MINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF THE RANCHO CALIFORNIA WATER DISTRICT. Thursday, May 14, :30 a.m.

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1 MINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS OF THE RANCHO CALIFORNIA WATER DISTRICT Thursday, May 14, :30 a.m. INTRODUCTION A regular meeting of the Board of Directors of the Rancho California Water District (District) was held on Thursday, May 14, 2015, at the appointed meeting place of the Board, the Board Room of the District's Administrative Headquarters Building, located at Winchester Road, Temecula, California. ROLL CALL President Hoagland called the meeting to order at 8:30 a.m. A quorum was declared with the following directors being present: Steve Corona Ben Drake William Plummer Roger Ziemer John Hoagland Lisa Herman James Stewart Also present were members of the District staff and others, including but not limited to, General Counsel Jim Gilpin of Best Best & Krieger; Jeff Armstrong, Interim General Manager; Richard Williamson, Assistant General Manager; Andrew Webster, Chief Engineer; Fred Edgecomb, Director of Operations and Maintenance; Corey Wallace, Engineering Manager CIP & Development; Warren Back, Engineering Manager Operations; Tim Carlisle, Field Services Manager Construction; Darren Milner, Field Services Manager-Facilities; Mike Calvert, Operations Project Manager; Heath McMahon, Construction Contracts Manager; Eileen Dienzo, Human Resources Manager; Rick Aragon, Finance Manager; Kathy Naylor, Accounting Manager; Dave Morrison, Safety/Risk Officer; Jake Wiley, Randy Neff, and Jeff Kirshberg, Principal Engineers; Meggan Valencia, Senior Public Information Officer; Justin Haessly, Senior Conservation/Water Use Efficiency Analyst; Bill Stephens, Senior Water Resources Planner; Denise Todd, Administrative Services Supervisor; Ana Belland, Administrative Assistant; and Kelli Garcia, District Secretary. Present in the audience were Brad Neufeld of Gresham Savage Nolan & Tilden, Consultant Kevin Ross of TerraVerde Renewable Partners, Michael Fife of Brownstein Hyatt Farber Schreck, Steve Tiritilli and Bryan Snell of JST Real Estate Services Inc., Roxanne Rountree of Eastern Municipal Water District, and the following customers/members of the public: Corinne Berge, Jim Lytle, Michael Van Daele, Mike O Donnell, City of Murrieta Councilmember Jonathan Ingram, Walter Wilson, Ben Fraleigh, Miguel Gonzalez, Greg Butler, Brice Kittle, City of Temecula Councilmember Matt Rahn, Charley Black, Nathan Miller with the Building Industry Association Riverside County Chapter, Wolf Valley Homeowners Association Board member Joseph Terrazas, Mike Freeman, Geoff Smith, Robert Anselmo, John Johnson, Janice Lovendahl, Danny Martin, Shelli Derobertis, Bruce Coleman, Chuck Bandy, Scott Stewart, Rick Neugebauer, Russ Oberlander, Trent Heiner, David Jeffers, Steve Convirse, Eric Scheck, Cecilie Nelson, Christine Damko, Cheryl Kitzerow, Liza Gomez, Wendy Fazeli, Al McDougall, and Vern Strong.

2 PLEDGE OF ALLEGIANCE President Hoagland 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 Rancho California Water District after the Agenda was posted. At this time, Interim General Manager Jeff Armstrong requested the Board of Directors (Board) consider adding a couple of items not appearing on the Agenda, as posted, concerning the approval of the 2015 Financing Team and a closed-session matter regarding anticipated litigation, respectively. Additionally, Mr. Armstrong noted that both items arose following finalizing the Agenda. In accordance with Government Code Section (b)(2), President Hoagland called for a two-thirds vote of the Board to add the items to the Agenda. Director Herman moved to declare that there is a critical need to take action on the two items, as described by Interim General Manager Jeff Armstrong. Director Stewart seconded the motion, and it carried unanimously. President Hoagland announced that the following items would be added to the Agenda. DISCUSSION AND APPROVAL OF 2015 FINANCING TEAM (discuss after Agenda Item 9) CLOSED SESSION, ANTICIPATED LITIGATION add one new item to discuss - (now) Three (3) Potential Cases APPROVAL OF AGENDA President Hoagland entertained a motion to approve the Agenda of the Regular Meeting of the Board of Directors of the Rancho California Water District of May 14, 2015, as revised, with the aforementioned change in order of item presentation. Prior to approving the revised Agenda, Mr. Armstrong requested that Item 7 Consider Approval of the Altair Specific Plan Water Supply Assessment, be discussed following Item 4. May 14, Board of Directors

