CONTRA COSTA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING June 20, 2018 MINUTES

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1 CONTRA COSTA WATER DISTRICT BOARD OF DIRECTORS REGULAR MEETING MINUTES CALL TO ORDER President Borba called to order a regular meeting of the Board of Directors of the Contra Costa Water District (District) at 6:33 p.m., at 1331 Concord Avenue, Concord, the regular meeting place of the Board. ROLL CALL Directors Present: Directors Absent: General Manager: Legal Counsel: District Secretary: Lisa M. Borba, President Connstance Holdaway, Vice President Ernesto A. Avila Bette Boatmun John A. Burgh None Jerry Brown Douglas E. Coty Mary A. Neher PLEDGE OF ALLEGIANCE Ms. Neher led the pledge of allegiance. ADOPTION OF AGENDA There were no changes to the agenda, and the Board adopted the agenda by rule. PUBLIC COMMENT (Please observe a three-minute time limit) President Borba asked for public comments. There were none. CONSENT CALENDAR 1. Approve Directors' Service/Business and Travel Expenses a. Future Services - June/July 2018

2 Page2 b. Expenses-May 2018 c. Compensation - May Approve May 16, 2018 meeting minutes 3. Approve the warrant register dated June 21, Authorize execution of an agreement with Superion for FYI 9 professional services and software licensing for the financial information system upgrade to a not-to-exceed amount of $950, Adopt Resolution No certifying the revenue required to be provided by taxes on land within the District during Fiscal Year Authorize a Construction and Repair Services Task to Construct Safety Improvements at Randall-Bold and City of Brentwood Water Treatment Plants a. Authorize execution of a task order in the Construction and Repair Services agreement with GSE Construction Company, Inc. for the Randall-Bold Water Treatment Plant and City of Brentwood Water Treatment Plant Safety Improvements Project in an amount not to exceed $517,155; and b. Increase the City of Brentwood Water Treatment Plant Improvements budget in an amount of $115, Authorize agreement with Brown and Caldwell for consulting services related to the Untreated Water Renewal and Replacement Study in an amount not to exceed $340, Authorize execution of an agreement with H. T. Harvey & Associates to provide biological mitigation monitoring services for Los Vaqueros Watershed and Conservation Lands in the amount not to exceed $430,000 in FY19, with an option for continued services in the amount not to exceed $435,000 in FY20, for a total amount not to exceed $865, Authorize execution of an agreement with the Special District Risk Management Authority for FY19 property and liability insurance not to exceed the premium cost of $577,134, with the option to renew for FY Authorize execution of an agreement with the Special District Risk Management Authority for FYI 9 Workers' Compensation insurance not to exceed the premium cost of $354,211, with the option to renew for FY20. President Borba asked if anyone wanted to remove an item from the consent calendar to be separately considered. No items were removed. President Borba asked for Board questions and comments. There were none.

3 Page3 President Borba asked for public comments. There were none. MOTION: Holdaway/ Avila to approve consent calendar. The motion carried by a unanimous voice vote. ACTION 11. Authorize Amendments to Agreements for the Canal Modernization Project a. Authorize an amendment to the professional services agreement with Carollo Engineers for the Canal Modernization Project in the amount of $759,000 for a revised total amount not to exceed $2,527,000; and b. Authorize an amendment to the professional services agreement with Black & Veatch for the Canal Modernization Project Peer Review in the amount of $313,000 for a revised total amount not to exceed $412,700. Engineering Manager Chris Hentz reviewed the history of the Contra Costa Canal (Canal), which is the backbone of the District's untreated water system and is almost 80 years old. Currently, the Canal requires increasingly costly repairs and maintenance, is vulnerable to extended service outages following a seismic event, and poses life and safety risks despite protective measures completed by the District. The Canal system facilities, which include the Main Canal and the Loop Canal, were reviewed. The modernization project focuses on the Main Canal, and the Loop Canal will need to be evaluated separately. A Canal feasibility study was completed, and the District selected Carollo Engineers (Carollo) through a competitive bid process to identify and evaluate alternatives for the modernization project. A review of possible alternatives was provided. Because the estimated cost is $650 million, the District recommended for a peer review to be completed. Black & Veatch was selected through a competitive process and completed the peer review and provided its recommendations to staff in March, which were presented to the Operations and Engineering (O&E) Committee on May 23, The key findings and recommendations of the peer review were provided. Due to the significant cost of the project, the District recommends completing a more thorough review of alternatives and completing additional strategic planning for the project, and the benefits to the District by the additional review were provided. The fiscal impacts and schedule were reviewed. By taking additional time now to consider project alternatives, Mr. Brown said the District will make better overall project decisions and changes to the project, as they will be less expensive now than made in two to three years. The Canal title transfer is expected to happen in 2022, and the additional evaluation of alternatives now will not impact the title transfer even if the transfer were to happen sooner. In response to Director Boatmun, Mr. Hentz provided a few possible project alternatives. In response to Director Boatmun, Mr. Brown said many things were being taken into consideration for the project, including public messaging. The project includes public outreach in approximately one year. Director Avila said the O&E Committee presentation was well done

