MINUTES OF MEETING BOARD OF DIRECTORS. ORANGE COUNTY WATER DISTRICT November 5, 2014,5:30 p.m.

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1 MINUTES OF MEETING BOARD OF DIRECTORS. ORANGE COUNTY WATER DISTRICT November 5, 2014,5:30 p.m. President Dewane called to order the November 5, 2014 regular meeting of the Orange County Water District Board of Directors at 5:30p.m. in the Boardroom at the District office. Following the Pledge of Allegiance to the Flag, the Secretary called the roll and reported a quorum as follows. Directors Philip Anthony Kathryn Barr Denis Bilodeau Shawn Dewane Jan Flory Cathy Green Vincent Sarmiento Stephen Sheldon Harry Sidhu Roger Yoh (not in attendance) (arrived 5:44p.m.) (not in attendance) (not in :lttendance) Staff Michael Markus, General Manager Joel Kuperberg, General Counsel Jan ice Durant, District Secretary Gina Ayala, Stephanie Dosier, Randy Fick, Roy Herndon, Bill Hunt, John Kennedy, Diane Pinnick, Greg Woodside, N ira Y amachika Others: Peer Swan, Paul Weghorst- Irvine Ranch W:.tter District Ric Collett- Yorba Linda Water District Don Calkins-- City of Anaheim John Earl-- Surf City Voice Ethan Temianka, Paul Shoenberger- Mesa Water District Betty Angell, MaryAnn Gordon, Dave Hamilton, Margie Powers, R4RD Brian Ragland -- City of Huntington Beach Scott Maloni -- Poseidon Keith Lyon-- Municipal Water District of Orange County Joe Geever- Surfrider Foundation Kelly Rowe -- WR Consultant Ken Vecchiarelli-- Golden State Water Company Nabil Saba- City of Santa Ana Pat Goodman - Huntington Beach Betsy Eglash -Brady VISITOR PARTICIPATION Surf City Voice representative John Earl commented on contributions to Director Dewane's campaign fund. He questioned a $500 expense on Director Dewane's expense report to Cal Desai for a Voter's Guide and requested that he be provided with the Guide. Mr. Earl also questioned why the OCWD Groundwater Producers Meeting agendas are not posted on the OCWD website with the other Board meetings.

2 CONSENT CALENDAR 11/05/14 Counsel Kuperberg announced that a revised agreement for Item No.7 had been distributed tonight adding language that the Property Management Committee asked for with regard to an Easement for OCWD's use for a backflow prevention device and other facilities. The Consent Calendar was then approved upon motion by Director Anthony, seconded by Director Green and carried [6-0] as follows. Ayes: Anthony, Barr, Dewane, Green, Flory, Sarmiento Absent: Bilodeau, Sheldon, Sidhu, Yoh 1. Approval of Cash Disbursements MOTION NO APPROVING CASH DISBURSEMENTS Payment of bills for the period October 9, 2014 through October 29, 2014 in the total amount of $12,325, is ratified and approved. 2. Approval of Minutes of Board Meeting MOTION NO APPROVING MINUTES OF BOARD MEETINGS The minutes of the Board of Directors meeting held September 17, 2014 and October 1, 2014 are approved as presented. 3. Publication of OCWD Statement of Financial Condition MOTION NO RECEIVING AND FILING AFFIDAVIT OF PUBLICATION OF STATEMENT OF FINANCIAL CONDITION FOR FISCAL YEAR ENDING JUNE 30,2013 The Affidavit of Publication of OCWD Statement of Financial Condition for Fiscal Year ending June 30, 2014 is received and filed. 3. Order Annual Engineer's Investigation and Report on Groundwater Conditions, Water Supply and Basin Utilization RESOLUTION NO ORDERING ANNUAL ENGINEERING INVESTIGATION AND REPORT ON GROUNDWATER CONDITIONS, WATER SUPPLY, AND BASIN UTILIZATION WHEREAS, Section 25 and Section 31.5, subparagraph (1), of the Orange County Water District Act, as amended, provide that the District shall annually order an investigation and report to be made by an engineer or engineers employed by said District, for the purpose of investigating and reporting on groundwater conditions of said District, and for the purpose of ascertaining information relative to water use, water availability, and water costs as set forth in said District Act; 2

