MINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF THE RANCHO CALIFORNIA WATER DISTRICT. Thursday, December 9, :30 a.m.

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1 MINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF THE RANCHO CALIFORNIA WATER DISTRICT INTRODUCTION Thursday, December 9, :30 a.m. A regular meeting of the Board of Directors of the Rancho California Water District was held on Thursday, December 9, 2010, at the appointed meeting place of the Board, the Boardroom of the District's Administrative Headquarters Building, located at Winchester Road, Temecula, California. ROLL CALL President Herman called the meeting to order at 8:30 a.m. A quorum was declared, with the following directors being present: Steve Corona Lisa Herman Lawrence Libeu Ben Drake John Hoagland William Plummer Also present were members of the District staff and others including, but not limited to Jim Gilpin of Best Best & Krieger; Matt Stone, General Manager; Jeff Armstrong, Chief Financial Officer/Treasurer; Perry Louck, Director of Planning; Craig Elitharp, Director of Operations and Maintenance; Andrew Webster, Chief Engineer; Fred Edgecomb, Water Reclamation Manager; Corey Wallace, Engineering Manager; Warren Back, Engineering Planning Manager; Pat O Neil, Human Resources Manager; Jason Martin, IT/Customer Service Manager; Laurie Williams, Engineering Services Manager; Ken Cope, Construction Contracts Manager; Oly Oliphant, Interim Field Services Manager; Robert Avera and Heath McMahon, Civil Engineers; Bud Jones, Associate Engineer; Tim Carlisle, Field Services Superintendent; Rich Ottolini, Water Quality Supervisor; Dave Morrison, Safety Officer; Vicki Browder, Budget/Debt Administrator; Denise Todd, Administrative Services Supervisor; Dale Badore, Datacenter Operations Supervisor; Mike McGrath, Water System Supervisor; Bill Stephens, Senior Water Resources Planner; Denise Landstedt, Water Resources Planner; Meggan Valencia, Public Information Officer; Justin Haessly, Conservation/Water Use Efficiency Analyst; Ana Belland and Nikki Reedy, Administrative Assistants; Erin Lang, Student Intern-Planning; and Kelli Garcia, District Secretary. Present in the audience were Jacqueline Howells of Howells Government Relations, Eastern Municipal Water District Board member Joe Kuebler, former Rancho California Water District Board member Ralph Daily, Liselle DeGrave of DeGrave Communications, Ron Craig of RBF Consulting, Bernard Truax, Daniel Wood, Scott McIntyre, Dennis Chiniaeff, Eric Kazakoff, Bob Lemons, Paul Gonzalez, Bill Blair, Roger Ziemer, Donald Van Selus, and Roland Skumawitz.

2 PLEDGE OF ALLEGIANCE Former Rancho California Water District Board member Ralph Daily led the Pledge of Allegiance to the Flag. 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. 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 legislative body, 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. At this time General Manager Matt Stone announced staffs request to add an item to the meeting agenda concerning a plaque presentation to former Rancho California Water District Board member Ralph H. Daily. APPROVAL OF AGENDA President Herman entertained a motion to approve the Agenda of the regular meeting of the Board of Directors of the Rancho California Water District of December 9, 2010, which includes the add-on item as requested. Director Libeu moved to approve the revised Agenda of the regular meeting of the Board of Directors of the Rancho California Water District of December 9, Director Drake seconded the motion, and it carried unanimously. PUBLIC COMMENT Any person may address the Board of Directors at this time upon any subject not identified on this Agenda but within the jurisdiction of the Rancho California Water District (RCWD/District); however, any matter that requires action will be referred to staff for a report and action at a subsequent Committee or Board meeting. As to matters on the Agenda, an opportunity will be given to address the Board when the matter is considered. There were no public comments. December 9, Board of Directors

