GUADALUPE-BLANCO RIVER AUTHORITY. Minutes of the Board of Directors

GUADALUPE-BLANCO RIVER AUTHORITY Minutes of the Board of Directors The Board of Directors of the Guadalupe-Blanco River Authority met in a regular monthly meeting on April 18, 2001, at the Guadalupe-Blanco River Authority offices, 933 East Court Street, Seguin, Guadalupe County, Texas. Directors present were Pamela M. Hodges, Stephen F. Wilson, DVM, Frederick Schlather, John P. Schneider, Jr., Catherine McHaney, Kathleen Devine, Anne Cooper, and William A. Blackwell. Director Ashley Turberville was absent. Also present were W. E. West, Jr., General Manager; Fred M. Blumberg, Deputy General Manager; David Welsch, Director of Project Development; Alvin Schuerg, Director of Accounting and Finance; John Smith, Operations Manager- Upper Basin; Bryan Serold, Operations Manager-Lower Basin; Gary Asbury, Manager of Project Engineering; Tommy Hill, Chief Engineer; Debbie Magin, Director of Water Quality Services; Dr. Todd H. Votteler, Director of Water Policy; Renee' Tuggle, Customer Representative and Economic Development Manager; Judy Gardner, Manager of Education and Communications; Rose DeJardo, Human Resource Manager; Cricket Dietert, Executive Assistant; Connie Rothe, Board Relations; Kathy Rutledge, Engineering and Water Quality Assistant; Darel Ball, Plant Manager-San Marcos Water Treatment Plant; Roger Nevola, legal counsel; Bruce Wasinger, legal counsel with Bickerstaff, Heath, Smiley, Pollan, Kever, and McDaniel, L.L.P.; Terry Dudley representing Pape-Dawson; David Wheelock, representing HDR Engineering; Lee Bright and R. G. MacDiarmid, representing Chesney Morales and Associates, Inc.; Stan Scott representing Kendall County Utility Company; Dale Yates representing Canyon Lake Water Supply Corporation; Tom Koch a consulting engineer; Craig Hines representing Canyon Regional Water Authority; Patrick Linder, legal counsel for Tapatio Springs Service Company; Cal Perrine representing Southern Trinity Groundwater Conservation District; David Wallace representing Water Services, Inc.; Chris and David Hill representing Cordillera Ranch; Tessye Mauner representing Tamiga Aexes; and Bryan Kirk representing The Seguin Gazette-Enterprise. The meeting was called to order at 10:15 a.m., by Chair Hodges who took note of the certifications presented by the General Manager that notice of the meeting had been properly posted in the office of the Secretary of State, in the Guadalupe County Courthouse, and at the business offices of GBRA in Seguin, Texas, pursuant to Title 5, Chapter 551 of the Government Code. A quorum being present, the following proceedings were had: Chair Hodges welcomed the guests. The Chair called for approval of the March 21, 2001, Board meeting minutes. Director Wilson noted a correction to the minutes. An addition to the minutes on page 152 regarding Action Item 1 - "Consideration of and possible action authorizing the General Manager to structure an arrangement to assist the City of Cuero with water and/or wastewater improvements" to include "The Board discussed the possible structure of assistance to the City to be in the form of a grant and/or loan. The General Manager will meet with the Cuero Industrial Foundation, discuss the structure of a grant and/or loan, and provide information to the Board of Directors". Director Cooper also noted a correction on page 155 for Discussion Item 3 - "Discussion regarding Kendall County Resource Stewardship Project." The sentence "The Kendall County Resource Stewardship Program was commissioned by GBRA to assist public entities recognize and address the potential impact on water and other natural resources as a result of rapid growth in the Hill County." was corrected to read "The Kendall County Resource Stewardship Program was commissioned by GBRA to assist public entities in recognizing and addressing the potential impact on water and other natural resources as a result of rapid growth in the Hill County." Director Schneider moved approval of the minutes. Director McHaney seconded the motion, whereupon the minutes, as amended, were approved by all Directors present voting and in favor

