SEASIDE GROUNDWATER BASIN WATERMASTER

REGULAR BOARD MEETING AGENDA WEDNESDAY, DECEMBER 3, 2014 - 2:00 P.M.

MEETING LOCATION MONTEREY REGIONAL WATER POLLUTION CONTROL AGENCY

BOARD ROOM, 5 HARRIS COURT, BUILDING D RYAN RANCH

MONTEREY, CALIFORNIA

WATERMASTER BOARD Coastal Subarea Landowner Director Paul Bruno, Chair City of Seaside Mayor Ralph Rubio, Vice Chair California American Water Director Eric Sabolsice City of Sand City Mayor David Pendergrass Monterey Peninsula Water Management District Director Bob Brower Laguna Seca Subarea Landowner Director Bob Costa City of Monterey Mayor Clyde Roberson City of Del Rey Oaks Mayor Jerry Edelen Monterey County/Monterey County Water Resources Agency Supervisor Dave Potter, District 5 I. CALL TO ORDER Page # II. ROLL CALL III. MINUTES The minutes of the Regular and Special Board meetings of October 1, 2014 are attached to this agenda.

The Board is requested to consider approving the minutes. ............................................................................. 5 IV. REVIEW OF AGENDA

If there are any items that arose after the 72-hour posting deadline, a vote may be taken to add the item to the agenda pursuant to the requirements of Government Code Section 54954.2(b). (A 2/3-majority vote is required).

V. PUBLIC COMMUNICATIONS Oral communications is on each meeting agenda in order to provide members of the public an opportunity to address the Watermaster on matters within its jurisdiction. Matters not appearing on the agenda will not receive action at this meeting but may be referred to the Watermaster Administrator or may be set for a future meeting. Presentations will be limited to three minutes or as otherwise established by the Watermaster. In order that the speaker may be identified in the minutes of the meeting, it is helpful if speakers would use the microphone and state their names. Oral communications are now open.

VI. CONSENT CALENDAR A. Consider Approval of Summary for Payments made during the months of October 1st

through November 30, 2014 totaling $25,645.00. ............................................................................... 11 B. Consider Approving Fiscal Year 2014 Financial Reports through November 30, 2014. .................. 13

VII. ORAL PRESENTATION None Scheduled

1

VIII. OLD BUSINESS A. Further Discussion Approving Recommendation of Budget and Finance Committee regarding

Amending the Administrative Budget to Retain Counsel for Specified Legal Services such as: 1. Possible Further Action Regarding Seeking Relief from 10% Pumping Reduction for Water

Years 2015 through 2018 Operating Yield 2. Update the Court concerning recent regional water supply developments pertinent to the

Seaside Basin 3. Update the Court concerning the recent draft modeling results and findings concerning the

Laguna Seca subbasin and Watermasters intended work plan over the following year to address long-term water reliability for the subbasin. .................................................................. 17

IX. NEW BUSINESS A. COMMITTEE REPORTS 1. TECHNICAL ADVISORY COMMITTEE (TAC)

a. Discussion/Consider Approving the Seawater Intrusion Analysis Report (SIAR for 2014). The Executive Summary is included in the Board agenda packet. The complete SIAR is posted on the Watermasters website at http://www.seasidebasinwatermaster.org. ................................................................................. 33

b. Discussion/Consider Approving Amending MPWMDs RFS No. 2015-01 by adding

$1,000 to perform additional water quality monitoring and transferring the $1,000 from the Monitoring and Management Contingency line item to the MPWMDs RFS No. 2015-01. ...................................................................................................................................... 40

c. Discussion/Consider Approving Professional Services Agreement (PSA) and Request for

Services No. 2014-01 with Todd Groundwater to perform a peer review of groundwater modeling work performed by HydroMetrics Water Resources, Inc. not to exceed the cost of $25,420.00. ............................................................................................................................. 43

B. Discussion/Consider Adopting for Water Year 2015 a Declaration regarding the

Unavailability of Artificial Replenishment Water (Water Year 2015 Allocation attached) ... 74 C. Discussion/Consider Approving the Watermasters Annual Report for Water Year 2014.

Attached is the body of the Draft 2014 Annual Report, reflecting input from the TAC. The complete Draft version is posted on the Watermasters website at http://www.seasidebasinwatermaster.org. . .................................................................................... 77

X. INFORMATIONAL REPORTS (No Action Required)

A. Timeline Schedule of Milestone Dates (Critical date monitoring) ................................................... 114 B. Technical Advisory Committee (TAC) minutes from November 12, 2014 meeting ....................... 115 XI. DIRECTORS REPORTS XII. EXECUTIVE OFFICER COMMENTS

2

http://www.seasidebasinwatermaster.org/http://www.seasidebasinwatermaster.org/

XIII. NEXT MEETING DATEJanuary 7, 2015 (MRWPCA-Board Room) 2:00 PM or if cancelled for

lack of meeting material; the next regularly scheduled meeting would be February 4, 2015 (MRWPCA - Board Room) at 2:00 PM.

XIV. ADJOURNMENT

This agenda was forwarded via e-mail to the City Clerks of Seaside, Monterey, Sand City and Del Rey Oaks; the Clerk of the Monterey Board of Supervisors, the Clerk to the Monterey Peninsula Water Management District; the Clerk at the Monterey County Water Resources Agency, Monterey Regional Water Pollution Control Agency and the California American Water Company for posting on November 26, 2014 per the Ralph M. Brown Act, Government Code Section 54954.2(a).

3

ITEM NO. III.

MINUTES

4

REGULAR MEETING MINUTES Seaside Groundwater Basin Watermaster (Watermaster)

October 1, 2014

I. CALL TO ORDER Chair Bruno called the meeting to order at 2:00 p.m.

II. ROLL CALL Coastal Subarea Landowner Director Paul Bruno, Chair California American Water (CAW) Director Eric Sabolsice City of Seaside Mayor Ralph Rubio City of Del Rey Oaks Mayor Jerry Edelen Laguna Seca Subarea Landowner Director Bob Costa City of Sand City Mayor David Pendergrass Monterey Peninsula Water Management District Director Robert Brower Monterey County/Monterey County Water Resources Agency Supervisor Dave Potter Absent: City of Monterey Mayor Charles Chuck Della Sala

III. APPROVAL OF MINUTES

It was moved by Mayor Pendergrass, seconded by Mayor Edelen, and unanimously carried to approve the minutes of the Watermaster Regular Meeting held August 6, 2014.

IV. REVIEW OF AGENDA

President Bruno requested, and the board concurred, to take up the 2015 budgets before Old Business.

V. PUBLIC PARTICIPATION/ORAL COMMUNICATIONS There were no public communications.

VI. CONSENT CALENDAR A. Consider Approval of Summary for Payments made during the months August 1 through

September 30, 2014 totaling $25,702.32 B. Consider Approving Fiscal Year 2014 Financial Reports through September 30, 2014

Moved by Mayor Edelen, seconded by Director Brower, and unanimously carried, to approve the consent calendar as presented.

2:03 P.M. Director Costa arrived at the meeting

VII. ORAL PRESENTATION - None

VIII. OLD BUSINESS A. Modeling of the Laguna Seca Subarea (continued from last meeting). CEO Evans received on

behalf of Watermaster a written letter from Eric Robinson of Kronick, Moskovitz, Tiedemann, and Girard, legal representative for Alternative Producer Bishop, McIntosh & McIntosh (BMM), dated September 10, 2014 regarding Laguna Seca Subarea (LSSA) modeling. Mr. McIntosh addressed the board, speaking to the letter provided that questioned the method used to determine safe yield in the modeling, in particular the calculation of Toro area outflow, and requested further study in that regard. The letter also included a request that BMM have input into the 2014 Annual Report to Court. It was explained that the Watermaster BMM representative, Director Costa, would be included in Annual Report development at the Technical Advisory Committee (TAC) level.

5

Director Sabolsice requested that the BMM letter be sent to Derrick Williams of Hydrometrics for review, comment, and determination whether the letter accurately represents the modeling. The TAC could then review the letter along with Mr. Williamss comments, and recommend to the board a response to Mr. Robinson. Mr. McIntosh supported seeking comments from Mr. Williams. Director Brower suggested obtaining a second opinion on the modeling. Mr. Jaques stated the TAC anticipated the peer review request and firms were already being considered and screened in preparation for the TAC to make a recommendation. The $40,000 line item in the 2015 budget for additional consulting could be used to cover costs of a peer review; Director Sabolsice requested cost proposals be provided to the board for approval.

Mr. Jaques planned to include the letter and Mr. Williamss comments on the November 12th

TAC meeting agenda along with development of the 2014 Annual Report to Court. Mr. Evans felt that determining how best to notify the Court of the LSSA modeling could be an item of focus for an ad hoc Watermaster Administrative Committee.

IX. NEW BUSINESS A. Fiscal Year 2015 Annual Budgets

1. Administrative Fund

Moved by Mayor Pendergrass, seconded by Director Brower, and unanimously carried to adopt the Fiscal Year 2015 Administrative Fund Budget as proposed.

2. Monitoring and Management Operations Fund

Moved by Director Sabolsice, seconded by Mayor Edelen, and unanimously carried to adopt the Fiscal Year 2015 Monitoring and Management Operations Fund Budget as proposed.

