DIRECTORS PRESENT: Jack Hoagland, Chairman Ben Drake Lisa Herman, Alternate. DIRECTORS ABSENT: Bill Plummer STAFF PRESENT:

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1 DIRECTORS PRESENT: Jack Hoagland, Chairman Ben Drake Lisa Herman, Alternate DIRECTORS ABSENT: Bill Plummer STAFF PRESENT: MINUTES OF THE JOINT REGULAR MEETING OF THE ENGINEERING AND OPERATIONS COMMITTEE AND SPECIAL MEETING OF THE BOARD OF DIRECTORS OF THE RANCHO CALIFORNIA WATER DISTRICT Thursday, June 26, :30 a.m. Matt Stone, General Manager Jeff Armstrong, Chief Financial Officer/Treasurer Andrew Webster, Chief Engineer Warren Back, Engineering Manager-Planning Bill Barnes, Field Services Manager-Facilities Fred Edgecomb, Water Reclamation Manager Heath McMahon, Construction Contracts Manager Rich Ottolini, Water Operations Manager Corey Wallace, Engineering Manager-Design Jeff Kirshberg, Principal Engineer (arrived at 8:40 a.m., left at 9:38 a.m.) Randy Neff, Principal Engineer (left at 8:40 a.m.) Jake Wiley, Principal Engineer Vicki Browder, Budget/Debt Administrator Kathy Naylor, Accounting Manager (left at 9:55 a.m.) Meggan Valencia, Public Information Officer Leslie Mayer, Sr. Administrative Assistant/Recording Secretary OTHERS PRESENT: Steve Corona, RCWD Board of Directors James Stewart, RCWD Board of Directors Roger Ziemer, RCWD Board of Directors This Committee meeting is also noticed as a special meeting of the Board of Directors because a quorum of the Board may be present. Members of the Board who are not members of the Committee may attend and participate in the meeting, but only members of the Committee may make, second, or vote on any motion or other action of the Committee. Any actions taken pursuant to this agenda will be actions within the purview of the Committee and shall be approved by an affirmative vote of a majority of the quorum of the Committee. The Committee is not empowered to act for or on behalf of the Board or the District unless exercising delegated authority from the Board. Any

2 actions taken by the Committee shall be deemed recommendations of the Committee for future consideration by the Board at a separately noticed regular or special meeting of the Board of Directors. The Board of Directors retains all powers, privileges, and duties to exercise and perform the business of the District. 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 Hoagland. 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 Hoagland called for approval of the Agenda of the Regular Meeting of the Engineering and Operations Committee of the Rancho California Water District of June 26, 2014, as presented. MOTION: Director Drake moved to approve the Agenda of the Regular Meeting of the Engineering and Operations Committee of the Rancho California Water District of June 26, 2014, as presented. Director Herman seconded the motion, and it carried unanimously. PUBLIC COMMENT An opportunity was given for any person to address the Engineering and Operations Committee (Committee) upon any subject not identified on the Agenda, but within the jurisdiction of the Rancho California Water District. For items not listed on the Agenda, the Brown Act imposes limitations on what the Committee may do during public comment. As to matters on the Agenda, persons will be given an opportunity to address the Committee when the matter is considered. There was no public comment. June 26, Engineering and Operations Committee