3 Director Stewart moved to approve the revised Agenda of the regular meeting of the Board of Directors of the Rancho California Water District of May 14, 2015, with the change, as discussed. Director Herman seconded the motion, and it carried unanimously. PUBLIC COMMENT An opportunity was given for any person to address the Board of Directors (Board) upon any subject not identified on the Agenda, but within the jurisdiction of the Rancho California Water District (RCWD/District). For items not listed on the Agenda, the Brown Act imposes limitations on what the Board may do during public comment. As to matters on the Agenda, persons will be given an opportunity to address the Board when the matter is considered. There were no public comments. ITEM 1. CONSIDER APPROVAL OF MINUTES OF THE BOARD OF DIRECTORS' REGULAR MEETING OF APRIL 9, 2015 AND SPECIAL MEETING OF MARCH 31, 2015 There being no additions or corrections to the minutes of the Board of Directors regular meeting of April 9, 2015 and special meeting of March 31, 2015, President Hoagland entertained a motion from the Board. ITEM 2. Director Drake moved to approve the meeting minutes, as presented. Director Plummer seconded the motion, and it carried unanimously. CONSENT CALENDAR Consent Calendar items are expected to be routine and non-controversial, to be acted upon by the Board of Directors (Board) 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, March 31, 2015 B. Consider Approval of Treasurer s Report, Certification of Cash Sufficiency, and Related Quarterly Investment Activity Data, as of March 31, 2015 C. Consider Ratifying Register of Audited Demands for the Period March 26 through April 23, 2015 D. Consider Approval of Expanded Audit Test Work E. Consider Approval of Revisions to Agricultural Water Allocation for Avocados F. Consider Approval of the Recommendations in the Preliminary Design Report for the Well No. 231 Replacement Project (Project No. D1806), and Approval of an Amendment to the Associated Professional Services Agreement with Todd Groundwater G. Consider Approval of Funding for the Preliminary Design of Buck Mesa Reservoir No. 3 and Adoption of the Appropriate Reimbursement Resolution May 14, Board of Directors

4 1. Resolution Declaring Its Intention to Reimburse Itself from the Proceeds of a Tax-Exempt Financing for Certain Expenditures to be Made in Connection with the Preliminary Design of Buck Mesa Reservoir No. 3 Hearing no requests to remove an item for separate discussion, President Hoagland entertained a motion to approve the Consent Calendar, as presented. It was moved by Director Drake and seconded by Director Stewart to approve the Consent Calendar, as presented, with the resolution titled: RESOLUTION NO RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO CALIFORNIA WATER DISTRICT, RIVERSIDE COUNTY, CALIFORNIA, DECLARING ITS INTENTION TO REIMBURSE ITSELF FROM THE PROCEEDS OF A TAX- EXEMPT FINANCING FOR CERTAIN EXPENDITURES TO BE MADE IN CONNECTION WITH THE PRELIMINARY DESIGN OF BUCK MESA RESERVOIR NO. 3 The motion was carried by the following vote: Aye: No: Absent: Abstain: ITEM 3. Directors Corona, Drake, Herman, Hoagland, Plummer, Stewart, and Ziemer PUBLIC HEARING TO CONSIDER DECLARATION OF SHORTAGE STAGE 4a EXTREME WATER SUPPLY WARNING MANDATORY OUTDOOR WATER REDUCTION PER THE RANCHO CALIFORNIA WATER DISTRICT WATER SHORTAGE CONTINGENCY PLAN Addressing the Board of Directors (Board), Interim General Manager Jeff Armstrong provided information regarding Rancho California Water District s (RCWD/District) plan to address the California statewide mandate to reduce urban water use, whereby the state s target is 25 percent; however, for the District s service area, the reduction requirement is 36 percent. To meet the state mandate urban water use reduction of 36 percent, Mr. Armstrong referred to the District s Water Shortage Contingency Plan (WSC Plan), which addresses water supply reductions during a period of water shortage. In today s discussion, staff will propose what stage of the WSC Plan the District needs to move into in order to accomplish the 36 percent urban water use reduction. Utilizing a PowerPoint presentation, Mr. Armstrong discussed the District s action for the drought/state-mandated water use reduction plan, which includes water budget changes and new meter connection policy, as well as other related items outlined in the WSC Plan. May 14, Board of Directors

