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Thursday, September 06, 2012

See Agenda for meeting location

CENTRAL ARIZONA PROJECT

Board of Directors

September 6, 2012 – 9:30 a.m.

Omni Tucson National Resort

Papago Ballroom

2727 W. Club Drive

Tucson, Arizona

FINAL AGENDA

Times shown are approximate.  Some items may take more or less time than scheduled
or the President may grant requests to hear items in an order other than shown.

1.     Pledge of Allegiance to the Flag, Moment of Silence and Safety Minute—Zimmerman (9:30)

2.     Recognition of Service to CAP by Employees with 25 Years (David Cervantez, Dillard Marshall) (Project Reliability: Managing our Workforce^)—Modeer/Pickard  (9:35)

3.      Consideration of Action to Approve Items on the Consent Agenda* (9:45)

    a.     Approval of Minutes of the August 2, 2012, Regular Meeting—Pickard
    
b.     Award of Equipment Purchase Contract to PCL Construction for Waddell Chiller Replacement Project (Project Reliability: Effectively Operate and Maintain CAP Assets^)—McCann
    c.     Award of Contract to WestWater Research LLC for CAGRD Water Supply Acquisition Program Implementation Consulting Services (Replenishment: Obtain Sufficient Water Supplies to Meet Replenishment Obligation^)—Harbour 
    d.    Approval of Construction Contract to SDB, Inc., for the Transformer Protection Project (Project Reliability: Effectively Operate and Maintain CAP Assets^)—McCann

4.      Consideration of Action to Approve Items Removed from the Consent Agenda      (9:50)

5.     Presentation of Tucson Water's Vision (Leadership & Public Trust: Relationships-Customers^)—Alan Forrest, Director of Tucson Water  (9:55)

6.     Introduction of Marana Utilities Director (Leadership & Public Trust: Relationships-Customers^)—John Kmiec/Utilities Director at Town of Marana  (10:10)

7.     Report on CAP's Cyber Security Systems (Project Reliability: Maintain Business Continuity^)—Phil Cook  (10:15)

8.     Report on Status of CAP Trail System (Leadership & Public Trust: Image-Education/Knowledge and Visibility of CAP^)— Tom Fitzgerald and Rafael Payan, Director, Pima County Natural Resources, Parks & Recreation (10:30)

9.     Report on Colorado River Activities, Including but not Limited to Water Supply and Discussions Among the Seven Basin States on Management of the River  (Water Supply: Reliability of the CAP Water Supply^)—McCann  (10:45)

10.  Consideration of Action to Extend Small User Exception to the CAWCD Procedure to Distribute Excess Water through 2014 (Leadership & Public Trust: Relationships-Customers; Project Reliability: Provide Reliable and Cost Effective Water Deliveries^)—McCann (10:50)

11.  Report of Committees and Consideration of Committee Recommendations

    a.     Public Policy Committee (Leadership & Public Trust: Relationships-Other Stakeholders; Water Supply: Reliability of the CAP Water Supply^)—Tenney  (11:20)

    b.     CAGRD & Underground Storage Committee (Water Replenishment: Long-term Role of the CAGRD^)—Bray (11:25)

                           i.          Approval of Recommended CAGRD Guiding Principles          

12.  Report on CAP Operations, Including but not Limited to CAP Water Diversions and CAP Deliveries (Project Reliability: Effectively Operate and Maintain CAP Assets^)—McCann  (11:45)

13.  Directors’ Reports on Current Events  (11:55)

14.  President’s Report on Current Events—Pickard  (12:05)

15.  General Manager’s Report on Current Events—Modeer  (12:10)

16.  Public Comment  (12:20)

17.  Consideration of Action to go into Executive Session of the Board for the following purposes:

    a.      Pursuant to A.R.S. §§38-431.03.A.3 and 38-431.03.A.4 to consult with the attorneys for the District and consider the District's position and instruct its attorneys regarding:

           i.     Navajo Generating Station

    b.     Pursuant to A.R.S. § 38-431.03(A)(3) to obtain legal advice from the District's attorneys on any matter listed on the agenda

 

 

 

 

 

 

 

 

[The discussions and minutes of the executive session shall be kept confidential.  The executive session of the Board is not open to the public.]**(approx. 12:25)

18.  Reconvene in Open Session                                                                           

19.  Consideration of Action Regarding Items Discussed in Executive Session (1:25)

__________________________________

*   Items listed in the Consent Agenda may be acted on by the Board without discussion.  Any item listed on the Consent Agenda may be removed from the Consent Agenda and acted on separately by the Board.

