CONTRA COSTA WATER DISTRICT

BOARD OF DIRECTORS

REGULAR MEETING

February 21, 2007

MINUTES

CALL TO ORDER

President Campbell called to order a regular meeting of the Board of Directors of the Contra Costa Water District at 6:30 p.m., at 1331 Concord Avenue, Concord, the regular meeting place of the Board.

ROLL CALL

Directors Present: Joseph L. Campbell, President

Elizabeth R. Anello, Vice President

Bette Boatmun

John A. Burgh

Karl L. Wandry

General Manager: Walter J. Bishop

Legal Counsel: Robert B. Maddow

District Secretary: Sharon L. Burris

PLEDGE OF ALLEGIANCE

Executive Assistant to the General Manager Desiree Castello led the Pledge of Allegiance.

ADOPTION OF AGENDA

Mr. Bishop reported that there were no changes to the agenda. He advised that he would have minor changes to Agenda Item No. 2 – Approve the minutes dated January 17, 2007, on the consent calendar.

PUBLIC COMMENT

President Campbell asked if there were any public comments. There were no public comments.

CONSENT

1. Approve Directors’ Services/Business and Travel Expenses

a. Compensation – January

~~2. Approve the minutes dated January 17, 2007.~~

3. Approve the warrant register dated February 22, 2007.

4. Delta Water Quality Management Practices in Rice Production

a. Adopt Resolution No. 07-04 authorizing acceptance of a grant from the State Water Resources Control Board to manage the Implementation of Water Quality Better Management Practices (BMPs) for Sacramento-San Joaquin Delta Rice Production Project, in an amount not to exceed $999,981;

b. Authorize execution of professional services agreements for the Implementation of Water Quality BMPs for Sacramento-San Joaquin Delta Rice Production Project with Bachand & Associates in an amount not to exceed $312,709; with HydroFocus in an amount not to exceed $259,413; with the University of California at Davis in an amount not to exceed $177,662; and, with the United States Geological Survey in an amount not to exceed $180,197 for a total amount not to exceed $929,981; and

c. Authorize an increase of $80,000 to the Planning Department FY07 operating budget and an increase of $769,981 to the Planning Department FY08 operating budget, to be funded by the SWRCB.

5. Amendment for Engineering Services for the Bollman Distributed Control System Replacement Project

a. Authorize execution of an amendment of $440,000 to the September 2006 agreement with Carollo Engineers for professional engineering services for the Bollman Distributed Control System (DCS) Replacement Project, for a total authorized amount not to exceed $1,689,525; and

b. Authorize procurement of the sole source DCS equipment from Alameda Electrical Distributors, Inc. at a cost not to exceed $310,000.

6. Property Damage, Liability Insurance Coverage and Brokerage Services

a. Authorize contract with Arthur J. Gallagher and Company as broker of record for the District for a two-year period through March 1, 2009 at a cost of $62,500 from March 1, 2007 through March 1, 2008, and $67,500 for brokerage services from March 1, 2008 through March 1, 2009; and

b. Authorize the execution of necessary documents to obtain property and liability coverage in the commercial market for March 1, 2007 to March 1, 2008 in an amount not to exceed $592,500.

7. Authorize amendment to agreement with Bold, Polisner, Maddow, Nelson & Judson in the amount of $500,000 for general and project-related legal services for a new total not to exceed $1,390,000 in FY07.

8. Authorize execution of a contract with JMB Construction, Inc. for the construction of the CCWD/Pittsburg Emergency Intertie Project in the amount of $296,632, with a change order authority of $29,663, for a total amount not to exceed $326,295.

9. Authorize execution of an agreement to conduct a labor stability study on the feasibility of using a Project Labor Agreement for the Alternative Intake Project, in an amount not to exceed $25,000.

President Campbell pulled Item No. 2 – Approve the minutes dated January 17, 2007 at the request of Mr. Bishop.

Director Burgh commended staff for their creativity on Item No. 5 - Amendment for Engineering Services for the Bollman Distributed Control System Replacement Project. He commented that the non-traditional approach would be a benefit to the District and the ratepayers.

MOTION: Boatmun/Anello to approve the consent calendar with the exception of Agenda Item No. 2. The motion carried by a unanimous voice vote.

2. Approve the minutes dated January 17, 2007.

Mr. Bishop noted that on Page 3, the second paragraph, the first sentence stated that “…there would not be a budget review for this calendar year.” He advised that the language should be revised to reflect, “…there would not be a new budget adopted for this calendar year.”