thereof and in open meeting signed. The Chair called for Consent Items from the Chair 1 - "Consideration of and possible action approving Directors' expense vouchers." Upon motion by Director Blackwell, seconded by Director Schlather, the Board unanimously approved Directors' expense vouchers. The Chair then called for Consent Items from the Chair 2 - "Consideration of and possible action approving a Proclamation in observation of Drinking Water Week May 6-12, 2001." Upon motion by Director McHaney, seconded by Director Cooper, the Board unanimously approved the Proclamation. A copy of the Proclamation is attached and made a part of these minutes. Next, the Chair called for Consent Items from the Chair 3 - "Consideration of and possible action approving a Proclamation in observation of Water Utility Awareness Week May 6-12, 2001." Upon motion by Director Devine, seconded by Director Wilson, the Board unanimously approved the Proclamation. A copy of the Proclamation is attached and made a part of these minutes. The Chair called for Consent Items from the GBRA Staff 1 - "Consideration of and possible action approving the monthly financial report for March 2001." The Board was briefed on financial report. Upon motion by Director Schlather, seconded by Director Blackwell, the Board unanimously approved the monthly financial report. The Chair then called for Consent Items from the GBRA Staff 2 - "Consideration of and possible action approving the monthly operations report for March 2001." Discussion was had regarding activities at the Salt Water Barrier, log jams, and access to the river. The Board was also briefed on activities at the Victoria Regional Wastewater Reclamation System and the San Marcos Water Treatment Plant. Upon motion by Director Schneider, seconded by Director Cooper, the Board unanimously approved the monthly operations report. Next, the Chair called for Action Item 1 - "Consideration of and possible action authorizing the General Manager to engage auditors for fiscal year 2001 financial audit and Canyon Hydroelectric Division filings with the Public Utility Commission." An annual financial audit is required by Section 7 of GBRA's Enabling Act, Section 49.191 of the Texas Water Code, and the provisions of numerous bond resolutions. The firm of Padgett, Stratemann and Company, LLP has audited GBRA's financial records for the past three years. GBRA's staff discussed the firm's past performance with the Audit Committee on March 21, 2001. Upon motion by Director Schlather, seconded by Director Devine, the Board unanimously adopted the Audit Committee's recommendation and authorized the General Manager to engage Padgett, Stratemann and Company, LLP for the fiscal year 2001 financial audit and Canyon Hydroelectric filing with the Public Utility Commission. A copy of the engagement letter is attached and made a part of these minutes. The Chair called for Action Item 2 - "Consideration of and possible action authorizing the General Manager to execute an Agreement for Raw Water Service with the City of Blanco, Texas." Fred Blumberg briefed the Board on contract negotiations with the City of Blanco. The City of Blanco has had serious and continual problems with its water supply during dry periods. The City owns and operates a surface water plant that treats water from a channel reservoir on the Blanco River. When the flow in the river stops, the City is dependent on the water left in the reservoir. The City of Blanco has requested a 600 acre-feet/year contract for water from Canyon Reservoir. The City is located outside the GBRA District, but inside the Guadalupe River basin. All return flows will return to the basin. Discussion was had relative to various sections of the agreement. GBRA staff will continue to work with the City of Blanco regarding financing of the pipeline to provide water to the City. The Board

commended the GBRA staff for the extra efforts made in assisting the City of Blanco with their water problems. This agreement is predicated on GBRA obtaining its amendment to the Canyon Reservoir Certificate of Adjudication. Upon motion by Director Schneider, seconded by Director Blackwell, the Board unanimously authorized the General Manager to execute an Agreement for Raw Water Service with the City of Blanco. A copy of the Agreement is attached and made a part of these minutes. The Chair called for Action Item 3 - "Consideration of and possible action authorizing the General Manager to execute a Contract for Raw Water Service with the Canyon Lake Water Supply Corporation." Fred Blumberg briefed the Board on contract negotiations with Canyon Lake Water Supply Corporation. Dale Yates with Canyon Lake Water Supply Corporation was introduced to the Board. Canyon Lake Water Supply Corporation (CLWSC) currently operates one water treatment plant at Canyon Lake and is constructing a second plant. CLWSC currently has a contract for 2,000 acrefeet/year for direct diversion from the Lake. CLWSC is requesting a contract for an additional 2,000 acre-feet/year predicated on GBRA obtaining its amendment to the Canyon Reservoir Certificate of Adjudication. The additional water will be used for CLWSC retail customers within GBRA's district. Upon motion by Director Devine, seconded by Director Cooper, the Board unanimously authorized the General Manager to execute a Contract for Raw Water Service with Canyon Lake Water Supply Corporation. A copy of the Contract is attached and made a part of