June 18, 2001

Regular Board Meeting

Monday, June 18, 2001

Time: 2:00 P.M.

Place: Board Room

29300 Valley Center Rd.

Valley Center, CA 92082

The Valley Center Municipal W ater District Board of Directors’ meeting was called to order by

President Broomell at 2:00 P.M.

Board members present were: Directors Broomell, Armstrong, Polito, Aleshire and Stone. Staff

members present were: General Manager Arant, General Counsel Cowett, District Engineer

Jewell, Director of Finance Jarrell, Director of Operations Dacus, and Board Secretary Stetson.

Spectators present were: Mr and Mrs. Davis, Messrs. Groh and Shaw, Mrs. Mason and Mr. Ross,

Valley Roadrunner Newspaper.

1. Clarification of Statements Contained in Roadrunner Newspaper’s Guest Opinion:

Mr. Keith Davis addressed the Board stating that he wished to provide clarification as

requested by General Manager Arant concerning statements contained in the Guest

Opinion he wrote which was in the Valley Roadrunner Newspaper’s June 13

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on proceeding with discussions and contract negotiations with California Power Partners

or securing additional alternative proposals. The memo states that if a generation facility

on District property is pursued, staff will retain the services of a consultant such as Dr. Tibbs

to negotiate the terms of the contract with the provider to secure the best possible deal for

the District and its ratepayers. General Manager Arant noted that Dr. Tibbs does not work

for the District at the present time as Board direction at the May 21

2.

3. Review of Measures Taken to Reduce Energy Consumption and Preparations for Possible

Rolling Blackouts:

Measures that have been implemented and system modifications to enhance energy service

reliability were reviewed as listed below:

~ Check and replace/upgrade prime-time clocks

~ Use weather forecasting and system trends to balance pumping and water distribution

to achieve maximum efficiency of pumps and, as much as possible, pump during

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4. Status Report on Energy Resources Options Assessment and Review of Proposed

Resolution:

Following action at the June 4, 2001 Board meeting, Dr. Lon House was requested to submit

a proposal outlining the steps to complete a comprehensive assessment of the District’s

energy resources options. The data that can be utilized from the District’s existing Master

Plan, hydraulic model and GIS needs to be determined. The Association of California Water

Agencies (ACWA) may fund Dr. House’s efforts to assess current trends in the energy

market. Also, a draft resolution has been prepared by staff which sets forth the District’s

energy policies, goals and implementation objectives.

Dr. House’s proposal was reviewed by Director of Finance Jarrell. It consists of a 4-part study

as follows:

• An assessment of baseline resources and operations - power needs and resource

assessment and District operations review/benchmark

• Current market conditions and forecast of future conditions

• Development of options - cost-effectiveness recommendations

• Options Assessment

Tasks that may be funded by ACWA to be undertaken by Dr. House are review of the market

conditions, forecast of future conditions and availability and pricing of electricity. Consulting

services to complete the assessment of baseline resources and District operations is

expected to cost approximately $45,000 to $50,000.

Generation of hydro-electric power from District facilities such as Lake Turner or at a pressure

reducing station may not be cost effective as the flows are variable, dependent upon demand

in the system, and there are relatively small water flows for generation of hydro-electric

power. A component of the District’s Master Plan Update is analyzation of potential hydroelectric

generation.

As recommended by Dr. House, a resolution setting forth the District’s policies, goals,

objectives and procedures with respect to securing affordable and reliable energy resources

and the appropriation of funds therefore was drafted. Implementation measures to achieve

the goals of reducing and controlling energy costs associated with the District’s operations

include the components of Dr. House’s proposal for a comprehensive assessment of the

District’s energy resources options as follows:

Power needs and resource assessment

Review of District operations and power use efficiency

Review current conditions for electricity and natural gas

Forecast of future market conditions for electricity and natural gas

Review of energy resources options available to the District

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Community input

Options assessment

The resolution will be presented for the Board’s review and consideration of adoption at a

subsequent meeting. Staff will continue to refine the estimated costs to achieve the District’s

energy policies, goals and implementation objectives.

5. Resolution Setting the Fixed Charge Special Assessments for Fiscal Year 2001-2002:

Resolution No. 2001-29 to set the District’s fixed charge special assessments for Fiscal Year

2001-2002 for the Paradise Mountain annexation, delinquent and unpaid water bills and

Assessment District No. 96-1 was presented for consideration. The proposed assessments

are outlined on the attached Exhibit “A” and are summarized below:

Paradise Mountain Annexation Annual Assessment: Pursuant to annexation of 14.5 acres

on Paradise Mountain to the District in 1993, this annual assessment is allocated toward

repayment of the annexation charges. Four of the five affected parcels were sold and their

annexation charges have been paid in full. One parcel remains with an annexation charge

due.

