCE AND INSURANCE COMMITTEE Adopted the Master Subordinate Resolution authorizing the issuance of subordinate water revenue bonds to finance any legal purpose of the District and providing the terms and conditions for the issuance of said bonds, as contained in the Board letter; and adopted the First Supplemental Subordinate Resolution to the Master Subordinate Resolution authorizing the issuance of subordinate water revenue refunding bonds, providing the terms and conditions of such bonds and authorizing the approval of other related documents, as contained in the Board letter. (Agenda Item 8-1) Adopted the Short-Term Certificates Resolution authorizing the sale and issuance from time to time of up to $400 million of short-term revenue certificates and providing for credit facilities and trust agreements, as contained in the Board letter. (Agenda Item 8-2) ENGINEERING AND OPERATIONS COMMITTEE Adopted a resolution supporting Metropolitan s application to State Water Resources Control Board s (SWRCB) Water Recycling Funding Program; and authorized the General Manager to accept potential grant funding, and to enter into an agreement with SWRCB in a form approved by the General Counsel; authorized agreement with MWH Americas, Inc. in an amount not to exceed $1.2 million for design of the demonstration-scale recycled water treatment plant; and authorized agreement with Black & Veatch Corporation, Inc. in an amount not to exceed $1.9 million to conduct initial feasibility studies of the recycled water delivery system. (Approps and 15493) (Agenda Item 8-3) ORGANIZATION, PERSONNEL AND TECHNOLOGY COMMITTEE Authorized the General Manager to enter into memorandums of agreement in excess of $250,000 with Metropolitan s four bargaining units to implement a three-year, $1,200,000 incentive payment program for Remote Location employees according to the provisions outlined in the board letter. (Agenda Item 8-4) EXECUTIVE COMMITTEE Ratified the prior action of the Executive Committee; appropriated $13.9 million; and ratified the General Manager s award of a $9.15-million contract to J. F. Shea Construction, Inc. for urgent prestressed concrete cylinder pipe (PCCP) repairs on the Sepulveda Feeder. (Approp ) (Agenda Item 8-5)

70 Attachment 6, Page 29 of 29 REAL PROPERTY AND ASSESSMENT MANAGEMENT COMMITTEE Authorized the General Manager to enter into an agreement to purchase certain property from Delta Wetlands Properties in Contra Costa, San Joaquin, and Solano Counties and directed the General Manager to report on due diligence findings at a Special Board Meeting on April 26, (Agenda Item 8-6) CONSENT CALENDAR In other action, the Board: Appropriated $620,000; and authorized final design to rehabilitate a blow-off structure on the Orange County Feeder; and authorized increase of $200,000 to an agreement with Dudek, for a new not-toexceed total of $485,000. (Approp ). (Agenda Item 7-1) Appropriated $840,000; and authorized preliminary investigations to rehabilitate the auxiliary power systems at the Colorado River Aqueduct pumping plants. (Approp ) (Agenda Item 7-2) Approved revised final terms for the pilot program agreement with Bard Water District and the land management and seasonal fallowing agreements with farmers of farmland in the Bard Unit. (Agenda Item 7-3) OTHER MATTERS: In other action, the Board: Held a public hearing to consider suspending the tax rate limitations in Section of the Metropolitan Water District Act to maintain the ad valorem property tax rate; and to receive comments on proposed water rates and charges for calendar years 2017 and 2018 to meet revenue requirements. THIS INFORMATION SHOULD NOT BE CONSIDERED THE OFFICIAL MINUTES OF THE MEETING. Board letters related to the items in this summary are generally posted in the Board Letter Archive approximately one week after the board meeting. In order to view them and their attachments, please copy and paste the following into your browser

71 Date: March 23, 2016 To: From: Subject: San Diego County Water Authority Board Members Ken Carpi, Washington Representative Federal Legislative Update Water Dispute Continues to Stall Energy Bill, Generates Calls for More Funding The Senate has been deadlocked since February on proceeding with the Energy Policy Modernization Act of 2015 (S. 2012), a bill that has become a vehicle for debate on the lead contamination in drinking water systems. A bipartisan team of senators initially attempted to attach the Drinking Water Safety and Infrastructure Act (S. 2579) to the broader energy bill. However, debate on the merits of the bill quickly expanded as other senators sought to respond to water contamination and infrastructure challenges throughout the nation. Senators remain divided over how much money should be provided to Flint and other systems, how funding should be provided (i.e. through existing EPA loan programs or through new grants), and whether assistance should be treated as emergency funding or whether it should be offset through cuts to other programs. Procedural holds have thus far stymied further action on the energy bill including the relevant sections addressing water. The situation in Flint has also led to the introduction of numerous bills that would increase funding for EPA s Clean Water and Safe Drinking Water revolving loan programs; loosen restrictions on private investment in water systems; increase testing and monitoring requirements for lead and other contaminants by local, state, and federal regulators; expand eligibility for the WIFIA program and increase its funding; and to reorder state and federal reporting requirements to improve alerts to the public and regulators. Few, if any, of these individual bills will progress through Congress this year, but elements from several may find their way into broader legislation such as S or legislative riders on EPA s annual appropriation. The Clean Water SRF is currently funded at $1.394 billion, but President Obama has proposed cutting that amount to $979.5 million in FY2017. The Drinking Water SRF is funded at $863 million this year and President Obama requested increasing this level to $1.03 billion in FY2017. House Democrats are pressing to raise funding to $2 billion for