Carmel Area Wastewater District/Pebble Beach Community Services District/Pebble Beach Company

WASTEWATER RECLAMATION PROJECT
MANAGEMENT COMMITTEE
MINUTES

Meeting of May 19, 2006
Pebble Beach Community Services District Boardroom
Forest Lake & Lopez Roads, Pebble Beach, CA

 1.         Call to Order

Ray von Dohren, CAWD General Manager, serving as facilitator, called the meeting to order at 9:36 a.m.  Members or alternates present were: Joyce Stevens and Charlotte F. Townsend, Carmel Area Wastewater District Board of Directors (CAWD); Richard D. Verbanec , Pebble Beach Community Services District Board of Directors (PBCSD); and Mark Stilwell, Executive Vice President, Pebble Beach Company (PBCo).

             Others in attendance:

Richard Andrews , General Manager, PBCSD
Michael Niccum , P.E., District Engineer, PBCSD
Brent Reitz, Capital Services Project Manager, Pebble Beach Company
Ken Buchert, Legal Counsel, CAWD/PBCSD
Barbara Buikema, Accountant/Controller, CAWD
 Tom Peterson, Operations Superintendent, Monterey District, California American Water (“Cal-Am”)
 Michael Magretto, Operations Supervisor, Cal-Am
 Mark Scheiter, Plant Superintendent, CAWD
 Fay A. Webb, Secretary to the Board, CAWD

 2.       Period for welcoming visitors, receiving public comment regarding matters not listed or considering changes to the agenda:

Following introductions, there were no comments from visitors or Committee members regarding matters not listed on the agenda, and no requests were received to change the content or order of the agenda.

 3.         Minutes:

Richard Verbanec questioned the wording in the first paragraph on page 3 which read: “Ms. Buikema advised that receivable from CAWD for electrical use. . . . .” and asked if the sentence should read, “Ms. Buikema advised that accounts receivable from CAWD for electrical use. . . . .”   Ms. Buikema replied that the language used is indicative of that used by accountants.

It was moved and seconded by Member Stevens and Member Townsend, and unanimously carried, to approve the minutes of the Committee meeting of March 17, 2006.

4.         Review proposed CAWD/PBCSD Reclamation Project Budget for fiscal year 2006-07

Ms. Buikema reviewed the budget documents bringing attention to the following points of explanation:

Water sales were estimated using 150 AF of potable water and 850 AF of reclaimed water at a price of $2,261 per AF.  This represents a 15% increase in the cost of water.

Tom Peterson of Cal-Am Water advised that there is still a question regarding the percent of rate increase for the use of water.

The MPWMD 7.125% charge is for the proceeds of the sale of reclaimed water with respect to the first 380 AF of water sold to PBCo and is estimated at $34,000 for budget purposes.  However, because of the sale of water entitlements and corresponding water permits issued that number will probably vary from the estimate and, in fact, will likely be lower.

Pebble Beach Co. Contribution represents $1,100,000 in principal payment and $405,000 in L/C (Line of Credit carrying costs.  This assumes that all monthly COP (Certificates of Participation) interest payments will be made from water sales revenue.

Plant operating wages were based on the average for the four-month period June through September and extended over 12 months.   With Forest Lake online, it is assumed the tertiary plant will no longer shut down over winter months.

PBCSD labor costs reflect an increase to accommodate management of Forest Lake .  Additional increases in power, chemicals, and operating supplies reflect the cost of operating the reservoir.

Michael Niccum advised that PBCSD estimates one and half maintenance personnel will be required to operate the reservoir the first year and the staffing requirement may be reduced in the future.  The District plans to use existing District staff for one full time equivalent employee and contract for a half-time person to aid in operating and maintaining the reservoir.

CAWD administrative labor costs have decreased because all engineering costs will be reflected in Phase II.  CSRMA has advised that insurance costs will remain low and the budget reflects a 10% increase in premium.

Non-operating costs are estimated to increase due to a higher interest rate environment, which translates into higher COP interest expenses.