Delinquent and Unpaid Water Charges: Per the provisions of the Water Code allowing

delinquent and unpaid water and other charges to be collected through the property taxes of

the property using the water or service, a total delinquency of $336.66 affecting two parcels

is eligible to be assessed through the tax roll for 2001-2002.

Assessment District No. 96-1: Assessment to meet the principal and interest obligations in

Fiscal Year 2001-2002 pursuant to the Moosa Sewer Treatment Facility improvements for

properties within Assessment District No. 96-1 (Treasures at Castle Creek development).

204 parcels will be assessed $729.92. Annual assessments will be made against properties

within this assessment district until September 2, 2017 or until the bonded debt is paid.

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6. Resolution to Purchase Outstanding Participant Loans from the Retirement Plan:

The District’s defined contribution Retirement Plan was terminated as of June 2, 2001. The

Board had concurred with the proposal to purchase the outstanding loans made to

participants in the old retirement plan as it would allow for timely termination of the Plan in

accordance with Federal tax law. Board adoption of Resolution No. 2001-27 to formally

authorize the District’s purchase of employees’ outstanding loans from the Retirement Plan

was requested.

Currently, there are six loans outstanding with a balance of $92,231.66. Purchase of these

loans by the District as of July 1, 2001, was proposed. At the current interest rate of 12% on

these loans, the District will earn approximately $10,000 between July 1, 2001 and May 24,

2002. It was proposed that the loans be secured by the retirement plan’s collateral until

May 24, 2002. After May 24

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7. 2001 Special Districts Election - LAFCO:

The Local Agency Formation Commission (LAFCO), which oversees the formation,

reorganization and dissolution of cities and special districts, is conducting its 2001 election

for Regular LAFCO member and to fill nine positions on the Special Districts Advisory

Committee. A mailed-ballot election is being conducted in which the deadline for receipt of

ballots by LAFCO is July 6, 2001.

Two nominations for the Regular LAFCO member and thirteen nominations for the Advisory

Committee were received. However, two nominations for the Advisory Committee were

withdrawn. Nominations were forwarded to the Nominating Committee which considered all

submitted nominations. LAFCO’s Nominating Committee recommended the following

candidates:

Regular District Member:

Ronald Wootton, Vista Fire Protection District

LAFCO Special Districts Advisory Committee Member:

Dan McMillan, Padre Dam Municipal Water District

Raymond Cruz, Vallecitos Water District

Barbara Barber, Helix Water District

Tom Pocklington, Bonita Sunnyside Fire Protection District

John Pastore, Rancho Santa Fe Community Services District

James Wolniewicz, South Bay Irrigation District

Judy Hanson, Leucadia County Water District

Darrell Jobes, East County Fire Protection District

Kevin Eggleston, San Miguel Consolidated Fire Protection District

8. Status Report on the Proposed Lake Turner Recreational Consortium:

Per direction of the Board, staff has proceeded with development of an operational agreement

with established youth groups for utilization of Lake Turner for recreation and youth

development activities. Meetings between potential members of the consortium, YMCA, Boys

and Girls Club, Girl Scouts of America and Boy Scouts of America, have been held and a

draft

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The youth groups have begun the process of assigning tasks and responsibilities; i.e.

scheduling, contact responsibilities. The senior fishing groups have declined becoming a

member of the consortium but have offered their services as mentors. As part of the

agreement for use of Lake Turner by members of the consortium, all costs would be borne

by members of the consortium. Concern has been expressed by the youth groups that their

funding responsibility and financial exposure be limited to the funds they secure for their

recreational projects. The consortium does not want to be liable for expenses created by

others. These conditions will need to be set forth in the License Agreement.

The District will continue to operate and maintain the lake, including incidental access road

and parking area maintenance. It has been proposed that the District extend water and

power service to facilitate recreational use of the lake. Ongoing costs that will be borne by

the consortium include utility costs, trash disposal and clean-up, waste facility servicing and

other related expenses.

Consortium members have suggested that public input on the recreational use concept for

Lake Turner be obtained which could be accomplished by conducting a noticed public

workshop on this proposal. In this manner, concerns that may be expressed by residents

could be addressed in the rules and regulations to be set forth in the License Agreement for

the consortium members.

9. A Closed Session was called by President Broomell at 3:42 p.m. pursuant to:

• Government Code §54956.9(c), Conference with Legal Counsel - Existing

Litigation

Name of case: Sweetwater Authority, et al. v. Dynegy, Inc., et al.

SDSC Case No. GIC 760743

The Regular Board meeting was reconvened at 3:57 p.m. No action was reported.

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