5 Providing a brief background on the District s WSC Plan, Mr. Armstrong relayed that the WSC Plan was adopted in March 2014, whereby it defines different stages of action that, when implemented, will balance customer demand with shortages in supply, and it provides for actions to comply with state water restriction mandates. Next, Mr. Armstrong read verbatim an abstract from the WSC Plan, Stage 4 Extreme Water Supply Warning Criteria. With regard to regional actions, Mr. Armstrong explained that there is a region-wide call for 50 percent reduction in outdoor water use. Moreover, he reported that Western Municipal Water District (WMWD) will be adopting Stage 4b on May 20, 2015, which entails a request for a 50 percent reduction in outdoor water use; a plan to eliminate WMWD s Tier III budgets; and a 25 to 40 percent reduction of WMWD s Tier II outdoor water budgets. Similarly, Eastern Municipal Water District (EMWD) will be adopting Stage 4a, which consists of a 50 percent reduction in outdoor water use; the elimination of EMWD s Tier III outdoor water budgets; and adjusting EMWD s Tier II outdoor water budgets to a 10 percent reduction. To be in alignment with neighboring agencies, Mr. Armstrong reported that staff recommends the District consider moving into Stage 4a - Extreme Water Supply Warning - Mandatory Outdoor Water Reduction, per RCWD s WSC Plan, as outlined below: Encourage 50 percent reduction in outdoor water use Implement Water Budget Reductions as follows: o Eliminate Tier III Water Budget (inefficient water use category) o Reduce Tier II (efficient water use category) outdoor budget by 30 percent Agricultural and Commercial, Industrial, and Institutional o Reduce Tier I by 10 percent No new meters without offset Effective June 1, 2015 Billings Next, Mr. Armstrong welcomed Finance Manager Rick Aragon to discuss the WSC Plan shortage level analysis. Providing context on the subject matter, Mr. Aragon explained how the District s overall supply conditions are feeding into the impending question of how much does RCWD need in order to elevate the WSC Plan shortage level? He illustrated a slide showing the reduction amounts in water supply conditions, as follows: Native Groundwater Pumping (26 percent - 5,320 acre feet [AF]) o Net of Vail Recharge Vail Lake Usable Storage (70 percent - 6,450 AF) o 2,870 AF Remaining at Fiscal Year (FY) 2016 o FY15 to FY16 Projected Ending Levels Metropolitan Water District of Southern California Water Allocation (15 percent - 6,000 AF) State Mandate (36 percent - 7,800 AF) o Limit of Residential Usage Speaking to supply conditions, Mr. Aragon displayed a slide detailing the current conditions and necessary reduction analysis in relation to Shortage 4a, citing state mandate requirements along with a monthly usage breakdown forecast by tiers. May 14, Board of Directors

6 At this time, President Hoagland asked if staff can provide an explanation on RCWD s Tiered Rate structure; in particular, how the residential, agricultural (Ag), and commercial tiers work. Responding, Mr. Aragon explained that, residential customers, apartment complexes, and sole landscaping accounts have four tiers. The first tier represents indoor water usage only and it is given on a customer-by-customer basis for the quantity of people in a home and an industry standard for what is efficient water usage, which will be 55 gallons per day (GPD). Tier II represents an efficient amount of outdoor water usage and it is given on a home-by-home basis, taking into consideration how many square feet of irrigated landscape, which is mapped out via satellite and includes daily weather to help factor in irrigating needs. He further explained that Tier III normally has been a cushion for the District before reaching the wasteful category of Tier IV, which is half the budget of the efficient tiers. Therefore, Mr. Aragon explained that Stage 4a would be eliminating the cushion of Tier III, which is inefficient and usage would be billed at Tier IV. As for District Ag and commercial and industrial accounts, there are two tiers, with Tier I being efficient water usage, whereby Ag customers are given individual allocations based on what type of crop they have, the recent weather, and overall, how much is planted in the respective area. The industry is based on total meter size, which includes variances for different types of customers in the District s service area. Tier I represents efficient water usage, wherein under Stage 4a, will be reduced by 10 percent. Concluding the presentation, Mr. Aragon noted that the next aspect of the Stage 4a plan has a provision for a water demand offset, wherein he called upon Assistant General Manager Richard Williamson to speak on the matter. Addressing the Board, Mr. Williamson explained the following presentation slides pertaining to water service connection options and staff s recommendation on the subject matter: Moratorium o Legal Criteria Sufficiency Status Quo o Regional Consistency Stage 4a Language Interim Application o Issued upon sufficiency of water demand offset Speaking to the proposed recommendation for moving into Stage 4a, Mr. Williamson explained the following: Recommendation is to move to Stage 4a o Encourage 50 Percent Reduction in Outdoor Water Use o Implement Water Budget Reductions as follows: o Water Budget Accounts o Eliminate Tier III Budget o Reduce Tier II (outdoor budget) by 30 percent o Agricultural and Commercial, Industrial, and Institution o Reduce Tier 1 by 10 percent o No New Meters without Offset o Effective June 1, 2015 Billings May 14, Board of Directors

