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07-01-99SOUTH TAHOE PUBLIC UTILITY DISTRICT "Basic Services for a Complex World" Robert Baer, General Mana.qer Richard Solbri~ Assistant Manager James Jones, President BOARD MEMBERS Christopher H. Strohm, Vice President Duane Wallace, Director Mar~ Lou Mosbacher, Director Pembroke Gochnauer, Director REGULAR MEETING OF THE BOARD OF DIRECTORS SOUTH TAHOE PUBLIC UTILITY DISTRICT JULY t, 1999 MINUTES The Board of Directors of the South Tahoe Public Utility District met in a regular session, July 1, 1999, 2:00 P.M., City Council Chambers, 1900 Lake Tahoe Boulevard, South Lake Tahoe, California. BOARD OF DIRECTORS: Vice President Strohm, Directors Gochnauer, Mosbacher. Directors Jones and Wallace were absent. ROLL CALL STAFF: Baer, Solbrig, Sharp, McFarlane, Cocking, Hydrick, Hoggatt, R. Johnson, Bergsohn, Hussmann, Attorney Kvistad. GUESTS: Judy Brown/City of SLT Liaison, Herman Zelmer/Alpine County Liaison, Andy Bourelle/Tahoe Daily Tribune, Juan Palma and Colin West/USDA Forest Service LTBMU, Tara Plimpton/Brooke & Shaw, Mike Weber/Camp Richardson, Attorney Deborah Palmer, Danny Lukins/Lukins Brother Water Co., David Kelly, Joyce Blackstone, Sam Strohm. Staff requested Consent Item a. (disconnection pro- cedures for delinquent sewer and/or water accounts) be removed and placed on a future Board Meeting Agenda. Consent Item b. was brought forward for discussion prior to Board action. CORRECTIONS TO THE AGENDA OR CONSENT CALENDAR ST034561 REGULAR BOARD MI=I= i lNG MINUTES - JULY 1, 1999 PAGE - 2 Moved Mosbacher/Second Gochnauer/Jones and Wallace Absent/Passed to approve the Consent Calendar, as amended: a. (Item removed); b. (See Consent Items Brought Forward); Flagpole Tank Site Work - Approved no cost Change Order No. 1 for C. B. Ebright to change the start date from May 17, 1999 to June 17, 1999; d. Lookout Tank Site Work - Approved Change Order No. 1 for C. B. Ebright in the amount of $15,877.62; e. Approved Regular Board Meeting Minutes: May 20, 1999; f. Approved Regular Board Meeting Minutes: June 3, 1999. Juan Palma came before the Board with two requests: 1) That the District provide the Forest Service with a temporary water supply for 90 days, to commence July 25, 1999 (to be used at the Fallen Leaf Lake (FLL) Campground, FLL stables, Camp Richardson camp- grounds, Tallac Historic site, and Taylor Creek visitors center) or until a connection can be made to a long-term supply. The temporary water supply would be primarily for domestic use, for the livestock at Fallen Leaf Stables, and for fire prevention. 2) The Forest Service would like to participate with the District in a long-term water supply for their use, with the excess for District customers. Palma stated their current water provider is prepared to terminate service. Contract negotiations are underway, but cannot reach acceptable terms. The pros and cons of various provisions of the request were discussed. Comments on this issue were heard from: Mike Weber/Camp Richardson Resort, Colin West/ USFS, Deborah Palmer, Danny Lukins/Lukins Brother Water Company, Tara Plimpton/Brooke & Shaw, Board members and District staff. CONSENT CALENDAR REQUEST TO APPEAR BEFORE THE BOARD: U.S.D.A. Forest Service, L.T.B.M.U. ST034562 REGULAR BOARD MEETING MINUTES -JULY 1, 1999 PAGE - 3 District staffwas agreeable to supplying water to the Fallen Leaf Complex provided that a mutually acceptable operat- ing agreement can be developed between the District and Forest Service staff. Their request for water service can be accommodated because: 1) the Tata Lane Booster Station was recently completed, 2) there is increased stor- age in Gardner Mountain, and 3) temporary water produc- tion of Helen Well #2 has been increased. Developing a long-term agreement with the Forest Service may prove to be beneficial, as it could provide District customers with additional water supplies. Moved Strohm/Second Mosbacher/Jones and Wallace Absent/Passed to defer further discussion of this item to a Special Board Meeting on July 7, 1999, to allow considera- tion by the full Board. 4:35 P.M. 4:50 P.M. REQUEST TO APPEAR BEFORE THE BOARD: U.S.D.A. Forest Service, L.T.B.M.U. (continued) MEETING BREAK MEETING RESUMED PUBLIC HEARING 4:50 P.M. PUBLIC HEARING PUBLIC HEALTH GOAL REPORT Vice President Strohm opened the Public Hearing at 4:50 p.m. Open Hearinq Rick Hydrick reported state law requires water purveyors to prepare a report if drinking water exceeds public health goals. A public hearing for the purpose of accepting and responding to public comments must be held annually. Staff Report Public health goals are set for 27 chemicals. The District's testing in 1998 found trace detections (7.1 and 7.4 ppb) of lead in two small wells (Industrial Wells I and 2). No lead was detected in any other wells. Industrial Well 1 has been abandoned, due to sanding, and will no longer be in service. Industrial Well 2 may have exceeded the lead public health goal due to inadequate flushing. It will be reflushed and retested next month. None. Public Comments It was the consensus of the Board to accept the Public Health Goal Report as presented. Board Member Comments ST034563 REGULAR BOARD MEETING MINUTES - JULY 1, t999 PAGE - 4 ITEMS FOR BOARD ACTION Bob Baer reported on the June 24 public hearing held by the California Air Resources Board (CARB) to consider amendments to the California reformulated gasoline regulations regarding winter oxygen requirements in the Lake Tahoe air basin and labeling pumps dispensing gasoline containing MTBE. Several actions have been taken by the joint committee (District/City of South Lake Tahoe/El Dorado County) in an effort to remove MTBE from gasoline sold in Tahoe. Baer recapped the committee's recommendations for further action: 1) The District conduct random sampling of gasoline at the gasoline stations to verify that MTBE has not been added to the fuel. If there are indications that MTBE is being used as an additive, the District will inform the media and ap- propriate state agencies of the testing results; 2) That the El Dorado County Board of Supervisors enact appropriate measures to provide necessary protection of water resources from future contamination by MTBE and other petroleum products by requiring additional secondary containment for all components of underground storage tank systems, with continual monitoring. Immediate closure would result for facilities in violation of monitoring require- ments and other laws. 3) The District will pursue development of a Groundwater Management Plan, with continuing stakeholder input, to provide necessary protection of water resources from future contamination by MTBE and other petroleum pro- ducts. 