Mr. Bishop also noted that there was a typographic error on Page 4, second paragraph, second sentence, and “... the total for the Bond would be $3.95 billion with $2 million for storage.” The sentence should be revised to reflect “… the total for the Bond would be $3.95 billion with $2 billion for storage.”

MOTION: Campbell/Boatmun to approve Item No. 2 – Approve the minutes dated January 17, 2007 with the revisions. The motion carried by a unanimous voice vote.

ACTION

10. Award of Contract – Randall-Bold Water Treatment Plant pH Control System Project

a. Authorize a $707,002 budget increase for the FY07 Water Treatment Plant Improvements Program, with $382,285 to be funded through budget transfers from the Randall-Bold Water Treatment Plant (RBWTP) Filter Media Replacement Project ($285,675) and RBWTP Sedimentation Basin Project ($96,610), and $324,717 funded from DWD, Brentwood and Antioch; and

b. Authorize execution of a contract with NCCI, Incorporated for the construction of the Randall-Bold Water Treatment Plant pH Control System Project in the amount of $999,117, with an 8% change order authority of $79,929, for a total amount not to exceed $1,079,046.

Mr. Bishop reported that the project was jointly funded by CCWD, Diablo Water District and the cities of Brentwood and Antioch. The project was previously bid and the low bid came in considerably higher than the engineer’s estimate. The Board had rejected that bid at its meeting on October 18, 2006.

After value engineering and contractor outreach, the project was re-bid and the new apparent low bid was five percent below the engineer’s estimate. He advised that the item was presented to the Operations and Engineering Committee meeting on June 8, 2006. He noted that Director of Engineering Steve Welch was available if the Board had questions, or if they would like a presentation. It was the consensus of the Board that a presentation was not necessary.

President Campbell asked if there were any public comments on the item. There were none.

MOTION: Boatmun/Wandry to a) authorize a $707,002 budget increase for the FY07 Water Treatment Plant Improvements Program, with $382,285 to be funded through budget transfers from the Randall-Bold Water Treatment Plant (RBWTP) Filter Media Replacement Project ($285,675) and RBWTP Sedimentation Basin Project ($96,610), and $324,717 funded from DWD, Brentwood and Antioch; and b) authorize execution of a contract with NCCI, Incorporated for the construction of the Randall-Bold Water Treatment Plant pH Control System Project in the amount of $999,117, with an 8% change order authority of $79,929, for a total amount not to exceed $1,079,046. The motion carried by a unanimous voice vote.

11. FY07 Mid-Year Budget Review

Review status of the District’s revenues and expenditures as of December 31, 2006, and consider approval of three budget transfers in the amounts of: $242,000 for the Canal Levee Elimination Project; $156,575 for the Country Club Pump Station Expansion Project; and $30,000 from General Management operating to capital labor to support the Alternative Intake Project.

Mr. Bishop advised that Investment Manager Brice Bledsoe would be making a presentation on the FY07 mid-year budget review.

Mr. Bledsoe reminded the Board that they had reviewed and approved the FY07 and FY08 two-year budget at the Board meeting of May 17, 2006. He advised that this mid-year budget review was through December 31. 2006.

Mr. Bledsoe focused on the highlights of the FY07 mid-year budget. He advised that revenues and operating costs were projected to end the year with a $3.8 million positive impact on rates.

He reported that there were three budget transfers requests for Board consideration totaling

$428,575. He identified the budget transfers as $242,000 for the Canal Levee Elimination Project, $156,575 for Country Club Pump Station Expansion Project, and a $30,000 transfer from the General Manager’s Operating budget to the Capital Labor budget for the Alternative Intake Project (AIP). He commented that the adjustments were between revenue funded accounts with no net budget impact and no impact on performance of the projects.

Mr. Bledsoe reviewed the FY07 mid-year revenues and reported that water sales were projected to end the year on budget. Treated water sales were expected to be lower than projected due to the continued high quality water in the Delta. This was offset by an across the board increase in treated water sales, which allowed the District to end the year on budget in this category.

He advised that Interest Income was projected to end the year at 117 percent of budget due to higher beginning reserve balances and higher than anticipated rates of return on the District’s investments.

Mr. Bledsoe advised that Other Operating Revenues were anticipated to end the year at 115 percent of budget. He also advised that Capital Revenues were expected to come in at 98 percent of budget. This was less than budgeted due to developer-funded projects. Revenues and expenditures were both down and there was no direct impact to the budget.

Mr. Bledsoe reviewed the FY07 mid-year expenditures and reported that Operating Expenses were anticipated to be 98 percent of budget, which equated to $2 million under budget. He attributed this to decreased water costs through the Central Valley Project Municipal and Industrial deficit settlement, which takes place later this year. Utility expenses were forecast to come in under budget by approximately $.6 million. Capital expenditures were projected to come in under budget, and he explained that several small revenue-funded capital projects were contributing factors.