7 President Hoagland opened the public hearing by acknowledging receipt of a number of request-to-speak forms. With each speaker being allowed three minutes to address the Board, the Board proceeded to hear comments from the following customers/members of the public who were opposed to the District proposing meter moratoriums and/or setting restrictions via a net-zero water demand program on water service connections: Corinne Berge, Jim Lytle, Michael Van Daele, Mike O Donnell, City of Murrieta Councilmember Jonathan Ingram, Walter Wilson, Ben Fraleigh, Miguel Gonzalez, Greg Butler, Brice Kittle, City of Temecula Councilmember Matt Rahn, Charley Black, Nathan Miller with the Building Industry Association Riverside County Chapter, Wolf Valley Homeowners Association Board member Joseph Terrazas, Mike Freeman, Geoff Smith, and John Johnson. Hearing no further comments, President Hoagland entertained a motion from the Board to close the public hearing. ITEM 4. Director Drake moved to close the public hearing. Director Corona seconded the motion, and it carried unanimously. CONSIDER DECLARATION OF SHORTAGE STAGE 4a EXTREME WATER SUPPLY WARNING MANDATORY OUTDOOR WATER REDUCTION PER THE RANCHO CALIFORNIA WATER DISTRICT WATER SHORTAGE CONTINGENCY PLAN, AND ADOPTION OF THE APPROPRIATE RESOLUTION A. Resolution Declaring Shortage Stage 4a Extreme Water Supply Warning Mandatory Outdoor Water Reduction of the Water Shortage Contingency Plan and Rescinding Resolution No With the public hearing concerning the aforementioned item having been held and closed with several of the comments heard from customers and members of the public, Interim General Manager Jeff Armstrong requested the Board of Directors (Board) consider approval of a declaration of Shortage Stage 4a Extreme Water Supply Warning Mandatory Outdoor Water Reduction, per the Rancho California Water District (RCWD/District) Water Shortage Contingency Plan, and adoption of the appropriate resolution therein. General discussion ensued between the Board and staff regarding the state mandate requirements for declaring Shortage Stage 4a, comparing neighboring water agencies plan to address the subject restriction, and the District s plan of action to continue working with the community for sustainable growth during water shortage conditions. At this time, President Hoagland acknowledged request-to-speak forms from the following customers and/or members of the community who addressed the Board regarding the need to enhance outreach and communication between District staff and the community on the subject matter: Nathan Miller with Building Industry Association Riverside County Chapter, City of Murrieta Councilmember Jonathan Ingram, and Greg Butler. Following public comments on the subject matter, general discussion ensued between the Board, staff, and members of the audience regarding the state mandate May 14, Board of Directors

8 requirements, the immediate impact to the community (commercial, residential, and land developers), and the necessary outreach and communication efforts toward strategically planning a solution-based plan. Director Plummer moved to adopt Shortage Stage 4a Extreme Water Supply Warning Mandatory Outdoor Water Reduction, with postponement of no new water meters allowed for reconsideration until end of February 2016; include a 30 percent reduction for budgetbased tiered rate customers Tier II outdoor water budget, and a 10 percent reduction for budget-based tiered rate customers Tier I Agricultural and Commercial, Industrial, and Institutional water budgets, to be effective June 1, 2015; and adoption of the appropriate resolution. Director Stewart seconded the motion, and discussion continued. Discussion ensued between the Board and staff regarding a timeframe for the development of a well-thought-out demand offset program to address the water supply condition during this immediate water shortage period. Following brief discussion, Board members utilized this opportunity to express their appreciation to members of the public for participating in today s public hearing and that all comments heard today will be considered, as the District moves forward to implement the state-mandated urban water use reductions. Moreover, the Board announced that the District will incur potential penalties and rate increases from the Metropolitan Water District of Southern California, which it will not be able to absorb. Therefore, such penalties and rate increases will need to be passed on to District customers through Tier III and Tier IV rates. Hearing no other comments, President Hoagland called for the question on the motion on the floor to include adoption of the resolution titled: RESOLUTION NO RESOLUTION OF THE BOARD OF DIRECTORS OF THE RANCHO CALIFORNIA WATER DISTRICT, RIVERSIDE COUNTY, CALIFORNIA, DECLARING SHORTAGE STAGE 4a EXTREME WATER SUPPLY WARNING MANDATORY OUTDOOR WATER REDUCTION OF THE WATER SHORTAGE CONTINGENCY PLAN AND RESCINDING RESOLUTION NO The motion was carried by the following vote: Aye: No: Absent: Abstain: Directors Corona, Drake, Herman, Plummer, Stewart, and Ziemer Director Hoagland At this time, President Hoagland announced a 5-minute break, with the meeting to reconvene at 10:15 a.m. for discussion of Agenda Item 7. May 14, Board of Directors

