Board of Directors

February 23, 2009

VALLEY CENTER WATER DISTRICT

Adjourned Regular Board Meeting

Monday, February 23, 2009

Time: 2:00 P.M.

Place: Board Room

29300 Valley Center Road

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.

ROLL CALL

Board members present were: Directors Broomell, Polito, Aleshire, Stone and Haskell. Staff members present were: General Manager Arant, General Counsel Cowett, District Engineer Grabbe, Director of Operations Hoyle, Director of Finance Jeffrey, Board Secretary Stetson, Manager of IT Pilve, Project Manager Carrillo and Wastewater Systems Supervisor Beath. Spectators present were: Mses. S. O’Rourke, L. Odland, T. VanKoughnett, D. Burroughs, L. Montgomery, S. Hilbig, P. Ohlson and Messrs. M. Saalberg, S. Flynn, S. Bernsen, L. Glavinic, T. Lopez, B. Fallon, M. Rust, C. Johnson, G. Wynn, V. Wynn, J. Coseo, A. Washburn, W. Hilbig, J. Ohlson, and Mrs. and Mrs. A. Olson.

WORKSHOP

1. Workshop on the Proposed South Village Wastewater Expansion Project:

District Engineer Grabbe reviewed that at the January 20th Board meeting it had been recommended that Village Redevelopment, LLC (formerly referred to as Bell/Alti and hereinafter referred to as Developer) proceed with a private wastewater expansion project and include individual participation that can secure funding through private means. The formation of an assessment district which would entail the sale of bonds and assessment district formation costs was not recommended due to the small participation level and, in the current financial climate, there is the possibility that the bonds may not be marketable.

In order to meet the long-term wastewater needs of the community, the District has proposed that an expansion of the Woods Valley Ranch Water Reclamation Facility (WVRWRF) include a module of 125,000 gpd capacity that with future expansions would allow for a maximum site capacity of 1800 EDUs or three 125,000 gpd modules. The Developer’s proposal is to construct one 60,000 gpd module which would allow for a maximum site capacity of 720 EDUs. A Technical Memorandum

prepared by District staff summarized the following regarding the Developer’s proposal:

▪ It is inconsistent with the WVRWRF master plan recommendations regarding the module size and redundancy requirements for the AeroMod unit and seasonal storage site requirements,

▪ The proposed smaller treatment units are more expensive per EDU to construct and operate for the initial phase and will set the treatment unit size for future expansions resulting in a lower overall site capacity contributing to a continued higher per EDU construction and operating cost for future phases,

▪ A lower overall site capacity will increase the per EDU reimbursement to Newland for the Phase 1 improvements, resulting in a higher cost for the initial project and future projects,

▪ Redundancy requirements for the treatment unit have not been met and require the use of excess capacity in the MBR. Thus, reimbursement for the use of the MBR capacity should be included as a project cost, again increasing the per EDU cost for the initial phase.

Mr. Robert Porr, Vice President of Fieldman, Rolapp and Associates and financial advisor to the District, stated that, at present, unprecedented challenges are being faced in the financial markets. Regarding the tax exempt market, there has been limited activity and only for high rated bonds. Bonds for the proposed WVRWRF would probably be non rated. If bonds were to be successfully marketed, they would be at an extremely high interest rate.

The developer’s proposal for the WVRWRF expansion project, as modified, is for a total of six 60,000 gpd modules with one module proposed to be constructed with this phase. Also included in the design is a proposal for a 4.6 mg to 4.8 mg seasonal storage pond located at the end of Charlan Road. The Developer’s proposal would provide service for the proposed Butterfield Trails subdivision and commercial property owned by Bell Enterprises, plus approximately 80 EDUs of capacity requests from private property owners, which the formation of an assessment district to fund the private property owners’ share has been requested. A cost comparison of the District’s expansion proposal and the Developer’s proposal shows that there would be a higher per EDU cost with the Developer’s proposal.

The District’s expansion project has a requirement for 75% redundancy for the AeroMod treatment units with the Developer proposing 50% redundancy. The District’s requirement for 75% redundancy will provide greater flexibility and reliability in operating the facility.

