Board

May 6, 2010

Location: Central Arizona Project

    REGULAR MEETING OF THE BOARD OF DIRECTORS

May 6, 2010

President Bitter Smith called to order a regular meeting of the Central Arizona Water Conservation District ("CAWCD" or "CAP") Board of Directors on May 6, 2010, at 10:00 a.m. The meeting was held at the Central Arizona Project Headquarters Building, located at 23636 North Seventh Street, Phoenix, Arizona, in the Board Room.

Board members present were President Susan Bitter Smith, Maricopa County; Lisa Atkins, Maricopa County; Timothy R. Bray, Maricopa County; Gayle Burns, Maricopa County; Dan Donahoe, Maricopa County; Paul Hendricks, Maricopa County; L.M. "Pat" Jacobs, IV, Pima County; Terri Kibler, Pinal County; Jean McGrath, Maricopa County; Sharon B. Megdal, Pima County (by teleconference); Pamela Pickard, Maricopa County; Warren Tenney, Pima County; and Janie Thom, Maricopa County.

Board members Mark Lewis, Maricopa County and Carol Zimmerman, Pima County were absent.

Staff members present were David Modeer, General Manager; Larry Dozier, Deputy General Manager; Ted Cooke, Assistant General Manager, Finance; Tom McCann, Assistant General Manager, Operations, Planning & Engineering; Douglas K. Miller, General Counsel; Marie Pearthree, Assistant General Manager, Business Planning; Kathryn Schmitt, Director of Communications, Public Affairs & Governmental Relations; Greg Ramon, Assistant General Manager, Maintenance Administration; and Donna Micetic, Management Liaison to the Board.

1. PLEDGE OF ALLEGIANCE TO THE FLAG, MOMENT OF SILENCE AND SAFETY MINUTE

Ms. Pickard led the Directors and public in reciting the pledge of allegiance to the flag of the United States of America and a moment of silence in memory of Bill Baker. Ms. Pickard presented a safety minute on preventing medication errors.

2. RECOGNITION OF FINANCE DEPARTMENT FOR GOVERNMENT FINANCE OFFICERS ASSOCIATION (GFOA) DISTINGUISHED BUDGET PRESENTATION AWARD FOR THE 2010-2011 BUDGET

3. CONSIDERATION OF ACTION TO APPROVE THE MINUTES OF THE APRIL 1, 2010, REGULAR MEETING

4. REPORT OF COMMITTEES AND CONSIDERATION OF COMMITTEE RECOMMENDATIONS

Public Policy Committee:

Ms. Burns reported that the Committee heard updates on State and Federal legislative issues that could affect CAWCD. Ms. Burns reported that the CAGRD bonding bill has passed the House and is awaiting the Governor's signature.

On a motion (Ms. Pickard) and a second, the Board adopted the revised Central Arizona Project Rate Setting and Central Arizona Project Recharge Rate Setting Policies.

Ms. Pickard reported that at the April 20, 2010, Finance, Audit & Power Committee meeting, the Committee discussed the preliminary rate schedule for 2011 through 2016.

Public Comment

On a motion (Ms. Pickard) and a second, the Board approved the Preliminary 2011-2016 Water Rate Schedule.

CAGRD & Underground Storage Committee:

Mr. Bray reported that, to allow more time for discussion and to gather additional input from stakeholders, the recommendation to approve the CAGRD Preliminary Rate Schedule for 2010/11 through 2015/16 will not be considered. Stakeholders are invited to attend the May 20, 2010, CAGRD & Underground Storage Committee Meeting when the Committee will further discuss the rates and develop a final rate recommendation for the Board's consideration on June 3, 2010.

Board members discussed the value of CAGRD membership to developers, the liability membership places on CAGRD and the implications of raising CAGRD enrollment fees.

Public Comment

Spencer Kamps, Home Builders Association of Central Arizona, opposes increasing the enrollment fee to $200 and supports staff's recommendation to increase the fee to $107.

Margaret Gallogly, representing DMB Associates, Sunbelt Holdings, Douglas Ranch El Dorado and Robson Communities, reported that her clients support staff's original recommendation to increase the enrollment fee from $83 to $107.

Scott Gray, Diversified Water Utilities, commented that CAGRD's water rate structure unfairly impacts developers and smaller water companies in Member Land areas.

Ray Jones, Aricor Water Solutions, urged the Board to maintain equity amongst all of the different users within the CAGRD.

Philip Saletta, Oro Valley Water Utility, supports the $200 enrollment fee and associated activation fee.

5. REPORT ON ADD WATER PROCESS

(President Bitter Smith left the meeting and Vice President Pickard assumed the chair.)

Mr. McCann reported that the implementation phase of the ADD Water Process will begin in the near future. A June 1, 2010, meeting is being planned to explain the process to stakeholders and begin the formation of workgroups.