3 11/05114 NOW, THEREFORE, the Board of Directors of the Orange County Water District does hereby resolve as follows: Section 1: The engineers of the District staff are instructed to proceed with said investigation and report on groundwater conditions for the water year , in accordance with Section 25 of the amended Orange County Water District Act, for consideration of the Board in the levy of the replenishment assessment for ; and to proceed with said investigation and report on water supply and basin utilization, in accordance with said Section 31.5 of the amended District Act, for the consideration of the Board in the levy of a basin equity assessment for Section 2: The engineers of the District staff are instructed to deliver the completed report in writing to the General Manager of this District on the second Wednesday in February 2015 as provided in said Act. CONSENT CALENDAR ITEMS RECOMMENDED FOR APPROVAL AT PROPERTY MANAGEMENT COMMITTEE MEETING HELD OCTOBER Amendment to License Agreement with County of Orange for Contract Extension RESOLUTION NO AUTHORIZING AMENDMENT TO LICENSE AGREEMENT WITH COUNTY OF ORANGE FOR LINCOLN A VENUE ROAD WIDENING PROJECT WHEREAS, pursuant to Resolution No adopted January 2, 2013, OCWD authorized a License Agreement to the County of Orange that provides for a temporary construction area in connection with its Lincoln A venue Road Widening Project through June 30, 20 14; and WHEREAS, the Property Management Committee of this Board has recommended Amendment Two to such License Agreement to extend the Agreement through December 31, 20 15; NOW, THERFORE, the Board of Directors of the Orange County Water District does hereby approve the aforementioned Amendment Two to the License Agreement with the County of Orange; and, upon approval as to form by District General Counsel, its execution by the District officers is authorized. 6. Amendment to License Agreement with Griffith Company for Contract Extension RESOLUTION NO AUTHORIZING AMENDMENT TO LICENSE AGREEMENT WITH GRIFFITH COMPANY FOR CONTRACT EXTENSION FOR LINCOLN A VENUE ROAD WIDENING PROJECT WHEREAS, pursuant to the General Manager's signing authority, OCWD entered into a License Agreement with the Griffith Company (the County of Orange's contractor for the Lincoln Avenue widening project) to allow Griffith to store equipment, construction materials and park vehicles in a lay-down area north of the Lincoln A venue Bridge at Five Coves Basins and to use the access ramp into the Santa Ana River to construct the bridge pilings; and WHEREAS, pursuant to Resolution No adopted February 5, 2014, such License Agreement was extended through October 20, 2014; and 3

4 11/05114 WHEREAS, the Property Management Committee of thi:-. Board has presented and recommended issuance of Amendment Two to such License Agreement providing for an extension of the License Agreement through October 31, 20 14; NOW, THEREFORE, the Board of Directors of the Orange County Water District does hereby authorize the herein-described Amendment to such License Agreement with Griffith Company; and, upon approval as to form by District General Counsel, its execution by the District officers is authorized. 7. Easement Request from Panattoni Development Company for Utilities at District Property Located at 3199 East La Palma A venue in Anaheim RESOLUTION NO APPROVING AMENDED AND RESTATED EASEMENT AGREEMENT WITH PANATTONI DEVELOPMENT COMPANY FOR UTILITIES AT DISTRICT PROPERTY LOCATED AT 3199 EAST LA PALMA A VENUE IN ANAHEIM WHEREAS pursuant to Resolution No adopted July 10,2013, the OCWD Board authorized the Purchase and Sale Agreement with La Palma/Miller Owners LLC (Panattoni) to acquire their property at 3199 East La Palma A venue in Anaheim to construct the La Palma Recharge Basin; and WHEREAS, such property is subject to an Easement Agreement for an access road from La Palma Avenue to the La Palma Recharge Basin; and WHEREAS, such Easement Agreement does not provide for Panattoni's underground utilities, nor does it provide for a refund or disbursement of Holdback Funds deposited in Escrow for the installation of OCWD's underground utilities within the access road and disbursement of excess funds to OCWD and Panattoni; and WHEREAS, Panattoni has requested that the Easement Agreement be amended to include utility easements to La Palma/Miller Owners LLC for fire and water lines, and electric, storm water drain, and sewer lines on District property located at 3199 E. La Palma A venue, Anaheim, California; and WHEREAS, in this regard, the Property Management Committee of this Board has recommended approval of the Amended and Restated Easement Agreement to La Palma/Miller Owners LLC for utility easements for fire and water lines, and electric, storm water drain, and sewer lines on District property located at 3199 E. La Palma A venue, Anaheim, CA; and WHEREAS, the Property Management Committee has further approval of Escrow Instructions to Release Access Road Holdback Funds to disburse $ to La Palma/Miller Owners, LLC for installation of District utility lines from the $112,935 funds deposited in Escrow by the District to La Palma/Miller Owners, LLC, with the balance and interest of the District's Escrow Deposit disbursed to the District; and to disburse the balance of the $153,233 funds deposited in Escrow by La Palma/Miller Owners, LLC and interest to La Palma/Miller Owner, LLC NOW, THEREFORE, the Board of Directors of the Orange County Water District does hereby resolve as follows: 4