4) Review of commitments made by the Davis adminis- tration will be reviewed prior to the committee's next quarterly report to consider proposing that El Dorado County not renew facility permits to the recalcitrant fuel dispensing stations that are not providing MTBE free gasoline. Moved Gochnauer/Second Mosbacher/Jones and Wallace Absent/Passed to approve the recommendations as out- lined above. Moved Strohm/Second Gochnauer/Jones and Wallace Absent/Passed to approve payment in the amount of $820,762.89. LAKE TAHOE REGION WATER PRESERVATION COMMITTEE: COOPERATIVE AGREEMENT RE: THE ELIMINATION OF MTBE IN GASOLINE IN THE LAKE TAHOE REGION PAYMENT OF CLAIMS ST034564 REGULAR BOARD MEETING MINUTES -JULY 1, 1999 PAGE -5 CONSENT ITEMS BROUGHT FORWARD FOR ACTION ! DISCUSSION Ross Johnson reported the Special Use Permit program requires frequent changes to adapt to evolving ground- water remediation efforts for MTBE. Past practice has been to consult with and/or inform the Operations Com- mittee regarding changes. This practice will continue. Attorney Kvistad presented suggestions to incorporate into the permit. Moved Strohm/Second Gochnauer/Jones and Wallace Absent/Passed to approve the Special Use Permit System including suggestions presented by Attorney Kvistad, and delegate authority to staff to revise permit requirements, as needed. Operations Committee: The committee met on June 28. Minutes of the meeting are available upon request. County Water Agency/EDWPA/LAFCO Committee: The purveyors met in another facilitated meeting re: the governance of the County Water Agency. Baer reviewed their recommendations. Two members of the El Dorado County Board of Supervisors will be invited to the next EDWPA meeting on July 29 to provide their input. Another meeting will be held, at a later date, that will include many special interest groups. Legislative Ad Hoc Committee: Director Strohm reported the committee met July I to review concerns re: Senator Feinstein's proposed Lake Tahoe Restoration legislation. Lahontan / SWRCB Communications Ad Hoc Committee: A report from Assemblyman Wildman was distributed re: the Underground Storage Tank (UST) audit. The report addresses flaws in how the program was implemented. He is proposing legislation that will ensure the effective- ness of the UST program, and has asked for the District's input. Lakeside Park Association Ad Hoc Committee: A meeting will be held with representatives of Lakeside Park Mutual Water Company on July 16. SPECIAL USE PERMIT (Consent Item b.) BOARD MEMBER STANDING COMMITTEE REPORTS BOARD MEMBER AD HOC COMMITTEE REPORTS ST034565 REGULAR BOARD MEETING MINUTES - JULY t, 1999 PAGE - 6 General Manager: Bob Baer reported on two items: 1) At the June 17 Board meeting, the Board voted to revoke the Special Use Permits held by Lahontan for cleanup of the Meyers Beacon gas station, and Tahoe Tom's gas station, due to non-payment. Since then, Lahontan has made partial payment, and therefore, the permit will not be revoked. Payment from Tahoe Tom's has not been forthcoming, their remediation system will be shut down until payment is received. 2) Dennis Cocking, customer service representative, will assume the interim District Information Officer duties. Interim District Information Officer: Dennis Cocking reported on the effectiveness of the Water Conservation Program. Richard Solbrig reported on the status of the remaining emergency project: Gardner Mountain Replacement Well Emergency of 9/17/98 - Several meetings have been held with the USFS staff. A scope-of-work has been defined for Parsons HBA to pursue. They will revise the BAB that was done on the eagle study for the new site, and modify the project descrip- tion to the entrance to Valhalla. Historical research will also be done on the red barn facility that may be used for an above ground well equipment storage area. A meeting with TRPA, Lahontan, and Parsons HBA has been scheduled for July 2 to refine the permit requirements for the new well. A $16,000 contract is in place to facilitate drilling in August. A Special Use Permit will eventually be issued by the USFS to place our well on their property. The well construction and installation of the pipeline is expected to be completed by October 15, which is when the bald eagles return to the basin for their winter foraging. Chief Financial Officer: Rhonda McFarlane reported on three items: 1) The 1999/00 budget has been completed. 2) A $148,000 reimbursement from FEMA was received June 18. $300,000 in reimbursements is remaining (the percentage for the project that was held back). 3) She reported on the technical aspects involved in over- seeing the EPA grant. STAFF REPORTS STATUS OF EMERGENCY PROJECT ST034566 REGULAR BOARD MEETING MINUTES -JULY 1, 1999 PAGE -? District General Counsel: Gary Kvistad reported he is working with Hal Bird, Alpine County Land Application Manager, to review contact issues in Alpine County. 