4 Page 4 by staff. The Canal was critical to the ratepayers who rely on the reliability of the system. It was good to complete the additional analysis to consider alternatives, which could benefit other parts of the District's infrastructure. Director Boatmun said it was important to consider impacts to homes located near the Canal when construction occurs and requested for that to be reflected in the scope of work. Vice President Holdaway concurred with Director Avila and thanked staff for taking the additional time to evaluate the project. Mr. Brown said the District's service goals were established about 20 years ago. The Board will review and reaffirm those goals to ensure they continue to be appropriate for the current District current operating circumstances. Director Boatmun said while the cost of the project was significant, it was important to remember that the Canal will be in service for a very long time. Mr. Brown said there will be various options discussed in the future regarding how best to fund this project, which is one of the largest projects undertaken by the District. President Borba said she was glad that the District continues to include this project in its Capital Improvement Program, committee meetings, and Board meetings. She agreed it was good to take the time now for additional evaluation and thought it demonstrated how the District is being prudent with its investments and looking out for its ratepayers. President Borba asked for additional Board questions and comments. There were none. President Borba asked for public comments. There were none. MOTION: Avila/Burgh to authorize an amendment to the professional services agreement with Carollo Engineers for the Canal Modernization Project in the amount of $759,000 for a revised total amount not to exceed $2,527,000; and authorize an amendment to the professional services agreement with Black & Veatch for the Canal Modernization Project Peer Review in the amount of $313,000 for a revised total amount not to exceed $412,700. The motion carried by a unanimous voice. DISCUSSION AND INFORMATION 12. Receive and discuss update on outreach for the rate structure study. Ms. Allen reported the District conducted its initial rate structure public outreach for all customer classes. The purpose was to provide initial information to customers and get their feedback. The District's messages included the reasons for the rate study and why changes to the rate structure have been proposed. The policy objectives were provided, which included the need for the rate structure to be stable, affordable, equitable, efficiency-minded, and understandable. Also included in the outreach was that changes to the rate structure would not increase revenues to the District. Even with the new rate structure, the cost for water services would still be less than $0.01 per gallon for an average user.

5 Page 5 The treated water residential customer outreach included customer surveys, and the District used that feedback to further develop the messaging taken to focus groups. General feedback indicated that customers agreed it was important to make costs fair and equitable for all customers. The District learned it needed to provide more clear information regarding the different energy zones throughout its service area. The District needs to develop a more detailed explanation for the changes for each area of the customer bill. Feedback showed that customers were less interested in attending community workshops and preferred to access information, tools, and videos online at their convenience. In response to President Borba, Ms. Allen said the survey group included customers throughout the service area and covered a wide range of demographics. The District needs to make its messages regarding the rate structure study and the annual rate review clear so people can better understand the information and that they are separate matters. Mr. Brown said the messages need to be direct. In response to Director Boatmun, Mr. Brown said the focus group attendees where paid a small fee and provided with a meal, which was handled through the consultant. The District received a lot of positive feedback regarding its current services provided to customers. A letter was sent to the untreated water customers detailing the workshops that were scheduled. Instead of a workshop for metered irrigation customers, who would only see minor changes with the proposed rate structure, they were provided the changes by letter with the offer for individual meetings or telephone communications to answer questions. The District held five workshops between May 18 and 24, which covered: municipal and wholesale; unmetered irrigation in Central County; unmetered irrigation in East County; agricultural and livestock; and industrial customers. Each group received a tailored presentation and was provided the opportunity to ask questions and give comments. All information from the workshops has been posted to the website following each workshop. In response to Vice President Holdaway, Ms. Allen said the municipal and wholesale group included representatives from most of the District's customers or were provided with follow up outreach after the meeting. Although the City of Oakley did not send its own representative, the General Manager of the Diablo Water District attended. For the unmetered irrigation customers, there were three customers at the central county workshop and six customers at the east county workshop. In response to Director Boatmun, Mr. Brown said letters were sent to all unmetered irrigation account holders. In response to Director Boatmun, Mr. Brown confirmed the unmetered irrigation account holders have previously resisted being put onto meters. In response to President Borba, Ms. Allen said the letters were sent out at least three weeks before the workshops. The agriculture and livestock workshop had approximately 15 attendees, which included some duplicate customer representation and represented about 80 percent of that customer class. Because only three representatives attended the industrial workshop, other industrial customers were offered one-on-one meetings. Director Boatmun said that some of the customer feedback notes include comments from the unmetered irrigation customers that want their rates subsidized. In response to Director Boatmun, Ms. Allen said the comments reflected a desire to maintain the current rate structure