3. Capital Fund and Replenishment Fund (No Action Required)

B. 2015 Professional Services Contracts

Moved by Mayor Rubio, seconded by Mayor Edelen, and unanimously carried to 1) approve Request for Service (RFS) No. 2015-01 and 2015-02 with Monterey Peninsula Water Management District for $76,462 and $4,788 respectively for continued monitoring and other Seaside Groundwater Basin Management and Monitoring Program work, and; 2) approve RFS 2015-01 with Hydrometrics Water Resources, Inc. for $11,600 to perform ongoing and as-requested general hydrogeologic consulting services and RFS 2015-02 for $25,750 to perform the 2015 Seawater Intrusion Analysis Report.

C. Replenishment Assessment Unit Cost for Water Year October 1, 2014 September 30, 2015 Moved by Mayor Rubio, seconded by Mayor Edelen, and unanimously carried to approve the Budget and Finance Committee recommendation of $2,702 as the Replenishment Assessment Unit Cost for Water Year 2015.

6

D. The board concurred to plan for a change in board meeting dates in November, possibly canceling the November 5th

regular meeting and convening a special meeting on November 19, 2014, to accommodate preparation of the 2014 Annual Report to Court.

Chair Bruno, upon recommendation by Watermaster CEO, Dewey Evans appointed an ad hoc Administrative Committee consisting of himself as Watermaster Board Chair and a representative from City of Seaside, California American Water, and City of Sand City, to assist with various Watermaster administrative and policy issues and make recommendations for board consideration.

X. INFORMATIONAL REPORTS (No Action Required) A. Timeline Schedule of Milestone Dates (Critical date monitoring) B. Technical Advisory Committee (TAC) meeting minutes from August 13th and September 10th

C. Comparative Water Year basin production analysis in preparation for the triennial 10% reduction in pumping to become effective October 1, 2014.

, 2014 meetings

XI. DIRECTORS REPORTS None

XII. EXECUTIVE OFFICER COMMENTS None

XIII. NEXT MEETING DATE It was agreed that a Special Meeting would be held immediately

following this meeting, at the Monterey Regional Water Pollution Control Agency (MRWPCA) Board meeting room at 5 Harris Court, Building "D" on Ryan Ranch in Monterey at 2:41 p.m.

XIV. There being no further business, Chair Bruno adjourned the meeting at 2:41p.m.

7

SPECIAL MEETING MINUTES Seaside Groundwater Basin Watermaster (Watermaster)

October 1, 2014

I. CALL TO ORDER Chair Bruno called the meeting to order at 2:41 p.m.

II. ROLL CALL Coastal Subarea Landowner Director Paul Bruno, Chair California American Water (CAW) Director Eric Sabolsice City of Seaside Mayor Ralph Rubio City of Del Rey Oaks Mayor Jerry Edelen Laguna Seca Subarea Landowner Director Bob Costa City of Sand City Mayor David Pendergrass Monterey Peninsula Water Management District Director Robert Brower Monterey County/Monterey County Water Resources Agency Supervisor Dave Potter Absent: City of Monterey Mayor Charles Chuck Della Sala

III. PUBLIC PARTICIPATION/ORAL COMMUNICATIONS

There were no public communications.

IV. NEW BUSINESS A. Watermaster Legal Representation

Mr. Russ McGlothin of the law firm Brownstein, Hyatt, Farber, and Schreck joined the meeting via teleconference. Mr. Evans noted that the meeting was added at the request of Attorney Don Freeman who felt that Watermaster could benefit from legal assistance from an attorney highly involved with the Seaside Basin Adjudication. Importantly, a 560 acre-foot (AF) triennial ramp-down in production by the parties to the Decision is effective today and it would seem prudent to notify the Court that replenishment efforts to offset the ramp-down have been underway in the Basin for some time. With regard to the material injury to the Basin that will occur in the future as reported by the Laguna Seca Subarea (LSSA) modeling, special counsel could formulate a notice to the Court of such injury, and handle subsequent Watermaster/Court interaction on the issue that may result.

Mr. McGlothlin more specifically defined targeted services as filing a motion with the Court to hear a tri-part presentation to:

1. Update the Court on community needs and management of collective resources with respect to Monterey Peninsula water supply matters, specifically the Water Supply Project inclusive of desalination and groundwater replenishment, and the status of the State Cease and Desist Order and related schedule

2. Seek relief from the triennial reduction effective October 1, 2014 a) Seeking relief of 560 x 3 years = 1,680 AF against 2,500 AF total that will be

replenished by the City of Seaside In-lieu Replenishment Project by the end of Water Year 2018

3. Notify the Court of material injury potential in the LSSA a) Report to Court that Watermaster has identified a long-term problem, steps have been

taken toward obtaining a second opinion on modeling results, and investigations have commenced to develop the most appropriate long-term solution gaining the Courts confidence in Watermaster in the matter by reporting progress annually

8

Director Sabolsice was hesitant for Watermaster to contract for legal services since the issues listed by Mr. McGlothlin have not had in-depth consideration by the Watermaster Technical Advisory Committee (TAC) or the board. Director Sabolsice noted that CAW customers have increased conservation efforts, reducing production needs. He requested that, prior to spending funds petitioning the court, the TAC should perform a full technical review of conservation achievements and LSSA modeling information. With the substantial increase in information from a few years ago regarding the status of the Basin, it may be found that a request for relief from pumping reduction may not be in the best interest of Basin health. Mayor Rubio was in favor of contracting with Mr. McGlothlin and notifying the Court of the informational matters in conjunction with the filing of the 2014 Annual Report, and supported requesting relief from the triennial ramp-down. Chair Bruno stated this was the first the board was hearing of the ramp-down waiver request and understood Director Sabolsices hesitation with including the Court filing of this item in the proposed legal services. Moved by Mayor Rubio, seconded by Supervisor Potter, and carried, with Director Sabolsice voting no, to approve Watermaster retaining special counsel to file a motion for a hearing to update the Court on Monterey Peninsula water supply matters; to seek relief from the triennial reduction effective October 1, 2014; and to notify the Court of material injury potential in the LSSA; allowing time for the TAC to perform technical review of the issues prior to preparation of Court documents.

Mr. McGlothlin recommended filing the motion on or shortly after the 2014 Annual Report to Court filing date in anticipation of the judge scheduling a hearing in early 2015. It was the intent of CEO Evans to have the newly appointed Administrative Committee develop a special counsel professional services contract at a meeting to be scheduled in the near future.

V. There being no further business, Chair Bruno adjourned the meeting at 3:17 p.m.

9

ITEM NO. VI.

CONSENT CALENDAR

10

ITEM VI.A. 12-3-2014

SEASIDE GROUNDWATER BASIN WATERMASTER

TO: Board of Directors

FROM: Dewey D Evans, CEO

DATE: December 3, 2014 SUBJECT: Summary of Payments Authorized to be paid during the months of October and November, 2014 PURPOSE: To advise the Board of payments authorized to be paid during the months of October and November, 2014 totaling $25,645.00. RECOMMENDATIONS: Consider approving the payment of bills submitted and authorized to be paid during the months of October and November, 2014. COMMENTS and FISCAL IMPACT:

OCTOBER, 2014

DDEvans Consulting (Professional Services AgreementCEO) September 25, 2014 through October 24, 2014 worked on Watermaster business a total of 52 hours at $100.00 per hour or $5,200.00. Responded to telephone inquiries, e-mail, and other correspondence as needed regarding the Seaside Basin. Received and reviewed water production and water level reports. Worked on October 1st Board meeting agenda and agenda packet; sent out posting notice for Board meeting and Board meeting agenda packet to Board members and appropriate others. Attended the October1st Board regular and special meetings and took appropriate follow up actions as necessary. Had several discussions with Russ McGlothlin and Lori Girard regarding contract discussions on possible court related items. Received and reviewed water production and water level reports. Robert Bob Jaques (Technical Program Manager)September 24, 2014 through October 27, 2014 worked on Watermaster business a total of 30.5 hours at $100.00 per hour or $3,050.00. Responded to email, telephone inquiries and other correspondence on a variety of Watermaster issues. Prepared for and attended the October 1st Board meeting; worked on Annual Report. Discussion with Eric Robinson, attorney for Laguna Seca Golf Resort; research and prepared draft Professional Services Agreement and Request for Services for potential hiring of Russ McGlothlin to prepare legal motion for watermaster. Attended remote imaging meeting at Hopkins Marine Station.

11

HydroMetrics Water Resources, Inc.One invoice for $322.50 was submitted for payment; this amount covers the conversation with Eric Robinson and Russ McGlothlin regarding the modeling work done clarifying the Laguna Seca Subarea modeling work done prior to October 1st Board meeting. Paxton ImagingHosting Watermaster web site for month of October, 2014--$200.00.