**  The Executive Session is expected to last approximately one hour and will not be open to the public.

^  Linkage to 2010 CAWCD Board of Directors Strategic Plan

 

REGULAR MEETING OF THE BOARD OF DIRECTORS

September 6, 2012

The regular meeting of the Central Arizona Project (“CAWCD” or “CAP”) Board of Directors was called to order by President Pamela Pickard on September 6, 2012, at 9:37 a.m. The meeting was held at the Omni Tucson National Resort, 2727 West Club Drive, Tucson, Arizona, in the Papago Ballroom. Secretary Timothy Bray was present.

Board members present were President Pamela Pickard, Maricopa County; Vice President Gayle Burns, Maricopa County; Secretary Timothy R. Bray, Maricopa County; Lisa Atkins, Maricopa County (by teleconference); Frank Fairbanks, Maricopa County; Jim Hartdegen, Pinal County; Jim Holway, Maricopa County (by teleconference); L.M. "Pat" Jacobs, IV, Pima County; Mark Lewis, Maricopa County; Jean McGrath, Maricopa County; Sharon B. Megdal, Pima County; Cynthia Moulton, Maricopa County; Warren Tenney, Pima County; Janie Thom, Maricopa County; and Carol Zimmerman, Pima County.

Staff members present were David Modeer, General Manager; Ted Cooke, Assistant General Manager, Finance; Tom Delgado, Assistant General Manager, Employee Services; Tom McCann, Assistant General Manager, Operations, Planning & Engineering; Marie Pearthree, Assistant General Manager, Business Planning and Government Programs; Kathryn Royer, Associate General Manager, Communications and External Affairs; Suzanne Ticknor, Senior Attorney; Phil Cook, Manager, Information Technologies; Tom Fitzgerald, Land Administrator; and Donna Micetic, Management Liaison to the Board.

PLEDGE OF ALLEGIANCE TO THE FLAG, MOMENT OF SILENCE AND SAFETY MINUTE
Ms. Zimmerman 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. Ms. Zimmerman presented a safety minute on emergency call scams.

RECOGNITION OF SERVICE TO CAP BY EMPLOYEES WITH 25 YEARS OF SERVICE
Mr. Modeer introduced David Cervantez and thanked him for 25 years of service to CAP. Dillard Marshall, 25 years of service, was unable to attend today's meeting. President Pickard, on behalf of the Board, expressed appreciation to these employees for their service to CAP.

CONSIDERATION OF ACTION TO APPROVE ITEMS ON THE CONSENT AGENDA
At the request of President Pickard, the CAGRD water acquisition program implementation consulting services item was removed from the Consent Agenda and will be discussed in Executive Session.

On a motion (Mr. Tenney) and second, the Board approved the minutes of the August 2, 2012, Regular Meeting; approved the award of an equipment purchase contract between CAWCD and PCL Construction for Chiller System Equipment and authorized the General Manager, or his designee, to execute an agreement up to $458,000 plus an additional $22,900 (5%) for contingencies, totaling $480,900; and approved the Award of the Construction Contract to SDB, Inc., for $670,000 plus $67,000 contingency, for construction of the Transformer Protection Project, and authorized the General Manager, or his Designee, to execute the Contract, and administer the contingency of up to $67,000.

PRESENTATION OF TUCSON WATER'S VISION
Mr. Alan Forrest, Director of Tucson Water, presented information on Tucson Water's planning activities and the critical role that CAP serves in Tucson Water’s portfolio.

INTRODUCTION OF MARANA UTILITIES DIRECTOR
Mr. John Kmiec, Utilities Director at the Town of Marana, introduced himself and stated that he looks forward to working with the Board.

REPORT ON CAP'S CYBER SECURITY SYSTEMS
Phil Cook, Manager, Information Technologies, reported on efforts that are taken at CAP to protect its electronic information and systems from cyber attacks.

REPORT ON STATUS OF CAP TRAIL SYSTEM
Tom Fitzgerald, Land Administrator, provided an update on the CAP trail system. Approximately 90 miles of trail has been developed along the CAP canal. Greg Hagen, Pima County Natural Resources, Parks & Recreation, reviewed the Pima County portion of the CAP trail system.

REPORT ON COLORADO RIVER ACTIVITIES, INCLUDING BUT NOT LIMITED TO WATER SUPPLY AND DISCUSSIONS AMONG THE SEVEN BASIN STATES ON MANAGEMENT OF THE RIVER
Mr. McCann reported:

·Negotiations with Mexico continue. 

·The release of the Colorado River Basin Study has been delayed to late November. It is expected to provide alternatives for addressing the projected imbalance between future demand and supply.

·Following a request by CAP and Southern Nevada Water Authority, Reclamation is working on procedures to implement the Secretary of the Interior's Colorado River inadvertent overrun and payback policy, and hopes to adopt procedures by the end of 2012.

·The Colorado River water supply status is stable. There is less than a ten percent probability of shortage before 2017.

