Supplemental Information (2) for Item 1

Item No. 1
(Supplemental Item #2)
DATE: June 26, 2013
TO: Board of Directors
FROM: Karl Seckel, Interim General Manager
SUBJECT: Supplemental Information for June 26, 2013 Special Board Meeting re
MET’s Foundational Actions Funding Program’s Request for Proposal and MWDOC’s
Potential Projects
I received two email requests last night, one from the City of San Juan Capistrano and one
from MNWD. MWDOC had forwarded the latest Foundational draft proposal to the Doheny
Participants for review and comments. The request from the two agencies was to withdraw
their names and support from the Doheny Desal Proposal on the Foundational items. The
San Juan request indicated that their City attorney had indicated that use of unspent Phase
3 Funds needed to go to the City Council for approval to be used in the Foundational Action
proposal.
At this point in time, staff options would include:
1. Honor the request by removing the two agencies as supporting agencies for the
Proposal. This leaves in question the dollar amount for funding. Assuming the
$100,000 is comprised of $20,000 for each agency, the Participant’s contribution
could be reduced to $60,000 for purposes of the scope of work. We should also
conduct follow-up discussions with San Clemente to get their input. This might mean
going forward with only a South Coast/Laguna Beach Proposal and possibly San
Clemente if they want to remain involved.
2. Just move forward as directed by the Participant’s Committee vote which was 5-0 to
move forward with the proposal using the $100,000 of unspent Phase 3 Funds and
work out the issues over the next month or so. Follow-up could involve getting
formal action from each of the Participants Governing Boards. If less than $100,000
is then available from the Participants, the funding would have to be made up or the
scope of work reduced. This might possibly influence the proposal consideration at
MET if we have to change the scope before we start. However, it is possible that
additional funding could be contributed by South Coast or Laguna Beach, but this is
not known at this time.
3. Calling a special meeting of the Doheny Desal Group before July 3 to get any input
they may have. It is likely that the same issue will be flagged which will require us to
go back to the governing boards for approval.
4. Pushing for individual consideration by the Governing Boards before July 3 is
probably not feasible.
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Following the June 17 Doheny Desal Participants meeting, I had received an inquiry
regarding the action taken and clarification of the action taken. I had MWDOC Legal
Counsel outline what had occurred at the meeting of June 17 and provide his input in an
email to me. His informal discussion via email, which was sent out to the Participant’s by
me was as follows:
MWDOC Attorney Email Communication to Karl Seckel Regarding the Doheny
Participants Action Taken on June 17
“As we discussed, you asked me to take a quick look at the action taken last Monday
by the Doheny Desal Participants’ Committee in light of both the Participants'
Agreement and the project status. I attended the meeting on behalf of MWDOC. It
was a long meeting, and the Committee spent a considerable amount of time
discussing its options for obtaining some of the MET Foundational Action Funding
Program grant money. Ultimately, the Committee voted to authorize MWDOC staff
to prepare and submit an FAF proposal based on $100,000 in local match funding
from the Doheny Desal group for tasks to be identified by MWDOC from the list of
tasks provided at the meeting. This action at this time was driven in part by a time
deadline for MWDOC’s submission to MET. A good deal of the discussion was
about the source of the local match funding being money already in existing funds.
Some members of the Committee stated prior to voting that their ability to approve
the action depended on the fact that this was money already committed to the desal
project, while others indicated they would request review by their governing bodies.
Either way, a final authorization on an expenditure was not a prerequisite for an
action to authorize submission of a grant application.
The Agency Participation Agreement is not overly detailed and includes a fairly
broad description of "Phase 3 Work" (§ 1.2). For this reason, I do not see an
immediate need to identify whether the work proposed for FAF funding is within the
current Phase 3 Work or requires a new agreement that will establish a scope for
“Phase 4” work. The work that will be selected for the grant application, and the
funding itself, is still a ways off. A central issue in considering the action taken
Monday is the authority of the Committee to take it. However you look at the current
"Phase" of the project and the status of the Participants’ Agreement, it is difficult to
conclude that no authority existed. The action was taken by a Committee that exists
because of the Participants’ Agreement; the Agreement focused on Phase 3 but also
contemplated taking the project beyond Phase 3. Clearly the Committee has a role
to play in the transition from Phase 3 to whatever the future has in store for the
project. As the Participants have discussed, that role may soon be defined further in
a “close-out agreement” or a “Phase 4” agreement, but for now only the Participants’
Agreement governs the Participants’ actions.
Since the action Monday did not irrevocably commit funds to a particular project, but
only authorized the submission of an application for funding, I do not believe it was
outside the Participants’ authority under the Agreement. Those are just my
thoughts, and counsel for the other agencies may well reach a different conclusion.
Between now and the time a grant agreement with MET is under consideration, a lot
will need to happen. The authorization Monday had limited reach and was
necessary to get the process going with MET. Assuming the grant application is
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approved, and it may not be, the Participants will have ample opportunities to
address the use of the funds at subsequent meetings.”
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