Total for October, 2014 $8,772.50

NOVEMBER, 2014

DDEvans Consulting (Professional Services AgreementCEO)October 27, 2014 through November 21, 2014 worked on Watermaster business a total of 58.5 hours at $100.00 per hour or $5,850.00. Responded to telephone inquiries, email and other correspondence as needed regarding the Seaside Basin. Received and reviewed water production and water level reports. Participated in numerous telephone and email discussions with Russ McGlothlin, Don Freeman, Lori Girard and others on the need to request the court to stay the 10% roll back on water production as directed by the court decision. Worked on November 19th Special Board meeting agenda which was later cancelled because of timing issues and rescheduled for the regular meeting date of December 3rd. Setup Administrative meeting for November 6th to discuss the roll back matter. Sent out Board adopted budgets to all producers in WM district boundary. Setup and attended Budget and Finance Committee meeting on November 19th; Worked on Holiday party to be held on December 10th at Chairman Brunos home. Worked on regular Board meeting agenda packet for December 3rd. Robert Bob Jaques (Technical Program Manager)October 28, 2014 through November 22, 2014 worked on Watermaster business a total of 42.0 hours at $100.00 per hour or $4,200.00. Responded to email, telephone inquiries and other correspondence on a variety of Watermaster issues. Worked on TAC agenda packet; Prepared for and attended the November 12th TAC meeting and prepared the minutes from that meeting and distributed copies to all TAC members. Worked on Annual Report to the court due to be filed on or before December 15th. Worked on variety of Watermaster transmittals for December Board packet. HydroMetrics Water Resources, Inc.Two invoices were received totaling $6,822.50; The first invoice totaling $5,171.25 was for 38.75 for work preparing the annual SIAR; the second invoice totaling $1,651.25 was for 7.75 hours of work responding to Laguna Seca subarea safe yield discussions and letter from Kronick Moskovitz law firm and specifically with Eric Robinson and Russ McGlothlin; and then responding to Bob Jaques regarding boundary flows. Total for November 24, 2014 $16,872.50 Total for October and November, 2014 $25.645.00

12

VI.B12/3/2014

2014 Adopted Budget

Contract Amount

Year to Date Revenue / Expenses

Available Balances & AssessmentsDedicated Reserve 19,000.00 19,000.00 FY (Rollover) - - Admin Assessments 66,000.00 66,000.00

Available 85,000.00 85,000.00

ExpensesContract Staff 60,000.00 60,000.00 53,750.00 Legal Advisor - - -

Total Expenses 60,000.00 60,000.00 53,750.00

Total Available 25,000.00

Dedicated Reserve 25,000.00

Net Available -

Seaside Groundwater Basin Watermaster Budget vs. Actual Administrative Fund

Fiscal Year (January 1 - December 31, 2014)Balance through November 30, 2014

13

VI.B.12/3/2014

2014 Adopted Budget

Contract Encumbrance

Year to Date Revenue/Expenses

Available Balances & AssessmentsOperations Fund Assessment -$ -$ -$ FY 2013 Rollover 356,385.00 - 359,133.53

Total Available 356,385.00$ -$ 359,133.53$

Appropriations & ExpensesGENERAL

Technical Project Manager 60,000.00$ 60,000.00$ 31,991.42$ Contingency @ 20% (not including TPM ) 38,120.00 -$ -

Total General 98,120.00$ 60,000.00$ 31,991.42$

CONSULTANTS (Hydrometrics; Web Site Database)Program Administration 10,100.00$ Production/Lvl/Qlty Monitoring 3,900.00 Basin Management Action Plan 80,000.00 Seawater Intrusion Analysis Report 27,750.00 25,750.00 5,171.25

Total Consultants 121,750.00$ 39,350.00$ 30,770.99$

MPWMDProduction/Lvl/Qlty Monitoring 66,186.00$ 62,238.00 17,601.00 Basin Management - 3,948.00 - Seawater Intrusion 2,664.00 2,664.00 3,320.00 Direct Costs - - -

Total MPWMD 68,850.00$ 68,850.00$ 20,921.00$

Reserve - Transfer Out to Capital Fund -

Total Appropriations & Expenses 288,720.00$ 168,200.00$ 83,683.41$

Total Available 67,665.00 275,450.12

Footnote 1: The $5,154 contract with MPWMD for data collection services consists of pass through expenditures paid by producers and is not budgeted. For 2014 $3,099 has been collected from producers, and MPWMD has invoiced $1,305.00 for services rendered through June 2014.

Seaside Groundwater Basin Watermaster Budget vs. Actual Monitoring & Management - Operations Fund

Fiscal Year (January 1 - December 31, 2014)Balance through November 30, 2014

13,600.00$ 25,599.74$

14

ITEM VI.B.12/3/2014

Replenishment Fund 2006 2007 2008 2009 2010 2011 2012 2013 2014

Estimated Totals WY 2006 Through 2014

Proposed Budget

WY 2015

Projected Totals Through

WY 2015Assessments: WY 05/06 WY 06/07 WY 07/08 WY 08/09 WY 09/10 WY 10/11 WY 11/12 WY 12/13 WY 13/14 WY 14/15Unit Cost: $1,132 $1,132 $2,485 $3,040 $2,780 $2,780 $2,780 $2,780 $2,702 $2,702

-$ 1,641,004$ 4,206,475$ (2,900,435)$ (2,868,685)$ (3,850,964)$ (6,088,909)$ (8,919,379)$ (6,538,537)$ (3,747,999)$ Cal-Am Water Production 3710.0 AF 4059.9 AF 3862.9 AF 2966.0 AF 3713.5 AF 3416.0 AF 3070.9 AF 3076.6 AF 3232.1 AF

Exceeding Natural Safe Yield Considering Alternative Producers 2,106,652 2,484,533 5,164,969 3,773,464 4,112,933 3,187,854 1,661,090 1,656,612 1,666,493 $ 25,814,601 1,700,000 27,514,601$ Operating Yield Overproduction Replenishment - 80,938 34,045 - - - 619,853 724,229 1,124,046 2,583,112 700,000 3,283,112

$ 2,106,652 $ 2,565,471 $ 5,199,014 $ 3,773,464 $ 4,112,933 $ 3,187,854 $ 2,280,943 $ 2,380,842 $ 2,790,539 $ 28,397,713 $ 2,400,000 $ 30,797,713

CAW Credit Against Assessment (465,648) (12,305,924) (3,741,714)$ (5,095,213) (5,425,799) (5,111,413) - - (32,145,711) (5,000,000) (37,145,711)

CAW Unpaid Balance 1,641,004$ 4,206,475$ (2,900,435) (2,868,685)$ (3,850,964)$ (6,088,909)$ (8,919,379)$ (6,538,537)$ (3,747,999)$ (3,747,999)$ (6,347,999)$ (6,347,999)$

City of Seaside Balance Forward -$ 230,671$ 413,454$ 1,106,116$ 1,737,569$ 988,414$ (13,109)$ (678,596)$ (1,507,666)$ (2,857,788)$ City of Seaside Municipal Production 332.0 AF 387.7 AF 294.3 AF 293.4 AF 282.9 AF 240.7 AF 233.7 AF 257.7 AF 223.6 AF

Exceeding Natural Safe Yield Considering Alternative Producers 169,200 173,739 385,642 399,211 231,961 141,335 156,752 128,755 129,523 $ 1,916,119 150,000 2,066,119$ Operating Yield Overproduction Replenishment 50,487 340 16,898 66,090 82,761 - 6,757 108,026 12,886 344,245 - 344,245

Total Municipal 219,687 174,079 402,540 465,300 314,721 141,335 163,509 236,782 142,410 2,260,363 150,000 2,410,363

City of Seaside - Golf CoursesExceeding Natural Safe Yield - Alternative Producer - - 131,705 69,701 - - - - - 201,406 - 201,406 Operating Yield Overproduction Replenishment - - 131,705 69,701 - - - - - 201,406 - 201,406 Total Golf Courses - - 263,410 139,402 - - - - - 402,812 - 402,812

Total City of Seaside* $ 219,687 $ 174,079 $ 665,950 $ 604,702 $ 314,721 $ 141,335 $ 163,509 $ 236,782 $ 142,410 $ 2,663,175 $ 150,000 $ 2,813,175 City of Seaside Late Payment 5% 10,984 8,704 26,712 26,750 15,737 88,887 88,887

In-lieu Credit Against Assessment - - -$ (1,079,613) (1,142,858) (828,996) (1,065,852) (1,492,531) (5,609,850) (1,000,000) (6,609,850) City of Seaside Unpaid Balance 230,671$ 413,454$ 1,106,116$ 1,737,569$ 988,414$ (13,109)$ (678,596)$ (1,507,666)$ (2,857,788)$ $ (2,857,788) (3,707,788)$ (3,707,788)$

Total Replenishment Fund Balance 1,871,675$ 4,619,929$ (1,794,319)$ (1,131,116)$ (2,862,551)$ (6,102,019)$ (9,597,976)$ (8,046,204)$ (6,605,786)$ (6,605,786)$ (10,055,786)$ (10,055,786)$

Replenishment Fund Balance Forward - 1,871,675$ 4,619,929$ (1,794,319)$ (1,131,116)$ (2,862,551)$ (6,102,019)$ (9,597,976)$ (8,046,204)$ (6,605,786)$ Total Replenishment Assessments 2,337,323 2,748,254 5,891,676 4,404,917 4,443,391 3,329,189 2,444,452 2,617,624 2,932,949 31,149,775 2,550,000 33,699,775 Total Paid and/or Credited (465,648) - (12,305,924) (3,741,714) (6,174,826) (6,568,657) (5,940,409) (1,065,852) (1,492,531) (37,755,561) (6,000,000) (43,755,561) Grand Total Fund Balance 1,871,675$ 4,619,929$ (1,794,319)$ (1,131,116)$ (2,862,551)$ (6,102,019)$ (9,597,976)$ (8,046,204)$ (6,605,786)$ (6,605,786) (10,055,786)$ (10,055,786)$

Total California American

Seaside Groundwater Basin WatermasterReplenishment Fund

Water Year 2015 (October 1 - September 30) / Fiscal Year (January 1 - December 31, 2015)Balance through November 30, 2014

Cal-Am Water Balance Forward

15

ITEM NO. VIII.

