MINUTES OF THE BOARD OF DIRECTORS
ZONE 7
ALAMEDA COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT

________________________________________________________________

REGULAR MEETING

May 17, 2017

The following were present:

DIRECTORS: SANDS FIGUERS

JOHN GRECI

ANGELA RAMIREZ HOLMES

JIM McGRAIL

SARAH PALMER

RICHARD QUIGLEY

BILL STEVENS

DIRECTORS ABSENT: NONE

ZONE 7 STAFF: JILL DUERIG, GENERAL MANAGER

OSBORN SOLITEI, ASSISTANT GENERAL MANAGER, FINANCE/TREASURER

KAREN NEWTON, ASSISTANT ENGINEER, WATER QUALITY

CAROL MAHONEY, MANAGER, INTEGRATED WATER RESOURCES

JOE SETO, PRINCIPAL ENGINEER, FLOOD PROTECTION

LINDA VAN BUSKIRK, BOARD SECRETARY

COUNSEL: DAVID ALADJEM, DOWNEY BRAND

KELLY POPE, DOWNEY BRAND

Item 3 -

CALL TO ORDER/PLEDGE OF ALLEGIANCE

The Board came out of Closed Session at 7:17 p.m. At 7:18 p.m., President Quigley called the meeting back into session and led the Salute to the Flag.

Item 4 -

REPORT OUT OF CLOSED SESSION

President Quigley reported that the Board discussed a Memorandum of Understanding between the Alameda County Flood Control and Water Conservation District, Zone 7 and the International Federation of Professional and Technical Engineers, Local 21 (IFPTE Local 21) dated July 2, 2017 through June 29, 2019.

President Quigley asked for a motion on the item. Director Stevens moved to approve the item, and Director Palmer seconded. There being no discussion or comment from the public on the matter, the motion passed by a voice vote of 7-0.

Resolution No. 17-38 Approved the MOU between Zone 7 & the IFPTE, Local 21.

Item 5 -

CITIZENS FORUM

There were no public comments at this time.

Item 6 -

MINUTES OF THE REGULAR BOARD MEETING OF APRIL 19, 2017 Director Palmer moved that the minutes of April 19, 2017 be accepted and approved and Director Greci seconded the motion. The minutes were approved by a voice vote of 7-0.

Item 7 -

CONSENT CALENDER

a. Request for "Out-of-State" Travel to Attend the American Water Works Association Annual Conference & Exposition

b. Designation of Agents for Disaster Relief

Director Stevens interjected and moved to hear Item 15 earlier in the order of agenda items listed, seeing that a large number of people were in attendance to hear that item. A discussion ensued regarding changing the order of items. Staff recommended moving Item 15 before Item 12. President Quigley agreed to the change. Item 15 was moved after Item 11 and before Item 12.

Director Greci moved to approve Items 7(a) and (b) and Director Palmer seconded the motion. The items were passed by a voice vote of 7-0.

Resolution No. 17-39 Authorized Out-of-State Travel for the AWWA ACE 2017 Conference

(Item 7a)

Resolution No. 17-40 Authorized the Designation of Agents for Disaster Relief (Item 7b)

Item 8 -

STAFFING UPDATE

a. Employee of the Month Recognition

General Manager, Jill Duerig, announced that Brandon Woods, Assistant Engineer in the Facilities Engineering Section, was nominated as Employee of the Month. Brandon was commended for his many responsibilities at the Del Valle Water Treatment Plant (DVWTP) such as the ozone improvement project and at the Chain of Lakes facilities addressing the slope failure issues and repair. The Board applauded Brandon Woods in absentia.

b. Recent Employee Activities

Ms. Duerig announced that because May is Water Awareness Month, Zone 7 traditionally celebrates a few extra events. In May its employee activities included two events - Take Our Children to Work Day and Service Recognition Awards. She encouraged everyone to look at the picture boards posted at the back of the board room. The agency's HR group prepared a short DVD about those receiving service awards and the presentation was played for the Board and audience. President Quigley congratulated all Staff who reached various milestones as shown in the video and thanked them for their service.