3 ADD-ON ITEM: PRESENTATION OF RESOLUTION PLAQUE TO FORMER RCWD BOARD MEMBER RALPH H. DAILY President Herman announced that, at their November 10, 2010 adjourned regular meeting, the Rancho California Water District (RCWD/District) Board of Directors adopted a resolution recognizing, honoring, and commending Ralph H. Daily for serving 23 years as a District Board member. With the resolution having been converted to a plaque, President Herman took this opportunity to again thank Mr. Daily for his hard work, dedication, and knowledge which he brought to the District during his years of service. The resolution plaque was then presented to Mr. Daily. ITEM 1. CONSIDER APPROVAL OF MINUTES OF THE BOARD OF DIRECTORS ADJOURNED REGULAR MEETING OF NOVEMBER 10, 2010 There being no additions or corrections to the minutes of the Board of Directors adjourned regular meeting of November 10, 2010, President Herman entertained a motion from the Board. Director Drake moved to approve the meeting minutes as presented. Director Plummer seconded the motion, and it carried 4-2, with Directors Hoagland and Libeu abstaining from the vote due to their absence at said meeting. ITEM 2. CONSENT CALENDAR Consent Calendar items are expected to be routine and non-controversial, to be acted upon by the Board of Directors at one time without discussion. If any Board member, staff member, or interested person requests that an item be removed from the Consent Calendar, it shall be removed so that it may be acted upon separately. A. Consider Approval of Financial Statements, October 31, 2010 B. Consider Approval of Treasurer s Report and Certification of Cash Sufficiency, as of October 31, 2010 C. Consider Ratifying Register of Audited Demands for the Period October 26, 2010 through November 24, 2010 D. Consider Approval of Rancho California Water District s Water Allocation Procedures for Newly Acquired Agricultural Properties Under the Interim Agricultural Water Program (IAWP) E. Consider Modification to Section C and Section A of the Rules and Regulations Governing Water System Facilities and Service, Included in Part III, Chapter 1, Section 1, of the Administrative Code F. Consider Approval of Budgeted Contract Items Over $50, Consider Approval to Award the Construction Contract for the Prado Reservoir No. 1 and De Portola Reservoir No. 1 Recoating and Cathodic Protection (Project Nos. D1618 and D1628), and Bear Creek Reservoir No. 2, Antelope Reservoir, De Portola Reservoir No. 2, and El Chimisal Reservoir No. 1 Exterior Recoating (Project Nos. D1619, D1620, D1625 and D1628) December 9, Board of Directors

4 2. Consider Approval to Award Construction and Professional Services Contracts for the Vail Lake Transmission Main and Pump Station Post-Construction Native Vegetation Restoration (Project No ) 3. Consider Approval to Award the Construction Contract for the Fiscal Year Capital Improvement Program Meter Vault Improvements (Project Nos. D1532 and D1538) At this time Director Drake requested that Consent Calendar Item 2F (1-3), be removed from the Consent Calendar and acted upon separately. There being no further requests to remove an item from the Consent Calendar, President Herman entertained a motion to approve the remaining items, as presented. Director Hoagland moved to approve Consent Calendar Items 2A-E, as presented. Director Plummer seconded the motion, and it carried unanimously. Pertaining to Consent Calendar Item 2F (1-3), Director Drake announced his concerns with the budget summaries for said projects. He then indicated that he does not have an issue with the award of contract portion; however, he is requesting a revision to the budgeted numbers. First, referencing Consent Calendar Item 2F1 Consider Approval to Award the Construction Contract for the Prado Reservoir No. 1 and De Portola Reservoir No. 1 Recoating and Cathodic Protection (Project Nos. D1618 and D1628), and Bear Creek Reservoir No. 2, Antelope Reservoir, De Portola Reservoir No. 2, and El Chimisal Reservoir No. 1 Exterior Recoating (Project Nos. D1619, D1620, D1625 and D1628), Director Drake voiced concern regarding the listed project contingency fees. He indicated that the contingency fees, as listed in the staff report, total $343,000 and requested that this amount be reduced to $34,000. Relaying the same message for Consent Calendar Item 2F2 Consider Approval to Award Construction and Professional Services Contracts for the Vail Lake Transmission Main and Pump Station Post-Construction Native Vegetation Restoration (Project No ) and Item 2F3 Consider Approval to Award the Construction Contract for the Fiscal Year Capital Improvement Program Meter Vault Improvements (Project Nos. D1532 and D1538), Director Drake requested that the project contingency amounts for Item 2F2 be reduced from $410,000 to $50,000, and Item 2F3 be reduced from $17,500 to $2,000. December 9, Board of Directors