these minutes. Next, the Chair called for Action Item 4 - "Consideration of and possible action approving amendments to the Basis of Design Report dated June 2000, for the Regional Water System for Portions of Comal, Kendall, and Bexar Counties (the Western Canyon Regional Treated Water Supply Project), including consideration of and possible approval of selection of a water treatment plant site, routes for a raw water line and treated water delivery system; and consideration of and possible action of alternative intake structures and other design criteria." David Welsch briefed the Board on proposed amendments to the Basis of Design Report and progress on the Western Canyon Regional Treated Water Supply Project. On May 17, 2000, the GBRA Board of Directors approved the Basis of Design Report for the Western Canyon Regional Treated Water Supply Project. This report describes the facility plans for the intake structure, raw and treated water delivery system and delivery points; defines the treatment process and identifies plant site alternatives. GBRA staff and consultants have continued to evaluate alternatives and refine the facility plans. A meeting of the Project Management Committee was held April 12, 2001. Among the items for discussion and recommendation were consideration of an alternative intake structure, refinement of the raw and treated water delivery system and pipeline route and delivery points, and selection of a primary plant site alternate. Upon motion by Director Devine, seconded by Director Schneider, the Board unanimously approved amendments as presented to the Basis of Design Report dated June 2000, for the Regional Water System for Portions of Comal, Kendall, and Bexar Counties (the Western Canyon Regional Treated Water Supply Project), including approval of selection of a primary water treatment plant site alternative, routes for a raw water line and treated water delivery system and delivery points, and an alternative intake structure located within Comal Park and other design criteria. A copy of the amendments to the Basis of Design Report are attached and made a part of these minutes. The Chair called for Action Item 6 -"Consideration of and possible action approving a Resolution by the Guadalupe-Blanco River Authority ("GBRA") declaring a public necessity for the acquisition of certain water pipeline easements and temporary construction easements and certain fee purchases for a water treatment plant and other system related facilities for the Regional Water System for portions of Comal, Kendall, and Bexar Counties, also called the Western Canyon Regional Treated Water Delivery Project or System in connection therewith, over, across, upon private property and public property and beginning at a point adjacent to Canyon Lake in the vicinity of "Comal Park" on the southwest side of Canyon Lake and continuing southwesterly to Startzville and crossing Farm to Market (FM) 2673 at a point near FM 3159, and following

along FM 3159 in southwesterly direction to a water treatment plant in the vicinity of Crane's Mill Road and Key Road and continuing from said water treatment plant along FM 3159 to the intersection of State Highway (SH) 46, then westerly along SH 46 to a bifurcation with an auxiliary line. The auxiliary line continues westerly along SH 46 to the intersection with SH 281. The main line continues south along Stahl road to an intersection with a Lower Colorado River Authority (LCRA) electric transmission line and turning westerly and following along said line, to a bifurcation with an auxiliary line turning southerly and somewhat parallel and on the east side of SH 281 to the intersect with FM 1863. The auxiliary line continues westerly along FM 1863 to a point approximately one mile west of SH 281, then turning southerly and intersecting and running somewhat parallel to the Old Bulverde Road at the south side of Cibolo Creek, and continuing to a point near SH 281 in Bexar County approximately three miles south of Cibolo Creek. The main line continues along said LCRA electric line to FM 3351. At FM 3351 a bifurcation provides an auxiliary line continuing North somewhat parallel and adjacent to FM 3351 to a point approximately one mile west of Bergheim at SH 46. The main line continues southwest along FM 3351 to point in Comal County where an auxiliary line continues southerly to a point north of Cibolo Creek with the main line continuing westerly on the north side of Cibolo Creek into Kendall County to a point east of IH 10, and an auxiliary line continuing southerly to a point south of Cibolo Creek and west of IH 10 as shown on the map, Exhibit "A", as attached hereto; for the public purpose of the construction, operation, and maintenance of a raw and treated water pipeline to be constructed as provided for in the Basis