3 Item 1. Status Update for the French Valley Parkway Phase 2A Overcrossing Pipelines (Project No. D1790) Engineering Manager-Design Corey Wallace addressed the Engineering and Operations Committee (Committee) to provide information relative to Rancho California Water District (District) water pipeline facilities to be constructed in conjunction with the subject City of Temecula (City) project. Mr. Wallace began his presentation by reminding the Committee that, at its June 12, 2014 regular meeting, the Board of Directors (Board) directed staff to continue with the preliminary engineering/design of the indirect potable reuse (IPR) brine disposal facilities, and proceed with final engineering/design of the IPR-related pipelines as an integral component of the subject City project. Utilizing a PowerPoint presentation, Mr. Wallace displayed a slide of an overview map of the subject project improvements, colored-coded to correspond with the different project phases, along with the area to include the overcrossing pipelines. To a question submitted by Director Hoagland, Mr. Wallace reviewed work previously performed for the Madison Avenue 54-Inch Water Transmission Main Relocation, Project No. D1505. Continuing, Mr. Wallace displayed a few additional slides showing specific work that will be involved in Phase 2A of the subject project, along with an activity timeframe table, as follows: Activity - Pipelines (by RCWD) Timeframe Request for Proposals Issued July 2014 Award of Engineering Agreement August 2014 Engineering/Design August 2014 thru December 2014 Activity - FVP2A Improvements (by Temecula) Timeframe Engineering/Design January 2014 thru September 2016 Bid/Award September 2016 thru December 2016 Construction July 2017 thru July 2019 Concluding his presentation, Mr. Wallace indicated that the completed design of the overcrossing pipelines will be incorporated into the City s bid package. As depicted in the timeframe table above, staff will first issue a Request for Proposals in July 2014, followed by a subsequent request for Board approval to award a professional services agreement at the August 14, 2014 regular meeting. He then stated that completion of the design is anticipated for late 2014/early June 26, Engineering and Operations Committee

4 Director Hoagland expressed his concern that, by completing the design of the District s overcrossing pipelines ahead of the City s final design of the subject project improvements, potential design conflicts may occur. Responding, Mr. Wallace indicated that, while he believes the City s time schedule may change, he does not believe design plans for the bridge will change. There being no questions or comments, this item having been presented for information purposes only, the Committee proceeded to Item 2. Item 2. Review and Consider Preferred Alternative for the Solar Power Remote Net Metering Project (Project No. D1695) Chief Engineer Andrew Webster addressed the Engineering and Operations Committee (Committee) to present several project alternatives associated with the subject project for the Committee s consideration and recommendation to the Board of Directors (Board). Utilizing a PowerPoint presentation, Mr. Webster began by reminding the Committee that the subject Rancho California Water District (District) project description includes a 5-megawatt (MW) solar power photovoltaic generating facility to be constructed within a 60-acre property owned by the District, that would route generated electrical power to Southern California Edison s (SCE) electrical grid, which would then, in turn, be converted to generation credits to offset electrical costs from the District s various existing electrical accounts. Displaying an overview location map, Mr. Webster showed the aforementioned 60-acre property located along Washington Avenue, adjacent to the District s Santa Rosa Water Reclamation Facility, and a closer overview location map outlining the impact area that would be utilized for the solar panels. Noting that Well No. 155, located within the 60-acre property, fulfills SCE s program requirement for an onsite account, Mr. Webster displayed another slide depicting a diagram of how SCE s Local Government Renewable Energy Self- Generation Bill Credit Transfer (RES-BCT) program operates from the generation account, which is the aforementioned 5-MW facility, to the designated benefiting electrical accounts throughout the District, with an anticipated cost savings to the District over a 25-year period. Expanding, Mr. Webster noted that reducing the overall power cost for the District will have a direct impact on the Operating Budget, which, in turn, helps staff to minimize rate impacts on an annual basis. Further, accumulation of renewable energy credits will continue. Next, Mr. Webster discussed the project risks associated with the subject project including the following: Unknown future modifications to SCE s rate schedules, which may reduce the estimated cost savings; June 26, Engineering and Operations Committee