5 Director Drake moved to award the Construction Contracts and/or Professional Services Contracts for Consent Calendar Item 2F (1-3), as presented; however, reduce the project contingency fees as follows: Item 2F1 2F2 2F3 Project Prado Reservoir No. 1 and De Portola Reservoir No. 1 Recoating and Cathodic Protection (Project Nos. D1618 and D1628), and Bear Creek Reservoir No. 2, Antelope Reservoir, De Portola Reservoir No. 2, and El Chimisal Reservoir No. 1 Exterior Recoating (Project Nos. D1619, D1620, D1625 and D1628) Vail Lake Transmission Main and Pump Station Post-Construction Native Vegetation Restoration (Project No ) Fiscal Year Capital Improvement Program Meter Vault Improvements (Project Nos. D1532 and D1538) Revised Project Contingency Fee $34,000 $50,000 $2,000 Director Corona seconded the motion, and discussion continued. Chief Engineer Andrew Webster responded by stating that said projects all display a project savings, as well as illustrates a standard construction contingency amount for each that is routine for any type of construction project. He then announced that said fees, as presented, are not required to be spent and is strictly a contingency which allows flexibility to do the job. Mr. Webster then relayed that staff is not requesting additional funding for these projects; moreover, he reiterated that the final cost summary for each project reflects a savings. Responding to Mr. Webster s comment, Director Drake indicated that his main concern is, should there be a construction issue, that he would like to be made aware of it rather than just having a fee established that can be drawn from. He then expressed an interest in keeping an eye on how the projects are proceeding. Director Plummer then voiced his concern regarding lowering the project contingency fees, as this would require that every change order be returned to the Board for review. Following a brief overview of Director Drake s proposed revised project contingency fees, Mr. Webster referenced the costs associated with Consent Calendar Item 2F1 and clarified that there is a 10 percent contingency listed for each project, which appears to be a large number; however, there are five separate projects listed. Director Drake then expressed his understanding of the 10 percent contingency; however, he shared that if the projects have already been bid and the District authorizes a contractor do perform the work should there be a large change order amount, other than the amounts listed, then the Board should to be notified preferably sooner than later. December 9, Board of Directors

6 At this time Director Hoagland requested clarification on the project cost summaries presented by staff, indicating that there are two costs listed budgeted cost and projected cost. He continued by relaying that it appears Director Drake calculated the contingency fees from the budgeted cost amounts however he expressed that in reality, the calculation should be made from the projected cost. Director Hoagland then concurred with Director Plummer s concern on having the contingency availability larger, thereby allowing flexibility on keeping the project moving along during minor issues. Next, Director Hoagland proposed that staff present a monthly status report to the Engineering and Operations Committee which includes a listing of change orders that have been completed on approved projects or possibly set a dollar amount which would require change order approval, as opposed to having each order reviewed, which would delay construction. Hearing no other questions or comments from the Board, President Herman called for the vote on the motion on the floor, and it failed 5-1, with Directors Corona, Herman, Hoagland, Libeu, and Plummer opposed. Director Hoagland moved to approve Consent Calendar Item 2F (1-3) as presented, with a stipulation that any change orders over $5,000 or ½ percent of the cost of the project, be reviewed at an Engineering and Operations Committee meeting. Director Drake seconded the motion, and it carried unanimously. ITEM 3. PUBLIC HEARING TO CONSIDER ADOPTION OF FINDINGS REQUIRED FOR ENERGY SERVICE CONTRACTING FOR THE DISTRICT HEADQUARTERS BUILDING SOLAR POWER PROJECT (PROJECT NO. D1595) AND THE SENGA DOHERTY PUMP STATION SOLAR POWER PROJECT (PROJECT NO. D1594) Chief Engineer Andrew Webster introduced this item by explaining that in accordance with Rancho California Water District s (RCWD/District) Strategic Business Plan, Objective V Maximize Energy Efficiencies Including the Economically Appropriate Use of Renewable Power, and Objective N Maximize Outside Funding Opportunities, staff has evaluated the use of solar power for the District Headquarters Building and the Senga Doherty Pump Station. Referencing the proposed projects, Mr. Webster announced that the first project will consist of canopy-mounted photovoltaic (PV) panels located at the District Headquarters and will provide percent of electrical consumption. The second project is to install pier-mounted PV panels on District property for use at the Senga Doherty Pump Station which will provide 55 percent of electrical consumption. By completing solar conversion, staff anticipates that over a 25-year timespan, there will be a savings of approximately $3 million for the District Headquarters Building and approximately $5.5 million for the Senga Doherty Pump Station. On September 15, 2010, the District issued Request for Proposals for these potential solar power projects based upon a design-build contract and optional pricing December 9, Board of Directors