of Design Report dated June 2000, for the Regional Water System for portions of Comal, Kendall and Bexar Counties, also called the Western Canyon Regional Treated Water Delivery Project or System and described in certain contracts by and between the Guadalupe-Blanco River Authority and the City of Boerne, City of Fair Oaks Ranch, San Antonio Water System, Bexar Metropolitan Water District and San Antonio River Authority, and authorizing all appropriate action by the General Manager, staff and retained attorneys, and engineering and technical consultants, in the institution and prosecution of condemnation proceedings to acquire any such needed fee purchases and easements and temporary construction easements and related rights of ingress and egress that cannot be acquired through negotiation; ratifying and affirming all acts and proceedings heretofore done or initiated by employees, agents and attorneys of GBRA to acquire such property interests; authorizing all other lawful action including the making of archaeological, environmental and linear surveys necessary and incidental to such acquisitions whether by purchase or eminent domain proceedings; declaring the sections of the Resolution to be severable one from the other in the event any section of this Resolution is determined to be invalid. The raw and treated water pipeline easements and temporary construction easements in connection therewith, over, across, upon and under certain properties located within portions of the abstracts and surveys are described in Exhibit "B" hereto and made a part hereof for all purposes and further directing and authorizing the General Manager, staff and retained attorneys to institute and prosecute to conclusion all necessary proceedings to condemn the property interests described herein and to acquire all such interests that GBRA is unable to acquire through negotiation by reason of its inability to agree with the owner thereof as to the damages to the landowner, and to take any other legal action necessary and incidental to such purchases or eminent domain proceedings to survey for archaeological, environmental and linear purposes to define, specify and secure such property interests and conferring all acts and proceedings done or initiated by the employees, agents and attorneys of GBRA or the acquisition of such property." David Welsch briefed the Board on the Western Canyon Treated Water Supply Project. All Notice of Open Meeting posting requirements for this portion of the Project have been met. Kathy Rutledge was recognized for her work on the Project. There are approximately 275 landowners affected by the Project. The GBRA Board of Directors approved a Resolution on May 17, 2000, that authorized the General Manager, staff, and consultants to proceed with activities necessary to define the facility plans for the Western Canyon Regional Treated Water Supply Project. Additional work has been conducted by GBRA staff and

consultants to further define the rights-of-way and fee acquisition needs. The firm of Pape-Dawson Engineers, in cooperation with HDR Engineering and Malcolm Pirnie, Inc., has assisted in the development of ownership maps, established control, and performed on-site surveys of the potential plant site. Aerial photography was developed further refining the rights-of-way needs and delivery points. Additional "low level" photography is presently underway for use in pipeline design. The project maps are available for inspection. Upon motion by Director Schlather, seconded by Director McHaney, the Board unanimously approved a Resolution declaring a public necessity for the acquisition of certain water pipeline easements and temporary construction easements and certain fee purchases for a water treatment plant and other system related facilities for the Regional Water System for portions of Comal, Kendall, and Bexar Counties, also called the Western Canyon Regional Treated Water Delivery Project or System in connection therewith. A copy of the Resolution is attached and made a part of these minutes. Next, the Chair called for Action Item 7 - "Consideration of and possible action approving treated water supply agreements between the Guadalupe-Blanco River Authority and Water Services, Inc.; the Guadalupe-Blanco River Authority and Cordillera Ranch LTD; and the Guadalupe- Blanco River Authority and Kendall County Utility Company and Tapatio Springs Service Company for delivery of a treated water supply from the Regional Water System for portions of Comal, Kendall, and Bexar Counties (the Western Canyon Regional Treated Water Supply Project)." David Welsch briefed the Board on the Project and presented an overview of each contract. The Board previously approved contracts with the City of Boerne, City of Fair Oaks Ranch, San Antonio Water System, Bexar