5 Expenditure of funds for initial project costs: SCE interconnection cost estimate is currently $408,000; and Surrounding property owner opposition. Concluding his presentation, Mr. Webster noted that staff is looking for direction from the Committee as to whether or not staff should proceed with the subject project and he highlighted certain project alternatives included within the Committee packet, as follows: Alternative No. 1: Defer the issuance of a Request for Proposals (RFP) for the Solar Power Remote Net Metering Project to an undetermined future date. Alternative No. 2: Cancel the Solar Power Remote Net Metering Project in its entirety. Alternative No. 3: Proceed with the implementation of the Solar Power Remote Net Metering Project with the following actions: Approval of the issuance of a RFP for the Solar Power Remote Net Metering Project; Authorize the general manager to apply for federal or state subsidy funding for the Solar Power Remote Net Metering Project, when available; Approval of a sole-source professional services agreement with TerraVerde Renewable Partners, in the amount of $320,020, for Phase I consulting services; and Approval of additional funding in the amount of $370,000, increasing the approved project budget amount from $255,000 to $625,000, for the Solar Power Remote Net Metering Project. The proposed source of funds is 50 percent Rancho Division Debt Service/Capital Improvement Fund, 35 percent Santa Rosa Division Debt Service/Capital Improvement Fund, and 15 percent Wastewater Division General Fund, with possible reimbursement from future permanent financing. General discussion ensued regarding the need to proceed with the project in order to determine specific project costs, SCE s rate schedule, real time pricing, financing options such as using a power purchase agreement, etc. Concluding his presentation, Mr. Webster outlined staff s plan, assuming the Committee recommends proceeding with the project, to divide the project into two phases: design and construction, and to provide for a way to manage risk and/or abandon the project all together if it is determined to not be cost-effective after the RFP process. He then displayed a project budget summary showing the amount of funding spent to date and the estimated costs for the RFP phase, design/environmental documentation phase, and construction phase, with a total overall project cost of $19,405,070. Mr. Webster noted that the estimated figure of $18 million represents the June 26, Engineering and Operations Committee

6 District owning the solar facility and paying the upfront costs initially, versus utilizing a power purchase agreement that would allow payment of the facilities over a 20-year period, as part of the energy purchase. Brief general discussion continued regarding SCE s overall rate structure for the District and its various facilities. Director Drake opined that he does not want to spend approximately $600,000 in order to find out if the District should proceed with the subject project; rather, he would prefer to know specific project costs before spending any funding. To a question posed by Director Stewart as to whether or not it is possible to solicit several solar vendors to find out if additional money can be saved through competition, Mr. Webster advised that he has had several discussions with SunPower, which is the company that has been involved in all three solar power projects for the District thus far. Further, SunPower has provided the estimate of the aforementioned $18 million cost for the solar facilities, with an expected $10 million to $30 million savings over 25 years through a power purchase agreement scenario. Expanding, Mr. Webster indicated that another alternative can be considered, as state law was passed allowing the District to enter into a sole-source contract with a solar power vendor, should the Board agree to bypass the District s current purchasing policy. To a question submitted by Director Ziemer regarding whether or not there are any time-sensitive issues/conditions pertaining to staff issuing a RFP, Mr. Webster advised that SCE s RES-BCT tariff program is capped at 113 MW, so the tariff will no longer be available after that capacity has been reached. He estimated that SCE s current territory is generating approximately MW thus far within the tariff program. Chairman Hoagland opined that there seems to be a pushback from Southern California utilities on net metering scenarios, as the increased use of solar power can undermine their rate structures; therefore, if significant rate modifications could possibly be implemented by these area utilities, he would prefer to wait a while to see if the situation settles out. Responding, Mr. Webster warned that if the District decides to wait a while before implementing this potential solar power project, the lengthy interconnection process with SCE will need to start over again. Expressing that she understands the specific economics of the subject solar power project may not be fully understood for a length of time, Director Herman suggested that staff move forward with the studies that will provide an adequate cost benefit analysis and, in the process of doing so, she hopes that additional information may surface that will assist with the overall project costs, such as potential future grant funding opportunities. Mr. Webster agreed that complete clarity on SCE s tariff program may not occur. June 26, Engineering and Operations Committee

