MINUTES OF THE REGULAR MEETING OF THE ENGINEERING AND OPERATIONS COMMITTEE OF THE RANCHO CALIFORNIA WATER DISTRICT Thursday, April 29, :30 a.m.

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1 DIRECTORS PRESENT: Steve Corona, Chairman Ralph Daily Larry Libeu STAFF PRESENT: MINUTES OF THE REGULAR MEETING OF THE ENGINEERING AND OPERATIONS COMMITTEE OF THE RANCHO CALIFORNIA WATER DISTRICT Thursday, April 29, :30 a.m. Jeff Armstrong, Chief Financial Officer/Treasurer Craig Elitharp, Director of Operations and Maintenance Andrew Webster, Chief Engineer Warren Back, Engineering Planning Manager Mike Calvert, Operations Project Manager Ken Cope, Construction Contracts Manager Fred Edgecomb, Water Reclamation Manager Oly Oliphant, Field Services Manager Pat O Neil, Human Resources Manager Corey Wallace, Engineering Manager Robert Avera, Civil Engineer Vicki Browder, Senior Accountant Bud Jones, Associate Engineer Heath McMahon, Civil Engineer Dave Morrison, Safety Officer Leslie Mayer, Sr. Administrative Assistant/Recording Secretary OTHERS PRESENT: Lisa Herman, Alternate, RCWD Engineering and Operations Committee Ben Drake, RCWD Board of Directors Bill Plummer, RCWD Board of Directors Steve Tiritilli, JST Real Estate Bryan Snell, JST Real Estate If at any time during this Committee meeting a quorum of the Board is present, then the meeting will continue as a Committee of the Whole. Actions taken pursuant to this agenda, whether taken by the Committee or the Committee as a Whole, shall be actions within the purview of the Committee and shall be deemed recommendations of the Committee. Procedures for the conduct of Committee meetings shall be provided for in the District's Administrative Code. Meetings of standing committees shall be noticed, agendized, and conducted in accordance with the Brown Act.

2 Upon request, this agenda will be made available in appropriate alternative formats to persons with disabilities, as required by Section 202 of the Americans with Disabilities Act of Any person with a disability who requires a modification or accommodation in order to participate in a meeting should direct such request to the District Secretary at (951) at least 48 hours before the meeting, if possible. The meeting was called to order at 8:30 a.m. by Chairman Corona. ADDITIONS TO AGENDA Items may be added to the Agenda in accordance with Section (b)(2) of the Government Code (Brown Act), upon a determination by a two-thirds vote of the members of the legislative body present at the meeting, or, if less than two-thirds of the members are present, a unanimous vote of those members present, that there is a need to take immediate action and that the need for action came to the attention of the District after the Agenda was posted. There were no additions to the Agenda. APPROVAL OF AGENDA Chairman Corona called for approval of the Agenda of the Regular Meeting of the Engineering and Operations Committee of the Rancho California Water District of April 29, MOTION: PUBLIC COMMENT Director Daily moved to approve the Agenda of the Regular Meeting of the Engineering and Operations Committee of the Rancho California Water District of April 29, Director Libeu seconded the motion, and it carried unanimously. An opportunity was given for any person to address the Committee upon any subject not identified on the Agenda but within the jurisdiction of this Committee; however, any matter that requires action is to be referred to staff for a report and action at a subsequent Committee or Board meeting. As to matters on the Agenda, an opportunity is given to address the Committee when the matter is considered. Representing a Rancho California Water District (District) agriculture customer and client, Mr. Smotrich of Temecula Vineyard (Account Number ), Ben Drake addressed the Committee and provided a handout of a copy of a letter that Mr. Smotrich received from the District and forwarded by facsimile to Mr. Drake. Mr. Drake expressed concern with the subject of the customer letters the District issued pertaining to agriculture penalty refund excess credit. Mr. Drake explained that he provided copies of the customer letter to the Committee in order for the Committee to see what has been done by the District and indicated that he relayed to Mr. Smotrich his embarrassment by the content of the customer letters and process that the District has followed. Specifically, the credit amount posted to Mr. Smotrich s water account in November 2009 was $2,837.89; the correct credit amount was $ As a result, the District is now asking the customer to return the overstated amount of $2, Chairman Corona thanked Mr. Drake for his comments and, as no other public comments were to be heard, proceeded with Item 1. April 29, Engineering and Operations Committee