9 ITEM 7. CONSIDER APPROVAL OF THE ALTAIR SPECIFIC PLAN WATER SUPPLY ASSESSMENT As follow up to the material presented at the recent regular meeting of the Engineering and Operations Committee, Assistant General Manager Richard Williamson provided the Board of Directors (Board) with an overview of staff s request for the Board to consider approval of the proposed Altair Specific Plan (Project) Water Supply Assessment (WSA), as requested by the City of Temecula (City), citing that, the WSA identifies a sufficient and reliable water supply for Rancho California Water District (RCWD/District) and the Project over a 25-year planning period. At this time, Mr. Williamson called upon RCWD s Principal Engineer Jeff Kirshberg to expound on the subject matter. Providing the Board with a brief description of the Project WSA, Mr. Kirshberg discussed the goal and purpose, which consist of entirely undeveloped property with the following five different City General Plan Land Use Designations: Industrial Park, Hillside Residential, High Density Residential, Medium Density Residential, and Open Space-Native. He also reported that 8.7 acres entails public right-of-way currently within the 271-acre Project site 1,750 maximum new residential dwelling units with pedestrian access to the Old Town Temecula area that, with its added base, will support the commercial uses of Old Town, which fall within the District s service area. Utilizing a PowerPoint presentation, Mr. Kirshberg reported that the Project includes an assessment of utilities that include availability of water supply that is in compliance with Senate Bill (SB) 610 (California Water Code Section et. seq.), which requires that a WSA be prepared, based on specific criteria, to document the sufficiency of available water supply for the identified water supplier (District) to the Project. Additionally, he provided the Board with detailed information pertaining to a supply surplus, indicating sufficient water supply for the Project over a 25-year planning period, thereby exceeding the 20-year planning period requirements. Concluding the presentation, Mr. Kirshberg explained that, while the analysis shows the Project water demands will be met entirely from existing sources, it does not preclude the District regulations in place at time of meter installation request. Discussion ensued between the Board and staff regarding the Project s water supply demand of ½ acre-foot per year for the 1,750 dwelling units, the potential for higher rates and additional restrictions from the Metropolitan Water District of Southern California (Metropolitan), the conditions for providing additional water services, and the fact that the WSA is basically a planning document confirming sufficient availability of water supply for the Project and in compliance with SB610 requirements, thereby supporting adoption of the WSA. At this time, President Hoagland acknowledged a few request-to-speak forms and individually invited the following members of the public to the podium to address their concerns/comments: Robert Anselmo, Councilmember Matt Rahn, and Wolf Valley Homeowners Association Board member Joseph Terrazas. May 14, Board of Directors

10 Addressing the Board, Mr. Anselmo commented being in support of the Project since it was designed in preparation for drought landscape and is of key importance to the City, as it will create and help businesses in Old Town Temecula. Councilmember Rahn expressed extreme sensitivity to the water supply issues during this water shortage period; however, he emphasized the importance that projects like this represent for the City. Additionally, he reported that the City is interested in and supports the Project, as it has the potential of being precedent-setting for utilization as an opportunity to identify new ways of moving forward and conditioning projects that meet the current water supply concerns. Expressing opposition to approval of the WSA, Mr. Terrazas stated that there is already too many houses and development in the area, which has caused too much traffic. He opined that approving the WSA is the wrong thing to do now. Thanking the members of public for their comments on the matter, the Board encouraged them to address land-use concerns with the City, as the District s position on the matter is to focus on water quality supply and reliability services. Director Plummer moved to approve the Altair Specific Plan Water Supply Assessment, as presented. Director Drake seconded the motion, and discussion continued. Director Drake commented that the District will look bad either way. If the District turns the Project down which should not be turned down, as staff justified the water use the City will not be pleased. If the District approves the Project, all the ratepayers will be upset, since the District is having customers cut back on water usage. Director Hoagland commented on voting against the Project, as he is not in agreement with the analysis provided and has questions on the validity therein. Responding to inquiries raised during discussion, staff reported additional information in support of the Project, citing that staff has incorporated Metropolitan s potential 15 percent allocation reduction in the analysis in line with SB610. Hearing no other comments, President Hoagland called for the question on the motion on the floor, and it carried by the following vote: Aye: No: Absent: Abstain: Directors Corona, Drake, Herman, Plummer, Stewart, and Ziemer Director Hoagland May 14, Board of Directors

