February 21, 2006

VALLEY CENTER MUNICIPAL WATER DISTRICT

Regular Board Meeting

Tuesday, February 21, 2006

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 and Stone. Director Haskell was absent. Staff members present were: General Manager Arant, General Counsel Cowett, Director of Finance Jeffrey, District Engineer Grabbe, Director of Operations Hoyle, Board Secretary Stetson, IT Specialist Rivard, Manager of Accounting Pugh, and Project Managers Kilwein and Carrillo. Spectators present were: Messrs. Engersoll, Richardson, Wynn and others.

CONSENT CALENDAR

1. Upon motion by Aleshire, seconded by Stone and unanimously carried, the following consent calendar items were approved:

• Minutes of the Board meeting held February 6, 2006

• Audit demand check numbers 107550 through 107721

ACTION AGENDA

2. Skyline Ranch Wastewater Treatment Facility Transfer Agreement:

General Manager Arant reviewed that in October 2005, the Skyline Ranch Country Club applied and received permission from the California Regional Water Quality Control Board to take back ownership and operational control of its wastewater treatment facility which was conditional upon the District and Skyline Ranch Country Club entering into a transfer agreement.

A tentative agreement “Wastewater Treatment Facility Transfer Agreement and Joint Escrow Instructions” has been prepared setting forth the terms of the transfer in which Skyline has agreed to completely indemnify and release the District for any issues which may arise after the transfer. Negotiations are continuing regarding completion of improvements identified by the District that were to be completed as part of the Skyline Ranch Wastewater Treatment Plant Upgrade project. They are:

Noise Abatement – Install sound attenuation material, enclosures and/or equipment to comply with the County’s noise ordinances.

Containment – Construct onsite containment facilities to prevent tank spillage from flowing off-site onto adjacent property such that any overflow is diverted to the sludge drying bed containment area.

Lift Station – Upgrade the lift station and provide emergency storage for containment of the wastewater generated at a capacity of 6 hours of flow at the average day’s design capacity.

General Counsel Cowett stated that the transfer agreement as drafted indemnifies and releases the district from any issues that may arise. He explained that agreement on two issues were pending, which were: what improvements will be constructed and the cost for said improvements to establish the level of security to be provided by Skyline Ranch to ensure completion of the identified improvements. General Counsel Cowett stated that the improvements to be constructed have been identified and the cost for such will be determined.

Adoption of Resolution No. 2006-06 approving in concept the transfer agreement with the Skyline Ranch Wastewater Treatment Facility was recommended subject to General Counsel’s and the General Manager’s approval. Chris Ingersol, Trustee for the Skyline Ranch County Club, stated that there is agreement for compliance with completing the three improvement projects that were reviewed, but questioned the bond amount required as security for completion of the improvement projects. General Counsel stated that details for defining the improvement projects to be completed and their costs are being negotiated. These items will be defined and, if approved by the Board, the transfer agreement can be executed subject to payment of any and all funds owed the District at the time of the transfer.

Upon motion by Polito, seconded by Stone and unanimously carried, the following resolution, entitled:

RESOLUTION NO. 2006-06

RESOLUTION OF THE BOARD OF DIRECTORS OF

THE VALLEY CENTER MUNICIPAL WATER DISTRICT

APPROVING THE TRANSFER AGREEMENT WITH THE

SKYLINE RANCH COUNTRY CLUB OF THE SKYLINE

RANCH WASTEWATER TREATMENT FACILITY

was adopted by the following vote, to wit:

AYES: Directors Broomell, Polito, Aleshire and Stone

NOES: None

ABSENT: Director Haskell

3. Resolution Entering into Water Reclamation Facilities and Reclaimed Water Agreements for the Orchard Run Project:

Dianne Kilwein, Project Manager, explained that approval to enter into two agreements with the developer of the Orchard Run project, the Water Reclamation Facilities Agreement and the Reclaimed Water Agreement, will be requested.

The Orchard Run project, consisting of 300 units, will expand the Woods Valley Ranch Wastewater Reclamation Facility for treatment of the project’s wastewater and use of the reclaimed water for irrigation. Concept approval for this project had been approved by the Board in September of 2005 and Board approval of the project’s mitigated negative declaration will be considered in March. A modification to the permit order with the Regional Water Quality Control Board for treatment and discharge of the wastewater on the Orchard Run project site is being pursued to reflect treatment of the wastewater at the expanded Woods Valley Ranch Treatment Plant. Also, preliminary work on the formation of an assessment district to fund the wastewater treatment facilities is underway in which costs and property valuation information is being collected,

The Water Reclamation Facilities Agreement for the Orchard Run project addresses specific requirements for the construction and operation of the facilities for collection, treatment and disposal of wastewater. Project Manager Kilwein explained that the agreement was modeled after the executed Woods Valley Ranch agreement and specifies progress of the wastewater facilities’ construction before building permits can be pulled from the county and addresses the sewer standby charge and sewer service charge. It was noted that the sewer expansion project for the Orchard Run project cannot occur until the construction of the Woods Valley Ranch Wastewater Treatment facility is completed and accepted. A section in the agreement identifies alternative treatment methods should completion of the Woods Valley Ranch Wastewater Reclamation Facility not be completed by November 1, 2006. Construction of the Woods Valley Ranch Treatment Plant is expected to be completed in August or September of 2006.

The Reclaimed Water Agreement for the Orchard Run project outlines the terms for sale and use of the reclaimed water that will be produced at the treatment plant. A requirement of the waste discharge permit is that the wastewater is disposed of on the Orchard Run property as irrigation on designated areas. The costs for the reclaimed water will be 85% of the then current charge for domestic water. Pipelines conveying the effluent from the treatment plant to the Orchard Run development and the distribution mains to the meters will be owned and maintained by the District. However, the irrigation system beyond the meter will be owned and maintained by the developer or the homeowners’ association.

