REGULAR MEETING OF THE BOARD OF DIRECTORS The regular meeting of the Central Arizona Project ( CAWCD or CAP ) Board of Directors was called to order by President Lisa Atkins on, at 10:01 a.m. The meeting was held at the Central Arizona Project Headquarters Building, located at 23636 North Seventh Street, Phoenix, Arizona, in the Board Room. Secretary Sharon Megdal was present. Board members present were President Lisa Atkins, Maricopa County; Guy Carpenter, Maricopa County; Karen Cesare, Pima County; Frank Fairbanks, Maricopa County; Terry Goddard, Maricopa County; Jim Holway, Maricopa County (by teleconference); Pat Jacobs, Pima County; Mark Lewis, Maricopa County; Heather Macre, Maricopa County; Sharon Megdal, Pima County; Cynthia Moulton, Maricopa County; and Mark Taylor, Pima County. Jim Hartdegen, Pinal County; and Pamela Pickard, Maricopa County, were absent. Staff members present were Ted Cooke, General Manager; Tom McCann, Deputy General Manager, Operations & Maintenance; Jay Johnson, General Counsel; Jerry Lubash, Director, Finance & Administration; Suzanne Ticknor, Director, Water Policy; Chuck Cullom, Manager, Colorado River Programs; Patrick Dent, Manager, Water Control; David Johnson, Senior Attorney; Dennis Rule, Manager, CAGRD; Ken Seasholes, Manager, Resource, Planning & Analysis; and Bridget Schwartz-Manock, Director, Public Affairs. PLEDGE OF ALLEGIANCE TO THE FLAG, MOMENT OF SILENCE AND SAFETY MINUTE Director Macre led the Directors and public in reciting the pledge of allegiance to the flag of the United States of America and a moment of silence. Director Macre presented a Safety Minute on holiday foods that may be harmful to pets. RECOGNITION OF EMPLOYEES CELEBRATING SERVICE ANNIVERSARIES: 20 YEARS PHIL COOK; 30 YEARS STEVE HOUSTON, MIKE FINCH, JOHN ZEIGLER Mr. Cooke introduced two employees and thanked them for their years of service to CAP: Steve Houston, 30 years and Phil Cook, 20 years. Mike Finch and John Zeigler, both with 30 years of service, were unable to attend. President Atkins, on behalf of the Board, expressed appreciation for their service to CAP. RECOGNITION OF EMPLOYEES FOR AMWA GOLD AWARD FOR EXCEPTIONAL UTILITY PERFORMANCE The Board recognized and congratulated employees who were instrumental in meeting the criteria to receive the AMWA Gold Award for Exceptional Utility Performance.
Page 2 CONSIDERATION OF ACTION TO APPROVE ITEMS ON THE CONSENT AGENDA On a motion (Director Fairbanks) and a second, the Board approved the minutes of the October 6, 2016, Regular Meeting; approved the award of a contract to World Wide Technologies in the amount of $444,078 for the CISCO Smartnet license/maintenance agreement and authorized the General Manager, or his designee, to execute the agreement; approved the Member Service Area Agreement Between CAWCD and Southwest Environmental Utilities, L.L.C; and approved the Purchase and Sale Agreement between Del Webb Corporation and the Central Arizona Water Conservation District for Central Arizona Groundwater Replenishment purposes. : Oct 6, 2016 minutes; WWT contract; MSA agrmt w/ SW Enviro Utilities; Purchase/Sale agrmt w/ Del Web Corp CONSIDERATION OF ACTION TO APPROVE ITEMS REMOVED FROM THE CONSENT AGENDA REPORT OF PUBLIC POLICY COMMITTEE President Atkins reported that the Public Policy Committee met this morning and discussed CAP s draft proposed 2017 State and Federal legislative agendas. In the Board s review of the 2017 proposed state and federal legislative agendas, there was direction to staff to include residential rain barrel usage as part of CAP s legislative efforts to encourage water conservation in the state. REPORT OF FINANCE, AUDIT & POWER COMMITTEE Director Fairbanks reviewed topics that were discussed by the Finance, Audit & Power Committee at their October 20 meeting. Possible Consideration of Action to Approve Insurance Program and Captive Funding for Calendar Year 2017 On a motion (Director Fairbanks) and a second, the Board approved the funding for the 2017 calendar year insurance program in the amount of $10,033,260 of which $9,840,487 is funding for the Captive, CAWCD Insurance Co. 2017 calendar yr insurance program REPORT OF CAGRD & UNDERGROUND STORAGE COMMITTEE Director Megdal reviewed topics that were discussed by the CAGRD & Underground Storage Committee at their October 20 meeting. Possible Consideration of Action to Approve Amendments to Board Policies Regarding CAGRD On a motion (Director Megdal) and a second, the Board approved the following revised Board policies regarding CAGRD: 1. Policy on Inspection Standards and Retention Requirements for Water Provider Records Relating to CAGRD Annual Reports 2. Policy on Collection of CAGRD Annual Membership Dues 3. Policy on Dedication of Existing CAWCD Storage Credits to CAGRD Replenishment Reserve Possible Consideration of Action to Approve Standard Form Documents for CAGRD Member Land Enrollment and Proposed Amendments On a motion (Director Megdal) and a second, the Board approved the Revised Standard Form Documents for CAGRD Member Land Enrollment. Revisions to Board policies regarding CAGRD Revised Standard Form Documents for CAGRD Member Land Enroll