In reviewing the Budget Summary, Member Stevens pointed out the 156% increase in PBCSD operating expenses.  Mr. Niccum advised that this was due to the operation and maintenance of the Forest Lake Reservoir.  

Ms. Buikema reviewed the significant changes to the budget and answered questions posed by the Committee.

The Management Committee approved the proposed CAWD/PBCSD Reclamation Project Budget for fiscal year 2006-07 as presented.

5.     Receive and consider reports relating to operations and maintenance (“O & M”) of Project: Treatment Plant O & M

The Committee received a written status report from CAWD Treatment Plant Superintendent, Mark Scheiter regarding treatment plant operations.  

There being no further questions or comments, the written and oral reports regarding Treatment Plant O & M were received as informational and no action was required or taken by the committee.

5-B.     Distribution System O & M; reclaimed and potable water use

PBCSD District Engineer, Michael Niccum , reviewed his Distribution System Operations Report, dated May 19, 2006 and indicated that it had been a routine period.

Mr. Niccum reported that total irrigation water demand for the 2005-06 water year to date is 234 acre feet, including 185 acre feet or 79% of recycled water.  Total demand for the water year is 87 acre feet, or 27%, below the 11-year average usage of 321 acre feet for this point in the water year.  Mr. Niccum reported that the May potable water flushing cycle used 26 acre feet, and that approximately 47 acre feet of potable water has been used in flushing cycles during the current water year.  This accounts for 96% of the total potable water use of 49 acre feet.

There being no questions or comments, the Distribution System O & M Report was received for information and no action was required or taken by the Committee.

 5-C.    Consolidated Financial Statements from July 2005 through March 2006

Barbara Buikema reviewed the financial statements for the period from July 2005 through March 2006. 

Ms. Buikema indicated that the O & M cash balances total $189,353.  First, second and third quarter 2005-06 funds have been received and O & M cash on hand as of May 18, 2006 is $275,986.  Phase II escrow account balance as of March 31 was $9,756,206.  She further reported that Cal-Am Water had made an error in the meter reading in November after payment had been made; hence, a credit balance which will be used by the end of the fiscal year. Ms. Buikema advised that receivable from CAWD for electrical use at the lab has been suspended due to repair of the meter.  Once work is completed, the District will adjust past usage as appropriate. 

The Summary O & M Revenue and Expense Statement shows a net cash income through March 2006 of $693,436, a positive variance of $301,353. Ms. Buikema stated that the monthly budget percentage is based on prior year historical revenue and expense data in order to “even out” seasonal variations.  She reported that water sales and purchase of potable water are both under budget. 

Ms. Buikema gave O & M Statement detail as follows:

Ms. Buikema stated that she had no further comments to offer regarding the financial statements and would respond to any questions the Committee members had.  Mark Stilwell, Pebble Beach Co., advised that an invoice for services will be received from CDM shortly.

Following questions and answers, the O & M Financial Statements for the period were received for information and no action was required or taken by the Committee.    

6.      Receive status reports concerning Main Components Phase II (Expanded)  Reclamation Project:

6-A.   Planning and Design of Advanced treatment: micro-filtration/reverse osmosis facilities

CAWD General Manager, Ray von Dohren, reported that he had sent a letter to Mark Stilwell advising that it is no longer in the best interests of CAWD to manage the advanced treatment project under the present design/build arrangement and that a 100% design/bid/build approach be considered.  He stated that numerous conversations have occurred since that time, including discussions held at the TAC meeting as well as the CAWD meeting of Board of Directors.  The CAWD Board gave directions to its General Manager to reach a solution that would maximize control of the project by CAWD.  Mr. Von Dohren expressed no doubt that the Pebble Beach Company and CAWD would come to a resolution of the issue. 