Reimbursement of costs to Newland Communities, who constructed the Woods Valley Ranch Water Reclamation Facility, is due upon the proposed expansion of the plant for the cost of those facilities constructed to benefit such future expansion. The base line estimated reimbursement cost is $6,000 per EDU. It was clarified that the reimbursement cost increases per EDU with decreases in the ultimate site capacity.

Pertaining to seasonal storage requirements, the District has proposed that the developer provide Charlan Road parcels ample enough to provide the seasonal storage volume needed for the maximum recycled water allocation to the golf course or 225,000 gpd. The Developer has proposed one parcel for the seasonal storage with a capacity of approximately 180 EDUs. Seasonal storage requirements are based on the irrigation area to which the recycled water is allocated. Per the Regional Water Quality Control Board, major projects are required to provide irrigation areas for recycled water generated by the development and the required 84 day seasonal storage. Development capacity that generates the recycled water that is allocated to the golf course has the added requirement of providing the 84 day seasonal storage requirement and a proportional amount of the volume needed to total 84 days storage for the Woods Valley Ranch subdivision. (Woods Valley Ranch development had provided the golf course, and its seasonal storage requirements for the Phase 1 installation were reduced to 45 days due to the high ratio of irrigation demand to available recycled water.) As such, subsequent expansion phases utilizing the golf course for irrigation would be required to provide a proportional share of the additional storage that will ultimately be required.

A summary of expenditures for the South Village Water Reclamation Facility Expansion Project was provided. The funds from the District, Bell Enterprises, Alti Corporation and property owners’ deposits total $618,524. These funds paid for the expansion project’s expenses of: engineering/legal ($171,690), CEQA documentation ($190,891), land/miscellaneous ($4,652), and District staff ($251,291). The work has resulted in a master plan for the wastewater reclamation plant’s expansion plan and a certified Environmental Impact Report for the project.

Mr. Steve Flynn and Mr. Wayne Hilbig presented their design concept for the proposed expansion of the WVRWRF stating that it is cost effective, responsive to the community’s needs, reliable and optimizes expansion potential.

Mr. Hilbig stated that the master plan for the WVRWRF indicates that its build-out could be maximized at 1900 EDUs. Mr. Hilbig expressed that, considering the build-out of the South Village area with the allowable density and capacity actually needed when a project is approved for development along with parcels that will not require wastewater service, the maximum build-out of the wastewater plant will not be required. The Developers voiced that a treatment plant that will eventually have the capacity to treat 1400 GPD is sufficient for the community.

A drawing of the Woods Valley Ranch Water Reclamation Facility with the equipment to be added for future expansion projects containing the 6 aeromod units that will provide 1440 EDUs of capacity was reviewed. The Developers expressed that the 6 aeromod units will provide adequate redundancy along with the capacity in the existing MBR unit. They also stated that the seasonal storage pond as proposed to be constructed on a lot off of Charlan Road is sufficient for their projects and they should not be required to purchase an additional lot for seasonal storage to serve the ultimate build-out.

A cost comparison of capital expenses between the wastewater treatment plant expansion project proposed by the District and the Developer’s proposal is a plant and storage total cost of $43,500/EDU for the District’s plan and $33,400/EDU for the Developer’s plan, which is outlined on the attached labeled “Exhibit A”.

Mr. Hilbig stated that the proposal to build a 60,000 gpd module will, with future expansions, accommodate all future potential EDUs and be an asset to the community in allowing for the needed commercial development. He suggested that the District consider purchasing the assessment district bonds that will finance the wastewater expansion project. Mr. Hilbig noted that the wastewater treatment plant will benefit the community also with the use of reclaimed water.

Several audience members addressed the Board to express their support of the wastewater expansion project. They voiced that commercial development supported by a sewer system is important for the Valley Center community and that a large scale wastewater treatment plant is not needed as there may not be ample disposal areas and wastewater requirements are diminished upon development of a parcel.

Staff was directed to evaluate the data presented and to summarize the concerns if the proposal for the expansion of the Woods Valley Water Reclamation Facility as proposed by the Developers were to be pursued, and address the proposal that the District purchase the assessment district bonds issued to finance the expansion project.

ADJOURNMENT

2. Upon motion by Aleshire, seconded by Haskell and unanimously carried, the meeting was adjourned at 5:45 p.m.

ATTEST: ATTEST:

____________________________ _______________________________

President

Secretary