3 Item 1. Consider Approval of a Cellular Communication Tower Co-Locate at General Kearny Reservoir Chief Financial Officer/Treasurer Jeff Armstrong addressed the Committee briefly and introduced Bryan Snell with JST Real Estate to present this item. Mr. Snell addressed the Committee and provided information pertaining to a request by Metro PCS to co-locate cellular communication equipment on an existing cellular communication tower at Rancho California Water District s (RCWD/District) General Kearny Reservoir. Indicating that the staff report in the Committee meeting package contained all relevant information and the proposed license agreement for Metro PCS s co-locate request, Mr. Snell asked the Committee if there were any questions. Responding to a query submitted by Director Herman, Mr. Snell advised that the license agreement for Metro PCS s request contains the standard agreement language with provisions for a 10-year term and three 5-year options. Further, the license agreement includes an initial rent amount of $2,000 per month, with Consumer Price Index escalators not to exceed three percent each subsequent year, and provides for each option period to be reset to market rent. MOTION: Director Daily moved to recommend the Board of Directors approve the execution of the license agreement with Royal Street Communications California, LLC (Metro PCS) as a co-locate on the Crown Castle (Sprint) cellular communication tower at the General Kearny Reservoir. Director Libeu seconded the motion, and discussion continued. Director Herman asked if market rate amounts for cellular communication tower leases are increasing. Responding, Mr. Snell advised that a few of the District s reservoir sites may have lower than market rental rates; however, with the built-in escalators, the rental amounts are coming back up appropriately. Further, Mr. Snell opined that, in general, the District s rental rates for cellular communication towers are within market rate amounts. To a question posed by Director Plummer, Director of Operations and Maintenance Craig Elitharp advised that District staff encounters no problems with the communication towers sharing space on reservoir sites as most of the access ways are separate and/or District areas are fenced and do not require the lessee to enter into the District s operating space. Following more general discussion, Chairman Corona called for the question on the motion on the floor, and it carried unanimously. Item 2. Consider Resolution Adopting Revised Local California Environmental Quality Act (CEQA) Guidelines Engineering Planning Manager Warren Back addressed the Committee to provide information relative to the yearly update performed by Rancho California Water April 29, Engineering and Operations Committee

4 District s legal counsel, Best Best & Krieger LLC (BB&K), on the Local California Environmental Quality Act (CEQA) Guidelines. Mr. Back explained that CEQA Guidelines are revised to reflect changes occurring due to legal or legislative action. Consequently, Rancho California Water District is required to adopt revisions made to the CEQA Guidelines by way of a new resolution each year. Mr. Back informed that BB&K provided a memorandum outlining revisions made to the CEQA document. Highlighting a few items worthy of mention, Mr. Back announced that specific guidelines are now available pertaining to greenhouse gas emissions and the CEQA guidelines also contain information relative to energy conservation. Concluding his presentation, Mr. Back advised that staff requests the Engineering and Operations Committee recommend the Board of Directors approve the resolution adopting the revised Local CEQA Guidelines, as presented. To a question posed by Director Daily, Chief Engineer Andrew Webster advised that the CEQA Guidelines would be revised should Assembly Bill 32 legislative action be set aside. Clarifying, Mr. Webster instructed that changes within the CEQA Guidelines are dictated by new state laws or previous CEQA litigation; further, the threshold has been reasonable and flexibility within the guidelines can assist to prevent certain legal challenges. MOTION: Item 3. Director Daily moved to recommend the Board of Directors approve the resolution adopting the revised Local California Environmental Quality Act Guidelines, as presented. It was further moved that the Engineering and Operations Committee recommend the Board of Directors approve the incorporation of said document into the Administrative Code Part III Engineering, Operations, and Maintenance of the District, Chapter 3 Local Guidelines for Implementing the California Environmental Quality Act (CEQA). Director Libeu seconded the motion, and it carried unanimously. Consider Approval of Project Funds and Consider Award of a Professional Services Contract for the Design of the Ace Bowen Pump Station Improvements - Pump Driver Replacement, On-Site Fuel Cell Power Generation, and Miscellaneous Facility Improvements Engineering Manager Corey Wallace addressed the Committee and began his presentation by providing background information regarding potential improvements to Rancho California Water District s (RCWD/District) Ace Bowen Pump Station. Utilizing a PowerPoint presentation, Mr. Wallace displayed a slide containing a few photographs of the current internal combustion (IC) engines and electric motors that serve Ace Bowen Pump Station, along with two project location maps for the Committee s information. Continuing, Mr. Wallace indicated that, due to South Coast Air Quality Management District s (SCAQMD) Rule becoming effective July 1, 2010, April 29, Engineering and Operations Committee