7 methodology using either a power purchase agreement or a direct purchase with the Quality Energy Conservation Bond financing. On October 13, 2010, the District received proposals from Borrego Solar Systems, SPG Solar, and SunPower Corporation (SunPower), and upon review of said proposals, SunPower was selected as the preferred vendor. Following Mr. Webster s presentation, in accordance with Government Code Section 4217 et seq., President Herman declared the public hearing open and invited questions and comments from the audience. Hearing none, she then entertained a motion from the Board to close the public hearing. Director Drake moved to close the public hearing. Director Plummer seconded the motion, and it carried unanimously. ITEM 4. CONSIDER ADOPTION OF APPROPRIATE RESOLUTIONS FOR MAKING FINDINGS REQUIRED FOR ENERGY SERVICE CONTRACTING, REQUEST FOR ADDITIONAL FUNDS, AND AUTHORIZATION OF A DESIGN-BUILD CONTRACT FOR THE DISTRICT HEADQUARTERS BUILDING SOLAR POWER PROJECT (PROJECT NO. D1595) AND THE SENGA DOHERTY PUMP STATION SOLAR POWER PROJECT (PROJECT NO. D1594) A. Resolution in the Matter of Making Findings Under California Government Code Section et seq. and Delegating the Authority to the General Manager to Execute the Proposed Design-Build Contract for the Construction of Solar Photovolataic Project at the Rancho California Water District Headquarters Building Solar Power Project (Project No. D1595) Site with SunPower Corporation B. Resolution in the Matter of Making Findings Under California Government Code Section et seq. and Delegating the Authority to the General Manager to Execute the Proposed Design-Build Contract for the Construction of Solar Photovolataic Project at the Senga Doherty Pump Station Solar Power Project (Project No. D1594) Site with SunPower Corporation With the public hearing to consider adoption of findings required for energy service contracting for the Rancho California Water District Headquarters Building Solar Power Project (Project No. D1595) and the Senga Doherty Pump Station Solar Power Project (Project No. D1594) having been held and closed, and there having been no members of the public present during the hearing to comment on the item, Chief Engineer Andrew Webster requested the Board of Directors take the following actions: 1. Adopt the appropriate resolutions making findings required for energy service contracting (pursuant to Government Code Section 4217 et seq.). 2. Authorize an additional $3,650,000, increasing the project budget amount from $50,000 to $3,700,000, for the District Headquarters Building Solar Power Project (Project No. D1595) and authorize the General Manager to enter into a design-build contract with SunPower Corporation (SunPower) in December 9, Board of Directors

8 the amount of $3,196,006. The proposed source of funds is 50 percent Rancho Division Debt Service/Capital Improvement Fund and 50 percent Santa Rosa Division Debt Service/Capital Improvement Fund, with reimbursement from Quality Energy Conservation Bond (QECB) financing and with possible reimbursement from future permanent financing. 3. Authorize an additional $6,450,000, increasing the project budget amount from $50,000 to $6,500,000 for the Senga Doherty Pump Station Solar Power Project (Project No. D1594) and authorize the General Manager to enter into a design-build contract with SunPower in the amount of $5,747,976. The proposed source of funds is the Santa Rosa Division Debt Service/Capital Improvement Fund, with reimbursement from QECB financing and with possible reimbursement from future permanent financing. Next, referencing the power production agreement established for set power at the Santa Rosa Water Reclamation Facility, there was brief discussion regarding the obligations and/or conditions with owning a system versus purchasing power, which includes meeting certain rebate requirements, as well as establishing an off-set cost for power during the subsequent years. Hearing no other questions or comments, President Herman entertained a motion from the Board. Regarding the District Headquarters Building Solar Power Project (Project No. D1595), Director Hoagland moved to adopt the appropriate resolution making findings required for energy service contracting; authorize an additional $3,650,000, increasing the project budget amount from $50,000 to $3,700,000; and authorize the General Manager to enter into a design-build contract with SunPower in the amount of $3,196,006. Director Libeu seconded the motion, and the resolution is entitled: RESOLUTION NO RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO CALIFORNIA WATER DISTRICT, RIVERSIDE COUNTY, CALIFORNIA, IN THE MATTER OF MAKING FINDINGS UNDER CALIFORNIA GOVERNMENT CODE SECTION ET SEQ. AND DELEGATING THE AUTHORITY TO THE GENERAL MANAGER TO EXECUTE THE PROPOSED DESIGN-BUILD CONTRACT FOR THE CONSTRUCTION OF SOLAR PHOTOVOLTAIC PROJECT AT THE RANCHO CALIFORNIA WATER DISTRICT HEADQUARTERS BUILDING SOLAR POWER PROJECT (PROJECT NO. D1595) SITE WITH SUNPOWER CORPORATION December 9, Board of Directors