5 11/05114 Section 1: The Amended and Restated Easement Agreement to La Palma/Miller Owners LLC is authorized for utility easements for fire, water line, electric, storm water drain, and sewer lines on District property located at 3199 E. La Palma A venue, Anaheim, CA; and, upon approval as to form by District General Counsel, its execution by the District officers is authorized. Section 2: The Escrow Instructions to Release Access Road Holdback Funds to disburse $76,100 to La Palma/Miller Owners, LLC is authorized for installation of District utility lines from the $112,935 funds deposited in Escrow by the District to La Palma/Miller Owners, LLC, with the balance and interest of the District's Escrow Deposit disbursed to the District; and to disburse the balance of the $153,233 funds deposited in Escrow by La Palma/Miller Owners, LLC and interest to La Palma/Miller Owners, LLC; and, upon approval as to form by District General Counsel, execution of the appropriate documents by the District officers is authorized. CONSENT CALENDAR ITEMS RECOMMENDED FOR APPROVAL AT RETIREMENT COMMITTEE MEETING HELD OCTOBER (B) Deferred Compensation Plan Investment Line-Up Review and 401 (A) Money Purchase Retirement Plan Red Flag Fund Re_yiew MOTION NO APPROVING CHANGES TO RETIREMENT FUND PLAN PORTFOLIOS RESOLVED, that the following changes to the OCWD the 457(B) Deferred Compensation Plan and the 401(A) Money Purchase Retirement Plan investment portfolios are hereby approved. 457 (B) PORTFOLIO ACTION SYMBOL Ivy Mid Cap Growth I Remove IYMIX MapToHMDYX Hartford Mid Can Y Add HMDYX Scout Mid Can Red Fla r UMBMX Delaware Select Growth Instl Red Flag VAGGX PIMCO Total Return A Remove PTTAX Map tojmtax JPMorgan Total Return A Add JMTAX Fidelity Spartan US Bond Index Red FlaE FBIDX 5

6 11/05/14 ~- 401 (A) PORTFOLIO ACTION SYMBOL MFS New Discovery R4 Remove MNDJX MaptoFSSAX Franklin Small Cap Growth Adv Add FSSAX Victory Established Value A Red Flag VET AX Fidelity Low Priced Stock Red Flag FLPSX JPMorgan Large Cap growth A Red Flag OLGAX Gabelli Asset AAA Red Flag GAB AX PIMCO Total Return A Remove Map to PINCX PTTAX Putnam Income A Add PINCX Fidelity Spartan US Bond Index Red Flag FBIDX Director Sheldon arrived at 5:44p.m. during discussion of the following item. INFORMATIONAL ITEMS 9. Poseidon Resources City of Huntington Beach Ocean Desalination Project Schedule Executive Director John Kennedy updated the Board on the proposed Poseidon Ocean Desalination project schedule. He noted the December 10 Water Issues Committee will be combined with the Groundwater Producers (GWP) meeting to discuss Poseidon issues. Mr. Kennedy stated that staff intends to come back to the Board at its regular meeting on January 7 to determine the Board's wishes for whether or not to proceed with the project. He noted the South County agencies have been invited to participate in the GWP November 12 meeting. Director Flory urged staff to review and respond to the issues raised in an article written by Debbie Cook and posted to The Oil Drum on February 17, She stated there may have been changes in technology that have neutralized some of the issues, but stressed she would like to see Poseidon respond to them. Staff was requested to provide the Board with copies of this article. Irvine Ranch Water District (IRWD) Executive Director of Water Policy Paul Weghorst stated he has been working with staff and the GWP to develop an appropriate schedule. He requested the schedule be extended a little longer to allow the GWP to review the final Clean Energy Capital report and meet with their respective city councils and boards. Mr. Weghorst requested the workshop be delayed to January. A discussion took place regarding extending the workshop with the Board and GWP to January, and it was the consensus of the Board to proceed with the schedule as recommended by staff, extend the deadline for comments to the Clean Energy Capital report to November 21, and hold a joint workshop with the Board and GWP on November 12 and December Groundwater Basin Accumulated Overdraft and FY14-15 Imported Water Purchases Mr. Kennedy reported that because low water supplies have created operational issues, the Metropolitan Water District (MWD) has been limiting the amount of untreated full service water the District and other groundwater basin agencies can purchase. At the current time, he stated these reductions in purchases will reduce the District's total purchases by about 13,000 acre-feet for fiscal 6