5 significant reductions in NOx, VOC, and CO emissions will be required. In addition, Rule requires continuous emissions monitoring, which will result in substantial increases to District operations and maintenance costs. Further, staff expects violations are highly probable with the continued use of the rich-burn IC engines. Reminding the Committee of alternatives previously discussed at the January 27, 2010 Engineering and Operations Committee meeting, Mr. Wallace provided a slide containing the alternatives considered, as follows: Retrofit existing IC engines with enhanced emissions control equipment; Replace existing IC engines with new IC engines capable of meeting new emissions requirements; or Replace existing IC engines with electric motors: o Purchase all power from Southern California Edison (SCE); or o Generate power on-site with fuel cell technology. Next, Mr. Wallace provided the recommended project alternative approved by the Board of Directors at its February 11, 2010 meeting, as follows: Core facility improvements o Replace the IC engines with electric motors; and o Generate power on-site with fuel cell technology. Staff to also evaluate the potential for supplemental, on-site wind power generation. Miscellaneous facility improvements o Upgrade/improve vehicular site access; and o Expand pumping capacity serving the 1440 Pressure Zone. Providing a net capital cost for the recommended project alternative, Mr. Wallace advised the Committee that the estimated net project cost is $6.2 million, which includes $3.0 million in grant funding from SCE. Further, the estimated net present value of the project is approximately $7.0 million, which is compared to the baseline project alternative of replacing the IC engines with electric motors and purchasing all power from SCE. Expanding, Mr. Wallace instructed that staff solicited proposals for the recommended project alternative from four firms: Carollo Engineers, MWH, AECOM, and CH2M Hill. A total of three proposals were received; CH2M Hill being the only firm not responding. At this time, Mr. Wallace asked the Committee to recommend the Board of Directors authorize $1,145,000 for design phase funding for the recommended project alternative and to also recommend a professional engineering services contract be awarded to Carollo Engineers in the amount not-to-exceed $872,000, which includes the full scope of preliminary and final design activities and wind power evaluation efforts. Mr. Wallace explained that staff provided information in the Committee meeting package as to the reason for choosing Carollo Engineers and expanded on the following areas: April 29, Engineering and Operations Committee

6 Staff has a certain comfort level with Carollo Engineers with services provided thus far; specifically, Carollo Engineers provides unmatched experience with fuel cell installations, including feasibility, design, equipment procurement, permitting, construction, and commissioning; Carollo Engineers has highly skilled and experienced in-house staff for this type of project, including a team of sub-consultants having experience with the SCE interconnect, air quality permitting, and California Environmental Quality Act (CEQA) requirements pertaining to fuel cell installations; and Superior project understanding, level of design effort, and schedule commitment. Concluding his presentation, Mr. Wallace displayed a slide containing the next steps for the project including an additional funding request pertaining to fuel cell procurement to be presented at the July 29, 2010 Engineering and Operations Committee meeting and a subsequent construction phase funding request anticipated to be presented at the February 24, 2011 Engineering and Operations Committee meeting. MOTION: Director Daily moved that the Engineering and Operations Committee forward this item to the Board of Directors without recommendation for further discussion and consideration regarding the authorization of $1,145,000 for the design phase of the Ace Bowen Pump Station Improvements - Pump Driver Replacement, On-Site Fuel Cell Power Generation, and Miscellaneous Facility Improvements, and to award a professional engineering services contract to Carollo Engineers in the amount not-to-exceed $872,000; the proposed source of funds being the Santa Rosa Division Debt Service/Capital Improvement Fund, with possible reimbursement from future permanent financing and/or applicable grant funding. Director Libeu seconded the motion, and discussion continued. Responding to a question submitted by Director Daily regarding the possibility for Assembly Bill 32 legislation to be set aside, Chief Engineer Andrew Webster advised that the purpose of the Ace Bowen Pump Station improvement project is not to meet potential greenhouse gas compliance issues; rather, the project is beneficial purely from a cost point of view and allows for flexibility of utilizing a separate power source of natural gas. Further, this flexibility assists with overall costs and reliability. General discussion continued regarding the proposed cost of $1.1 million, including approximately 4,000 hours involved for the design effort. Next, Director Libeu requested further detailed information to substantiate approximately $273,000 for in-house staff expenses and more specific reasoning for staff s request to award the professional services contract to Carollo Engineers, as their proposal appears to be approximately $285,000 higher than the other two firms. Responding, Mr. Wallace indicated that staff provided three alternatives in the Committee meeting package for the Committee s review; should staff be directed to award the professional services contract to MWH, for example, there is a possibility for a change in scope of work for the project. April 29, Engineering and Operations Committee