9 The motion was carried by the following vote: Yes: No: Absent: Abstain: Directors Corona, Drake, Herman, Hoagland, Libeu, and Plummer Regarding the Senga Doherty Pump Station Solar Power Project (Project No. D1594), Director Hoagland moved to adopt the appropriate resolution making findings required for energy service contracting; authorize an additional $6,450,000, increasing the project budget amount from $50,000 to $6,500,000, and authorize the General Manager to enter into a design-build contract with SunPower in the amount of $5,747,976. Director Plummer seconded the motion, and the resolution is entitled: RESOLUTION NO RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO CALIFORNIA WATER DISTRICT, RIVERSIDE COUNTY, CALIFORNIA, IN THE MATTER OF MAKING FINDINGS UNDER CALIFORNIA GOVERNMENT CODE SECTION ET SEQ. AND DELEGATING THE AUTHORITY TO THE GENERAL MANAGER TO EXECUTE THE PROPOSED DESIGN-BUILD CONTRACT FOR THE CONSTRUCTION OF SOLAR PHOTOVOLTAIC PROJECT AT THE SENGA DOHERTY PUMP STATION SOLAR POWER PROJECT (PROJECT NO. D1594) SITE WITH SUNPOWER CORPORATION The motion was carried by the following vote: Yes: No: Absent: Abstain: ITEM 5. Directors Corona, Drake, Herman, Hoagland, Libeu, and Plummer CONSIDER AMENDING THE APPENDIX OF THE CONFLICT OF INTEREST CODE AND ADOPTION OF THE APPROPRIATE RESOLUTION A. Resolution Amending the Appendix of the Conflict of Interest Code Pursuant to the Political Reform Act of 1974 (Amending Resolution No ) Pursuant to the Political Reform Act, 2010 is a mandatory review year for all public agencies within the jurisdiction of the County of Riverside to review their Conflict of Interest Codes to determine if they are accurate or require amendment. Local agencies are also required to submit a notice to their code-reviewing body, specifying that they will December 9, Board of Directors

10 amend their code or indicate that no corrections are required at this time. The Riverside County Board of Supervisors serves as the code-reviewing body for Rancho California Water District. Director Plummer moved to approve the amendments to the Appendix of the Rancho California Water District Conflict of Interest Code, to adopt the appropriate resolution amending the Appendix, and to direct staff to forward an executed copy of the adopted resolution to Best Best & Krieger for submittal to the Riverside County Board of Supervisors for approval. Director Drake seconded the motion, and the resolution is entitled: RESOLUTION NO RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO CALIFORNIA WATER DISTRICT, RIVERSIDE COUNTY, CALIFORNIA AMENDING THE CONFLICT OF INTEREST CODE PURSUANT TO THE POLITICAL REFORM ACT OF 1974 (AMENDING RESOLUTION NO ) The motion was carried by the following vote: Yes: No: Absent: Abstain: ITEM 6. Directors Corona, Drake, Herman, Hoagland, Libeu, and Plummer CONSIDER RENEWAL OF MOTION FOR THE APPROVAL OF FUNDS AND AWARD OF CONTRACT FOR THE WATER USE EFFICIENCY MASTER PLAN FOR RESIDENTIAL, COMMERCIAL, INDUSTRIAL, INSTITUTIONAL AND AGRICULTURAL CUSTOMERS A. Renewal of Motion B. Approval of Funds and Award of Contract for the Water Use Efficiency Master Plan for Residential, Commercial, Industrial, Institutional and Agricultural Customers General Counsel Jim Gilpin announced that the subject item was presented and approved by the Board of Directors at their November 10, 2010 adjourned regular meeting. Subsequent to the November 10 th meeting, Director Corona requested the Board consider a renewal of motion of the request for approval of funds and award of contract for the preparation of a Water Use Efficiency Master Plan to A&N Technical Services in the amount of $109,400, and a total project budget of $160,000. At this time Director Corona requested the Board consider the renewal of motion for the approval of funds and award of contract for the Water Use Efficiency Master Plan for residential, commercial, industrial, institutional and agricultural customers. December 9, Board of Directors

