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1 _MINUTES OF MFETING HOARD OF l)jrfctoi{s, O}{ANGE COUNTY WATER DISTRICT July!0, 2013, 5:~\0 p.m. President Dewane called to order Lhc July 1 0, 20 I] adjourned regular meeting of the Orange County Water District Board of Directors at 5:~30 p.m. in the Boardroom at the District office. Following the Pledge of Allegiance to the Fh=tg, the District Se~retary called the roll and reported a quorum as follows. Staff Philip Anthony Kathryn Barr Denis Bilodeau Shawn Dewanc Cathy Green Vincent Sanniento (arrived at 5:50p.m.) Stephen Sheldon Harry Sidhu Bruce Whitaker Roger Yoh Q!hr.;!A in 9:tt~!litl!!l~~: Michael P. Wehner, Assistant General Manager Joel Kuperbcrg, General Counsel Janice Durant, District Secretary Dan Bott, Jason D8dakis, Bruce Dosier, Stephanie Dosier, l{ ~ndy Fick, :tviark Greening, Roy Herndon, Bill Hunt, John Kennedy, Chris Olsen, Craig Patterson, Nira Yamachika Don Calkins -- City of Anaheim Bob Kiley -Yorba Linda Water District Brett Barbre, Keith Lyon-- Municipal Water District of Orange County Hill Everest Jo:~c Diaz -City of Orange County Water District Robert Hanford-- Golden State Water Company Brian Ragland -- City of Huntington Beach Jonathan V ulzke - Communications Lab AndrEe Johnson-- Brady Pili l(aahauge VISITOR PARTlCIPATION There were no per~;ons wishing to address the Board. CONSENT CALENDAR The Consent Calendar was approved upon motion by Director Green, seconded by Director Barr and carried [9-0] as follows. (Director Sarmiento arrived after approval of the Consent Calendar).

2 1. Approval of Cash Disbursements 7/10/13 MOTION NO APPROVING CASH DISBURSEMENTS Payment of bills for the period June 13, 2013 through July 3, 2013 in the total amount of $9,321, is ratified and approved. 2. Approval of Minutes of Board of Directors Meetings MOTION NO APPROVING MINUTES OF BOARD MEETING The minutes ofthe Board ofdirectors meeting held May 15 and May 22, 2013 are hereby approved as presented. 3. Public Comments Policy RESOLUTION NO ADOPTING PUBLIC COMMENTS POLICY RESOLVED, that the Board of Directors of the Orange County Water District does hereby adopt a Public Comments Policy codifying the existing practice of limiting public comments at Board meetings to three minutes per speaker. CONSENT CALENDAR ITEMS RECOMMENDED FOR APPROVAL AT PROPERTY MANAGEMENT COMMITTEE MEETING HELD JUNE 28 (ITEMS NO. 4-5) 4. Amendment to Lease Agreement with Prado Basin Duck Club RESOLUTION NO AUTHORIZING AMENDMENT EIGHT TO LEASE WITH PRADO BASIN DUCK CLUB FOR DUCK HUNTING AT PRADO BASIN WHEREAS, pursuant to Resolution No adopted May 21,2003, as amended annually, OCWD authorized issuance of a Lease to the Prado Basin Duck Club for duck hunting activities in the OCWD lower Prado Basin ponds through June 30, 2013; and WHEREAS, the Property Management Committee of this Board has recommended issuance of Amendment Eight to such lease extending the lease for the duck hunting season through June 30, 2014; NOW, THEREFORE, the Board of Directors ofthe Orange County Water District does hereby approve the aforementioned Lease Amendment Eight with Prado Basin Duck Club as described herein; and, upon approval as to form by District General Counsel, its execution by the District's officers is authorized. 2