11 ITEM 5. CONSIDER APPROVAL OF ADDITIONAL FUNDING AND AWARD OF PROFESSIONAL SERVICES AGREEMENT FOR THE ASSET MANAGEMENT PLAN FOR WELLS (PROJECT NOS. D1731, D1733, AND D1736), FOR RESERVOIRS (PROJECT NOS. D1732 AND D1737), AND FOR THE SANTA ROSA WATER RECLAMATION FACILITY Engineering Manager-Operations Warren Back presented this item as a follow up from the May 12, 2015 adjourned regular meeting of the Finance and Audit Committee (Committee), whereby the Committee recommended the Board of Directors (Board) take the following actions related to the Asset Management Plan for the aforementioned wells and the Santa Rosa Water Reclamation Facility (SRWRF): Authorize an additional $90,000, increasing the project budget amount from $620,000 to $710,000; and Authorize an award of professional services agreement with CH2MHill, in the amount not to exceed $583,345.78, for the Asset Management Plan (AMP) for Wells (Project Nos. D1731, D1733, and D1736), for Reservoirs (Project Nos. D1732 and D1737), and for the SRWRF. Director Plummer moved for Board approval on the aforementioned actions, as presented. Director Stewart seconded the motion, and it carried unanimously. ITEM 6. CONSIDER RENEWAL OF MOTION ON THE FOLLOWING ACTIONS PERTAINING TO RANCHO CALIFORNIA WATER DISTRICT S RES- BCT SOLAR POWER PROJECT (PROJECT NO. D1695): A. Consider Renewal of Motion B. Consider Approval of Appropriate Authorization for a Solar Power Purchase Agreement, Site Agreement, and Interconnection Services Agreement C. Consider Approval of Additional Funds D. Consider Approval of an Amendment to a Professional Services Agreement with TerraVerde Renewable Partners, and Approval of an Amendment to a Professional Services Agreement with LSA Associates Presenting the Agenda item, President Hoagland reported that Directors Stewart and Ziemer requested the Board of Directors (Board) consider a renewal of motion on the subject item. Aye: No: Absent: Abstain: Director Stewart moved to approve renewal of the aforementioned item. Director Herman seconded the motion, and it carried by the following vote: Directors Herman, Plummer, Stewart, and Ziemer Directors Corona, Drake, and Hoagland May 14, Board of Directors

12 Next, President Hoagland entertained a motion by the Board to approve the corresponding actions pertaining to Rancho California Water District s Renewable Energy Self-Generation Bill Credit Transfer (RES-BCT) Solar Power Project (Project No. D1695). Director Stewart moved to approve the following actions pertaining to Rancho California Water District s (District) RES-BCT Solar Power Project. Director Herman seconded the motion, and discussion continued. 6.B Authorize the Interim General Manager to enter into a Solar Power Purchase Agreement (PPA), Site Agreement, and Interconnection Services Agreement with SunPower Corporation (SunPower) pursuant to Alternative No. 1, herein, with a modified PPA rate of $0.0785/kWh fixed over a 25-year term. 6.C Authorize an additional $450,000, increasing the project budget from $400,000 to $850,000 for the District s RES-BCT Solar Power Project (Project No. D1695). The proposed source of funds is 50 percent Rancho Division Debt Service/Capital Improvement Fund, 35 percent Santa Rosa Division Debt Service/Capital Improvement Fund, and 15 percent Wastewater Division General Fund, with possible reimbursement from future permanent financing. 6.D Approve an amendment to a professional services agreement with TerraVerde Renewable Partners, in the amount of $67,720 (increasing the contractual amount of the professional services agreement to $387,740), for Phase 2 consulting services, and approve an amendment to the professional services agreement with LSA Associates, in the amount of $14,595 (increasing the contractual amount of the professional services agreement to $63,565), for environmental consulting services. Director Drake expressed opposition to the subject project, citing he is not in favor of the usage of the land the District purchased, nor that the land is being utilized efficiently, and in regards to timing, the District needs to review its asset management plan with respect to usage of electricity for wells. He further opined that, if the District has contractors that it has a PPA with, it is expending monies that perhaps should be incurred by the contractors upfront. Director Stewart discussed why he supports the subject project, stating that this is a win-win opportunity for the District. Additionally, he explained that during the District s previous public hearing on the subject matter, no community comments were received. Furthermore, Director Stewart stated that it would be difficult to explain to his constituents the fact that the District has already spent $400,000 on the subject project and has only an additional $81,000 from creating a $20 million savings for RCWD and then vote against the subject item altogether. May 14, Board of Directors