11 Director Corona moved to consider a renewal of motion for the approval of funds and award of contract for the Water Use Efficiency Master Plan for residential, commercial, industrial, institutional and agricultural customers. Director Drake seconded the motion, and it carried with a vote of 5-1, with Director Plummer opposed. With the renewal of motion having been approved, Director Corona referenced Governor Schwarzenegger s (Governor) 20x2020 plan and expressed that political views change quite often and that establishing a plan to achieve a 20 percent reduction statewide by 2020, is a lengthy amount of time. He then suggested staff only complete the work necessary to find out what the baseline information would be for the 20x2020 plan. Once that is established, he stated that Rancho California Water District (RCWD/District) could then proceed. Director Corona continued by stating that the District still needs to complete an Urban Water Management Plan, which will also include an extensive amount of information needed for the 20x2020 plan. Director Corona moved to direct staff to complete the baseline calculations first, without the use of consulting services, and then proceed from there. Director Drake seconded the motion, and discussion continued. Director Hoagland expressed that he understands the motion to be that a Water Use Efficiency Master Plan will not be completed for residential, commercial, industrial, institutional, and agricultural customers; instead, that a consultant will be brought on board to quantify how the District s water conservation program is currently working that data will then be transferred to the Urban Water Management Plan. Director Drake confirmed Director Hoagland s comment then added that he believes that a base-year needs to be established so the District knows where to start and can recognize what it is already locked into then we can evaluate/proceed with an Urban Water Master Plan to see if there are possibly additional savings that can be incorporated. Interjecting, Director Corona stated that depending on what that base-year is, especially with agricultural (Ag), the new requirements may have already been met. At this time Director of Planning Perry Louck clarified a few points. In particular, why staff feels that it is critical to proceed with the subject item as previously presented. He stated that, under the 20x2020 Plan, there is an Agricultural Water Management Plan requirement that needs to be adopted by December 2012 which involves more than calculating a baseline. He relayed that it is staff s intent to then intergrade both the baseline calculation and required 20x2020 target methodologies and the Ag Plan into the Urban Water Management Plan as these are both critical components. Next, Mr. Louck conveyed that there is also an interim requirement of a 15 percent reduction by the year 2015 which does not apply to Ag as there needs to be an Agricultural Water Management Plan adopted. He indicated that what is critical for the District is to have a Water Use Efficiency Master Plan in place, in order to meet the regulatory requirements. With respect to the Urban Water Management Plan, Mr. Louck also stated that it is crucial that the District proceed due to already established grant funding which RCWD will not qualify for without the adoption of an Urban Water Management Plan and approval by the State. Concluding, December 9, Board of Directors

12 he expressed that he understands the Board s concerns; however, he stated that, should the Board proceed with only the baseline calculation, it is left far-short from both the compliance of water cutbacks required by 2020, along with the Ag data needed to incorporate into the required Urban Water Management Plan and Agricultural Water Management Plan. Responding to a question posed by President Herman regarding already having the data in-house to perform an analysis on said components, Mr. Louck confirmed that staff has the data, yet it, does not have the staff nor expertise to establish the baseline calculations. Regarding Ag and Water Use Efficiency Master Plans, Mr. Louck requested an interest on having an objective view and evaluation on said programs in moving forward, since the majority of the cost component for the Water Use Efficiency Master Plan is to analyze the entire District database by customer class, and look at absorption rates to establish a comprehensive-long term plan to help meet the cutback requirements. Referencing the critical timeframe as detailed at the November 10, 2010 Board meeting, Legal Counsel Jim Gilpin briefly clarified that the Urban Water Management Plan needs to be completed by July 2011 and indicated that, if separated, this is the critical piece which the District needs to comply with in order to avoid potential impacts with grant funding. Director Corona responded by expressing his understanding, yet, stated that two competing plans are being presented and he believes that the data on the base-rate is the most important issue that needs to be focused on first. Reiterating the motion on the floor as to complete the baseline calculations without the use of outside consultant services, President Herman called for the motion on the floor, and the motion carried with a vote of 5-1, with Director Plummer opposed. ITEM 7. ELECTION OF OFFICERS FOR CALENDAR YEAR 2011 In accordance with Section of the California Water Code, the Board of Directors, in December of each year, elects a president from its members to serve for the forthcoming year. In addition to electing a president, it has been the Board s tradition to also elect a senior vice president to act as president in their absence. President Herman opened the nominations for the office of President of the Board. Director Corona nominated Senior Vice President Lawrence Libeu. Director Drake seconded the nomination. There being no further nominations, the nominations were closed upon adoption of the following motion: Director Corona moved that the nominations for the office of President be closed. The motion was seconded by Director Drake, and carried unanimously. President Herman called for a vote on the nomination of Senior Vice President Libeu to serve as President of the Board of Directors for the 2011 calendar year, and it carried unanimously (with Director Libeu abstaining from the vote). December 9, Board of Directors