Richard D. Verbanec asked the purpose of the Committee when faced with this type of situation.  General Manager von Dohren stated that there are actually two separate projects; one is the tertiary microfiltration/reverse osmosis project done by CAWD and the other is the Forest Lake Reservoir project done by PBCSD.  He further stated that, as far as the current issue is concerned, PBCSD staff has offered valuable suggestions to help resolve the matter.  As far as the Board members on the Committee are concerned, he felt that they could nothing further than offer suggestions.   General Manager von Dohren said that the ultimate authority over what happens on the project, in this particular case, is up to CAWD because of the fact that the facilities are on CAWD’s property.  

General Manager von Dohren said that Mr. Verbanec was correct in his assumption that the Project is listed in all documentation as “Phase II” and not as separate elements.  However, the responsibilities are very well defined and the responsibilities for water quality and quantity rest with both Districts

6-B.    Forest Lake Reservoir Construction Project

PBCSD District Engineer Mike Niccum, in addition to his written report, presented a slide show, together with comments, showing the progress made to date on construction of the Reservoir.   Mr. Niccum stated that the Reservoir is now at full capacity and that the algae continue to dissipate due to the natural growth of microscopic rotifer and crustacean zooplankton that eat or graze on algae.  In addition algae control measures including the mixer and air flow bubbler systems circulate the reservoir water continuously and reduce the potential for algae to accumulate in the upper layer of the reservoir where the sunlight promotes growth.  A successful 7-day test of the treatment facility including automatic operation of the microstrainers, plant feed pumps, pipeline motor operated valves, chemical feed systems for chlorine injection and pH adjustment and instrumentation controls at the reservoir was completed on May 15th.  The liner testing found no weak spots requiring repair and no water from the leak detection system below the liner has been observed to date.  

Mr. Niccum pointed out that two change orders were executed by the General Manager increasing the sum of the construction contract by $173,935.  They include: a) increasing the height of three gates and 437 feet of fencing from 6 feet to 8 feet and adding 380 feet of new fencing around the perimeter of the project; b) constructing a drainage ditch above the east embankment and overlaying the access road to the Cal-Am tanks with 2 inches of asphalt; c) providing sand slurry backfill in valve and meter vault excavations located at the toe of the south embankment; d) installing four security cameras mounted on two new poles near the outlet structure and on the chemical building; e) installing a fiber optic line between the Forest Lake chemical building and the maintenance building.  Mr. Niccum stated that the PBCSD had paid $125,000 to add the security cameras and cable because the District would derive benefit from those improvements.  He further stated that there remains some finish grading and paving before the project reaches final completion on June 15, 2006.

6-C.     Implementation of financing plan

Mark Stilwell, Pebble Beach Company, reported that water sales continue to come in and that he is hoping for possible sales of 10 acre feet per year.

There were no further questions, comments or action taken by the Committee.

7.     Receive Miscellaneous Information or Announcements from Members, Staff or Visitors:

Tom Peterson, Cal-Am Water, reported that the exact amount of rate increase is still unknown.

Michael Niccum reported that it has been suggested that the Committee consider a formal dedication ceremony celebrating the completion of the Reservoir project.  General Manager von Dohren recommended that, if the announcement will be in print, it should occur fairly soon while the Reservoir is full and before the water is drawn down for the summer irrigation season.  It was the consensus that PBCSD would start planning of the ceremony, run it through the TAC, then through CAWD and finally the Management Committee.  Michael Niccum thought that the focus of the ceremony should be on the north end of the Reservoir.

Charlotte Townsend, referring to the retirement of the PBCSD General Manager, Richard Andrews , commended Mr. Andrews on his achievements and the cooperation between the Districts as a result of his dedicated work.

There were no further reports or announcements from Committee members, staff or visitors.

8.    Closed Session

The Committee did not meet in a closed session.

9.   Adjournment & Next Meeting Date:

There being no further business at 10:45 a.m., it was moved by Mark Stilwell and  seconded by Joyce Stevens, and determined by consensus of the members, that the Reclamation Management Committee adjourn to its next regular meeting on Friday, July 14, 2006 at 9:30 a.m. in the PBCSD Boardroom at 3101 Forest Lake Road, Pebble Beach.

Respectfully submitted:
Fay Webb
Secretary