OLD BUSINESS

16

ITEM VIII. A. December 3, 2014

SEASIDE GROUNDWATER BASIN WATERMASTER

TO: Wastermaster Board of Directors FROM: Laura Dadiw REVIEWED AND APPROVED BY: Dewey D. Evans, CEO DATE: December 3, 2014 SUBJECT: Discussion on whether Watermaster should obtain legal counsel for Laguna Seca Subarea and other matters - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RECOMMENDATIONS: It is recommended that, if the board approves a contract with Brownstein et al for Watermaster legal services, that the action include a budget adjustment of $25,000 to the Administrative Fund funded by an addition assessment paid 83% by California American Water ($20,750), 14.4% by the City of Seaside ($3,600), and 2.6% paid by the City of Sand City ($650). BACKGROUND: The Board at its October 1, 2014 Watermaster special board meeting approved retaining legal representation on three matters to be brought before the Court. The motion approving retention of legal services contained no parameters regarding costs. Mr. McGlothin provided to Watermaster CEO a draft Scope of Work: PROFESSIONAL shall prepare, file and appear at a motion before the Monterey County Superior Court in the Seaside Basin Adjudication (California American Water v City of seaside, et al., Case No. M66343) (the Motion) to: (1) request a stay of the 2015 through 2018 Operating Yield reduction; (2) update the Court concerning recent regional water supply developments pertinent to the Seaside Basin; and (3) update the court concerning the recent modeling results and findings concerning the Laguna Seca subbasin and Watermasters intended work plan over the following year to address long-term water reliability for the subbasin. The total estimated cost submitted by Mr. McGlothlin to perform the three items was $20,000 - $25,000 plus any additional costs requiring prior written approval by Watermaster. The Watermaster Administrative Committee at its November 6, 2014 meeting concurred that the estimated cost for proposed legal services appeared prohibitive, and suggested using the Watermaster 2014 Annual Report to convey to the Court any Watermaster request related to the triennial Operating Yield reduction, and to provide preliminary information on the recent modeling results and pending peer review concerning the Laguna Seca Subarea. The Watermaster Budget and Finance Committee at its November 19, 2014 meeting recommended, if the board approves entering into contract, that it be budgeted out of the Administrative Fund and assessments be levied to cover the budget adjustment in addition to those assessments not yet invoiced to the parties that will fund the 2015 approved Administrative Fund budget. (CEO Evans noted that since a large percentage of the estimated cost proposed for legal services covered filing a motion and appearing in court, Russ McGlothlin had indicated that $20,000 - $25,000 was the minimum that could be charged even if only one or two of the items proposed was approved to be pursued.)

17

DISCUSSION: A stay of the 10% triennial reduction in production by standard producers (California American Water, City of Seaside (Municipal), DBO Development No. 30, and Granite Rock Company) effective October 1, 2014 would delay for three years achieving annual production equivalent to the Natural Safe Yield of the Basin as set forth in the Decision. A stay would increase to an unknown degree the amount standard producers are able to carry over to the 2016 - 2019 water years, carry over that would otherwise diminish with the enforcement of the triennial ramp down. The method of calculation of the Replenishment Assessments has recently been called into question by legal counsel of Watermaster parties. Watermaster staff feels that this issue should be resolved prior to entering a formal request to the Court for a stay of triennial reduction in production, as the method of calculation and associated assessments determine the degree of monetary consequence, if any, to standard producers if a stay is granted. The recent modeling results concerning the Laguna Seca subbasin are slated for peer review by Gus Yates of Todd Groundwater for a cost of $25,420. It would appear prudent to complete the peer review and develop a mitigation work plan prior to notifying the court beyond anything preliminary in this matter. It should be considered that if the contract for legal services is approved, there would be very limited time for Mr. McGlothlin to prepare the motion to be filed by December 15, 2014 as stated in the documents. FISCAL IMPACT: Approval of a contract with Brownstein et al, for Watermaster legal services would require a budget adjustment of $25,000 recommended to the Administrative Fund, funded by an additional assessment paid 83% by California American Water ($20,750), 14.4% by the City of Seaside ($3,600), and 2.6% paid by the City of Sand City ($650.00). The cost for the technical program manager to develop the 2014 Annual Report is accounted for in the current fiscal year budget so there is minimal fiscal impact to report the issues to the Court via the Annual Report. ATTACHMENTS: 1. Agreement for Legal Service from Brownstein Hyatt Farbe Schreck LLP (Russell M. McGlothlinAttorney at Law) and related documents including Request for Service (RFS).

18

RFS No. 2014-01 Page 1

SEASIDE BASIN WATERMASTER REQUEST FOR SERVICE DATE: October 23, 2014 RFS NO. 2014-01 (To be filled in by WATERMASTER) TO: Russ McGlothlin FROM: Dewey Evans Brownstein Hyatt Farber Schreck LLP Watermaster Services Needed and Purpose: Provide legal services to prepare, file, and appear at a motion with the Superior Court regarding the matters more fully described in Attachment 1 Completion Date: All court filings authorized by this RFS No. 2014-01 shall be completed not later than December 31, 2014 with an anticipated hearing to follow. Method of Compensation: Time and Expense Payment Method (As defined in Section V of Agreement.) Hourly rates and costs for Other Direct Costs and Expenses are described in Attachment 1. Total Price Authorized by this RFS: $ (25,000) (Cost is authorized only when evidenced by signature below.) Total Price may not be exceeded without prior written authorization by WATERMASTER in accordance with Section V. COMPENSATION. Requested by: Not Applicable to this RFS Date: . WATERMASTER Technical Program Manager Authorized by: Date: . WATERMASTER Chief Executive Officer Agreed to by: Date: . PROFESSIONAL

19

RFS No. 2014-01 Page 2

ATTACHMENT 1

Scope of Work: PROFESSIONAL shall provide the following services under this RFS No. 2014-01: PROFESSIONAL shall prepare, file, and appear at a motion before the Monterey County Superior Court in the Seaside Basin Adjudication (California American Water v. City of Seaside, et al., Case No. M66343) (the Motion) to: (1) request a stay of the 2015 through 2018 Operating Yield reduction; (2) update the Court concerning recent regional water supply developments pertinent to the Seaside Basin; and (3) update the court concerning the recent modeling results and findings concerning the Laguna Seca subbasin and Watermasters intended work plan over the following year to address long-term water reliability for the subbasin. The primary attorneys that shall work on this scope of work will be Russell McGlothlin and Jena Shoaf Total Estimated Cost: The cost to provide the services described in the Scope of Work is estimated as follows:

Task:

Target Due Date

Low

High

1. Develop Outline of Motion and Call with Watermaster to Obtain Agreement on Scope

November 12 $2,000 $3,000

2. Draft Motion November 28 $8,000 $9,000

3. Attend Up to Two Telephonic Meetings with Watermaster concerning Draft Motion

December 10 $1,000 $2,000

4. Revise and File Motion (Including Administrative Organization and Outreach to Court)

December 15 $2,000 $3,000

5. Prepare for and Appear at Motion January 2015 $7,000 $8,000

Total $20,000 $25,000 In no case shall the total cost for these services exceed the dollar amount stated in the Total Price Authorized by this RFS on page 1 of this RFS No. 2014-01 without the prior written approval of WATERMASTER.

20

Russell M. McGlothlin Attorney at Law 805.882.1418 tel 805.965.4333 fax RMcglothlin@bhfs.com

1020StateStreet SantaBarbara,CA931012711 main805.963.7000

bhfs.com BrownsteinHyattFarberSchreck,LLP

June 23, 2014

VIA EMAIL

Dewey Evans Chief Executive Officer Seaside Groundwater Basin Watermaster 2600 Garden Road Suite 228 Monterey, CA 93940 watermasterseaside@sbcglobal.net

RE: Agreement for Legal Services

Dear Mr. Evans:

Thank you for retaining Brownstein Hyatt Farber Schreck, LLP (Brownstein), to advise Seaside Groundwater Basin Watermaster (Watermaster) regarding extractions outside of the Laguna Seca subarea and cumulative extractions in excess of the subareas safe yield (Laguna Seca Matter). In our representation of Watermaster regarding the Laguna Seca Matter, we are representing Watermaster and not its member agencies. This letter and the enclosed Terms and Conditions constitute the Legal Services Agreement between Brownstein and Watermaster. This Agreement will also apply to other services that we may provide you from time to time, at your request, unless we execute a separate agreement. When we refer to you in this Agreement, we are referring to you in your representative capacity for Watermaster.