REPORT ON CAP OPERATIONS, INCLUDING BUT NOT LIMITED TO CAP WATER DIVERSIONS AND CAP DELIVERIES  (item heard out of order)
Mr. McCann reported:

  • Elevation in Lake Pleasant is higher than anticipated at the present time.
  • Crews are making temporary repairs to storm damage at Hieroglyphic Mountains Recharge Project.

 
The Board recessed from 11:14 to 11:25 a.m.

CONSIDERATION OF ACTION TO EXTEND SMALL USER EXCEPTION TO THE CAWCD PROCEDURE TO DISTRIBUTE EXCESS WATER THROUGH 2014
Mr. McCann described CAP’s procedures to distribute Excess Water.  In November 2011, the Board authorized an exception to the CAP procedure that allowed users of less than 1,000 acre-feet (af) of water per year ("Small Users") to continue receiving Excess Water in 2012 while they worked to secure other sources of water for the future.  Recently, a number of Small Users asked for an extension of the exception to allow them more time to identify and secure other water supplies, stating that there would be adverse impacts to their operations if Excess Water is not available after 2012.  The total pool required to meet the Small User demand is less than 6,000 af per year. Staff recommends that the Board extend the exception through 2014, contingent on the Small Users meeting certain conditions. The conditions include:
Ø  exceptions would be granted to customers that ordered less than 1,000 af per year in each of the last three years;

Ø  the volume of Excess Water available to each customer would be limited to its highest annual order during the three year period; and

Ø  the Small User would be required to submit to CAP a written plan for transitioning to an alternative water supply by 2015.

CAP will fill the Small User water orders for 2013 and 2014 by taking up to 6,000 af from the AWBA/CAGRD firming pool each year.

Directors discussed a variety of issues associated with making Excess Water available to Small Users including:
Ø  providing Excess Water to Small Users reduces water deliveries designated for and available to other users;

Ø  Excess Water is only available if long-term subcontractors do not take their full entitlement;

Ø  the Excess Water procedures prioritize the allocation of Excess Water to (1) non-Indian agriculture, (2) CAGRD’s replenishment obligation, (3) Arizona Water Bank for firming long-term supplies, and (4) others;

Ø  the issue for CAP is the availability of water;

Ø  the issue for most of the Small Users appears to be cost;

Ø  the ability of the Small Users to continue operating their business may be jeopardized when Excess CAP Water is not available; and

Ø  pricing could be used to encourage development of other water resources.

Public Comment
Rory Van Poucke, Apache Sun Golf Club, expressed concerns regarding the future viability of his business if Excess Water is not available and other water is not affordable.

Dorothy Timian-Palmer, Vidler Water, reported that Vidler met with many of the Small Users to discuss alternative water supplies that could be available through purchase and exchange agreements. Vidler has underground storage credits in the Phoenix AMA that could be used by the CAGRD to meet replenishment obligations making Excess Water available to meet Small User water demands.

Michelle Van Quathen, Ryley Carlock, representing Vidler Water, stated that there has been some question regarding statutory and regulatory limitations on transferring underground storage credits, but no legislation or other regulatory arrangements are required to exchange or transfer credits. 

Aimee Upton, Maricopa County Parks & Recreation, encouraged the Board to extend the exception to the Excess Water Policy as recommended by staff.

Gordon Petrie, Red Mountain Ranch Country Club, stated that Red Mountain is developing other water supplies but cannot complete them by December 31, 2012. He encouraged the Board to extend the exception to the Excess Water procedures as recommended by staff.

Jason Moyes, Moyes, Sellers and Hendricks, representing Red Mountain Ranch and other Small Users, stated that in addition to a higher cost for other water, there is not time to develop alternative water resources before December 31, 2012. He encouraged the Board to extend the exception to the Excess Water procedures as recommended by staff.

Bill Cox, Arizona Wholesale Growers, encouraged the Board to extend the exception to the Excess Water procedures as recommended by staff and to consider third-party options going forward.

President Pickard referred Directors to a letter from Carol Augustine, Mazatzal Tree Farm, encouraging the Board to extend the exception to the Excess Water procedures as recommended by staff. 

A motion was made (Ms. Megdal) and seconded that the Board extend the exception to the CAP procedure for distributing Excess Water to fill Small User water orders for 2013 and 2014 subject to the conditions set forth in the Board brief.

A substitute motion was made (Ms. Zimmerman) and seconded that the Board extend the exception to the CAP procedure for distributing Excess Water to fill Small User water orders for one year and then terminate the extension.