6 Page 6 that is subsidized by the other customer groups or to be subsidized through other District revenue alternatives. The Board was provided with the raw comments taken from the flip charts at each meeting. Following the workshops, the District held one-on-one meetings with the City of Concord to review their individual accounts and Diablo Vista to review the line-by-line rate structure changes for its account. The agriculture and flat rate customers suggested the rate structure changes be phased in over 3 to 20 years. The agriculture customers did not think the rate changes were fair and they should continue to be subsidized. The agriculture customers also requested to see how the changes would impact each customer. In response to Director Boatmun, Mr. Brown said the District was evaluating the complexity of trying to provide individual customer calculations. In response to President Borba, Ms. Allen said the majority of questions were answered at that workshop. Any question that could not be answered was redirected to appropriate staff members for follow up. The District will use the comments/questions provided to develop Frequently Asked Questions. Ms. Allen said the District was not yet able to meet with the school districts and will continue to work to set up a meeting, and the Board will be provided with an update after the meeting. In response to President Borba, Mr. Brown that the school districts needed to determine the appropriate staff member that is authorized to review the rate changes with the District. Based upon customer feedback, the District is: analyzing the impact of phasing changes for agriculture customers; evaluating the minimum acreage on unmetered irrigation accounts; evaluating the development of a sample bill statement or web-based calculator for individual customers to use; developing tools and information to clarify the energy zones; and developing messages and materials for clarifying the rate structure and annual rate review. The schedule for the outreach, rate structure, and annual rate review was provided. Mr. Brown said there was some flexibility for items not related to the annual rate review, which would follow the Prop 218 notice requirements. President Borba asked for additional questions and comments from the Board. There were none. President Borba asked for public comments. There were none. The Board thanked staff for the update. REPORTS FOR DISCUSSION 13. Committee Report( s): a. East County Water Management Governing Board Post-Meeting Report (05/17/18) b. Other Post-Employment Benefits Committee Post-Meeting Report (05/18/18) c. Retirement Committee Post-Meeting Report (05/18/18) d. Operations and Engineering Committee Post-Meeting Report (05/23/18) 14. Schedule Future Meeting Dates and Times

7 Page7 Mr. Brown said he will be out of the office June 21 through July 3 and Assistant General Manager - Administration Ron Jacobsma will be acting General Manager. Director Boatmun said that she had met with Stan Caldwell, Chair of the California Special District Association, Contra Costa Chapter regarding its scholarship award program on June 19. REPORTS 15. General Manager Mr. Brown reported that the Board had its federal legislative visits June 13-15, which included President Borba and Director Avila. The meetings were productive and focused on the Canal title transfer and the Los Vaqueros Reservoir Expansion project. The meeting with the Bureau of Reclamation showed that the organization was divided between political and financial matters. The scoring of the Canal title transfer bill was reviewed. The Board thanked the legislators for introducing the title transfer bill. The trip was beneficial and helped to build relationships between the District and legislators. 16. Legal Counsel Mr. Coty did not have a report. 17. Board Members Director Boatmun said she did not have any additional items to report. Director Avila concurred with the General Manager. The Board federal legislative trip was very rewarding and educational to see the federal government in action. He found the District to be well regarded by the legislators and their staff. Vice President Holdaway reported that she met with the General Manager on June 18 and with the District's auditor on June 19, who had high praise for staff. Vice President Holdaway thanked staff for its work. Director Burgh provided a presentation to the Martinez Rotary Club on June 13. He received positive feedback about the public outreach tour that included the Los Vaqueros Watershed. President Borba reported that she met with the General Manager on June 12 and 19. She and Director Avila met with Assemblymember Grayson on June 7. The Board federal legislative trip meetings were beneficial and allowed the District to conduct a lot of business and received a lot of legislator support.

8 Page8 ADJOURNMENT At 7:31 p.m., President Borba adjourned the meeting. The next regular meeting of the Board of Directors will be on July 11, 2018, commencing at 6:30 p.m. in the Board Room located at 1331 Concord A venue in Concord. Attest: :::s - Connstance Holdaway; Vice President for Lisa M. Borba, President eher, District Secretary