6.  REPORT ON SILVERY MINNOW CASE AND YUMA CLAPPER RAIL RECOVERY PLAN

Mr. Miller reported that the Silvery Minnow litigation involved a series of court decisions to the effect that the obligations of Reclamation's contracts to deliver water may be ignored if the water is needed for endangered fish. After 10 years of litigation, the Tenth Circuit Court vacated all the District Court decisions of concern and the case is now closed.

Mr. Miller reported on the Yuma Clapper Rail Recovery Plan. The Fish and Wildlife Service has linked the recovery of the Clapper Rail in the U.S. to providing a long term water supply for the Cienega de Santa Clara in Mexico. This could adversely affect the operation of the Yuma Desalting Plant, and CAP intends to submit comments on the plan recommending that the Recovery Plan delete requirements related to providing a long term water supply for the Cienega.

7.  REPORT ON COLORADO RIVER ISSUES INCLUDING BUT NOT LIMITED TO WATER SUPPLY AND DISCUSSIONS AMONG THE SEVEN BASIN STATES ON MANAGEMENT OF THE RIVER

Mr. Henning presented an update on the CAP and western water supply forecast.  As a result of Agua Fria inflows to Lake Pleasant in early 2010, water that would have been pumped into the lake for summer deliveries was made available to other customers. Lake Pleasant is at elevation 1698 feet.

Mr. McCann reported that at a Basin States technical meeting held on April 8, 2010, the parties heard reports on and discussed water supply issues. A meeting on the Colorado River Basin Study was held on April 26, 2010, to allow states to present their current and future demands. The pilot run of the Yuma Desalting Plant started on May 3, 2010, with fewer complications than anticipated.

8.  REPORT ON CAP OPERATIONS ISSUES, INCLUDING BUT NOT LIMITED TO CAP WATER DIVERSIONS AND CAP DELIVERIES

Mr. McCann reported that construction began on the CAP system 37 years ago today. Lake Pleasant is full and releases will begin on normal schedule in June. Operations has begun coordinating with customers at the southern end of the system for the normal fall maintenance outage of the southern plants. There will also be an outage of the Agua Fria tunnel for three weeks in July to facilitate installation of new communications cable.

Mr. Ramon provided updates on the repair work being done on the Mark Wilmer Unit 4 and scraping for caddis flies in the metropolitan Phoenix area.

9. DIRECTORS' REPORTS

Mr. Bray participated in a briefing and a helicopter tour with State Treasurer Dean Martin.

Mr. Hendricks attended the Kick-Off Ceremony for the Yuma Desalting Plant and the Drop 2 Storage Reservoir Project. He just returned from the Bureau's River Review trip.

Mr. Jacobs reported that he participated in the Tucson Forum.

Ms. Kibler reported that she attended the Kick-Off Ceremony for the Yuma Desalting Plant and the Drop 2 Storage Reservoir Project.

Ms. McGrath reported that she attended the Tucson Forum and the White Tanks Water Treatment Plant dedication.

Dr. Megdal reported that she participated in the Tucson Forum. She will be giving a presentation at a cross-border workshop later this week.

Mr. Tenney reported that he participated in the Tucson Forum. He will tour the Mark Wilmer Pumping Plant later this month.

Ms. Thom reported that she, along with Bob Barrett, gave a presentation regarding the Navajo Generating Station (NGS) at the Gilbert Town Council meeting on May 4.

10. PRESIDENT'S REPORT

Vice President Pickard reviewed upcoming events and meeting dates.

11. GENERAL MANAGER'S REPORT

Mr. Modeer reported that the Udall Foundation's historic exhibit will be on display in the CAP lobby during the month of May. Mr. Modeer gave an update on recent meetings that involved CAP staff and Board members.

12. PUBLIC COMMENT

None.

13. CONSIDERATION OF ACTION GO INTO EXECUTIVE SESSION

The Board convened in Executive Session for the following purposes: To consult with the attorneys for the District and consider the District's position and instruct its attorneys regarding: Navajo Nation v. United States, pending in the United States District Court for the District of Arizona, and related settlement negotiations; Regulation of nitrogen oxide emissions at the Navajo Generating Station; Litigation regarding funds of the Arizona Water Banking Authority; Negotiations regarding a possible settlement of the water rights claims of the Tohono O'odham Nation, Sif Oidak District; and H.R. 4349, the Hoover Power Allocation Act of 2009. The discussions and minutes of the executive session shall be kept confidential. Board convened in executive session from 12:46 p.m. until 1:44 p.m. and reconvened in open session at 1:44 p.m.

There being no further business to come before the Board, the meeting adjourned at 1:45 p.m.

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Timothy R. Bray, Secretary