6:10 P.M. 6:15 P.M. 6:45 P.M. STAFF REPORT MEETING BREAK MEETING RESUMED AND ADJOURNED TO CLOSED SESSION RECONVENE TO REGULAR SESSION ACTION I REPORT ON ITEMS DISCUSSED DURING CLOSED SESSION Legal counsel updated the Board regarding this item. No Board action. Pursuant to Section 54956.9(a) of California Government Code/Con- ference with Legal Counsel: Existing Litigation - Schwake v. STPUD, Federal Case No. CV-N-93-851-DWH This item was not discussed. No Board action. Pursuant to Section 54956.9(a) of California Government Code/Con- ference with Legal Counsel: Anticipated Liti.clation (one case). Legal counsel updated the Board regarding this item. No Board action. Pursuant to Section 54956.9(a) of California Government Code/Con- ference with Legal Counsel Existing Litigation - STPUD v. ARCO, et al, San Francisco County Superior Court, Case No. 999128 6:45 P.M. ADJOURNMENT Jan~s R. Jones, Boa~l'/l~r_esident ,~dUth Tahoe Public I~l'ity District ATTEST:,:~:~. ~-....~.,~z-~ '~_ ~,~ "Kal~hy ~har~,JClerk of the Board South Tahoe Public Utility District ST034567 USFS Request for Water Service July 1, 1999 Board Meeting Presentation Highlights Chris opened the discussion and pointed out that while the USFS's request only represents about 1/~ of 1% of our total supply, that the timing for this request couldn't be worse. Our ability to serve is being hampered by wells being shut down with MTBE and it is at a time when our demand is absolutely peak with the summer tourist season and our irrigation season well in full swing. A Special Board meeting has been scheduled at 1:00, July 7 at the District office. There are three good reasons to delay this decision today: 1 ) I'd like to know what happens on the 4th of July - what is the demand on our system going to be? 2) We don't have any contract before the Board today that spells out our relationship with this new customer - we need to know what the conditions are. 3) We are missing two Board members - this is to important of a decision for just three to make. Tapes and notes will be provided to those two members so they will have just as much information as we do. Chris gave an outline of questions he hoped would be answered: Do we have enough water, and why? Why all the sudden is the Helen Well ok to use? Will the temporary contract protect our existing customers? What cost is it to the District to do this, if any? What physical infrastructure changes need to be made, and what's the timing of getting those in to serve the customer (if we decide to serve the customer)? What long-term and short-term benefits are there for the District? Is the Forest Service willing to fix all the leaks that are out there? What's the future status or the present status of the pipeline - the infrastructure that's in the ground now? Will there be an absence of the federal bureaucratic red tape? Can the Forest Service be like every other one of our customers? Juan Palma, Forest Supervisor - This is more of an informative discussion since the Board will resume these deliberations next week. We are asking for two things: 1) that STPUD provide temporary supply of water starting on, or about, or before, July 25th, and that would be for 90 days or until a connection can be made to a long term supply. Need temporary supply to use for three things: domestic use, livestock ( i.e., FLL stables) and in case of a fire. Mostly for domestic use. 2) We want to participate with the District in a long-term water supply for USFS and excess for STPUD customers. A well is discussed near Camp Rich by Valhalla entrance that engineers say may be a site for a water well. That would be a long-term solution - the well would be drilled there and the lines would be connected to STPUD's regular lines.' Water supply would be used for: FLL campground (benefits citizens and Lake Tahoe ) FLL stables, Camp Rich campgrounds, Tallac historic site, Taylor Creek visitors center. Important facilities that benefit citizens. USFS and STPUD have worked in partnerships for a long time. Involved in: Gardner Mountain storage tank (signed special use permit for replacing that tank on USFS property); B-Line export over Luther pass; Flagpole water tank; Twin Peaks water tank; master special use permit for sewage lines that go out of the basin; and in future for ST034568 water lines on USFS land. Partners in many activities and continue in future. Working on providing access to lines located on Burton Santini lands. Gochnauer - Where will you get landscaping water while we give you temporary domestic water? Palma - We have water rights to FI:L,-plus we can access take water - we are working on those, but we will get the water from surface water - it won't be treated, but... Gochnauer - But you can put that into play before the 25th? Palma - Yes. Strohm - Re: the contract and long-term relationship if we decide to take you on. Does the USFS have ability to become a regular customer? Palma - Have the ability, but have to go through contracting officers in Placerville. But beyond that we have the ability to be like any other customers. The only thing we can do is we can't sign any long-term contracts. But, beyond that I can sign them myself. Strohm - Would there be any special stipulations that you would know of that would come from the contracting unit in Placerville? Palma - The one I just mentioned - how long of a contract can I sign and commit the government to - it would be a question that would come. Normally what we do is sign a contract for one year with subsequent years to be added to the contract. Strohm - We'd definitely need a temporary contract, but with our regular customers don't have a contract with either... Palma - In that situation it wouldn't be a problem. Mike Weber, President of Camp Rich. Resort - The agreement we had was a short- term one - if we get approval, can we get the water hooked up in time? Strohm - Staff will answer later. Gochnauer - I spoke to Weber prior to meeting. He expressed concern we would be able to operate within the time frame needed - we discussed some of the engineering concepts that staff will present to us. Just for the record. Colin West - Forest Engineer and Recreation. Have been working with your staff re: terms of the short-term agreement, and also some of the long-term conditions. The draft contract doesn't have anything in it that would prevent us from moving forward - as far as the short-term goes. As far as the long-term goes, there is nothing that prevents us from connecting to a utility district just like any other customer. 