3 7/10/13 IU~SOUJTION NO AUTHORIZING AMENDMENT NO. 11 TO LEASE WITH MIKE RAAHAUGE SHOOTING ENTERPRISES FOR DUCK HUNTINGAT PRADO BASIN WHEREAS, pursuant to Resolution No adopted November 2, 2005, as amended annually, OCWD issued a Lease to Mike Raahauge d.b.a. Mike Raahauge Shooting Enterprises for the operation of a duck hunting concession on 450 acres of OCWD land in Prado Basin on an annual basis expiring June 30 of each year; and WHEREAS, the Property Management Committee of this Board has presented and recommended issuance of Amendment No. 11 to such Lease providing for a renewal ofthe lease for the 2013/14 duck hunting season through June 30, 2014; NOW, THEREFORE, the Board of Directors ofthe Orange County Water District does hereby approve the aforementioned Lease ArntPdment No. 11 with Mike Raahauge Shooting Enterprises as described herein; and, upon approval as to form by District General Counsel, its execution by the District's officers is authorized. Director Sanniento arrived at 5:50p.m. during discussion of the following item. MATTER FOR CONSIDERATION 6. _Ac<;g!isition of Property Located at 3199 East La Palma A venue in Anaheim Director of Information Services/Property Bruce Dosier advised that pursuant to prior Board direction, staff has negotiated a Purchase and Sale Agreement in the amount of $28.9 million with Panattoni Development Corporation for property located at 3199 East La Palma A venue in Anaheim. He indicated that the property (formerly owned by Boeing) is approximately acres and is located adjacent to the Carbon Creek Diversion Channel and the District's existing GWRS pipeline making it a favorable location for potential use as a recharge basin due to its proximity to existing District facilities and favorable geology. In response to questions raised by the Board, Mr. Dosier responded that the District would be depositing $800,000 in escrow which is fully refundable should staff find something troublesome during the 60-day due diligence period; and an additional $1.2 million at the end of the Due Diligence period. He also noted that OCWD would consider upgrading the aesthetics surrounding the basin with enhanced landscaping such as has been done at some of the District's other basins, and would be required to get approval from both Panattoni and Boeing for the design. Mr. Dosier stated that per the Special Land Use Restrictions recorded against the Property, the District will be required to provide an Enviromnental Indemnity to both Boeing and Panattoni. In conclusion, he stated that staff recmmnends accessing the Commercial Paper program to provide the necessary funding for the $28.9 million required to purchase the Property, and using low-interest state loan ±or the remainder of the project. Director Anthony expressed concern over the significant cost of the industrial land and requested assurances that the purchase is a good investment for OCWD. General Manager Markus provided assurances that the land would greatly benefit the District's recharge efforts, and noted that the assessed value is already more than the purchase price. The following action was taken. 3

4 Upon motion by Director Green, seconded by Director Sidhu the following resolution was unanimously carried [1 0-0]. 7110/13 RESOLUTION NO MAKING CEQA FINDINGS AND APPROVING AN ENGINEER'S REPORT FOR THE ACQUISITION OF THE PROPERTY AT 3199 EAST LA PALMA A VENUE IN ANAHEIM, CALIFORNIA FOR USE AS A REPLENISHMENT BASIN; AND AUTHORIZING EXECUTION OF PURCHASE AND SALE AGREEMENT WHEREAS, pursuant to Resolution No adopted July 19, 2006, the OCWD Board certified the Program Environmental Impact Report for the Orange County Water District Application to Appropriate Santa Ana River Water (State Clearinghouse Number ) (the "Final EIR"); adopted a Mitigation Monitoring and Reporting Program; adopted a Statement of Overriding Consideration; and authorized the Filing of a Notice of Determination regarding such a project to apply for an appropriations permit for additional Santa Ana River water, and to develop projects to put that water to beneficial use, including the acquisition of one or more water replenishment basins near the District's existing groundwater recharge facilities: and WHEREAS, the District has made a minor modification to the project described in the Final EIR, which was approved based upon the Final EIR as augmented by Addendum No. 1 on October 7, 2009 (the Final EIR, as augmented by Addendum No. 1, is hereinafter referred to as the "FPEIR"); and, WHEREAS, the District investigated properties near the District's existing groundwater recharge facilities and has determined that property comprising approximately acres located at 3199 East La Palma Avenue in Anaheim (the "Property") has characteristics very similar to the District's nearby recharge facilities such as Kraemer Basin and Anaheim Lake, and would serve the District's needs as a water replenishment basin. Consequently, District staff has recommended that the project analyzed by the FPEIR be modified to include the acquisition of the Property (the "Revised Project"); and WHEREAS. in accordance with CEQA guidelines, Section 15164, the District staff has prepared an initial study to analyze the potential environmental impacts from the Revised Project and has proposed minor changes to the FPEIR through the preparation of Addendum No.2 to such EIR, in order that the FPEIR may be used as the environmental document for the Revised Project; and WHEREAS, the FPEIR, as augmented by Addendum No.2, analyzes the Revised Project at a programmatic level, and a project-level environmental document must still be prepared to analyze the specific environmental effects of the construction and operation of a surface water replenishment basin at the Property; and WHEREAS, District staff has prepared an Engineer's Report on the acquisition of the Property in accordance with Section 20.6 of the Orange County Water District Act; and WHEREAS, District staff has successfully negotiated to acquire the Property, subject to Board approval. NOW, THEREFORE, the Board of Directors ofthe Orange County Water District hereby resolves as follows: 4