7 At this time Mr. Webster offered to provide additional information for the Board s review and consideration involving the aforementioned sole source alternative to selecting a solar power vendor without going through the RFP process. To a question posed by Director Corona, Mr. Webster explained the financial difference of maintaining a solar power facility through a power purchase agreement versus a design/build agreement with an operations and maintenance arrangement. Brief discussion ensued regarding the agreement choices/financial arrangements made for the District s current solar power facilities. Director Ziemer cautioned that, due to the potential upcoming supply and demand conditions for natural gas, staff and the Board should be mindful in any decision-making process when considering the cost-effectiveness of any potential future District solar power project. MOTION: Item 3. Director Drake moved that the Engineering and Operations Committee forward this item to the Board of Directors without a recommendation, for further discussion and selection of a preferred alternative for Rancho California Water District s (RCWD/District) Solar Power Remote Net Metering Project (Project No. D1695). Director Herman seconded the motion, and it carried unanimously. Consider Approval to Award a Professional Services Agreement for the Reservoir Asset Management Plan Development and Implementation (Project Nos. D1732 and D1737) Prior to discussion of this item, Director Corona recused himself, citing a potential conflict of interest, and left the room. Engineering Manager-Planning Warren Back addressed the Engineering and Operations Committee (Committee) to provide information for the Committee s review and potential recommendation to the Board of Directors (Board) regarding the award of a professional services agreement for the subject projects. Reminding the Committee that the Board reviewed this item at its regular meeting of June 12, 2014 and requested that staff provide additional review, Mr. Back began by instructing that the budgets for the subject projects were approved within Rancho California Water District s (District) Fiscal Year Capital Improvement Plan (CIP). Further, staff had provided a review of the District s asset management strategy at the January 30, 2014 regular Committee meeting, including specific discussion pertaining to staff s objective for the Reservoir Asset Management Plan, which he offered to revisit if the Committee so desired. Director Drake queried as to staff s intent with the subject professional services agreement; specifically, he asked if it pertains to reservoir seismic analysis information or if it involves a type of software package to cover all District assets. Responding, Mr. June 26, Engineering and Operations Committee

8 Back advised that the subject request involves a key component of the Reservoir Asset Management Plan: seismic evaluation and condition assessment to understand structural risk of the reservoir assets. He explained that the specific work involved would define remediation options after gaining an understanding of risks associated with a seismic event for ranked reservoirs, to include potential adjacent structural/property damage, along with quantifying the cost benefit associated with remediation efforts that will lend itself to long-term financial strategy in dealing with reservoir assets over time. Moreover, he opined that this effort will complement staff s work with the water facilities master planning. To a few questions posed by Director Drake, Mr. Back indicated that the state does not require the District to perform a seismic study, and Chief Engineer Andrew Webster advised that, although the District does have drawings and calculations for most reservoirs, some reservoir files contain none of this information. Brief general discussion ensued regarding the need for individual reservoir seismic evaluation so that remedial work can be included in future CIP budgets. Director Drake opined that if the state is not worried about mandating that reservoir seismic evaluations be performed, he does not want the District to spend the money on the effort. MOTION: Director Drake moved that the Engineering and Operations Committee recommend the Board of Directors deny approval of the award of a professional services agreement to Krieger & Stewart Engineering Consultants, in the amount not to exceed $128,500, for the proposed structural inspection and seismic analysis for the Reservoir Asset Management Plan Development and Implementation (Project Nos. D1732 and D1737). Director Hoagland seconded the motion, and discussion continued. Chairman Hoagland cautioned that, by asking questions, the answers must then be known and handled. He stated that staff is asking questions, but is not sure what to do, which opens the District up to unquantifiable liability. Further, he agreed with Director Drake s comments that the District s reservoirs were built under American Water Works Association (AWWA) standards required at the time of construction, and also opined that, with the District s regular reservoir inspections, funds do not need to be spent on efforts for the subject request. Director Herman expressed her concern regarding the District s older reservoirs and their seismic capabilities. To a question submitted by Director Drake, Mr. Webster advised that seismic isolation fittings have been installed at all reservoirs that required them. June 26, Engineering and Operations Committee