2 ST034569 Strohm - What's the feasibility if the Board decides to take you on as a customer of getting the physical hooked up? It's also important that there's no extra costs to us in the temporary or long-term. West - That's all in the terms. Solbrig - The document is a temporary water service agreement we had w/city that was reviewed and approved to provide temporary water service. We utilized it as a model to develop a temp water service agreement. Staff and general counsel have reviewed. Physically, it is doable in this time frame our staff est 3-4 days of construction, and 2 days of coliform testing. It's basically 250' of pipe. We have a 6" line behind St. Francis motel that is on USFS property - we'd be extending that 6" line down almost to the highway, thru USFS property and hooking onto USFS's 10" line and existing 10" meter. Need to put in a couple of valves. Only extra item is our own ordinance requires a backflow device on that line. Would have to revisit if there is a long-term agreement. If there was water coming in from the USFS property to that line, we'd have to change it's location when the well comes on line. We believe 3-5 days in field, and our staff can do the job - it's 6" pipe and fittings are in stock. Backflow device expected to be easy to get. Gochnauer - Colin, it hasn't been our experience that we can get our permits with USFS in a matter of days, which would be required to put this new pipeline in and hook you up and so forth. Are any other permits required from Lahontan or other agencies that would slow us down? West - No, not aware of any. Solbrig - It's their line we'd be installing and paid for by the USFS - it would be their line - by making it their line as a temporary connection so it eliminates the necessity to get a special use permit. Have MOU w/TRPA any project under 2,000 feet is just a phone call. Plus we're meeting w/Lahontan and TRPA tomorrow to discuss this. Gochnauer - If the Board approves this, then you'll be hooked up when? Solbrig - Physically, in about a week if no problems with the contract West - This construction contract that we'd contact with you to install this line - it's of an emergency nature and the dollar value is such that it will be an expedited item that can happen right away. All we're waiting for right now is the construction costs estimate to provide to the contracting officer to sign to install the line. Mosbacher - I thought we'd be responsible for installing the line. West - There are two ways to go. You can own the line and it would be under Special Use permit from us. Since that's not always the most expedient way to go - the other way is for the USFS to own the line up to your current supply and we'd pay the cost, 3 ST034570 and in the end own that piece of line. USFS would contract w/STPUD to do the construction work and pay the District. Solbrig - It's a 6" line and Schroeder's crew can do. Strohm - The long-term disposition of that line that obviously serves you now, but potentially could serve, if the well comes to pass, serve us coming back. Who does the line belong to and who does maintenance if USFS is the owner of that line. West - We own the 10" line that goes to the City limits out into the South Shore recreation area. We paid to have it installed in 1992. We got into the emergency situation with our surface water supply. As far as the future goes, we can't answer that question right now because don't know the volume of water that would be produced from a productive well and if the size of lines are sufficient for volume. The 6" line, no doubt, wouldn't be sufficient to handle any supply you'd want to bring back into town. The 10" line might be - so I think after we determine what the volume being produced is, when we determine if the 10" needed to be replaced or if it could be used, and who would own it. Strohm - It's important to us that the line be maintained just in this water shortage situation for instance. Any leaks or problems it has in it, we'd want assurance that while it is a temporary situation, that the USFS to maintains it, including all your facilities - all the faucets and showerheads, and hopefully there is a provision in there that everywhere water comes out that Iow-flow fixtures, while the water goes out serving you it makes sense that you take care of maintenance, etc. getting water. If water situation reverses and the water's for us, then the line would be ours and our responsibility. West - For the short-term, that's a condition that your staff put in the agreement - that we'd be responsible for repairing any leaks within 48 hours of detection of the leak, including that 10" supply line. Strohm - If we signed a temporary contract, how quickly before you can evaluate if USFS system is tight and we aren't supplying water to a leaky line? And who is responsible if it does. $olbrig - District staff can't go thru all USFS lines looking for drips and leaks. $trohm - Can USFS do it? West - Yes. Areas well utilized and those would be pointed out to us. Distribution system is old and can leak, but people in area will tell us. Leaks surface quickly. Gochnauer - The 10" line - is that how your currently supplied? West - Yes. 4 ST034571 Gochnauer - We are discussing its potential is to go the other way from the well that we're going to drill back into town - how would you - so you would then be supplied directly from that well which would free up this 10" line for potential delivery into town. Is that right? West - Parts of it - there are laterals off this 10" line - like the well would be farther out than the connection to Camp Rich, so there are some laterals between the well and where we end service (where it becomes