An update on the Orchard Run Project was provided by Patrick Richardson of D.R. Horton. He stated that a grading permit for the project from the County of San Diego is expected to be obtained within 30 to 45 days. Models for the homes may be completed by this fall with build-out of the project estimated at between 18 to 24 months.

Upon motion by Stone, seconded by Polito and unanimously carried, the following resolution, entitled:

RESOLUTION NO. 2006-04

RESOLUTION OF THE BOARD OF DIRECTORS OF

THE VALLEY CENTER MUNICIPAL WATER DISTRICT

ENTERING INTO A WATER RECLAMATION FACILITIES

AGREEMENT AND RECLAIMED WATER AGREEMENT

FOR THE ORCHARD RUN PROJECT

was adopted by the following vote, to wit:

AYES: Directors Broomell, Polito, Aleshire and Stone

NOES: None

ABSENT: Director Haskell

4. Request for Approval for Professional Architectural Services for the Engineering/Finance Office Remodels, Operations Building Remodel and Engineering Annex Modular:

Board approval to enter into an agreement for professional architectural services for the architectural design and construction management of the engineering/Finance offices remodel, Operations building remodel and an engineering annex modular was requested. The services will consist of a pre-design, design of the three projects and completion of the plans and specifications. The architectural firm selected will assist with the bid process for the project and the selection of a contractor and during the construction phase will be the construction manager.

Proposals for the architectural services were received from two architectural firms in which Robert A. McQuead, Architect, submitted the lowest proposal at $88,150. The proposals were reviewed by a selection committee and approval to enter into an agreement with Robert A. McQuead, Architect, was recommended.

Upon motion by Aleshire, seconded by Polito and unanimously carried, the following resolution, entitled:

RESOLUTION NO. 2006-05

RESOLUTION OF THE BOARD OF DIRECTORS OF

VALLEY CENTER MUNICIPAL WATER DISTRICT

APPROVING ENTERING INTO A PROFESSIONAL

SERVICES AGREEMENT WITH ROBERT A. McQUEAD,

ARCHITECT, FOR ARCHITECTURAL DESIGN AND

CONSTRUCTION MANAGEMENT SERVICES

was adopted by the following vote, to wit:

AYES: Directors Broomell, Polito, Aleshire and Stone

NOES: None

ABSENT: Director Haskell

GENERAL MANAGER’S AGENDA

5. Review of Miscellaneous Information Item::

Aqueduct Shutdown – General Manager Arant commended the District’s staff for their efforts in which they effectively administered operations during the aqueduct shutdown of February 4 through February 13. Work was coordinated among all of the District’s departments and a sufficient level of water capacity was maintained in the District’s system for in-home domestic needs and for fire protection largely due to the cooperation and understanding of the District’s customers who were asked to not use any outside water, except for livestock watering, during the period of the aqueduct shutdown.

Communication methods to potentially improve informing District customers of occurrences such as planned aqueduct shutdowns or emergency outages are being evaluated. The District had sent a separate mailer to its customers informing them of the shutdown and watering prohibitions and sent news releases to the local newspapers. In the future, more notoriety of pre-shutdown news stories will be pursued, as well as alternative notification methods such as rental of additional electronic signs so that motorists continue to receive the message.

Letters will be forwarded to the District’s certified agricultural customers thanking them for their cooperation during the aqueduct shutdown period and asking them for their input on how communication methods can be improved. Also, nurseries that had requested and received limited variances from the prohibition on outside watering will be sent letters commending them for their cooperation during the shutdown period and advising them to investigate constructing onsite storage as interruption of service may be necessary in our region. This could be completed in conjunction with the construction of run-off containment facilities being required by the county. Also, a newsletter is being compiled on the shutdown process to provide information on its necessity due to the improvements at the Skinner Filtration Plant, and to review water capacity improvements to our region, such as the Olivenhain Storage Facility and the Twin Oaks Water Treatment Plant, as well as construction of additional storage (Miller Reservoir) within the District’s system.

Municipal Service Review – General Manager Arant informed the Board that the District’s Municipal Service Review has been completed which is part of the process by LAFCO to review the water, sewer and recycled water in the Bonsall-Pala hydrologic subareas which was triggered by the San Luis Rey Municipal Water District’s application to exercise its latent powers to provide water and sewer service to the proposed Pardee development. The Rainbow M.W.D., San Luis Rey M.W.D. and the Yuima M.W.D. have also been requested to complete Municipal Service Reviews. The District’s Municipal Service Review provides data such as the District’s infrastructure, its governance, emergency supplies, master planning, financial information, reserve and budget policies, and operational history. A consultant for LAFCO will review the reports, provide a summary, and the Executive Officer of LAFCO will make a recommendation as to who is best suited to provide water and sewer service to the San Luis Rey area.

BOARD OF DIRECTORS’ AGENDA

6. ACWA/JPIA Premium Adjustment:

Director Aleshire reported that the ACWA/JPIA provides a premium adjustment (rebate) to agencies with low claims. In December of 2005, refund checks totaling $1.4 million were issued to 160 agencies with good claim performances. Also, agencies with low workers’ compensation claims had sufficient funds in their accounts to pay premium balances. The ACWA/JPIA provides good insurance coverage at competitive rates along with its training programs which assist in maintaining low claims.

ADJOURNMENT

7. Upon motion by Aleshire, seconded by Stone and unanimously carried, the meeting was adjourned at 3:17 p.m.

ATTEST: ATTEST:

____________________________ _______________________________

President Secretary