We cannot predict with certainty the amount of fees and costs that may be incurred. Our hourly rates are based upon the experience, reputation and ability of the professional performing the required service, and we will assign to your matter the personnel who, in our judgment, are best suited to represent you. My current hourly rate is $525, however my hourly rate will be discounted to $450 for Watermaster. I will be assisted by Jena Shoaf whose current hourly rate is $290. Unless you request otherwise, we will bill you for services rendered and disbursements and charges on a monthly basis. Subject to the Terms and Conditions, you agree to pay those statements upon receipt, and no later than the last day of the month in which you receive the statement. We are not requesting a retainer.

If you agree with the provisions of this letter and with the Standard Terms and Conditions, please sign the enclosed copy where indicated, and return it to us with the Disclosure of Relationship, and Waiver of Potential Conflict of Interest. If you do not understand any portion of this letter, or the attached Standard Terms and Conditions, or if you have any questions, please call us at your earliest convenience. If you require advice about your decision to engage us, you should confer with independent counsel before signing this agreement. We cannot give you advice about that decision.

We look forward to a long and productive relationship with you, and thank you for the opportunity to represent you.

21

Seaside Groundwater Basin Watermaster June 23, 2014 Page 2

099001\0052\11261649.1

Sincerely,

Russell M. McGlothlin

RMM:amm Enclosures: Standard Terms and Conditions Disclosure of Relationship, and Waiver of Potential Conflict of Interest

ACCEPTED AND AGREED TO:

SEASIDE GROUNDWATER BASIN WATERMASTER

By: _______________________________ Dated: _________________

Name: _______________________________

Its: _______________________________

ACCEPTED AND AGREED TO:

BROWNSTEIN HYATT FARBER SCHRECK, LLP

By: _______________________________ Dated: _________________ Robert J. Saperstein Managing Shareholder, California

22

BROWNSTEIN HYATT FARBER SCHRECK, LLP STANDARD TERMS AND CONDITIONS

Scope of Representation: The scope of our representation is set forth in the attached Letter. Our representation of you on any particular matter will end when we have completed our essential work on that matter. Duties of the Parties: We agree to provide all legal services reasonably required to represent you, consistent with our ethical obligations. It is our intent to provide you with thorough, prompt and cost-efficient legal services, keep you informed of significant developments in the matter, and respond to your inquiries. You agree to fully cooperate with us, be open and truthful and provide us with all information pertaining to the matter, keep us informed of developments, to pay our bills in a timely manner, and keep us advised of your address, telephone number and whereabouts. You also agree to appear at any proceeding we deem necessary and to cooperate fully with us on all matters related to the investigation, preparation and presentation of your matter. Fees: We review all billing statements before they are issued to ensure that the amount charged is appropriate. The statement for fees is simply the product of the hours worked multiplied by the hourly rates for the attorneys and legal assistants who did the work. The current range of hourly rates for our professional services is: Partners: From $350 to $1065 per hour Of Counsels: From $300 to $1065 per hour Associates: From $210 to $400 per hour Land Use Planners: From $150 to $265 per hour Paralegals: From $150 to $265 per hour Legal Assistants: From $100 to $150 per hour We adjust our rate structure at the beginning of each calendar year. You agree to pay all fees billed at the then-current rate. Outside Contract Attorneys and Legal Assistants: You agree that we may utilize specialized contract attorneys and legal assistants as necessary. You agree to pay the reasonable hourly rate for these legal services. In-House Costs and External Expenses: In addition to charging fees for legal work, we will charge for certain out-of-pocket costs incurred by our firm in representing clients. Charges for long distance telephone calls, facsimile charges, in-office copying, ordinary postage and deliveries made by in-house staff are covered by a 2.5% administrative fee, calculated at 2.5% of fees incurred. This administrative fee is in lieu of itemizing those costs. Other fees, such as computer-assisted legal research and third party vendor fees including document copying, transcript production, overnight delivery service charges, travel, meals and hotel accommodations will be itemized and billed separately at cost. Other in-house costs and expenses include, but are not limited to, secretarial overtime, extraordinary administrative, technical or accounting support; computer legal research; messenger and other delivery fees; mileage, and the cost of licensing and other installation of special computer programming to manage your case. These are directly billed to you at our cost. External expenses are also charged at cost. These include, but are not limited to, the following: Notary fees; consultant costs, investigative costs, professional mediator, arbitrator

and/or special master fees; travel costs, including parking, transportation, meals and hotels. External expenses will either be passed through to you for direct payment to the vendor or included on your statement. We may select experts, consultants and investigators who in our judgment are necessary to aid in the preparation of your matter and will inform you of the persons selected and their charges. You authorize us to incur all reasonable costs and to hire such experts, consultants and investigators. We will not incur any major external expenses on your behalf without your prior approval. Billing Period and Payments: We will bill you for services rendered and disbursements and charges on a monthly, or such other periodic, basis as we may determine. If you require additional statements, you agree to request them at intervals of no less than 30 days and we agree to respond within 10 days. You agree to inform us of any dispute you may have with respect to a statement within 10 days of the statement date. If you do not object, the statement will be deemed correct. If you do object, we will consider our right to the fees and costs set forth on that statement as disputed. Absent a dispute, you agree to pay all statements upon receipt, and no later than the last day of the month in which you receive the statement. Even if you dispute a portion of a statement, you agree to pay the undisputed portion not later than the last day of the month in which you receive the statement. If payment is not timely received, we may assess a monthly delinquency charge of 1.25% (15% per year) of the amount not paid until paid in full. Payments will be applied to the longest outstanding charges in the following order: first, costs, then delinquency charges, and then fees. Retainers: If required, you agree to pay an advance fee retainer upon execution of this agreement and agree that we may, at our discretion, withdraw the undisputed amount of any statement, whether fees or costs, from any retainer you have on deposit. You agree to replenish the retainer monthly to maintain a credit toward fees. That means that, even though you have a retainer on account, you still must pay your statements as they become due. If we expect significant additional expenses, you agree to provide a further retainer within 15 days of our request. Your retainer will be held on your behalf in our trust account without interest to you, because California law requires all interest earned on such funds to be forwarded to the California State Bar for its Legal Service Trust Fund Program. If you prefer, you may request that we hold your funds in a non-interest bearing account, or in an interest bearing account for your benefit. If you make such a request, you agree to pay administrative costs of a one-time $75 set-up charge and a $25 per month service charge. At the conclusion of our representation, we will return any unearned retainer to you. As an additional retainer and as security for the payment of our fees, costs and expenses, you agree that we have a first priority lien on all claims and causes of action that are the subject of our representation under this Agreement and on all proceeds or property obtained or recovered, whether by agreement, settlement, mediation, arbitration award, court judgment, cost or fee award or otherwise resulting from our representation.

23

099999\1073\4598701.3 2

No Guarantee: Our comments about the potential outcome of your matter or any phase thereof are expressions of opinion only. We cannot guarantee the outcome or make any promises in that regard. Discharge: Our goal is to maintain at all times a constructive and positive relationship with you, to the conclusion of this matter and in future matters. However, you have the right to discharge us as your lawyers at any time, and we have the right to withdraw from your representation at any time, consistent with our ethical obligations. If you discharge us or we elect to withdraw, you agree to immediately secure new counsel. If we are your attorneys of record in any proceeding, you agree to cooperate fully in substituting such new counsel as your attorneys of record. At the time of discharge or withdrawal, you agree to immediately pay us for all services rendered to you and for all costs and expense paid or incurred by us on your behalf. Files: At the conclusion of our services, your files will be transferred to you upon request. You agree to pay the cost of accessing, copying and delivering the file to you. If you do not request the return of your files within five (5) years from either the completion of our essential work on the matter or the termination of our relationship by discharge or withdrawal, we have the right, but not the obligation, to destroy any files created and maintained by us with respect to the matter. Disputes: Any controversy or claim arising out of or relating to fees and/or costs incurred under this Agreement shall be resolved pursuant to Business and Professions Code section 6200 et seq. All other disputes arising out of or relating to this Agreement or the professional services rendered under this Agreement, shall be determined in accordance with the laws of the State of California. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. Judgment on the Award may be entered in any court having jurisdiction. Each side shall bear its own costs and attorney fees in said arbitration. Miscellaneous: Unless you instruct us to the contrary in writing, we will utilize facsimile, e-mail, cellular phone, PDA and similar communication methods, and we disclaim any liability for unauthorized third-party interception of communications. You agree that we may use your name and information generally available to the public in our marketing efforts. Interpretation and Effective Date: This agreement is our entire and only agreement and is governed by California law. If any provision is found unenforceable, the remainder of the agreement will remain in effect. This agreement will not take effect until you sign and return the enclosed copy of the letter with these terms and conditions attached and until the agreement has been countersigned by the firms Managing Partner. This agreement will then be retroactive to the date services were first provided. If this agreement does not take effect, you will still be required to pay us the reasonable value of any services we have performed for you.