just a supply line). Gochnauer - If this well is an average well, then 10" line will be enough to deliver. But if it's a real pumper, which we hope it might be, then we might need a considerably larger line than this... WestlSolbrig - Yes. Deborah Palmer - I represent Lukins Bros Water Co. I want to advise Board that there is a 30-day contract for water from Lukins Bros. to the USFS through that 10" meter that expires July 25% You asked about the 4th of July weekend, and indicated a concern about that. I just wanted to address that point. My client, also having been the contract purveyor of water to USFS for the past 8 years, wanted to make a few comments. Strohm - On 4th of July I want to see how our whole system works and I'm directing staff to have a report on Wednesday how we're doing overall, but especially that zone - how close are we before we consider taking on other customers? Not with regard to the deadline, or your contract, but the 4th will be a good test of our own supply and help with our decision on Wednesday. Danny Lukins - On Friday I spoke to Baer when I found out on Thursday morning about your proposal of taking the USFS over. I offered all information we've compiled over last 7 yrs. This is pretty close to what happened in 1992 when the USFS came to us requesting water. We entered into a one year contract w/four options, which was temporary water service. At the expiration of the 5th year, we requested a contract - we needed a long-term commitment to continue our increasing of our infrastructure and we needed a long-term commitment from the USFS. Up until last Friday, when we were served with litigation. Basically only issue outstanding issue from this the long-term part of the agreement that we had agreed to. One thing I wanted to point out is the numbers from USFS that we received in 1992 indicated they needed 2 million cubic feet - the first year, the used over 4 million with various leaks and things. We've had significant increases and determined that their average is 4 million cubic feet, which is about 30 million gallons per year. In that 30 million, in a sixty day period in summer months, they use about 15 million in those two summer months. They had an increase in May of 1 million gallons over what their normal use would be. The number that we had for this month - for June - worked out to - it was the third highest - of course the other two highest had significant leak to relate to the major use of the water. In 1995 we were requested by USFS under Rule 15 of 5 ST034572 Ca. Public Utility Code to make an estimate on taking over their system. That basically looked at us drilling wells and changing their facilities. (He distributed a full run down on all seven years worth of usage.) In that estimate, we determined by the time we drilled a new well, or added a new line to be in compliance w/State Heath requirements, and retrofitting all the connections that we are aware of - we also had an estimate at that time of water per month, at about $3.00 per 100 cubic feet was a total cost to the UFSF of about $3,739,000 and some change - they didn't accept this offer. We've had two major, major leaks - one in April 1995, which was about 25 million cubic feet of water, and in July of 1996 that was over 10,000 cubic feet. I know the infrastructure as closely as I know my own back yard of that system, and of course I am hear to help the public as much as possible. Our issue has been going on for seven years of the contract, we have been in two years of litigation with USFS, the last six months we have been in formal complaint from USFS to the Utility Commission, in which they determined the had no jurisdiction. As far as I'm concerned, its purely a contractual issue. We've offered them not only arbitration or a third party to step in and jerk the numbers around - they were unacceptable. The fact that we had a 25% increase in our water rates from the PUC back in May - that's when they stopped paying the difference and that was the disputed amount. We also have a filing on the boards right now w/PUC an 86% increase (that 25% is a part of it). This is our filing with the PUC which is just the infrastructure and long-term forecast of what we're proposing to do, which we based our 86% increase on. The USFS didn't like the numbers they had a potential of being charged. Being out of our service area, and out of our boundaries, they are considered strictly a contract customer. The PUC requires us to ensure the welfare and cross factors to our customers that are under tariff; that they aren't burdened from a large customer like this. They are about 40% of our production a year, but are only about 20% of our gross income, so there were some considerations about them having to pay a larger amount of the percentage of the gross based on the revenues and water usage. Gochnauer - You presented the USFS in May with a bill which reflected the PUC's across the board increase approved for Lukins to charge tariff customers, which was about 25%, right? (yes). The USFS said no, this isn't our understanding with you - we aren't going to pay that, right? (yes) So the dispute at this point, is you said if you don't pay me this extra, I'm not going to supply you anymore, and this came to a head this past month. Lukins - Well, it went to a formal complaint with the PUC, which they claimed we had increased the prices without proper notice. The problem was, under the original contract, there was a provision in which they told the PUC even though it was there, they didn't like it and weren't going to abide by it, which allowed for this to occur. When the contract expired and we were still in negotiations ~ we had the chief of the water branch of the PUC come up here, we've had several of their agents come up here and sit in on meetings with the USFS and we ended up in a formal complaint in which they were told that they were basically still a contract customer and they needed to establish a contract. The