Metropolitan Water District, and the San Antonio River Authority. GBRA is working to finalize contracts with in-district municipal and non-municipal customers, and to obtain certificates of convenience and necessity to provide retail water and wastewater service in the vicinity of the Project delivery system. Water Services, Inc., and Kendall County Utility Company and Tapatio Springs Service Company are in-district customers that are purchasing treated water available under the 10 percent of project capacity limitation. The 10 percent provision relates to the portion of a project that can be committed to non-municipal customers and still maintain a tax-exempt status for the sale of debt. Cordillera Ranch, LTD will be a customer of GBRA under a Certificate of Convenience and Necessity in the name of GBRA that provides for Cordillera Ranch to construct all facilities within the Cordillera development under GBRA supervision and deed them to GBRA for operation. The point of delivery of water to each potential customer was identified in the amendment to the Basis of Design Report. Patrick Linder, legal counsel for Kendall County Utility Company and Tapatio Springs Service Company, addressed the Board requesting an alternate a point of delivery for Kendall County Utility Company and Tapatio Springs Service Company in lieu of the common delivery point with the City of Boerne. Mr. Linder thanked GBRA for their assistance with the project and making water available to the citizens. The staff recommendation based on engineering review of the design, construction and operating costs associated with the respective delivery points, which was reviewed by the Project Management Committee, is to deliver water to Kendall County Utility Company and Tapatio Springs Service Company at the common delivery point with the City of Boerne. Upon motion by Director Schlather, seconded by Director Schneider, the Board unanimously approved treated water supply agreements between the Guadalupe-Blanco River Authority and Water Services, Inc.; the Guadalupe- Blanco River Authority and Cordillera Ranch LTD; and the Guadalupe-Blanco River Authority and Kendall County Utility Company and Tapatio Springs Service Company for delivery of a treated water supply from the Regional Water System for portions of Comal, Kendall, and Bexar Counties (the Western Canyon Regional Treated Water Supply Project) in substantial conformance with the contracts presented to the Board. The delivery point to Kendall County Utility Company and Tapatio Springs Service Company will be the common point with the City of Boerne as described in the proposed contract. The staff agreed to continue to work with the Project Management Committee and Kendall County Utility Company and Tapatio Springs Service Company to evaluate alternative delivery points.

The Chair then called for Action Item 5 - "Consideration of and possible action approving connection fees for the Regional Water System for portions of Comal, Kendall, and Bexar Counties (the Western Canyon Regional Treated Water Supply Project)." David Welsch briefed the Board on the Western Canyon Treated Water Supply Project and connection fees. Upon motion by Director Schlather, seconded by Director Schneider, the Board unanimously approved connection fees for the Regional Water System for portions of Comal, Kendall, and Bexar Counties (the Western Canyon Regional Treated Water Supply Project. A copy of the connection fee schedule is attached and made a part of these minutes. The Chair called for Discussion Item 1 - "Discussion regarding Base Flow Report, Water Quality Index, and condition of the Guadalupe Basin." The reports were discussed with the Board. Next, the Chair called for Discussion Item 2 - "Local area news articles and related material." Discussion was had regarding various news articles. The Chair then called for Discussion Item 3 - "Discussion regarding Sunilandings Subdivision located in Port Alto, Calhoun County, Texas." Bryan Serold briefed the Board on the subdivision. The owners have sold the facilities to QMS of New York. QMS operates several package plants at rest areas and other similar type facilities. GBRA staff will continue to provide assistance to the community as requested. The Chair called for Discussion Item 4 - "Status report regarding grant funding of the October 1998 flood costs." Alvin Schuerg briefed the Board regarding the flood costs. The Guadalupe River Basin flood of October 1998 caused considerable damage to GBRA facilities and deposited a considerable amount of debris in the river. Since the flood, GBRA has worked with the Federal Emergency Management Agency (FEMA) and the Texas Division of Emergency Management (DEM) to fund repairs to GBRA facilities. GBRA has also worked with the USDA Natural Resource Conservation Service (NRCS) to fund debris removal projects from the Guadalupe River. FEMA, DEM, and NRCS have completed all field audits. Funding of the final four FEMA projects is still outstanding. GBRA anticipates receiving an additional $582,279.06 of grant funds for these last four projects. During March 2001, GBRA received $1,120,793.19 of FEMA grant funds for eight projects located at the Victoria Wastewater Plant. A portion of these funds was utilized to payoff the flood loan GBRA received to assist with flood costs. The Chair called for Discussion Item 5 - "Discussion regarding proposed amendments to the contracts with Canyon Regional Water Authority related to its Lake Dunlap Water Treatment Plant." Fred Blumberg briefed the Board on the proposed amendments to the contracts. Canyon Regional Water Authority (CRWA) has requested two amendments to the October 13, 1998, contract. The first amendment would allow CRWA to divert Canyon Reservoir water at its Lake Dunlap Water Treatment Plant. There are two basic components to the Contract which are (a) 2,350 acre-feet/year for in-district use terminating on December 31, 2039, and (b) 5,200 acre-feet/year for out-of-district use terminating on December 31, 2018 with 4,000 acre-feet/year for Bexar Metropolitan Water District, 1,100 acre-feet/year for East Central Water Supply Corporation, and 100 acre-feet/year for Green Valley Supply Utility District. CRWA would like the 5,200 acre-feet/year to be extended to 2025, or at least 2020. CRWA is willing to leave the termination date at 2018, if GBRA amended the contract to provide use of the 5,200 acre-feet/year by CRWA's in-district customers. CRWA's demand projections show the need for an additional 4,689 acre-feet/year of Canyon Reservoir water in 2020. That leaves approximately 511 acre-feet/year unused by CRWA. The second amendment to the contract is Bexar Metropolitan Water District has requested to add a "second, temporary" diversion point at Canyon Lake for 485 acre-feet/year of its 4,000 acre-feet/year allocation. Additional information has been requested to clarify some questions. GBRA staff will present this item for approval pending clarification on various

issues. Next, the Chair called for Discussion Item 6 - "Discussion regarding GBRA's "Our Day to Shine" in Cuero, Texas, March 24, 2001." Connie Rothe made a presentation on GBRA's "Our Day to Shine" workday in Cuero. This project was a success due to the overwhelming support of many GBRA employees. The Board commended Connie Rothe and the employees for their participation in the project. The Chair called for Items from the General Manager 1 - "Discussion regarding Senate Bill 1 planning, proposed Senate Bill 2, and water resource issues." General Manager West briefed the Board on activities of the South Central Texas Regional Water Planning Group, funding for Amicus Curiae Brief from the Texas Water Conservation Association to assist GBRA with a case, and a Texas Rural Water Association summary of water-related legislation. The Chair then called for Items from the General Manager 2 - "Discussion regarding the 77 th Legislative Session and interim study committees." The Board was briefed on Senate Bill 1335, redistricting activities, and legislative activities. Next, the Chair called for Items from the General Manager 3 - "Discussion regarding the Edwards Aquifer Authority and South Central Texas Water Advisory Committee." The Board was briefed on the Edwards Aquifer Authority Board activities and the Habitat Conservation Plan. The Chair called for Items from the General Manager 4 - "Discussion regarding the 35 th Annual Texas Legislative Conference held in New Braunfels, Texas, February 22-23, 2001." A brief overview of the Conference was presented to the Board. Director Devine served as the Chair of the Arrangements Committee for the Conference. Next, the Chair called for Items from the General Manager 5 - "Discussion regarding the National Water Resources Association 2001 Federal Water Seminar in Washington, D.C., April 4-6, 2001." Director Schneider briefed the Board on the Seminar and meetings with Congressmen and Senators. GBRA is well received in Washington, D.C. The Chair then called for Items from the General Manager 6 - "Discussion regarding Texas Ethics Commission Financial Disclosure Statement. Forms are to be submitted by April 30, 2001, to the Texas Ethics Commission and a copy of the form to GBRA for file." The Board was reminded to submit their forms to the Texas Ethics Commission by April 30, 2001. The Chair recessed the meeting at 1:00 p.m. The Chair convened the meeting in Executive Session at 1:05 p.m. The meeting reconvened in open session at 3:20 p.m. There being no further business to be brought before the Board, the meeting was adjourned, subject to call by the Chair. Chair

Secretary