13 Director Ziemer concurred with Director Stewart, stating that, given the amount of money that has been spent thus far versus the percentage of what is left to be spent and the potential for long-term savings, perhaps the Board may want to consider supporting the project. Director Plummer inquired on the agreement with the subject project contractor and potential changes that Southern California Edison (SCE) may impose. Responding, Chief Engineer Andrew Webster provided a brief explanation on SCE s RES-BCT tariffs. Following discussion, President Hoagland called for the question on the motion on the floor and it carried by the following vote: Aye: No: Absent: Abstain: Directors Herman, Hoagland, Plummer, Stewart, and Ziemer Directors Corona and Drake ITEM 8. CONSIDER APPROVAL OF APPROPRIATE PROCEDURE FOR REDISTRIBUTION OF SOIL MOISTURE DEVICES Senior Conservation/Water Use Efficiency Analyst Justin Haessly presented the Agenda item, which was discussed at the recent regular meeting of the Engineering and Operations Committee (Committee), whereby the Committee recommended the Board of Directors approve a hybridized version of staff s following alternatives: Distribute the devices to agricultural customers on a first-come, first-served basis. Develop a list of interested parties and distribute the devices based on equity among growing regions (i.e. half go to the avocado-growing region and the other half to wine-grape growers). ITEM 9. Director Stewart moved to approve a hybridized version of staff s aforementioned alternatives, as presented. Director Ziemer seconded the motion, and it carried unanimously. REVIEW AND CONSIDER ALTERNATIVE TIERED RATE STRUCTURE FOR RANCHO CALIFORNIA WATER DISTRICT S EXISTING AGRICULTURAL/DOMESTIC ACCOUNT STATUS Senior Conservation/Water Use Efficiency Analyst Justin Haessly presented the Agenda item, which was discussed at the April 30, 2015 regular meeting of the Engineering and Operations Committee (Committee), whereby the Committee recommended the Board of Directors (Board) change the policy for Agricultural (Ag)/Domestic account status, which basically raises the requirement for irrigated acreage for Ag status, and asked staff to provide the Board with information on how this particular policy change would affect existing customers. Utilizing a PowerPoint presentation, Mr. Haessly discussed the proposed changes to Rancho California Water District s (RCWD/District) Ag/Domestic accounts, stating that the property associated with an Ag/Domestic water service account must contain at least 3.5 acres of irrigated Ag to qualify for Ag account status. Additionally, he explained that May 14, Board of Directors

14 the Committee also directed to bring back information to the Board regarding the effect this policy change would have on customers whose accounts would be switched from Ag/Domestic to Domestic status and the potential affects this change would have on the gallons-per-capita-per-day data the District reports to the State Water Resources Control Board. Discussion ensued between the Board and staff with regard the irrigation specifications for Ag accounts. Aye: No: Absent: Abstain: Director Drake moved to approve the change in threshold from 1 acre to 3.5 acres irrigation for Agricultural accounts. Director Herman seconded the motion, and it carried by the following vote: Directors Drake, Herman, Hoagland, Plummer, and Ziemer Directors Corona and Stewart ADD-ON ITEM: DISCUSSION AND APPROVAL OF 2015 FINANCING TEAM Finance Manager Rick Aragon presented the Agenda item that was originally presented to the Finance and Audit Committee (Committee) at their adjourned regular meeting this week for Committee-level action; however, the Committee recommended moving the subject item on to the Board of Directors (Board) for approval to utilize the services of Bank of America Merrill Lynch, Stradling Yocca Carlson & Rauth, Fieldman Rolapp & Associates, Inc., and Bank of New York Mellon as the financing team to pursue a new financing issue for 2015 for refinancing of existing land-secured debt associated with Community Facilities Districts (CFD) and the Assessment District (AD). Director Corona moved to utilize the services of Bank of America Merrill Lynch, Stradling Yocca Carlson & Rauth, Fieldman Rolapp & Associates, Inc., and Bank of New York Mellon as the financing team to pursue a new financing issue for 2015 for refinancing of existing land-secured debt associated with CFDs and AD. Director Stewart seconded the motion, and discussion continued. Director Drake commented that he would like staff to conduct an evaluation on other consultants that offer this financial service so as to encourage a variety of contractors and bring this information back for review at a future Committee meeting. Following Director Drake s comments, President Hoagland called for the question on the motion on the floor, and it carried unanimously. May 14, Board of Directors