Item 9 -

PRESENTATION OF THE GFOA CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING Osborn Solitei, Assistant General Manager of Finance/Treasurer, introduced Mr. Damien Charlety of East Bay Municipal Water District who is also the East Bay Chapter Chair for the California Society of Municipal Finance Officers (CSMFO) the statewide version of the Government Finance Officers Association (GFOA) which is the national organization. On behalf of GFOA, Mr. Charlety presented Zone 7 with the distinguished Certificate of Achievement for Excellence in Financial Reporting for its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2016. Mr. Solitei accepted the award and thanked Staff members Margaret Chun, Teri Yasuda, Karen Bartels, Zeljka Bozic, Anthony Choi, Rosario Lopez, Tamara Baptista, JaVia Green, and Mike Wallace for their dedication and hard work in developing the CAFR. He also acknowledged David Alvey, CPA with Maze & Associates, the Agency's auditors, along with the Board of Directors and General Manager for their leadership and support. This is the first year the Agency has received this recognition.

Director Palmer thanked Staff for responding to Board requests for clear financial information and thereby making their job easier.

Item 10 -

PRESENTATIONS BY SCIENCE AND ENGINEERING FAIR AWARDEES

Karen Newton, Assistant Engineer in the Water Quality Section, provided a brief background on Zone 7 Water Agency's participation over the years in judging water-related projects during the Alameda County Science and Engineering Fair. Ms. Newton was a returning judge this year along with first time judge, Wes Mercado. She then welcomed and introduced the students who presented their special award-winning projects to the Board.

Abigail Huang, Sunol Glen Middle School, presented her project entitled, "Solar Water Purifier." Cassandra Leo, Quarry Lane Middle School, presented her project entitled, "Is the Hardness of Water Different in Certain Locations?" Akshit Mehta, Dublin High School, presented his project entitled, "Smart Sprinkler System."

President Quigley presented a certificate and an award to each winning student.

Item 11 -

SUSTAINABLE GROUNDWATER MANAGEMENT ORDINANCE ADOPTION President Quigley stated that this is the second reading of the Proposed Sustainable Groundwater Management Ordinance. This was brought up last month during the April board meeting where a first reading of the title was made. The entire document is voluminous and has been uploaded to the Zone 7 Water Agency website. President Quigley read a brief summary from the staff report. He then opened the public hearing. There were no public comments so the public hearing was closed.

President Quigley asked for Board comments.

In response to a question from Director Ramirez Holmes regarding how public outreach was conducted, Mr. Aladjem explained that the Board has had two readings - by having a meeting when the board considered it when it was read and then a second meeting, so there was at least 30 days of public notice of the proposed ordinance. She further asked about what is the problem that the Agency is attempting to solve with this ordinance. Mr. Aladjem explained that in December, Zone 7 accepted the role of Groundwater Sustainability Agency and finalized its alternative Groundwater Sustainability Plan to manage the basin. What was not anticipated when the Sustainable Groundwater Management Act (SGMA) was enacted in 2014 was that the State Water Resources Control Board would have a very strong enforcement policy. The way in which the statute was written was to encourage most of the work to be done between water agencies and the California Department of Water Resources which is the planning agency for the state of California with regard to water and it was very much modeled on a general plan type of process where local water agencies would come up with groundwater sustainability plans, or in our case, an alternative plan and work with DWR to ensure that plan was adequate. That was 2014. What has happened since is the State Water Board has said that this is a really wonderful opportunity for us to begin to regulate groundwater in California. Under California law, the Porter-Cologne Water Quality Control Act, groundwater is already under the jurisdiction of the State Water Resources Control Board. However, water rights and use of water for potable or agricultural purposes has not been under the authority of the board. Over the last year, particularly in the last six months, the Water Board has really been gearing up to be a very active enforcement agency for groundwater that was not contemplated in SGMA. So there has been a fairly good level of alarm that the State Water Resources Control Board is actually trying to impose different standards. What this ordinance is intended to do is to forestall any effort by the State Water Resources Control Board to use waste and unreasonable use to try to take control of the management of our local groundwater basins. If you look for example, in Section 4 Prohibitions (see page 4 beginning at line 137), you'll see that the prohibitions there are very focused on what is known as the general waste and unreasonable use language and that comes from the California Constitution. That is the hook that the State Water Resources Control Board has been using. The purpose of the ordinance is to say to the Water Board we already have all the local enforcement we need; we are doing exactly what you would be doing with your enforcement staff and therefore there is no need to assert control over this basin. This is proactive, this is prophylactic. It is better to be ahead of the curve as opposed to behind the curve.

Director Ramirez Holmes said she agreed and appreciated that but the process and outreach seemed nonexistent. When we were considering the well ordinance, we had notices, workshops, and mailings. She expressed concern over implementation and enforcement as it established broad authority to the General Manager with items like CEQA and a schedule of fees that do not even come back to the full Board. She doesn't want to pass an ordinance without safeguards and appropriate outreach so the agency message can be communicated clearly to the ag community and wineries. She added that she would rather any appeals went to full Board, since they are publicly noticed and televised.