President Campbell commented positively on the two-year budget review. Director Burgh also commented positively on the budget and commended staff for a job well done.

President Campbell asked if there were any public comments. There were no public comments.

MOTION: Wandry/Boatmun to approve three budget transfers in the amounts of: $242,000 for the Canal Levee Elimination Project; $156,575 for the Country Club Pump Station Expansion Project; and $30,000 from General Management operating to capital labor to support the Alternative Intake Project. The motion carried by a unanimous voice vote.

12. Ten-Year Capital Improvement Program and Financial Plan

a. Review and comment on the Ten-Year Capital Improvement Program and Financial Plan for fiscal years 2008-2017; and

b. Based on the review, adopt the Capital Improvement Program for fiscal

years 2008-2017.

Mr. Bishop reported that the Board reviewed the Ten-Year Capital Improvement Program and Financial Plan in detail at its meeting on February 2, 2007. He advised that no changes had been made to the documents since that time. He reminded the Board the document was used as a planning tool and was consistent with the Board rate and reserve policies.

President Campbell advised that there was not a public hearing on the item but that it was heard at a public meeting at which time the public was invited to speak. He asked if anyone would like to speak to the item at this meeting. There were no comments.

MOTION: Anello/Wandry to adopt the Capital Improvement Program for fiscal years 2008-2017. The motion carried by a unanimous voice vote.

REPORTS FOR DISCUSSION

13. Committee Report(s)

a. Operations and Engineering Post-Meeting Report (2/1/07)

b. Finance Committee Post-Meeting Report (2/9/07)

c. Board of Supervisors’ Transportation, Water and Infrastructure Committee Post-Meeting Report (2/12/07)

President Campbell asked for comments on the committee reports. There were no comments.

14. Schedule Future Meeting Dates and Times

Director Boatmun advised that she would be attending the Water Education Foundation Delta Vision Workshop in Suisun on March 16.

REPORTS

15. General Manager

Mr. Bishop reported on his trip to Washington, DC on February 15 and 16. He commended Water Resources Manager David Briggs for identifying money that could be used for Delta Projects in the FY08 President’s budget for appropriations through the US Bureau of Reclamation. Discussion took place on the budget and its impact on the District.

Mr. Bishop also reported on the Governor’s 2008 Water Bond bill and a meeting that he attended earlier that day in Sacramento with Senator Cogdill. He reported that another meeting with Senator Cogdill would be scheduled for later in the week regarding the 2008 Water bond and storage issues. President Campbell commented that he was encouraged that Contra Costa Water District was invited to attend the meeting.

16. Legal Counsel

Mr. Maddow did not have a report.

17. Board Members

Director Burgh and Director Wandry did not have reports.

Director Boatmun reported on the Association of California Water Agencies (ACWA) 2007 DC Board of Directors trip that she attended on February 13-15. She advised that approximately 100 people attended the conference, but many others were unable to attend due to the weather conditions. She reported that she had distributed copies of the February 4, Contra Costa Times editorial, “Plan offers best hope for Delta protection” to speakers at the conference, and also reported on the various legislators that were in attendance.

President Campbell reported that he attended the Contra Costa Council Board of Directors meeting on February 16. He commented on a letter sent by the Council to Senator Torlakson concerning the Alternative Intake Project. He also reported that the Council was very complimentary of the presentation on the Staged Conveyance Action Plan given by Assistant General Manager of Planning/Delta Projects Greg Gartrell at the Council’s Water Task Force meeting on February 20.

CLOSED SESSION

18. Conference with Legal Counsel – Existing Litigation, as allowed under Government Code 54956.9(a): San Luis & Delta-Mendota Water Authority v. Contra Costa Water District.

19. Public Employee Performance Evaluation as allowed under Government Code 54957: General Manager.

At 7:05 p.m., President Campbell announced that the Board would move into closed session. There were two matters before the Board. One of the matters was a litigation matter that did not require the announcement of additional attendees. The other matter was a public employee performance evaluation and there would be no additional attendees.

RECONVENE FROM CLOSED SESSION

20. Report on closed session.

At 7:26 p.m., President Campbell reconvened the meeting and announced that the Board did not take any action on the matters before it.

ADJOURNMENT

At 7:27 p.m., President Campbell adjourned the meeting to the next regular meeting of the Board of Director scheduled for March 7, 2007, at 6:30 p.m.

Joseph L. Campbell, President

ATTEST:

Sharon L. Burris

District Secretary