other factor is, under a PUC ruling, if I provide water service to someone who is out of my service area, it is required to have a contract. We are in a position that's a no-win position. We had an infrastructure, we needed to develop more 6 ST034573 water, we've already started the process of burdening our own customers. We had to show in good-faith to the PUC that the burden would also be to our contract customer and we were having problems trying to sway them. One other thing is - under the basic agreements we've had under our contracting - the USFS portion of the contract was only 19%, and in fact most of our negotiations have been with the Resort. Most of the facilities, permittees, are in compliance with Iow-flow fixtures. There is a leak right now we're trying to locate in the area of FLL campgrounds that's about 30 gallons. There's about 44,000 feet of pipeline in this system - and that's just from 4" on up to 12" Lukins wasn't responsible for the lines (repair and patching) but was contracted to do some of the repair work. Gochnauer - This is construed to be a major emergency. Why? Lukins - There certainly was a major emergency. We were set that we had legal right to termiate service. After two years, we exhausted much of the system that was available to us. Thursday, we had contact with PUC commissioners indicating that there was a broad spectrum of concerns - not only didn't they want to see the legislation get into this, and it was brought to that point - with the letter from Bob, I thought there may be a solution so I called Bob first thing in the morning that we decided not to shut them off to see if it could be worked out, thinking with another third party that's a utility walking in could mitigate the fine lines of water usage. Unfortunately, the USFS thinks water grows on trees and that a long term situation is not an issue Gochnauer - We're being requested to provide service here - I don't see the emergency that we've got to do this by the 25th, or the summer falls dead. Plus it seems a matter of numbers for USFS. Palmer - Lukins would love it if you took over the burden - the leaks and system from the 1920's and 90% of the use from July and August - we are excited you seem to have the water. Lukins - We want you to have the full facts. I didn't have the full facts when we entered into this agreement. We were 100% behind the eight-ball before we actually started using the USFS numbers. They are going back to 1982 on the survey - even with all the infrastructure changes the permittees have done to improve their system, we still are seeing increases directly related to better marketing by the various entities. The Tallac society wasn't an entity that was originally in the~:e. Promoting people to come has increased usage. Use has substantially increased. Related to weather conditions - like this year will have a high use in that area. May was 1 million gallons over. June is the highest use on record without noted leaks in seven and will probably continue. Palmer - What started the dispute - Lukins made it clear that the USFS was a contract customer, not a tariff customer - they aren't part of our system - we offered them emergency, temporary water under contract. The dispute arose when the contract expired, we offered to continue as same increase as our tariff customers, and they ST034574 refused to pay. When we did not have a contract with them, and they wouldn't pay what our tariff customers were paying - we did not initiate litigation - they filed a complaint against Lukins w/PUC to stop us from turning off water when there was no contract and they wouldn't pay what everybody else was paying. That complaint has a tentative ruling to be dismissed, that will be final by July 8 (tentatively). Gochnauer - You have achieved a settlement wherein, on a temporary basis they are paying the requested rate, correct? Palmer - Correct... Lukins - ...they ended up paying our attorney and administrative fees, and they also paid the disputed water - is going to be to the PUC back to us. So, we only have one issue per contract - and that's the time frame of the long-term contract. Gochnauer - There is a 30-day extension until July 25th. Are you willing to supply beyond that at the agreed upon temporary rate? Palmer - We've offered them a 5 yr. contract at the agreed rate (what's been pending with the PUC for last two years) - we made that offer- they refused and instead came to you. Gochnauer - We are under water rationing and want to protect our customers. At end of August our critical period is over. We could then - our water system is designed for peak use, if it was November... would you supply them the rest of the summer if you had to at the agreed rate beyond the 25% would this alleviate some of our emergency timing if we go ahead with this? Lukins - If they would request it, we would consider it. The fact that we had decided prior to being drug into litigation to actually wait for a decision from this Board and wait for a decision and work with your staff any way possible indicates on itself that we were concerned about the welfare of the general public. The litigation action was resolved quickly some of the problems that were posed to all of us. We could consider it they would make the request. After 7 yrs. what do you consider to be temporary and what is long-term You are going into the same type of agreement that I have been in. When do you change over and make that decision. They are asking you the same thing (for a temporary service) they asked us and look... Palmer - The contract expired April 30, 1998. We've been in these temporary negotiations for over 1 year. Mosbacher - Under the PUC, don't rates have to be fair for everyone? That the ruling determined these were fair charges Palmer - Can't enter into contracts that are less $ than we charge our other customers. We can't give them a 43-cent break per 100 cubic foot on rates, which is what they asked. It's based on line size, etc. They were asking to be compared to a residence and they are not comparable. 