Director Figuers agreed with Director Ramirez Holmes and asked if it would be possible to hold an outreach program to invite people, send letters, make contacts to wineries and other large users.

Director McGrail expressed concern that the appeal process as written gives the general manager an unfettered right to say no. Staff responded that an appeal review committee comprised of the Water Resources Committee of the Board of Directors shall hear the appeal and issue a decision within 30 days after the hearing. Under the existing County Water Well ordinance and the MOU that the agency has with the county, this is the process that the Board has already decided to use. This ordinance tracks that existing process. There is an appeals process if the general manager were to make a mistake -- the Water Resources Committee is the final appeal.

Director Stevens moved to adopt the Ordinance. Director Figuers seconded the motion, but then withdrew the second so that a substitute motion could be made. The motion died for lack of a second.

A motion was made by Director Ramirez Holmes to postpone the item until the next Board meeting in June to allow Staff time to conduct more public outreach. Director McGrail seconded the motion. The motion was passed by a voice vote of 5-2, with Directors Palmer and Stevens voting no.

Item 15 -

ADLL EMERGENCY BANK STABILIZATION PROJECT - HEARING ON THE RESOLUTION OF NECESSITY DECLARING THE PUBLIC NECESSITY FOR ACQUISITION OF PROPERTY INTERESTS FROM ALAMEDA COUNTY APN 946-3785-2-5 AND DIRECTING THE FILING OF EMINENT DOMAIN PROCEEDINGS Kelly Pope, Counsel, gave a presentation on the legal requirements of the proposed Resolution of Necessity and the eminent domain process as it pertains to the Arroyo de la Laguna Emergency Bank Stabilization Project along the west bank between Castlewood Drive and the Verona Bridge. The property is currently vacant and undeveloped at 3 Verona Road. The property owners, Bhupinder Singh and Rajinder Randhawa received notice of the public hearing and were present at the hearing.

Carol Mahoney, Integrated Water Resources Manager, gave an overview of the project, the property and the necessity. Her discussion addressed the findings at the site due to the substantial rains in January and February which necessitated a declaration of a state of flood emergency within Zone 7's service area. The recommended solution at the Verona site is to conduct an emergency bank stabilization on the Arroyo de la Laguna on the west bank and across from the existing Zone 7 easement, immediately north of Verona bridge. If bank repair work is not completed before the beginning of the next rainy season beginning in the fall of 2017, there is a serious risk of further damage to the banks of the Arroyo de la Laguna and the surrounding property. In order to complete the work before next fall, Zone 7 needs immediate possession of the property. The Project is therefore an emergency project, and is necessary to preserve health, safety, welfare and property in Zone 7's service area.

President Quigley asked if there were any questions from the Board

In response to Director Greci's question asking if this area is considered a flood zone, Ms. Mahoney said no, this is an elevated area, about 30-35 feet above the water surface.

In response to Director Ramirez Holmes question asking how much the cliff has eroded at the 3 Verona site, Ms. Mahoney responded that it is estimated to be 90 feet in three years. Director Figuers added that it eroded 40-50 feet from the prior year. A moderate El Niño is predicted for this year, so a lot of powerful water can potentially be coming and hitting the bank, causing more extreme erosion.

President Quigley opened the public hearing.

Mr. Bhupinder Singh addressed the Board. He stated he is one of the owners of that property which was purchased last year. He and his 12-year-old son currently live in Fremont and have wanted to live in the ADLL area for the past four years. They would drive through and search for property where they could build a home and his son could then attend Foothill High School. They had planned to ask the County to allow them to build a house on this land. They borrowed money from friends, family and his business in order to purchase the land to build their dream home. He has been cooperative with Zone 7 through this process and would like to see the stream bank returned to its original location where it was when he purchased the land. He urged the Board to consider any other option in order to save his property so that he can build his family's dream home, but if public safety is an issue, he is not against that in order to save other properties. Whatever the Board decides, he will abide by that decision. He requested fair market value for the land.

Director Ramirez Holmes asked if Mr. Singh does not want to give up the property, why within the last two weeks did he place it up for sale? Mr. Singh responded that it is on the market because the property is at fair market value now. If he can sell at fair market value rather than keeping it but not being able to build, he can then move on to something else.

