VALLEY CENTER MUNICIPAL WATER DISTRICT

                                                                            Adjourned Regular Board Meeting

                                                                            Monday, August 27, 2007

                                                                            Time:      2:00 P.M.

                                                                            Place:     Board Room

                                                                                            29300 Valley Center Road

                                                                                            Valley Center, CA  92082

The Valley Center Municipal Water District Board of Directors’ meeting was called to order by President Broomell at 2:00 P.M.

ROLL CALL

Board members present were:  Directors Broomell, Polito, Aleshire, Stone and Haskell.  Staff members present were:  General Manager Arant, General Counsel Akins, Director of Finance Jeffrey, District Engineer Grabbe, Director of Operations Hoyle, Board Secretary Stetson, and IT Specialist Learue. Spectators present were:  Mr. Larry Slominsky and Mr. Todd Gibbs.

ACTION AGENDA

1.         Approval of California Power Purchase Agreement and Lease Agreement with Solar Power Partners:

            The California Solar Energy Power Purchase Agreement and Lease Agreement by and between Solar Power Partners Fund and the Valley Center Municipal Water District for a solar energy project at the District’s Lake Turner site and Betsworth Pumping Station had been reviewed during the Board meeting of August 20^th.  The agreements had been forwarded to the Board for review and a summary analysis provided, as follows:

Solar Power Partners (SPP):

►  Pays for all the environmental review, design, permits and construction. VCMWD will review plans and has the right to inspect construction to ensure conformance with the approved plans.

►  Provides bonding for all construction and full liability insurance during construction and the operation period.

►  Owns and assumes all costs of operating and maintaining the system under contract with World Water and Solar Technologies.

►  Is responsible for security of the system.

►  Provides a system performance guarantee to keep VCMWD financially whole with cash payments to VCMWD if solar production falls below a certain level of power production and the District has to buy more power from the grid.

►  Deposits a cash set aside of $100,000 deposited in an interest accumulating account to guarantee the removal of the system at the end of the 20 year agreement if VCMWD decides not to purchase and SPP decides not to continue the agreement.

Valley Center Municipal Water District:

►  Agrees to buy all the power SPP can produce at a starting rate of 8.5 cents per KWh, with a 3% annual inflation rate (currently the District pays approximately 9.5 cents per KWh for power at Betsworth).

►  Will be able to, on limited occasions, “net meter” solar power it cannot use back to SDG&E; i.e., excess electricity will be fed back through the meter to the grid, with the District saving the difference between the full retail value paid to SDG&E and the amount paid to SPP through the power purchase agreement. Legislation (SB 451) is pending which, if enacted into law, would actually allow the District to sell excess solar power back to SDG&E.

►  Has ownership of all the Renewable Energy Credits (Recs), which may be sold with some economic value now, but will likely have a greater value in the future as Green House Gas Emission Offsets for the District.

►  Has first right of refusal if SPP wants to sell off our specific system.

►  Has the option of buying the system at fair market value at the end of the 20 year agreement, or having SPP remove the system if they choose not to continue operating the system.

            The application submitted to the Regional Energy Office and the agreement with Solar Power Partners is for a minimum base line of 803 kWh dc capacity as well as the potential for build-out of the system to 1194 kWh dc (1 megawatt net output), which is subject to approval by system owner and the District.  The “Expected Annual kWh” or the amount of electricity expected to be produced by the system in a year is outlined on the attached labeled Attachment 1.

            Definitions contained in the agreement and calculation of actual kWh output were reviewed.  Actual annual insolation is the annual daily average insolation level in units of kWh/m2/day measured.  Data used to calculate the solar energy project’s expected production is from NASA and NOAH which includes the daily collected data of the average amount of available energy resource in Valley Center as well as the performance guarantee level that is at 85%.

            Upon adoption of the Solar Energy Power Purchase Agreement and Lease Agreement with Solar Power Partners, the environmental review process for the solar energy project will be initiated.

            Upon motion by Stone, seconded by Aleshire and unanimously carried, the following resolution, entitled:

RESOLUTION NO. 2007-36

RESOLUTION OF THE BOARD OF DIRECTORS

OF THE VALLEY CENTER MUNICIPAL WATER DISTRICT

APPROVING A SOLAR ENERGY POWER PURCHASE

AGREEMENT AND LEASE AGREEMENT BY AND BETWEEN

SOLAR POWER PARTNERS FUND I, LLC AND

THE VALLEY CENTER MUNICIPAL WATER DISTRICT

AND AUTHORIZING THE GENERAL MANAGER TO SIGN

            was adopted by the following vote, to wit:

            AYES:            Directors Broomell, Aleshire, Stone and Haskell

            NOES:           None

      ABSENT:            None

     ABSTAIN:            Director Polito

ADJOURNMENT

2.       Upon motion by Aleshire, seconded by Stone and unanimously carried, the meeting was adjourned at 2:45 p.m.

ATTEST:                                                             ATTEST:

____________________________               _______________________________

                   President                                                            Secretary