Page 3 REPORT ON, DISCUSSION AND CONSIDERATION OF ACTION TO ADOPT MODIFICATIONS TO THE CAWCD POLICY REGARDING THE TRANSFER OF CAP M&I SUBCONTRACT ALLOCATIONS Mr. David Johnson reviewed the history and purpose of the original Policy Regarding the Relinquishment and Transfer of CAP M&I Subcontract Allocations and summarized the discussion that took place at the September 1 Board meeting concerning the proposed policy change. Mr. Johnson mentioned that following the September 1 Board meeting, staff made changes to the proposed policy. Under the revised policy, staff propose to continue to provide reimbursement to CAGRD for any back capital charges the CAGRD paid under the current policy if CAGRD is required to relinquish an entitlement pursuant to the terms of its supplemental contract. On a motion (Director Fairbanks) the Board approved the amended CAWCD Policy Regarding the Relinquishment and Transfer of CAP M&I Subcontract Allocations. Director Lewis voted against the motion. CAWCD Policy Re Relinquishment & transfer of CAP M&I Subcontract Allocations REPORT ON 2017 WATER ORDERS AND CAP ANNUAL OPERATING PLAN Mr. Dent reported on 2017 water orders received from customers in October. CAP staff will review the orders and make determinations about the water supply and size of excess contracts that may be available in the coming year. REPORT ON COLORADO RIVER CONDITIONS Mr. Cullom reviewed the Colorado River Water Supply report as of October 24, 2016, and the precipitation patterns in the upper basin for September. UPDATE ON DROUGHT CONTINGENCY PLANNING Ms. Ticknor reported that discussions concerning the draft proposal continued through October. The groups are working to refine the draft proposal and make progress towards a final product. UPDATE ON DRAFT SYSTEM USE AGREEMENT President Atkins mentioned that Board members received a copy of the draft System Use Agreement earlier this week via email. She thanked Ted Cooke and Suzanne Ticknor for their leadership role in developing the agreement and other staff members for their involvement in this process. Mr. Seasholes outlined differences between earlier versions and the current draft agreement. He also described changes that have been made in terminology. A CAP stakeholder meeting will be scheduled in the near future to receive comments. UPDATE ON MINUTE 32x TO THE MEXICAN TREATY Ms. Ticknor briefed the Board on negotiations between the U.S. and Mexico to develop Minute 32x to the Mexican Treaty, a successor agreement to Minute 319 which expires at the end of 2017. Ms. Ticknor discussed benefits that are currently in place under Minute 319. REPORT ON DESALINATION PROJECTS IN THE SOUTHWESTERN U.S. AND MEXICO Mr. Cullom reviewed how desalination works. He also gave a status report of plants that are operating, planning to be operated or under development in the southwestern region of the U.S. and northern Mexico. Mr. Cullom presented an overview of three plants that are critical to understanding how the future of desalination may unfold in this region.
Page 4 REPORT ON LEGAL MATTERS Mr. Jay Johnson updated the Board on the New Mexico unit of the Central Arizona Project. He reviewed the implications from a water perspective to CAP should this unit ever be built. Mr. Johnson also discussed the financial effects on the development fund if the money to build the unit is withdrawn. DIRECTORS' REPORTS ON CURRENT EVENTS Directors reported on various meetings and events they attended. FUTURE AGENDA ITEMS Suggestions for future agenda topics were given by various Directors. PRESIDENT'S REPORT ON CURRENT EVENTS President Atkins reviewed current events and future meeting dates. President Atkins reported that the Stakeholder Discussion Meeting about CAP Finances will be held on November 17 at CAP. GENERAL MANAGER'S REPORT ON CURRENT EVENTS Mr. Cooke reviewed items that will appear on the December Consent Agenda and also reported on current events. PUBLIC COMMENT CONSIDERATION OF ACTION TO GO INTO EXECUTIVE SESSION OF THE BOARD By unanimous consent, the Board convened in Executive Session at 12:55 p.m. for the following purposes: Pursuant to A.R.S. 38-431.01.A.1 and A.4, to discuss and consider the employment of an Internal Audit Manager for the District; and Pursuant to A.R.S. 38-431.03.A.3 and.a.4 to consult with the attorneys for the District and consider the District's position and instruct its attorneys regarding potential water supply acquisitions; and Pursuant to A.R.S. 38-432.03.A.3 and A.4, discussion and consideration for legal advice and to consider its position and instruct the District s attorneys regarding negotiation of terms of agreements relating to drought contingency; and Pursuant to A.R.S. 38-432.03.A.3 and A.4, discussion and consideration for legal advice and to consider its position and instruct the District s attorneys regarding negotiation of the system use agreement; and Pursuant to A.R.S. 38-432.03.A.3 and A.4, discussion and consideration for legal advice and to consider its position and instruct the District s attorneys regarding negotiation of terms of agreements relating to Minute 32x to the Mexican Treaty; and Pursuant to A.R.S. 38-432.03.A.3 and A.4, discussion and consideration for legal advice and to consider its position and instruct the District s attorneys regarding negotiation of terms of agreements relating to recovery; and Pursuant to A.R.S. 38-432.03.A.3 and A.4, discussion and consideration for legal advice and to consider its position and instruct the District s attorneys regarding negotiation of terms of agreements related to potential power transactions; and Pursuant to A.R.S. 38-431.03.A.3 to obtain legal advice from the District's attorneys on any matter listed on the agenda The Board reconvened in open session at 3:25 p.m.
Page 5 CONSIDERATION OF ACTION TO SELECT AN INTERNAL AUDIT MANAGER On a motion (Director Fairbanks) and a second, the Board granted the Chair of FAP Committee the authority to offer Mr. Ramon Ramirez the position of auditor, upon completion of a full security check and within normal salary guidelines of the CAWCD. Hiring of Ramon Ramirez for Internal Audit Mgr position CONSIDERATION OF ACTION REGARDING ITEMS DISCUSSED IN EXECUTIVE SESSION There being no further business to come before the Board, the meeting adjourned at 3:27 p.m. Sharon B. Megdal Sharon B. Megdal, Secretary