8 ST034575 Palmer - They maintained the lines - pond leaks straight into the lake - talk about leaks. Lukins - Our authority stops at the meter at City limits. Strohm - Are the negotiations still underway - is there a poss something can be worked out by the 25th, or are we spinning our wheels? Palmer - Your not spinning your wheels, they cut off negotiations when they started negotiating with you. They sued us and we entered into a 30-day contract for water with the understanding that they would be negotiating with you. Strohm - Everybody should be treated the same if they are customers. Lukins - During the 1992, when we picked them up, the only costs to the USFS was the installing of their line to us. We didn't have any connection fees, so there was no money from the USFS other than what we calculated in their cubic foot rate that went to the system for the infrastructure. Between the fees that were calculated for the meter and the water, that was established at a higher rate than our normal customers ~ we can do that under a contract and that was to compensate for what we felt would be a long-term commitment to pay for the infrastructure to continue to be able to supply that. Weber - This is Tara Plimpton, she represents the resort. We are in the middle here. Plimpton - I'm with Brooke and Shaw. Brookes the attorney actually representing the resort. I understand it became an emergency situation during the contract negotiation is that - we wanted a contract, we even wanted a shorter-term contract, that was absolutely not an option - it was either no contract or a five-year contract which was exclusive with no opportunity to took for alternate water sources, such as the well. That was important. Also, there were things that the USFS couldn't really understand in a contract, such as a minimum amount of water that they had to use, liability issues, etc. But the big thing was the five years and the exclusivity. They tried to negotiate in good- faith, thought they were working towards that and it just seemed to be an impossibility and then got the notice that water was going to be turned off. So it turned into an emergency situation. Camp Rich filed a complaint to get a temporary restraining order when we saw that the water was going to be shut off. We didn't want to do it, but no choice. We requested a shorter-term contract... Gochnauer - I'm confused. You felt this terrible threat and had no choice but for a five year contract. Then Lukins just said they wanted to help, act in best interest in the community, and they could extend it. We are spending huge amounts of staff time, etc. trying to react to this. Now I'm hearing - We could bring on USFS as a customer when we drill our new well. Still don't understand emergency. Weber - 3 weeks ago, I met w/Lukins. I asked if we could have a short-term contract at whatever the going rate was until we could develop a water source or see what might happen. I was told it's a five-year deal - take it or leave it. 9 ST034576 Palmer - When we met 3 weeks ago with Camp Rich, we were still negotiating a contract - they didn't say they were negotiating w/anyone else. To keep our infrastructure in the appropriate condition to supply that massive amount, we needed a five-year contract for lending reasons and to also keep the system up and running for the supply. We weren't told it would be short-term, if it was short-term, we would not have had to enter into long-term capital loans and get money. If we knew it would be for only 30 days, we wouldn't have had to borrow money and worry about our infrastructure. When we met three weeks-ago; they--failed'tomention that they were negotiating with you. We only heard on Thurs. morning. When we went to court we had less than 24-hours notice that they were trying to connect w/you. That's when we said, of course, if it's only 30 days we don't have to do capital improvements. That's the difference between the five year and 30 days. Gochnauer - Still want to know the emergency and why our staff has to hurry if it doesn't need to be done by the 25th. Lukins - Colin asked us to do this and now he's reversing. Palmer - No emergency - they just don't want to pay and are asking you for a better deal. Gochnauer - If you were to supply long term, would have to do major upgrades. We want to know if we can fit them in our system and our supply. Lukins - Baer's letter came at a time when we thought we had the contract ironed out. We have no control since we have no contract... We want to be in the best interest of customers and the USFS. Palmer - There is no emergency - the quest, is who is paying for the infrastructure? Us, them, you? They don't want to pay Lukins to supply it. If it's you, look at the costs and how you are going to pass them on to your customers. West - Add my perspective - we started neg. for a short term contract at a 26% increase. As it went on, it was an 86% increase. They want us to commit to using 2m. per year - how do you commit to that when we need to conserve Strohm - Summary - there is an impasse, not emergency. CW - we were served with a shut off notice - that's an emergency. Palma - I want to make sure I use this venue to ask Lukins I will take him up on the offer, it here is no opportunity to connect to another source, I never heard that until today here. If that's his word, we will entertain that. We didn't feel we have that opportunity until today. Strohm - We will look into facts to help in our decision if there is some sort of an agreement to be made. Now it's staff's turn. 10 ST034577 Solbrig - In terms of contract - we haven't had opportunity to review terms of agreement that was modeled after City's. We added provisions re: operational problems or water shortage would result in terminating service, to USFS in a quick time-frame - protecting our customers in case of severe shortages. Limiting to interior use