5 7/10/13 s_~_cj.iqn.l: Based on the evidence presented to the Board of Directors, including the staff report, initial study and Addendum No.2 lo the FPEIR, the Board of Directors of the Orange County Water District does hereby find that pursuant to State CEQA Guidelines Section 15164: (l) 1'-lo substantial changes are proposed in the project covered by the FPEIR which will require major revisions in the FPEIR due to the involvement of new significant en vironmcntal effects or a substantial increase in the severity of previously identified sig11ificant effects. As the Initial Study indicates, the Revised Project comprising the acquisition of the Property would not result in any environmental impacts not previously addr-.~ssej in the FPEIR. (2) No substantial changes would occur with respect to the circumstances under which the project covered by the FPEIR is undertaken which will require major revisions of the FPEIR due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects. The physical and el!vironmental circumstances analyzed in the FPEIR with respect to the proposed recharge basin at the Property are not substantially different than those analyzed in the FPEIR. (3) No new information of substantial importance, which was not known and could not have been known with the exercise of reasonable diligence at the time the FPEIR was certified as complete, shows either that the Revised Project will have any significant effects not discussed in the FPEIR, that the significant effects of the Revised Project will be substantially more severe than shown in the FPEIR, that mitigation measures or alternatives found in the FPEIR to be infeasible would in fact be feasible, or that any mitigation measures or altematives are considerably different than those analyzed in the FPEIR. The information in the FPEIR regarding the environmental impacts, :::nvironmental circumstances, mitigation measures and alternatives relating to the project have not changed. Based on the foregoing, the FPEIR, as augmented by Addendum No.2, adequately analyzes at a programmatic levd all of the impacts of the Revised Project, including OCWD identifying the Property as the location of a potential site for a surface water recharge basins. 5~ction2: The Revised Project covered by the FPEJR and Addendum No.2 is hereby approved. 5~stiQ.TI_l: The Engineer's Report for the acquisition of the Property is hereby approved and such ::1cquisition, as described in the July 20tJ La Palma Recharge Basin Engineer's Report, is found and determined to be feasible, necessary and beneficial to the District. s_eetion 4_;_ The project budget for the acquisition of the Property and its development as a surface water recharge basin is established at $34,900, The costs of the acquisition of the Property and its development as a surface recharge facility shall be financed through the District's commercial paper program, state loans, or other available funding sources. Sect!.Q!Li~ The Purchase and Sale Agreement presented to the Board of Directors for the acquisition of the Property for a purchase price of$28,899, is hereby approved, and the President and General Manager are hereby authorized to execute the Purchase and Sale Agreement upon approval as to form by the General Counsel. 5