9 Hearing no additional comments or questions, Chairman Hoagland called for the question on the motion on the floor, and it carried unanimously. At this time, Director Corona returned to the room and sat at the dias. Item 4. Status Report for Water Production Well No. 128 Chief Engineer Andrew Webster addressed the Engineering and Operations Committee (Committee) to provide a verbal update on the status of Rancho California Water District s (District) Water Production Well No Noting that a paper copy of the presentation for this item was distributed to the Committee at the start of this meeting, Mr. Webster began by displaying a slide of a map showing the locations of District production wells and he advised that the Committee meeting packet includes previous Board of Directors (Board) action for well strategy for potential contaminant issues; specifically, the Board had instructed staff to analyze the contaminant issues for each well on a case-by-case basis. Referring to the production well location map, Mr. Webster instructed that the wells with current contaminant issues are identified by red dots. In addition, Mr. Webster displayed a separate table containing the identified wells with contaminant issues and their corresponding operational action plan. He then asked the Committee if there were any specific questions and/or desired discussion pertaining to the subject item. Responding to a question submitted by Director Drake, Mr. Webster indicated that, although Well No. 128 is not currently used for water production, a budgeted groundwater production amount for the sub-basin is still met utilizing the wells surrounding Well No With the understanding that Well No. 128 is not currently producing water for the potable system, Director Drake suggested that this well has been a stranded asset for the last six years and he asked why staff spent $1 million-plus for wellhead treatment on a well that we don t need to begin with. Mr. Webster explained that Well No. 128 is in place for purposes of redundancy. Director Drake asked if any of the identified wells not currently producing potable water could be retrofitted for agriculture water use. Director Herman opined that it would be expensive to plumb single potable water wells for recycled water use. General discussion ensued regarding the status of Well No. 128, along with the current disposition of the equipment originally purchased for its wellhead treatment and other scenarios involved with the various wells listed in the table for water quality issues overall. To a question posed by Chairman Hoagland, Mr. Webster advised that, rather than use the wellhead treatment equipment originally purchased for Well No. 128 on Well No. 102, staff found that it was less expensive to purchase new equipment. Chairman Hoagland asked how much was spent on the original equipment purchased for Well No Responding, Engineering Manager-Design Corey Wallace reported that the cost was approximately $600,000. June 26, Engineering and Operations Committee

10 Director Drake requested that staff provide the Committee with a strategy for the stranded asset Well No. 128, and the originally purchased equipment that is currently not being used. He opined that it has been six years since discussion of remediation for Well No. 128 began and staff needs to once again bring information to the Committee for review, to include alternatives for all poor quality/contaminant-issue wells and any potential retrofit to recycled water for agricultural use. Mr. Webster cautioned on the potential for staining complaints with the use of recycled water containing iron/manganese for the recycled water distribution system. More general discussion continued concerning the potential for retrofitting contaminant-issue wells to recycled water and the operation and production levels of other various wells, along with discussion history for wellhead treatment at Well No Chairman Hoagland suggested that he would like to see Well No. 128 be used once again for production within the potable water system, with an appropriate treatment/remedy for arsenic removal, since the total dissolved solids level is low and the water quality is considered good overall. General Manager Matt Stone advised that he will work with staff to develop a scope of ideas for Well No. 128 to present to the Committee in the near future. To a question submitted by Director Herman, Mr. Webster indicated that staff plans to redrill Well No. 121 within the next few years and use wellhead treatment facilities, as necessary, after testing is complete. There being no questions or comments, this item having been presented for information purposes only, the Committee proceeded to Item 5. Item 5. Project Status Reports May/June 2014 Presented for Engineering and Operations Committee (Committee) review and acceptance were the Rancho California Water District (RCWD/District) Construction Project Status Report, Outside Contracts Summary Report, and Capital Job Status Report for the months of May/June The Committee accepted the Project Status Reports for the months of May/June 2014, as presented. Item 6. Operations Reports May 2014 Presented for Engineering and Operations Committee (Committee) review and acceptance were the Rancho California Water District (RCWD/District) Operations Reports, Regulatory Compliance Report, production charts, status reports, and water sales and production statistics for the month of May The Committee accepted the Operations Reports for the month of May 2014, as presented. June 26, Engineering and Operations Committee

11 Prior to adjournment, Director Ziemer requested that staff provide him with information on the practice of blending water to achieve improved water quality. Finally, General Manager Matt Stone reported that recent discussions among RCWD, Western Municipal Water District, and Elsinore Valley Municipal Water District have been favorable regarding the formation of a Joint Powers Authority (JPA) agreement pertaining to the necessary upgrades/rehabilitation work at the Santa Rosa Water Reclamation Facility. Further, it has been agreed upon by all three agencies that, prior to executing a formal JPA agreement, each agency will adopt a separate resolution of intent to announce each agency s desire to form a JPA. He advised that staff will present this request for approval of a resolution of intent at the July 10, 2014 regular Board of Directors meeting. Item 7. Adjournment There being no further business to come before the Committee, the meeting adjourned at 10:09 a.m. Leslie Mayer, Recording Secretary June 26, Engineering and Operations Committee