felt we would be shaving off some of the demands - look like 100 gal. min. flow - it wouldn't create problems, in Gardner Mountain zone. Boyle verifying there will be no pressure problems Gardner Mountain tanks - one was rebuilt and almost ready to use - next week will have double storage in that zone. That tank holds more than the USFS will use in a day. So all that additional storage online by next week. Will install backflow device to protect our customers. Benefit to our customers - we're balancing community needs re: use of USFS area and at same time asking our customers to conserve on watering landscaping. We would provide if we can stay at stage 3 restrictions - can keep their landscaping alive. A balancing act given the emergency situation. We felt comfortable providing domestic use. Helen Well - we thought there was a nearby MTBE plume heading its way. Rick - Operationally we've been fine thanks to public. 4th of July is highest demand begins now and stays up there. We'll look at the use and can determine what we can deliver. What the USFS wants in daily consumption represents less than ¼ of 1% of what we have today. So far, we're ok. Know more on Wed. Completed a 20 day pump test and 5 day recovery at Helen. Can run thru summer in a conservative way. Strohm - Why has it changed? Hydrick - We asked Beacon to do a pump test in 7/98. We gained access to their property and got info. we needed to draw a conclusion. We did Paloma sooner (pump tested) and other wells in the area to determine, our vulnerability. Helen no. 1 no. We had to act conservatively in past in not spreading plume until opportunity, Brand new info. as of yesterday. Mosbacher - you said you increased temporary production at Helen well - what do you mean? Hydrick - Thru labor day. Can probably do without Helen, will know more after evaluate. 4th of July An agreement will be presented on Wed. for Bd. to consider. Mosbacher - If we didn't help USFS - could we lift restrictions? Hydrick - I wouldn't do it. ST034578 $olbrig - We are saving a lot more than 100 gpm being on stage 2 vs. stage 1 which is what we would provide the USFS. They are asking for a small fraction of what we've saved. Stage 1 would be a big increase that we couldn't meet. Mosbacher - Hearing daily $500 fine, yet can supply while in such a critical condition. Not so critical we can serve more people... Solbrig - The fines only apply to about 1% of customers. Those threats apply to only them, It's still the smart thing to do - water at night is best anyway. Don't have water meters to do a tiered conservation Mosbacher - Not confident the USFS only needs 100 gpm. Solbrig - The meter reads - based on max monthly usage for the last 2 years. 115 gpm in July (is average for month) and that's with irrigation. With no irrigation, we can get water from Gardner Mountain to them. Hydrick - To let up on stage 2 would blow the ceiling off it. If we lifted it, people would quite conserving. We're only asking to water between 7:00 p.m. - 7:00 a.m. - it's not that onerous. Gochnauer - The Gardner Mountain tank represents several days worth of use. Can provide water pressure now. Last 2 years had limited capacity, now will have much more. This is ~ of 1% of our supply. Not best timing to ask to be connected, but .... The STPUD mission statement is to ensure community has supply for all its needs. This is a major part of community. Fed. gov't, wants our supPly. It will hep defray costs to customers. We are drilling the first large replacement well. Need to have capacity and reserve. If we used all bits of water, we'd have to continue conservation ...? If we can do it, we should do it in some time frame. Hydrick - Staff came up with recommendation - it looked like we were heading for a shutoff. We had to take a responsible position and get the facts if we could help or not. That's what we tried to provide you. If this is for no other reason than to provide water just for summer, that's good. Staff has to bail the USFS out. Can be beneficial. Mosbacher - If they hookup temporarily is there a connection fee? Hydrick - It's modeled after the agreement w/City - no hookup for first year. If long- term, there is a connection fee the same as everyone else (commercial customer). Kvistad - Bd. expressed concerns re: community and re: assisting Camp Rich in future. Suggested that Lukins, who is faced with no contract to build infrastructure, if they can continue thru summer. The USFS wants water serv. short and long -term. District faced with critical high use season and have to ensure water for customers. A solution would be to dev. a tri-party agreement where we can assist them reaching agreement. Little distrust between parties over history. Would ensure Lukins that there would be a 12 ST034579 cutoff, USFS would get water and we wouldn't have to supply during critical summer, but later when demand is down (after labor day). A way to solve what's before the Board now. Strohm - Any way we can mediate or facilitate for a short-term agreement so we can get out of this peak season. Secondly, to pursue short and long-term ability to serve. Without that agreement, Wed. Special. mtg. still stands. Need staff to provide information to base decision on. Our community is our customers and can't threaten our ability to serve them. Need time to hammer details to take over the system long- term. Encourage parties to talk. CS 1 MLM 2 to continue discussion on Wed. at Special Board mtg. By then, more material and agreement. Lukins - We have time to make input of information. It's all metered from a master meter - you can look on a daily basis to determine usage. Weber - Other constituents (lodging assoc.) directly affects customers already on line. In long-term can be beneficial. 13 ST034580 DATE: REGULAR BOARD OF DIRECTORS MEETING GUEST SIGN-IN SHEET IN ACCORDANCE WITH THE BROWN ACT: COMPLETION OF THIS INFORMATION IS VOLUNTARY, NOT MANDATORY, AND IS NOT A PRECONDITION FOR ATTENDANCE ST034581