24

Russell M. McGlothlin Attorney at Law 805.882.1418 tel 805.965.4333 fax RMcglothlin@bhfs.com

bhfs.com BrownsteinHyattFarberSchreck,LLP

1020StateStreet SantaBarbara,CA931012711 main805.963.7000

June 23, 2014

VIA EMAIL

Daphne Hodgson Deputy City Manager of Administrative Services City of Seaside 440 Harcourt Avenue Seaside, CA 93955 dhodgson@ci.seaside.ca.us James Cullem Executive Director Monterey Peninsula Regional Water Authority 580 Pacific Street, Monterey Monterey, CA 93940 Cullem@monterey.org Dewey Evans Chief Executive Officer Seaside Groundwater Basin Watermaster 2600 Garden Road Suite 228 Monterey, CA 93940 watermasterseaside@sbcglobal.net

RE: Disclosure of Relationship, and Waiver of Potential Conflict of Interest

Dear Ms. Hodgson, Mr. Cullem, and Mr. Evans: The purpose of this letter is to disclose to the City of Seaside (Seaside), Monterey Peninsula Regional Water Authority (MPRWA) and Seaside Groundwater Basin Watermaster (Watermaster) potential conflicts of interest relating to our simultaneous representation of Seaside, MPRWA and Watermaster (collectively Monterey Clients or you) which might involve similar issues over which we represent the Monterey Clients, and to obtain the Monterey Clients written acknowledgment of that disclosure and waiver of any current conflicts of interest, if any. This letter confirms and supplements prior discussions and documentation regarding this matter between you and representatives of Brownstein. Watermaster has requested our assistance regarding the matter of extractions outside of the Laguna Seca subarea and cumulative extractions in excess of the subareas safe yield (Laguna Seca Matter). In our representation of Watermaster regarding the Laguna Seca Matter, we are representing Watermaster and not its member agencies. We will take direction from Mr. Evans and other employees of Watermaster regarding the Laguna Seca Matter. The applicable California Rules of Professional Conduct (attached) require us to explain the extent of our client relationships, fully disclose any existing or potential conflicts of interest, and obtain your written

25

May 15, 2014 Page 2

099001\0052\11258155.1

consent to our ongoing concurrent representations of the Monterey Clients. It is important that you understand the nature of these potential conflicts before signing the attached Consent and Waiver of Conflict of Interest, pursuant to the Rules of Professional Conduct (attached). As previously discussed, the Monterey Clients understand that Brownstein represents numerous private and public agency clients throughout California and the western states, as well as on a federal and international basis. We currently represent a number of cities and special districts as general and special counsel, and are engaged in numerous matters throughout California relating to water law and policy. Brownstein provides a variety of professional services for its clients, including general counsel services, transactions, litigation, legislative advocacy, regulatory compliance, political and strategic advice, coalition building and other services. We recognize that actual conflicts may arise in the future. Should we become aware that our representation of any current or future client may create an actual conflict of interest with our representation of the Monterey Clients, either among you or individually with other clients, it is our intent to promptly advise you so that you may decide whether you wish to obtain independent counsel concerning that matter or consent to Brownsteins continued representation of you. As of the date of this letter, we are aware of no actual legal conflicts involving the Monterey Clients. However, the attorney-client relationships discussed below may create the potential for a conflict of interest. Each of these circumstances has previously been disclosed to the Monterey Clients.

(1) Brownstein represents MPRWA with respect to issues relating to Cal-Ams proposed Monterey Peninsula Water Supply Project (MPWSP) for which Cal-Am is presently seeking approvals from the CPUC and other agencies, and efforts to obtain an extension of the Cease and Desist Order in SWRCB WR Order 2009-0060 (CDO) to allow sufficient time for the completion of the MPWSP. This will likely include future proceedings before the SWRCB. We also generally represent the MPWSP concerning water supply by Cal-Am to the Monterey Peninsula, which may involve future proceedings before the SWRCB, CPUC, other regulatory agencies, or the California Courts.

(2) Brownstein represents Seaside with respect to matters concerning the Seaside Groundwater Basin (Seaside Basin) and Seasides use of groundwater from the Seaside Basin. Seaside does not extract groundwater from the Laguna Seca subarea, which is the precise subject of the proposed representation of Watermaster. However, Seaside shares Watermasters concern and goals for robust management of the Seaside Basin and long-term protection of all areas of the Seaside Basin pursuant to the Seaside Basin Groundwater Judgment. As such, the interests of Seaside and Watermaster are aligned at present with respect to the proposed representation of Watermaster with respect to the Laguna Seca Matter.

(3) Brownstein previously represented Cal-Am with respect to issues pertaining to the Carmel River, but no longer does so.

(4) Brownstein also represented the cities of Sand City, Del Rey Oaks, Pacific Grove, Seaside, Monterey and Carmel before the California Public Utilities Commission (CPUC), and other judicial and administrative venues, with respect to the prior proposed water supply project referred to as the Regional Water Project that was proposed to provide replacement water to Cal-Am, and Cal-Ams request to approve a moratorium within its Monterey District. Brownteins present representation of the interests of the aforementioned cities concerning replacement water supplies for the Monterey Peninsula is undertaken pursuant to our representation of the MPRWA.

26

May 15, 2014 Page 3

099001\0052\11258155.1

(5) Brownstein previously represented the City of Monterey with respect to other water matters within the city but no longer does so.

By signing this letter and returning it to us, Seaside, MPRWA and Watermaster acknowledge that we have fully disclosed the foregoing matters to you. Although we do not presently perceive a likely conflict of interest and cannot predict with specificity the manner in which a conflict could arise, the interrelated nature of the Carmel River, the Seaside Basin, and the proposed MPWSP, which are used (or proposed to be used) by Cal-Am in an integrated manner to serve water demands on the Monterey Peninsula, could cause a conflict of interest to arise.

At the same time, it is foreseeable that a conflict of interest may arise in the future. For example, if Seaside were to differ with Watermaster with respect to the strategy and proper approach for resolving the Laguna Seca Matter, Brownstein could not represent any party to that matter without proper informed written consent. Likewise, a conflict could arise if the Laguna Seca Matter presented an issue related to the completion or operation of the MPWSP or efforts to manage issues stemming from the CDO, in which case, Brownstein could not represent any party to that matter without proper informed written consent. Should an actual conflict occur between the MPRWA, Seaside or Watermaster regarding any matter in which Brownstein represents the Monterey Clients, we will attempt to resolve the conflict in a manner that protects our ability to continue our concurrent representation of you. However, that may not be possible or practical given the ethical rules presented below. Thus, we request that Seaside, the MPRWA and Watermaster waive any potential conflict of interest with respect to our representations as disclosed above. Should a conflict or dispute arise that we cannot resolve informally among the Monterey Clients, we will not represent any of the Monterey Clients with respect to the disputed matter. We very much value our relationship with Seaside and MPRWA and the opportunity to represent Watermaster, and recognize that you are free to terminate your engagement of Brownstein at any time.

Should you have any questions regarding this letter, please contact me. We respectfully request that you sign and return the enclosed copy of this letter acknowledging that you have been advised of the California Rules of Professional Conduct and of the potential conflicts associated with your respective interests, and that you nevertheless agree to the concurrent representation and the waiver of conflicts regarding the Monterey Clients.

We encourage you to seek the advice of independent counsel in reviewing this consent. Should you have any questions concerning this letter or the consent, please discuss them with your own, independent counsel before signing and returning the enclosed copy of this letter.

Best Regards,

Russell M. McGlothlin Brownstein Hyatt Farber Schreck, LLP Enclosures: California Rules of Professional Conduct

27

May 15, 2014 Page 4

099001\0052\11258155.1

CONSENT AND WAIVER

The undersigned acknowledge receipt of the above written disclosure pursuant to the California Rules of Professional Conduct and understand the matters discussed therein. Having all this information in mind, I consent and give approval to Brownsteins concurrent representation of Seaside, MPRWA and Watermaster as described in this letter, and waive any actual or potential conflict of interest arising from such representation. In the event that an actual conflict of interest occurs, we will not represent any of the Monterey Clients with respect to the disputed matter.

I acknowledge that I have had an opportunity to review this matter with independent legal counsel. In the event that I have not discussed the matter with a legal counselor of my choice before executing this consent/waiver, I freely and voluntarily waive such counsel, although I understand that I have the right to seek such independent counsel regarding this matter at any time.

CITY OF SEASIDE

By: _______________________________ Dated: _________________ Daphne Hodgson Deputy City Manager, City of Seaside

MONTEREY PENINSULA REGIONAL WATER AUTHORITY

By: _______________________________ Dated: _________________ James Cullem Executive Director

SEASIDE GROUNDWATER BASIN WATERMASTER

By: _______________________________ Dated: _________________

Name: _______________________________

Its: _______________________________

28

May 15, 2014 Page 5

099001\0052\11258155.1

California Rules of Professional Conduct, Rule 3-310 (B) and (C)

"(B) A member shall not accept or continue representation of a client without providing written

disclosure to the client where: (1) The member has a legal, business, financial, professional, or personal

relationship with a party or witness in the same matter; or

(2) The member knows or reasonably should know that:

(a) the member previously had a legal, business, financial, professional, or personal relationship with a party or witness in the same matter; and

(b) the previous relationship would substantially affect the members

representation; or

(3) The member has or had a legal, business, financial, professional, or personal relationship with another person or entity the member knows or reasonably should know would be affected substantially by resolution of the matter; or

(4) The member has or had a legal, business, financial, or professional interest in the

subject matter of the representation.

