March 4, 2002

Regular Board Meeting

Monday, March 4, 2002

Time: 2:00 P.M.

Place: Board Room

29300 Valley Center Rd.

Valley Center, CA 92082

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

President Broomell at 2:00 P.M.

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

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

Jewell, Director of Finance Jarrell, Director of Operations Dacus, Manager of Accounting Jeffrey

and Board Secretary Stetson. Spectator present was Mr. Ross, Valley Roadrunner Newspaper.

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Following revisions to Section 50.3, Statement of Investment Policy, were proposed:

• Delete reference to the grant of an exception to the investment with Federal Home

Loan Mortgage Corporation, which had a maturity date longer than 5 years, as it was

called and paid in full at face value.

• Allow use of any of several reputable rating services rather than solely utilizing the

IDC Financial Publishing Inc.’s rating service.

3. Review of Miscellaneous Informational Items:

The following miscellaneous items were discussed:

• Cancer Cluster Newsletter - This newsletter addressing questions pertaining to the

water supply and the potential cancer cluster in Valley Center was mailed to all

customers in their February water bills. It has been provided to the University of

California at Irvine College of Medicine’s Epidemiology Division that is involved in the

study on the cancer cases in Valley Center for inclusion on their web site. An oversight

committee is being formed of community residents who will work with the University of

California staff on the study.

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• Woods Valley Ranch Development - Correspondence received from the Regional

Water Quality Control Board regarding the Report of Waste Discharge Order 98-99 for

the Woods Valley Ranch Water Reclamation Facility was forwarded to Newland

Communities, the owners of Woods Valley Ranch. Newland Communities has

responded that it is their intent to develop a golf course as planned for the Woods

Valley Ranch Development and to comply with all of the permits and approvals of the

County of San Diego and the Regional Water Quality Control Board. This will

necessitate no changes to the proposed treatment plant’s operating permits or the

Report of Waste Discharge.

Woods Valley Ranch Development has proposed the establishment of a funding

mechanism for assessment of a sewer service standby charge for properties within the

development. These funds will secure the operations & maintenance costs of the

treatment plant. A standby charge will provide a means to secure funds from any

undeveloped lots and will supplement sewer service fees from units on line at the

Woods Valley Treatment Plant. Also, it will provide the ability to assess sewer service

fees on the tax rolls for those properties within the development. This matter will be

further discussed at the March 18

4. Legislation Adopted Requiring Assessment of Water Availability for Large Developments:

Senate Bill 901 was signed into law which requires that developments with 500 residential

units include in the EIR for the project a “water supply assessment” indicating whether the

water supplier can satisfy the water demands to be created by the proposed project. This

assessment must be approved by the water supplier’s governing body. General Counsel

Cowett reported that procedures for implementation of such an assessment process, if

required in the future, are being developed and will be provided the District. Metropolitan

Water District of Southern California has projected there will be enough water supply to meet

the needs of its service area for the next 20 years, which includes the San Diego County

Water Authority’s service area and hence the District’s.

5. Preferential Rights Lawsuit - The San Diego County Water Authority’s lawsuit challenging

Metropolitan Water District of Southern California’s preferential rights, a provision of

Metropolitan’s enabling act, was thrown out of court as groundless. General Counsel Cowett

explained that Metropolitan’s preferential rights provision allocates water to its member

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agencies proportionate to the amount of property tax revenue each agency has contributed

to Metropolitan. Because Los Angeles’ property assessed valuations have historically been

higher than San Diego’s and Metropolitan had previously derived a large percentage of its

revenue from tax assessments, the preferential rights provision provides 23 percent of

Metropolitan’s water supply to Los Angeles while San Diego would receive approximately 14

percent. At present, Los Angeles buys about 8 percent of Metropolitan’s water sales while

the San Diego County Water Authority buys approximately 26 percent. However, even in the

drought conditions of 1991, Metropolitan did not invoke its preferential rights provision for

allocation of water supplies. The San Diego County Water Authority’s lawsuit challenging

Metropolitan’s preferential rights statute argued that since a significant portion of

Metropolitan’s water sales revenue goes toward capital costs and operating expenses, such

revenue should be included in the allocation formula. Metropolitan had argued that it has the

discretion to not invoke preferential rights in favor of an allocation better suited to meet the

needs of the circumstances.

In response to the State Superior Court judge’s decision to dismiss the San Diego County

Water Authority’s complaint challenging Metropolitan’s preferential rights statute, the

Authority’s Board has voted to appeal.

6. Metropolitan’s Fluoridation Implementation Request:

President Broomell reported that at the February 28

7. A Closed Session was called by President Broomell at 2:50 p.m. pursuant to:

• Government Code §54956.9(a), Conference with Legal Counsel - Existing Litigation.

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

Superior Court Case GIC 760743

• Government Code §54956.9(c), Conference with Legal Counsel - Anticipated Litigation.

Number of potential cases: 1

The Regular Board meeting was reconvened at 4:30 p.m. No action was reported.

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