15 ITEM 10. 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 April 2015 B. Claims Activity Report for the Period Wednesday, April 1 through Tuesday, May 5, 2015 C. Information Items There being no discussion concerning the information items, President Hoagland moved on to the next order of business. ITEM 11. GENERAL COUNSEL S REPORT General Counsel Jim Gilpin briefly reported on a response to a request he received regarding reviewing the possibility of annexing a non-contiguous parcel of the Sundance Property (purchased by Rancho California Water District), whereby he stated that it is possible to do so with Board of Directors (Board) action. Should the Board wish to pursue this, it would require going through the Local Agency Formation Commission (commonly known as LAFCO) process. Mr. Gilpin will bring this matter back to the Board for proper consideration. ITEM 12. GENERAL MANAGER'S REPORT Referring to his written report, which was included in the meeting packet, Interim General Manager Jeff Armstrong reported that there is a lot of activity going on right now and he wanted to take this opportunity to thank staff for their diligent efforts in the process. ITEM 13. BOARD MEMBERS COMMENTS AND REPORTS Directors Plummer and Stewart, along with President Hoagland, reported on having attended a few sessions, including a gathering whereby Governor Edmund G. Brown was the speaker, held at the recent Association of California Water Agencies Spring Conference, which took place last week in Sacramento, California. Directors Herman and Ziemer reported on having participated in Best Best & Krieger s webinar presented by Kelly Salt regarding legal updates involving water agency rates. Director Ziemer further reported on recently purchasing a hot water recirculating pump and looks forward to seeing the water savings. Director Drake reported on having attended a couple of meetings. The first was a State Board of Food and Agriculture meeting/public forum in Fresno, California, whereby discussion involved the depleting levels of water in wells. The other meeting was a fundraising dinner for U.S. Congressman Ken Calvert. May 14, Board of Directors

16 President Hoagland reported on having attended a quarterly meeting with Riverside County water taskforce, whereby the discussion entailed restoration of the Delta. At this time, President Hoagland announced a 10-minute break to be followed by adjournment to closed session. ITEM 14. 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 (Per Government Code ) Property: Prado Reservoir Site (APN ) and Calle Paramo Reservoir Site (APN ). Property Negotiators: Jeff Armstrong, Interim General Manager; Rich Williamson, Assistant General Manager; Rick Aragon, Finance Manager; & Steve Tiritilli. Negotiating Party: Verizon Wireless. Under Negotiation: Price & Terms B. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) Shawn Bennett vs. Rancho California Water District, Case No. RIC C. PUBLIC EMPLOYEE PERFORMANCE EVALUATION Title: Interim General Manager (Per Government Code 54957) D. CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION Significant Exposure to Litigation (Per Government Code Section (c)) Three (3) Potential Cases E. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) United States vs. Fallbrook Public Utility District, Case No F. 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 G. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) Villanueva vs. Grossman, et al., Case No. RIC H. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) Rancho California Water District vs. Carollo Engineers, Inc. Case No. RIC I. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) In re Vail Lake Rancho California, LLC, Bankruptcy Court, Southern District of CA, Case No LA11 J. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) In re Vail Lake USA US Bankruptcy Court, Southern District of CA Case No LA11 K. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) In re Vail Lake Village & Resort US Bankruptcy Court, Southern District of CA Case No LA11 May 14, Board of Directors

17 L. CONFERENCE WITH LEGAL COUNSEL PENDING LITIGATION (Per Government Code (a)) Rancho California Water District vs. Kid Gloves, Inc., et al. The Board reconvened in open session at 12:45 p.m., whereby General Counsel Jim Gilpin announced that there were no reportable actions. ITEM 15. ADJOURNMENT There being no further business to come before the Board of Directors, the meeting adjourned at 12:45 p.m. Kelli E. Garcia, Secretary of the Board of Directors of the Rancho California Water District May 14, Board of Directors