(C) A member shall not, without the informed written consent of each client:

(1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or

(2) Accept or continue representation of more than one client in a matter in which the interests of the clients actually conflict; or

(3) Represent a client in a matter and at the same time in a separate matter accept as a client a person or entity whose interest in the first matter is adverse to the client in the first matter.

29

ITEM. IX.

NEW BUSINESS

30

ITEM IX.A.

COMMITTEE REPORTS

31

ITEM NO. IX.A.1.

TECHNICAL ADVISORY

COMMITTEE (TAC)

32

ITEM IX.A.1.a 12/3/2014

SEASIDE GROUNDWATER BASIN

WATERMASTER

TO: Board of Directors FROM: Robert S. Jaques, Technical Program Manager REVIEWED AND APPROVED BY Dewey D Evans, CEO DATE: December 3, 2014 SUBJECT: Discussion/Consider Approving the Seawater Intrusion Analysis Report (SIAR) for WY 2014 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RECOMMENDATIONS: It is recommended that the Board approve the Seawater Intrusion Analysis Report for WY 2014. BACKGROUND: HydroMetrics has prepared the Draft Seawater Intrusion Analysis Report (SIAR) for Water Year 2013-2014 (WY 2014). The Executive Summary from the SIAR is attached. The complete Draft SIAR is lengthy, so rather than including it in this agenda packet it has been posted on the Watermasters website so Board members and members of the public wishing to review the entire document can do so. The SIAR examines the health of the Basin with regard to whether or not there are any indications that seawater intrusion is either occurring or is imminent. At its November 12, 2014 meeting the TAC reviewed the Draft 2014 SIAR and recommended it for approval by the Board DISCUSSION Previous SIARs have stated that depressed groundwater levels, continued pumping in excess of recharge and fresh water inflows, and ongoing seawater intrusion in the nearby Salinas Valley all suggest that seawater intrusion could occur in the Seaside Groundwater Basin. In spite of these factors, the previous SIARs stated that neither the Piper nor the Stiff Diagrams indicated the presence of seawater intrusion in the existing monitoring wells. HydroMetrics has reported essentially these same findings and conclusions in the 2014 Draft SIAR. Because of an increase in the chloride and sodium levels this year in the Watermasters Sentinel Monitoring Well SBWM-1 (located a short distance inland from the beach just south of the former Soldiers Club at the former Fort Ord) HydroMetrics recommends that this well be resampled in January 2015 to determine whether the analytical results from this sample were outliers (sampling or lab error) or whether they are repeatable and therefore considered to be valid. If the results of the resampling indicate the results are valid, HydroMetrics will likely provide additional recommendations about this. The costs to perform this additional monitoring are included in Amendment No. 1 to MPWMDs contract with the Watermaster (RFS No. 2015-01), which is the subject of Agenda Item No. IX.A.1.b in todays agenda packet.

33

A representative from HydroMetrics will participate in todays Board meeting via telephone to provide an oral summary of the report and to respond to questions by Board members. ATTACHMENTS: 1. Executive Summary of the WY 2014 Seawater Intrusion Analysis Report. The complete Draft SIAR is posted on the Watermasters website http://www.seasidebasinwatermaster.org/, for review by those who wish to examine the entire document, including all of its attachments. 2. Seaside Groundwater Basin 2014 Seawater Intrusion Analysis Report (Presentation Slides)

34

http://www.seasidebasinwatermaster.org/

35

36

12/23/2014

1

November 19, 2014

Cation/Anions Piper and Stiff Diagrams

Chloride Distribution and Na/Cl Molar Ratio

Electric Induction Logs

Groundwater Elevations

Protective Levels

Groundwater Production

DeepShallow

37

12/23/2014

2

4444thththth Quarter Shallow 2014Quarter Shallow 2014Quarter Shallow 2014Quarter Shallow 2014 4444thththth Quarter Deep 2014Quarter Deep 2014Quarter Deep 2014Quarter Deep 2014

Subarea Well Depth

Protective

Elevation,

feet amsl

Above

or Below

Northern

Coastal

MSCDeep 17 Below

Shallow 11 Below

PCA-WDeep 17 Below

Shallow 2 Above

Sentinel Well 3 Deep 4 Below

Southern

CoastalCDM-MW4 Shallow 2 Above

38

12/23/2014

3

1. Verification water quality sampling and

analysis for sentinel well SBWM-1 because of

high sodium and chloride concentrations

2. Continue to analyze and report on water

quality annually

39

ITEM IX.A.1.b 12-3-14

SEASIDE GROUNDWATER BASIN

WATERMASTER

TO: Board of Directors FROM: Robert S. Jaques, Technical Program Manager REVIEWED AND APPROVED BY: Dewey D Evans, CEO DATE: December 3, 2014 SUBJECT: Discussion/Consider Approving Amending MPWMDs RFS No. 2015-01 by adding $1,000 to perform additional water quality monitoring and transferring the $1,000 from the Monitoring and Management Contingency line item to MPWMDs RFS No. 2015-01. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RECOMMENDATIONS: It is recommended that the Board approve the attached Amendment No. 1 to RFS No. 2015-01 with MPWMD for FY 2015. BACKGROUND: After the execution of RFS No. 2015-01, a recommendation was made in the 2014 Seawater Intrusion Analysis Report (discussed under Agenda Item No. IX.A.1.a on todays Agenda) that an additional water quality sampling event be performed on one of the Watermasters sentinel monitoring wells (Well SBWM-01). DISCUSSION This additional sampling event had not been included in the original scope of work for this RFS, and the cost to perform it had not been included. The attached Amendment No. 1 to RFS No. 2015-01 will add one additional water quality sampling event on SBWM-01 to the scope of work, and will increase the Total Price of RFS No. 2015-01 by $1,000 to cover the cost of this additional work, resulting in a revised Total Price of $77,462.00. FISCAL IMPACTS The $1,000 increase in the authorized amount of RFS No. 2015-01 will be funded by transferring $1,000 from the FY 2015 Monitoring and Management Program Contingency line item to MPWMDs RFS No. 2015-01. ATTACHMENTS: 1. Amendment No. 1 to MPWMD RFS No. 2015-01.

40

41

42

ITEM IX.A.1.c 12/3/14

SEASIDE GROUNDWATER BASIN WATERMASTER

TO: Board of Directors FROM: Robert S. Jaques, Technical Program Manager REVIEWED AND APPROVED BY: Dewey D Evans, CEO DATE: November 20, 2014 SUBJECT: Discussion/Consider Approving Professional Services Agreement (PSA) and Request for Services (RFS) No. 2014-01 with Todd Groundwater to Perform a Peer Review of Groundwater Modeling Work Performed by HydroMetrics at a Not to Exceed Cost of $25,420.00 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RECOMMENDATIONS: It is recommended that the Board approve the attached PSA and RFS No. 2014-01 with Todd Groundwater. BACKGROUND: At its June 4, 2014 meeting the TAC discussed the issue of performing a peer review of HydroMetricss modeling work. Based on the very specific knowledge of the Seaside Basin which would be necessary in order to properly perform a peer review of the work HydroMetrics has performed, the TAC unanimously recommended that Gus Yates of Todd Groundwater be selected to perform this work, if the Board were to request that a peer review be performed. At its October 1, 2014 meeting the Board requested that a peer review of HydroMetrics recent modeling work for the Watermaster be performed. DISCUSSION: A Scope and Cost Proposal was requested from Todd Groundwater to perform this work. Using the Scope and Cost Proposal provided by Todd Groundwater, draft contract documents were prepared for TAC review and approval. The attached Professional Services Agreement (PSA) and Request for Service (RFS) No. 2014-01 with Todd Groundwater to perform this peer review were reviewed, discussed, and recommended for Board approval by the TAC at its November 12, 2014 meeting. Mr. Yates of Todd Groundwater will participate in todays Board meeting via telephone to provide a short description of his expertise and experience pertinent to performing this work and to respond to questions by Board members. Copies of the PowerPoint slides Mr. Yates will be using are attached. ATTACHMENTS:

1. PowerPoint Slides Regarding Mr. Gus Yates 2. Professional Services Agreement 3. RFS No. 2014-01

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

61

62

63

64

65

66

67

68

69

70

71

72

73

ITEM IX. B. 12/3/2014

SEASIDE GROUNDWATER BASIN

WATERMASTER

TO: Board of Directors

FROM: Dewey D Evans, CEO

DATE: December 3, 2014

SUBJ: Watermaster Declaration of NO Replenishment Water Available for Water Year 2015

To notify all Seaside Groundwater Basin producers that the Watermaster has declared for Water Year 2015 that NO Artificial Replenishment Water is available to offset Over-Production in excess of the Operating Yield for the Seaside Groundwater Basin pursuant to the Amended Decision entered in the Seaside Adjudication.

PURPOSE:

Consider approving the Declaration of No Artificial Replenishment Water Available for Water Year 2015.

RECOMMENDATION:

The Court has declared in Section III L 3 j iii of the adjudication Decision that in the event Watermaster cannot procure Artificial Replenishment Water to offset Operating Yield Over- Production during the ensuing Water Year that the Watermaster Board shall so declare in December that no Operating Yield Over-Production then in effect may occur during the ensuing Water Year.