Director Stevens expressed his empathy for Mr. Singh's situation and asked Mr. Singh if he understands that due to the damage that occurred this past winter, that he would probably not be able to build there. Mr. Singh thanked Director Stevens and reiterated the dreams of his family to build a house in that neighborhood, but if he must sacrifice his land to save other houses, he will. He urged the Board to offer fair market value.

David Aladjem stated that under California law, if the board were to choose to move towards the eminent domain process, Zone 7 is required to pay fair market value as determined by an appraiser or, if necessary, by a court of law. That would be what the landowners would be compensated. Ms. Pope added that as part of that process, Zone 7 would be required to also reimburse the property owners up to $5,000 for the cost of obtaining their own appraisal. The process is set forth in the California Code of Civil Procedure to make sure that the end result is that the agency is paying the fair market value to the property owners. She stressed that the point of this public hearing is not to determine what the fair market value is, but rather to determine the necessity of the project and the property for that project to start the eminent domain process. It is that process where fair market value is litigated, if necessary, and a resolution of necessity and the start of an eminent domain process does not foreclose continued negotiations.

David Raun, a resident of Foothill Road in Pleasanton, addressed the Board. Having lived there for 20 years, he fully understands why Mr. Singh and his family would want to live there. It is a great place to live. He stated his concern is also for the other nine homeowners on the other side of the bank. He expressed his support for whatever solution is necessary to protect their properties from the force of the water. He thinks that acquiring this property would be a good move.

President Quigley asked if there were any further public comments. There being none, the public hearing was closed.

Director Palmer moved to approve Item 15 and Director Figuers seconded the motion. The item was passed by a roll call vote of 6-1, with Director Ramirez Holmes voting no.

Resolution No. 17-44 Declared the public necessity for the taking of certain property and

directed the filing of eminent domain proceedings for

Arroyo de la Laguna emergency bank stabilization (Item 15)

Item 12 -

AUTHORIZATION FOR BANKING/DEPOSITORY SERVICES, CUSTODIAL SERVICES, INVESTMENT MANAGEMENT SERVICES AND DESIGNATING FINANCIAL SIGNATURE

Osborn Solitei presented the staff report summarizing the need for the agency to enter into a contract with MUFG Union Bank, N.A. in order to provide banking and custodial services and to approve HighMark Capital Management to provide investment management services. Due to activities such as the Camp Parks endowment and pursuing debt, the agency must prepare for those activities by having separate bank accounts.

Director Ramirez Holmes asked why the agency would need bank accounts and services if Zone 7 doesn't withdraw its money from the County. Mr. Solitei explained that the Board approved Resolution 16-160 for the Camp Parks Project Phase 1 Agreement. That required the Board to accept responsibility to be a land manager and accept an endowment that will be controlled solely by Zone 7. The agency will be receiving that money very soon. However, when we receive that money we currently have nowhere to deposit it. This resolution is creating that banking service. He added that in 2012 the Board authorized Staff to set up a bank account, but that was through Wells Fargo Bank. Staff is recommending approval of the resolution to instead utilize Union Bank, which is where the County keeps Zone 7's money. The new account is for the purpose of accepting and depositing all money received, such as the Camp Parks endowment or bonds or money received from the state revolving fund.

Director Palmer expressed her support for the item, stating it seems like a very wise resolution for the agency to pass as it sets up a place for future money coming in, grants, etc. and is in the public's best interests as it will be transparent and allows the public to know exactly what we're doing with our money. This is a good venue for that.

Director Greci expressed his support for the item as it will create a process whereby we will get the Camp Parks endowment and grant money and we can better manage it because it has specific uses. It doesn't have to go into the county general fund because we're going to manage it and use it and this will make it easier to manage.

Director Stevens expressed his support for establishing a bank account. We need to start managing the Agency's funds and this is one of the first steps in doing it.

President Quigley also expressed his support.

President Quigley asked if there were any public comments. None were received.

Director Stevens moved to approve Item 12 and Director Palmer seconded the motion. The item was passed by a roll call vote of 7-0.

Resolution No. 17-41 Authorized Banking/Depository Services, Custodial Services,

Investment Management Services and Designated Financial Signature

(Item 12)

Item 13 -

INVESTMENT POLICY

Osborn Solitei presented the staff report summarizing the Investment Policy which is intended to provide guidelines, pursuant to California Government Code section 53600, for the prudent investment of surplus cash, reserves, trust funds and restricted monies and to outline a policy for maximizing the efficiency of the Agency's cash management system.