7 To a question posed by Director Herman, Mr. Wallace advised that Carollo Engineers was the engineering firm involved with the fuel cell installation for Eastern Municipal Water District. Discussion continued with regard to the potential for negotiating with the engineering firms; specifically, verifying each firm understands the full scope of work and adjusting anticipated hourly involvement, if necessary, ahead of awarding the professional services contract. Further discussion ensued pertaining to the need for the project to be in operation within 18 months in order to receive grant funding; a six-month extension will be required. Mr. Webster provided his comments related to MWH s proposal and opined that, while MWH is a large firm, staff felt that MWH would have more in-house design experience on fuel cell technology; rather, MWH proposed to use a sub-consultant for this work, raising a red flag for staff. Further, staff believes that Carollo Engineers is the best qualified firm for the project scope of work, and staff will rely heavily on Carollo Engineers expertise in fuel cell technology. Finally, staff in-house costs are necessary to adequately manage this complex project including review work, CEQA requirements, design work, permitting, etc., and Mr. Webster reminded that the original analysis provided in the feasibility report estimated the project cost at $1.5 million for the design portion; therefore, the requested project cost is within that projection. To a question posed by Director Libeu, Mr. Wallace advised that environmental work is included in the requested funding amount of $1,145,000, and a $50,000 reallocation amount is included for the preliminary work provided thus far. Responding to a question submitted by Director Drake, Mr. Wallace instructed that the District can sell power back to SCE for water that isn t used on the west side of the District; however, due to the pricing structure, the best condition is to offset power used, rather than sell the power back to SCE. Following more general discussion, Chairman Corona clarified the motion on the floor; specifically, the motion is to move the item to the Board of Directors without recommendation. Chairman Corona then called for the question on the motion on the floor, and it carried unanimously. Item 4. Project Status Update for the Vail Lake Transmission Main and Pump Station Project (Project No. D1317) Construction Contracts Manager Ken Cope addressed the Committee to provide updated information pertaining to the Vail Lake Transmission Main and Pump Station Project (Project No. D1317). Mr. Cope provided a PowerPoint presentation containing maps and several photographs of the transmission main installation thus far, as well as photographs of the pump station progress. April 29, Engineering and Operations Committee

8 Next, Mr. Cope reviewed the project construction budget summary, indicating that approximately $687,000 has been spent on construction costs to date, with the project approximately 10 percent complete. To a question posed by Director Herman, Mr. Cope advised that the project is on schedule to meet the requirements of the stimulus funding. Also, minor issues such as groundwater levels have not impacted the project schedule. Brief discussion ensued with regard to comments received by the regional engineer for the Division of Safety of Dams concerning the unique construction method of Vail Dam. There being no questions or comments, this item having been presented for information purposes only, the Engineering and Operations Committee proceeded to Item 5. Item 5. Project Status Reports March/April 2010 Presented for Engineering and Operations Committee review and acceptance were the Rancho California Water District (RCWD/District) Project Status Report, Outside Contracts Summary Report, and Capital Job Status Report for the months of March/April The Engineering and Operations Committee accepted the Project Status Reports for the months of March/April 2010, as presented. Item 6. Operations Reports March 2010 Presented for Engineering and Operations Committee review and acceptance were the Operations Report, Regulatory Compliance Report, and water sales and production statistics for the month of March To a question posed by Director Daily, Director of Operations and Maintenance Craig Elitharp advised that, since mid-january, approximately 6,000 acre-feet of water have been added to Vail Lake, raising the lake level approximately eight feet. The Engineering and Operations Committee accepted the Operations Reports for the month of March 2010, as presented. Item 7. Adjournment There being no further business to come before the Committee, the meeting adjourned at 9:09 a.m. Leslie Mayer, Recording Secretary April 29, Engineering and Operations Committee