The Board voted by roll call on the substitute motion: Mses. Atkins, Burns and Zimmerman and Messrs. Fairbanks, Holway, Jacobs and Tenney voted in favor of the substitute motion.  Mses. McGrath, Megdal, Moulton, Pickard and Thom and Messrs. Bray, Hartdegen and Lewis voted against the motion. The substitute motion failed on a vote of 6.03 in favor and 7.77 against.

The Board voted by roll call on the main motion: Mses. Atkins, Burns, McGrath, Megdal, Moulton, Pickard, and Thom; and Messers. Bray, Fairbanks, Hartdegen, Holway, Lewis, and Tenney voted in favor of the main motion. Ms. Zimmerman and Mr. Jacobs voted against the motion. The motion passed on a vote of 12.50 in favor and 1.30 against.

CONSIDERATION OF ACTION TO GO INTO EXECUTIVE SESSION (item heard out of order)On a motion (Mr. Lewis) and a second, the Board convened in Executive Session for the following purposes: Pursuant to A.R.S. §§38-431.03.A.3 and 38-431.03.A.4 to consult with the attorneys for the District and consider the District's position and instruct its attorneys regarding Navajo Generating Station; and Pursuant to A.R.S. § 38-431.03(A)(3) to obtain legal advice from the District's attorneys on any matter listed on the agenda.

The Board convened in executive session at 1:08 p.m. and reconvened in open session at 2:30 p.m.

On a motion (Mr. Tenney) and a second, the Board approved the award of a contract between CAWCD and WestWater Research, LLC, for professional consulting services for the CAGRD Water Supply Acquisition Program Implementation Plan and authorized the General Manager to execute the contract in the amount of $1,399,332.  The Board also authorized additional spending authority for the CAGRD up to $457,000 for outside services in 2013.

Ms. Thom voted against the motion.

PUBLIC POLICY COMMITTEE
Mr. Tenney reported on the September 6, 2012, meeting of the Public Policy Committee, including the legislative outreach program.

CAGRD & UNDERGROUND STORAGE COMMITTEE
Mr. Bray reported on the August 16, 2012 meeting of the CAGRD & Underground Storage Committee. He stated that the committee has met with stakeholders over the past twelve months and recommends adoption of the CAGRD Guiding Principles.

Public Comment
Alan Forrest, Tucson Water, Cliff Neal, City of Phoenix, Philip Saletta, representing Oro Valley Water Utility and Southern Arizona Water Users Association (SAWUA), Kathy Ferris, Arizona Municipal Water Users Association (AMWUA), and Rob Anderson, representing Fennemore Craig, spoke in favor of adopting the Guiding Principles as recommended by the Committee.

On a motion (Mr. Bray) and a second, the Board approved the Recommended CAGRD Guiding Principles.

DIRECTORS' REPORTS ON CURRENT EVENTS
Directors reported on various meetings and events they attended.

PRESIDENT'S REPORT ON CURRENT EVENTS
President Pickard reviewed current events and future meeting dates.

GENERAL MANAGER'S REPORT ON CURRENT EVENTS
Mr. Modeer reported on current events.

There being no further business to come before the Board, the meeting adjourned at 2:50 p.m.

_________________________________
Timothy R. Bray, Secretary

All documents distributed in conjunction with this meeting and transcripts of its proceedings are on file at CAWCD
headquarters.

NOTICE OF A REGULAR MEETING OF THE CENTRAL ARIZONA PROJECT BOARD OF DIRECTORS Pursuant to A.R.S. § 38-431.02, notice is hereby given to the members of the Board of Directors and the general public that the Central Arizona Project Board of Directors will hold a regular meeting, open to the general public, on September 6, 2012, at 9:30 a.m. The meeting will be held at the Omni Tucson National Resort, 2727 W. Club Drive, Tucson, Arizona in the Papago Ballroom. Members of the Board of Directors may attend either in person or by telephone conference call. Enclosed is a tentative agenda for the meeting. A copy of the final agenda for the meeting will be available at the CAP office, 23636 North Seventh Street, Phoenix, Arizona, at least twenty-four (24) hours in advance of the meeting. Agendas may also be viewed at http://www.cap-az.com/BoardofDirectors/BoardMeetings.aspx. If indicated in the agenda, the Board of Directors may vote to go into Executive Session, which will not be open to the public, to discuss certain matters. In accordance with the Americans with Disabilities Act (ADA), if you need reasonable accommodations due to a disability, please contact the CAP office at (623.869.2333) or TDD (623.869.2170) at least seventy-two (72) hours in advance of the meeting. To avoid interference with the conduct of the meeting, persons (including those with media credentials) wishing to video record any portion of the public meeting should notify CAP's media relations office at 623.869.2135 at least forty-eight (48) hours in advance of the meeting to make arrangements. This meeting will not be broadcast to the Tucson Field Office. August 30, 2012 ________________________________________ Donna Micetic, Management Liaison to the Board