13 Opening the nominations for the office of Senior Vice President of the Board, Director Libeu nominated Director John Hoagland, Director Drake seconded the nomination. There being no further nominations, the nominations for the office of Senior Vice President were closed upon adoption of the following motion: Director Libeu moved that the nominations for the office of Senior Vice President be closed. The motion was seconded by Director Drake, and carried unanimously. President Herman called for a vote on the nomination of Director John Hoagland to serve as Senior Vice President of the Board of Directors for the 2011 calendar year, and it carried unanimously (with Director Hoagland abstaining from the vote). Senior Vice President Libeu and Director Hoagland shall assume their respective offices as President and Senior Vice President of the Board of Directors of the Rancho California Water District on January 1, ITEM 8. REVIEW, CONSIDER, AND APPOINT A REPLACEMENT TO FILL THE VACANCY ON THE BOARD OF DIRECTORS OF THE RANCHO CALIFORNIA WATER DISTRICT At their November 10, 2010 adjourned regular meeting, the Board of Directors acknowledged the resignation of Rancho California Water District (RCWD/District) Board member Ralph H. Daily, and by unanimous vote, agreed to fill the vacancy on the Board by appointment. In accordance with the procedures set forth in Government Code Section 1780, the Board directed staff to post and publish a Notice of Vacancy on the Board, inviting interested persons who are resident registered voters within the District and have experience and the time to commit to the Board, to contact District Secretary Kelli Garcia by Friday, December 3, In response to said notice, the District received resumes and letters of interest from the following individuals: Karl Blackmun William Blair Dennis Chiniaeff Paul Gonzalez Eric Kazakoff Bob Lemons Scott McIntyre Roland Skumawitz Bernard Truax Donald Van Selus Daniel Wood Roger Ziemer Each candidate had submitted a letter of interest and/or resume to the Board outlining their experience and qualifications. Copies of said material were distributed to December 9, Board of Directors

14 Board members prior to today s meeting and would become part of the record of these proceedings. President Herman indicated that this matter will consist of a two-step process the first order of business is to determine the process for filling the vacancy. Opening this issue for discussion, she suggested the Board consider voting for their top three selected candidates in order to narrow down the number of candidates to select from. Agreeing with President Herman s suggestions, Director Hoagland added that he would like to give each of the candidates an opportunity to address the Board, limiting their speeches to approximately three minutes, to discuss why they are interested in serving on the Board and what perspective they would bring forth to assist the Board on having a broader view of representing the community. Following this process, the Board would then narrow down the number of candidates to select from. At this time Director Libeu requested that each candidate address a third question what they believe to be the biggest challenge RCWD faces in the forthcoming year. Hearing no other questions regarding the selection process, the Board unanimously concurred with the procedure as stated. Pertaining to the specific position, President Herman announced that the individual selected to fill the vacancy will be seated on the Board at their January 13, 2011 meeting, the term will be for slightly less than one year, and said position will be subject to the August 2011 general District election. Next, President Herman stated that each candidate will be called to address the Board in alphabetical order. She then indicated that candidate Karl Blackmun was not able to attend today s meeting due to a schedule conflict. At this time the Board heard from candidates William Blair, Dennis Chiniaeff, Paul Gonzalez, Eric Kazakoff, Bob Lemons, Scott McIntyre, Roland Skumawitz, Bernard Truax, Donald Van Selus, Daniel Wood, and Roger Ziemer. Following the candidates comments, President Herman thanked them for their participation and announced a five-minute break as an opportunity for the Board to collect their thoughts and vote on their top three selected candidates. The Board reconvened at 9:58 a.m., with the vote having taken place, President Herman announced that there were six individuals selected as the top candidates: William Blair, Dennis Chiniaeff, Paul Gonzalez, Roland Skumawitz, Donald Van Selus, and Roger Ziemer. The Board then determined to narrow the list again, with President Herman requesting the Board vote for their top two candidates. With the second round of voting having taken place, President Herman announced the selected candidates as William Blair, Paul Gonzalez, Roland Skumawitz, and Donald Van Selus. Director Hoagland moved to appoint Donald Van Selus to fill the vacancy on the Rancho California Water District Board of Directors. Director Libeu seconded the motion. December 9, Board of Directors

15 SUBSTITUTE Director Drake moved to appoint Roland Skumawitz to fill the vacancy on the Rancho California Water District Board of Directors. Director Libeu seconded the substitute motion, and it carried by the following vote: Yes: No: Absent: Abstain: Directors Corona, Drake, Libeu, and Plummer Directors Herman and Hoagland The substitute motion having carried, the original motion was dismissed. President Herman congratulated Mr. Skumawitz on his appointment to the Board, and asked that he meet with Ms. Garcia following today s meeting to verify his registered voter status and to assemble the documentation needed to administer the oath of office. ITEM 9. INFORMATION ITEMS This item is intended for information only, however, at the discretion of the Board, may be discussed. A. Activity Report, Committees of the Board for the Month of November 2010 B. Claims Activity Report for the Period Friday, November 5, 2010 Through Thursday, December 2, 2010 C. Information Items At this time there was brief discussion regarding a claim which was denied by Rancho California Water District in 2009, and the Joint Powers Insurance Authority s current review and involvement on said claim. ITEM 10. GENERAL COUNSEL'S REPORT General Counsel Jim Gilpin reported that United States District Judge Oliver Wanger is expected to issue a ruling on his motion for summary judgment pertaining to the Delta Salmon Case on December 16, ITEM 11. GENERAL MANAGER S REPORT General Manager Matt Stone briefly announced that there will be an Ad Hoc Committee meeting with Eastern Municipal Water District on December 20, 2010, whereby the topic of discussion will be centered on recycled water availability, including perhaps a discourse on wine country sewer concerns. Mr. Stone also commented on having attended the Association of California Water Agencies 2010 Fall Conference, stating that there was a healthy exchange of information made available pertaining to the Bay Delta water supply, as well as, discussions involving the state of California governorship transition. Also, he commented on informative presentations provided on the Senate Bill 7x7 pertaining to water conservation via an urban water management plan. December 9, Board of Directors