7 11105/14 year , noting that his estimate could change depending upon conditions and the availability of water this winter and spring. Mr. Kennedy reported the July 1, 2014 accumulated overdraft was 342,000 acre-feet, and would be 382,000 af higher if MWD extracts the water in its conjunctive use program storage account. He stated the accumulated overdraft would remain about the same by June 30, 2015 assuming an average hydrological year for the Santa Ana River, Santa Ana River base flows of 95,000 acre-feet for the year, purchasing 65,000 acre-feet of MWD untreated full service water to recharge the groundwater basin, GWRS Production of 80,000 acre-feet, and a 72% Basin Production Percentage (BPP). He stated that all other factors remaining the same, the accumulated overdraft will increase by the 13,000 acre feet amount of reduced MWD purchases. Mr. Kennedy recalled that the BPP is currently set at 72%. He indicated staff may recommend the Board consider lowering the BPP at the January 21, 2015 Board meeting depending on the amount of precipitation that has occurred to date locally and throughout the State, and the availability of MWD supplies. Mr. Kennedy stated that MWD is trying to balance many issues within its system to accommodate its member agencies but these recent cut backs to untreated full service deliveries have policy implications. He stated that unless water supply conditions dramatically improve, MWD indicated it is likely it will need to implement its Water Supply Allocation Plan for import water as early as this spring, and that a methodology for determining how much untreated full service water for groundwater basin recharge will be made available under the likely Allocation Plan needs to be developed in the next few weeks. Mr. Kennedy stated that OCWD staff will fully participate in these discussions with MWDOC. Director Green requested that staff clarify whether OCWD will get the full 30,000 af of water when the new phase of GWRS comes online. She further requested a graph on usage in Orange County per capita. Director Dewane suggested the future staff report contain the worst case scenarios for the Board to consider. The Board suggested the MWD policy is discriminatory for groundwater agencies that use untreated water, noting the allocations are different for agencies with groundwater basins. Director Sheldon proposed the Board President appoint a Board Drought Ad Hoc Committee, and suggested there might be a need for an Orange County Drought Taskforce. Director Sheldon also asked staff to prepare a graph showing the timeline going into the future of the decline of groundwater based on the current situation. He suggested that there may need to be deeper conservation measures so that demand is at least equal with supply. He stressed that the Orange County community needs to come together for a unified response to the worsening drought. 11. SANTA ANA WATERSHED PROJECT AUTHORITY ACTIVITIES Director Anthony provided an update on conservation efforts in the upper watershed. 12. COMMITTEE REPORTS Oct 22- OCWD/MWDOC Joint Planning Committee Oct 24 - Property Management Committee Oct 28 - Retirement Committee 13. VERBAL REPORTS Director Green reported on her attendance at the ACW A Regions 8, 9, and 10 Conference in San Diego. She expressed the need for conservation education. 7

8 1 1/05/14 Director Sarmiento stated that he and OCWD staff hosted a water conference in Santa Ana. ADJOURNMENT TO CLOSED SESSION The Board adjourned to Closed Session at 6:48 p.m. as follows: CONFERENCE WITH LABOR NEGOTIATOR [Government Code Section ] OCWD designated representative: Stephanie Dosier 8

9 ADJOURNMENT 11/05/14 There being no further business to come before the Board, the meeting was adjourned at 6:48p.m. ~~, ~ \'.., /. {I.<C.L LlLu,_ t ~ ;J~Je Durant, District Secretary Shawn Dewane, President 9