DISCUSSION:

Watermaster has determined that there is no foreseeable replenishment water available for Water Year 2015. As ordered by the Court at the January 12, 2007 hearing, a third full triennial 10% reduction in Operating Yield will be in effect for the entire Water Year 2015. (Commencing with the fourth Water Year, and triennially thereafter the Operating Yield for both Subareas will be decreased

by ten percent (10%) until the Operating Yield is equivalent of the Natural Safe Yield.)

If potable water becomes available to the Watermaster during Water Year 2015, such as the City of Seaside golf course irrigation program creating in-lieu replenishment water in an amount necessary to offset the 10% reduction, all producers under the Decision would be notified of such availability and of any resulting adjustments to the limits of production.

1) Declaration of Unavailability of Replenishment Water for Water Year 2015 and limits on production.

ATTACHMENTS

2) Watermaster Producer Allocations Water Year 2015 including a third triennial 10% Reduction for the entire Water Year.

74

ITEM IX.B. 12/3/2014

NOTICE TO ALL SEASIDE GROUNDWATER PRODUCERS:

Case No. M66343 Amended Decision Section III.B.2. Commencing with the fourth Water Year, and triennially thereafter, the Operating Yield for both Subareas will be decreased by ten percent (10%) until Operating Yield is the equivalent of the Natural Safe Yield unless:

a. The Watermaster has secured and is adding an equivalent amount of Non-Native water to the Basin on an annual basis; or

b. The Watermaster has secured reclaimed water in an equivalent amount and has contracted with one or more of the Producers to utilize said water in lieu of their Production Allocation, with the Producer agreeing to forego their right to claim a Stored Water Credit for such forbearance; or

c. Any combination of a and b above which results in the decrease in Production of Native Water required by this Decision; or

d. The Watermaster has determined that Groundwater levels within the Santa Margarita and Paso Robles aquifers are at sufficient levels to ensure a positive offshore gradient to prevent seawater intrusion.

The Watermaster has determined that the conditions necessary to avoid the ten percent Operating Yield reduction have not been met as follows:

1. Watermaster has not secured water for adding an equivalent amount of Non-Native water to the Basin on an annual basis. The Watermaster and the City of Seaside have, however, entered into a Memorandum of Understanding for Seasides In-lieu Replenishment Program which may, in future water years, provide sufficient water to avoid an Operating Yield reduction.

2. The Watermaster has not secured reclaimed water in an equivalent amount. 3. The Watermaster has not secured Non-Native water or reclaimed water which results in the

decrease in Production of Native Water required by the Decision. 4. The firm contracted by Watermaster for technical analyses continued to report in 2013 that

Groundwater levels within the Santa Margarita and Paso Robles aquifers are not at sufficient levels to ensure a positive offshore gradient to prevent seawater intrusion, so the requirement for this item continues to not be met.

Section III.L.3.j.iii: Watermaster declares that for Water Year 2015 Artificial Replenishment Water is not available to offset Operating Yield Over-Production and producers are limited in production to the following quantities of water:

Coastal Subarea Alternative Producers: Seaside (Golf) ............................. 540.00 acre-feet SNG ............................................ 149.00 acre-feet

Cypress (Calabrese) ..................... 14.00 acre-feet Mission Memorial (Alderwood) 31.00 acre-feet Sand City ..................................... 9.00 acre-feet

75

Laguna Seca Subarea Alternative Producers: Nicklaus Club Monterey ............. 251.00 acre-feet Bishop ......................................... 320.00 acre-feet York School ................................ 32.00 acre-feet Laguna Seca County Park ........... 41.00 acre-feet

Coastal Subarea Standard Producers:

Seaside (Municipal) ................... 184.61 acre-feet**

California American Water .......... 2,251.14acre-feet*

Granite Rock ............................... 217.81 acre-feet***

D.B.O. Development 30 ............. 422.96 acre-feet****

California American Water .......... 48.30 acre-feet Laguna Seca Subarea Standard Producers:

* Total is the 2015 base allocation of 2,251.14 acre-feet. California American Water has a negative balance of 349.17 acre-feet of stored water credit

in WY 2015 from Basin extractions exceeding injections in 2013 under the CAW/MPWMD ASR Program, formalized through a Storage Agreement in 2012.

** Total is the 2015 base allocation of 184.61 acre-feet. *** Total includes 121.57 acre-feet of free carryover and 78.85 acre-feet of not-free

carryover credit from previous water years, plus the 2015 base allocation of 17.39 acre-feet. **** Total includes 238.88 acre-feet of free carryover and 152.52 acre-feet of not-free

carryover credit from previous water years, plus the 2015 base allocation of 31.56 acre-feet.

76

ITEM IX.C 12/3/14

SEASIDE GROUNDWATER BASIN WATERMASTER

TO: Board of Directors FROM: Robert S. Jaques, Technical Program Manager REVIEWED AND APPROVED BY: Dewey D Evans, CEO DATE: December 3, 2014 SUBJECT: Discussion/Consider Approving Watermaster Annual Report for WY 2014 Due to be Filed with the Court on or before December 15, 2014 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - RECOMMENDATIONS: It is recommended that the Board approve the Watermaster Annual Report for WY 2014. BACKGROUND: The Watermaster submits an Annual Report to the Court after the end of each Water Year to fulfill one of its obligations under the Court Decision that created the Watermaster. This document summarizes and provides information on all of the Watermasters principle activities of the year, and as required by the Decision is organized into the following Sections: A. Groundwater Extractions B. Groundwater Storage C. Amount of Artificial Replenishment, if any, performed by Watermaster D. Leases or sales of Production Allocation and Administrative Actions E. Use of imported, reclaimed, or desalinated Water as a source of Water for

Storage or as a water supply for lands overlying the Seaside Basin F. Violations of the Decision and any corrective actions taken G. Watermaster administrative costs H. Replenishment Assessments I. All components of the Watermaster budget J. Water Quality Monitoring and Basin Management K. Conclusions and Recommendations

DISCUSSION: A Preliminary Draft Annual Report was presented to the TAC for its review and input at the TACs November 12, 2014 meeting. Attached is the body of the Draft 2014 Annual Report, which reflects the TACs input on the Preliminary Draft Annual Report. The complete Draft version is posted on the Watermasters website at http://www.seasidebasinwatermaster.org/. At the Boards request, at its November 12 meeting the TAC reviewed and discussed a September 30, 2014 letter sent to the Watermaster from the attorney (Mr. Eric Robinson)

77

http://www.seasidebasinwatermaster.org/

representing Bishop, McIntosh & McIntosh (who is the landowner and leaseholder of the Laguna Seca Golf Resort) questioning some of the findings and conclusions in the August 26, 2014 HydroMetrics Draft Technical Memorandum describing the Laguna Seca Safe Yield modeling. A copy of this letter is attached. A copy of HydroMetrics October 13, 2014 response letter is also attached.

The attorneys letter makes the following requests and raises the following points: Request 1: That the Watermaster should clarify, in any communication it makes with the Court, the issues regarding the Natural Safe Yield (NSY) of the Laguna Seca Subarea (LSSA) apparently being considerably lower than the NSY reported in the Adjudication Decision, and what the Watermasters plans are to stabilize groundwater levels in the LSSA over the long term. Request 2: That the Watermaster should work directly with the LSSA Alternative Producer representative on how this matter is addressed in the Annual Report as well as in communications with the Court. Point 1: The El Toro area pumpers do not have a Court-determined prior right to groundwater originating in the LSSA. Therefore, it would be a mistake for the Watermaster to suggest to the Court that the true NSY for the LSSA is lower than the NSY cited in the Decision. The Technical Memorandums subsurface outflow assumptions for the LSSA should be revisited before drawing any conclusions regarding whether the NSY of the LSSA is different than the NSY cited in the Decision. Point 2: The attorneys letter cites some of the language from the Technical Memorandum pertaining to the matter of pumping from outside the LSSA Decision boundary as affecting groundwater levels in the LSSA, and that this is beyond the Watermasters control, and whether the boundary in the Decision is correctly drawn for the LSSA. However, the letter does not appear to question any of this language. Point 3: The attorneys letter cites some of the language from the Technical Memorandum indicating that the LSSA has negligible influence on seawater intrusion, and that groundwater levels in both the Southern Coastal Subarea and the LSSA are high enough to prevent seawater intrusion. However, the letter does not appear to question any of this language. At the conclusion of its discussion of this matter, the TAC gave its unanimous concurrence to the following comments and conclusions: 1. With regard to the attorneys two requests, the TAC believes it is the Boards intent

to do both of these things. Although there is no Board membership position titled alternative producer representative, there is a Laguna Seca Subarea Landowner representative (Mr. Costa) who is a member of both the TAC and the Board and who regularly attends the meetings of both of those bodies. Hence, the LSSA alternative producers, through Mr. Costa, are represented in all of these deliberations.

2. HydroMetrics October 13 response letter refutes Point 1 in the attorneys letter which characterizes the 1,556 AFY of subsurface outflow from the LSSA as being only an estimate of what might be flowing out of the LSSA. HydroMetrics points out that the detailed groundwater model that was developed for the Watermaster, and which was used to perform this modeling, accur