A discussion on Section 3.0, Delegation of Authority ensued. Director Ramirez Holmes suggested that Staff add language to the Investment Policy stating that the Agency's Board of Directors has primary responsibility for the investment program and then the Board designates that authority to a treasurer. She also had a question about policy review on a regular basis. Staff responded that the Investment Policy was drafted pursuant to Section 53600, et. seq., of the Government Code of the State of California, and confirmed that the responsibility for the investment program is specifically delegated by the Board to the Board-appointed Treasurer as stated in the first sentence of Section 3.0. Staff also pointed out that the Board resolution states that the resolution shall be reconsidered by the Board annually.

President Quigley asked if there were any public comments. None were received.

Director Stevens moved to approve Item 13 with no changes and Director Palmer seconded the motion. The item was passed by a roll call vote of 6-1, with Director Ramirez Holmes voting no.

Resolution No. 17-42 Adopted Investment Policy and Delegated Authority to

Deposit and Invest Funds to the Treasurer (Item 13)

Item 14 -

EMERGENCY ENVIRONMENTAL SUPPORT SERVICES FOR PURSUANCE OF FEDERAL FUNDING ASSISTANCE WITH THE US ARMY CORPS OF ENGINEERS Joe Seto presented the staff report summarizing the significant damage to Zone 7 flood control facilities as a result of the storms of January and February 2017. He showed a map of the Zone 7 Service Area Damage Location Overview and reported the estimated cost to repair 208 documented bank slides is $44 million. Staff recommends specialized environmental support services to qualify for and meet the USACE project funding requirements in order to obtain possible funding assistance of approximately $5 million.

President Quigley asked if there were any Board comments. Directors Ramirez Holmes and Palmer requested a copy of the map be sent to the full Board. President Quigley asked if there were any public comments. None were received.

Director Ramirez Holmes moved to approve Item 14 and Director Figuers seconded the motion. The item was passed by a roll call vote of 6-0-1, with Director Stevens absent.

Resolution No. 17-43 Authorized contracts for emergency environmental support services to

meet disaster funding requirements, for a total not-to-exceed amount

of $250,000 (Item 14).

Item 16 -

COMMITTEES

a. Tri-Valley Water Liaison Committee Meeting - April 26, 2017 - notes pending

b. Finance Committee Meeting, May 8, 2017 - notes

President Quigley reported that three board members were present at the Tri-Valley Water Liaison Committee meeting on April 26, 2017. The meeting notes are pending.

No comments were received on the notes from the Finance Committee meeting.

Item 17 -

REPORTS-DIRECTORS

a. Verbal comments by President

b. Written Report by President Quigley

c. Verbal reports

President Quigley reported that he attended the ACWA Spring Conference in Monterey. His written report will follow at the next board meeting.

Director Palmer reported that she also attended the ACWA Spring Conference and will also provide a written report at the June board meeting. The Water Quality group presented a report on toxic algae and the benefits of treating the problem with ozonation. She expressed her support for Zone 7's decision to move forward with ozonation. The group also discussed the importance of applying for grants as soon as possible. A number of grants may be available through the Army Corps of Engineers, so she urged Staff to watch and pursue this potentially useful resource.

Director Ramirez Holmes reported that she attended the Elected Women's Lunch. Since May is Water Awareness Month, she was able to hand out some Zone 7 items and other information on rebates. She thanked Robyn Navarra for providing those items.

Item 18 -

ITEMS FOR FUTURE AGENDA - DIRECTORS No further future agenda items were discussed.

Item 19 -

STAFF REPORTS

(Information items. No action will be taken.)

a. General Manager's Report

b. Legislative Update

c. Outreach Activities

d. Water Inventory and Demand Update

e. Groundwater Model Update

f. Capital Projects Status

g. FY 2016-17 Third Quarter Revenue and Expenditure (R&E) Report

h. Verbal reports

Ms. Duerig stated that there will be an Administrative Committee meeting on Monday, May 22, 2017 to discuss the Hazard Mitigation Program which is an emergency response plan that describes our local program. Director Palmer added that if the public should want to attend that meeting, it will be held on May 22nd at 3:30 p.m. here in the Boardroom.

In response to Director Ramirez Holmes' question on Item 19b about how a school or school district would request lead testing, Ms. Duerig explained that a school official must send a written request to its retail water agency. The retail water agency then has 90 days to respond. The State Water Resources Control Board's Division of Drinking Water has information on the process posted on its website. There is currently a bill pending in the State Assembly (AB 746) that would make lead testing in public schools an annual requirement, but at the school's expense.

Item 20 -

ADJOURNMENT

The meeting was adjourned at 9:34 p.m.