6 7/10/13 Section 6: District staff are hereby authorized and directed to take such other steps as are reasonably necessary to effect the acquisition ofthe Property, including but not limited to purchase of pollution liability insurance for an amount not to exceed $300, Section 7: District staffis hereby authorized and directed to file a Notice ofdetermination with respect to the approval of the Revised Project and the acquisition of the Property. 7. INFORMATIONAL ITEMS Director Sheldon recused himself due to his past employment with Poseidon Resources LLC and left the room prior to discussion of this item. He did not return to tonight's meeting. A. Considering Seawater Desalination Project Supplies Executive Director John Kennedy recalled that in May 2013 the District adopted a policy resolution stating that ocean desalination projects should be considered to ensure availability of adequate water resources. He stated that ocean desalination plants have been successfully constructed and operated in other countries; noting that a 50 million gallons-per-day (mgd) desalination plant is currently being constructed in Carlsbad. Mr. Kennedy recalled that in the mid 1970's the District in partnership with the federal government constructed a pipeline from the Pacific Ocean to the Fountain Valley campus along with a 5 mgd distillation plant that desalted ocean water, with the intent of pumping the product water into the seawater barrier injection wells. He stated the plant was shut down due to operational issues and high energy costs related to the distillation process. Mr. Kennedy advised that reverse osmosis membranes are now being used to economically remove salt from ocean water supplies, and that plants have been constructed and are operating worldwide. Mr. Kennedy reviewed cun ent water supply sources within OCWD used to meet total water demands of 445,000 afy, and stated that a seawater desalination facility would reduce imported water needs in the OCWD service area. He advised that a seawater desalination project could possibly be integrated into groundwater basin operations, and noted that ocean desalination supplies could be provided to coastal groundwater producers to reduce pumping and help prevent seawater intrusion. Given the recent decline of Santa Ana River supplies by approximately 50,000 acre-feet per year and the general uncertainty of how much imported water supply will be available in the future, he suggested the District could review options and opportunities to develop and/or participate in an ocean desalination plant to provide greater water supply reliability for the region. A discussion ensued in which Director Anthony noted that while GWRS water is limited, an ocean desalination facility would provide unlimited supply. He urged the Board and staff to keep pursuing this idea. Director Sarmiento stressed the need to address the concerns of the environmental community and requested an analysis of the project's impact to the ratepayers. He requested that staff explore ways to soften the impact to the ratepayers such as incrementally phasing it in. Director Whitaker expressed concerns over the rising costs of energy, a major component of desalination, and stressed that ocean desalination should be viewed as a last resort. He stated that unless there is a pressing emergency, it is hard to justify the cost and suggested staff develop a plan on how the costs of ocean desalination could be reduced. Municipal Water District of Orange County Director Brett Barbre speaking on behalf of the Metropolitan Water District stressed the need to develop local resources. He stressed that this project is a great opportunity for MWDOC and OCWD to work together, noting that MWDOC has a critical 6

7 policy imitative to g<:>t desalinat,on water declared an extraordinary supply. Mr. Barbre suggested this be agendized tor the July Joint Planning Committee for discussion. It was the consensus of the Board to continue to follow up and agendize this for discussion at the July t 7 Water Issues Committee meeting. 7110/13 R Prado Basin Sediment Managemer.t Demonstration Project- Application for MWD Grant Fundin_K _ General Manager Markus advised that the Metropolitan Water District of Southern California (MWD) has issued a Request for Proposals for its 2013 Foundational Actions Grant Funding Program that has up to $500,000 in grant funding is available for selected projects. He stated that staff has submitted a proposal in cooperation with the City of Anaheim for $500,000 funding for the Prado Basin Sediment Management Demonstration Project. There was no discussion of the remainder oflnformational Items on tonight's Agenda..._ Reports on Conferences/Meetings Attended at District Expense (at which a quorum ofthe Board was present) The Board reported on attendance at the following Committee meetings and noted the minutes/action agendas were included in tonight's Board packet..._ June 28 Property Management Committee ~ July 08 GWRS Steering Committee 9. VERBAL REPORTS President Dewane reported that he and Congressman Dana Rohrabacher recently hosted a tour of G WRS for visitors from Russia. 10. ADJOURNMENT TO CLOSED SESSION The Board adjourned to Closed Session at 6:35 p.m. as follows: RECONVENE IN OPEN SESSION The Board reconvened in Open Session at 7:30p.m. whereupon General Counsel Joel Kuperberg armounced that the Board took no reportable action in Closed Session. 7

8 ADJOURNMENT 7110/13 There being no further business to come before the Board, the meeting was adjourned at 7:30p.m. r:r.. ~ Shawn Dewane, President 8