16 ITEM 12. BOARD MEMBERS COMMENTS AND REPORTS Director Hoagland commented on having attended the Joint Powers Insurance Authority (JPIA) meeting during the beginning of the Association of California Water Agencies (ACWA) 2010 Fall Conference. He announced that JPIA purchased a new building in Citrus Heights, California at a substantially discounted price; the building had an original sell price range of $6 to 8 million, yet it was purchased just under $3 million. He further stated that, in terms of financing, JPIA continues to be very solid and that they offer extensive support to RCWD staff in dealing with a number of industry-related issues. Regarding the ACWA Conference, he explained that there was a good exchange of discussion pertaining to water master and urban water management plans. Director Plummer reported on having attended the Southern California Water Committee meeting held in Irvine, California, whereby the discussion involved a push for the 2012 Water Bond. Also, he commented on having attended a meeting at the ACWA Conference pertaining to dynamic pricing tariffs for 2011, which may impact the District s power rates. Additionally, he discussed that another topic of exchange during the subject conference was on water supply transfers. Director Libeu began by thanking the Board for the nomination of president, and additionally welcomed Director-Elect Roland Skumawitz to the Board. He further commented on also having attended the ACWA Conference; in particular, he was quite impressed with a new workers compensation issue of Blackberry thumb. He also announced that during the conference he completed the required Assembly Bill 1234 Ethics Training. On another note, Director Libeu announced that he plans to personally attend the Colorado River Water Users Association Conference next week. ITEM 13. CLOSED SESSION At any time during the regular session, the Board may adjourn to closed session to consider litigation, personnel matters, or to discuss with legal counsel matters within the attorney-client privilege. Discussion of litigation is within the attorney-client privilege and may be held in closed session. Authority: Government Code Section A. CONFERENCE WITH REAL PROPERTY NEGOTIATORS Matt Stone, General Manager; and Perry Louck, Director of Planning (Per Government Code ) Concerning Acquisition of Real Property Various Water Transfers B. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) United States vs. Eastern Municipal Water District and Rancho California Water District, Case No. CV C. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) Rancho California Water District vs. Vail Lake USA, LLC, Case No D. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) United States vs. Fallbrook Public Utility District, Case No December 9, Board of Directors

17 E. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) La Cresta Highlands Association vs. Rancho California Water District and Southern California Pipeline Construction, Case No. RIC F. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) Ross A. Guy & Son General Engineering Contractor vs. Rancho California Water District, Case No. RIC G. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) Southern California Pipeline Construction vs. Rancho California Water District, Case No. RIC H. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) Rancho California Water District vs. Dahlen, et al., Case No. RIC I. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) United States of America et al. vs. J-M Manufacturing Company, Inc. Case No. 5:06-CV GW J. CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION Initiation of litigation (Per Government Code (c)) One (1) potential case K. CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION Significant exposure to litigation (Per Government Code (b)) one (1) potential case L. CONFERENCE WITH LABOR NEGOTIATORS Matt Stone, General Manager; Jeff Armstrong, Chief Financial Officer/Treasurer; and Pat O Neil, Human Resources Manager (Per Government Code ) and Employees Organization: Rancho California Water District Employees Association At 10:44 a.m., President Herman declared the meeting in closed session. Board members, legal counsel, and select staff members remained, all other individuals left the room. The Board reconvened in open session at 11:40 a.m. President Herman announced that there were no reportable actions taken by the Board of Directors in closed session. ITEM 14. ADJOURNMENT There being no further business to come before the Board, the meeting adjourned at 11:40 a.m. Kelli E. Garcia, Secretary of the Board of Directors of the Rancho California Water District December 9, Board of Directors