** D R A F T ** Special Board meeting – May 22, 2007

                        THE BOARD OF DIRECTORS

Minutes of the joint Special Meeting of the Boards of Directors of Marin Municipal
Water District (MMWD) and North Marin Water District (NMWD) held on, Tuesday,
May 22, 2007, at the Inn Marin at 250 Entrada Drive, Novato, California.

The meeting was called to order at 7:36 p.m. MMWD Directors present were David
Behar, Alex Forman, Jack Gibson, Larry Russell and Cynthia Koehler. NMWD
Directors present were: Steve Petterle, Rick Fraites, John Schoonover, Jack Baker
and Dennis Rodoni.


No one spoke during this time.


Chris DeGabriele, NMWD General Manager, introduced the item and said the need
to update the intertie agreement was discussed at the last joint meeting of meeting
of the two Boards in November 2005. He said had spoken with the NMWD Board
and MMWD General Manager Paul Helliker, on areas of the intertie agreement that
are in need of revision and this was the opportunity for the two Boards to review the
agreement and formally authorize staff to initiate renegotiation of the agreement.
He noted a number of events that have occurred since agreement was executed in
1993 including: State Water Resources Control Board Water Rights Order No. 95-
17 on Lagunitas Creek directing NMWD to locate alternate sources of supply in dry
years for West Marin customers; reorganization of the Hamilton boundary; delay of
construction of Sonoma Marin Aqueduct No. 2; and escalating costs necessitating
the need to renegotiate the wheeling charge for delivery of MMWD Russian River
Water through the North Marin Aqueduct.

Paul Helliker, MMWD General Manager, said MMWD has not had a chance to start
discussions on the proposed changes to the intertie agreement. He pointed out that
Section 10 concerning the Stafford Lake Water Treatment Facility needs to
recognize that changes beyond 2008 will need to be addressed as well. He said
MMWD looks forward to beginning a dialog on the proposed changes. Discussion
followed concerning the timetable for this item. Chris DeGabriele said he expected
the agreement could be revised by the end of the year.

There was consensus of both Boards to proceed with the dialog.

** D R A F T ** Special Board meeting – May 22, 2007


Chris DeGabriele gave an update on NBWRA’s plan to develop a regional recycled
water transmission system and summarized three alternatives as follows: local
reuse in the vicinities of the individual wastewater treatment plants to serve primarily
urban uses; subregional systems linking regions in the south and north to serve
both urban and agricultural uses; and a regional alternative to link all the North Bay
wastewater treatment plants to serve the above uses and the Napa Salt Marsh
restoration. He informed the MMWD Board that NMWD is sharing costs with
Novato Sanitary District (NSD) to participate with NBWRA to produce and deliver
recycled water to various areas of the North Bay. He stated that NMWD has
developed a Recycled Water Implementation Plan for Novato and participation in
the NBWRA provides an opportunity to complete the environmental review for the
urban reuse project. Mr. DeGabriele also gave an overview of a bill in Congress
(H.R. 236) that proposes funding the implementation phase.

Paul Helliker said that MMWD had recently discussed recycled water as component
of MMWD’s water supply analysis. He said the Peacock Gap area was identified as
the most likely candidate for using recycled water from Las Gallinas Valley Sanitary
District (LGVSD); however, the cost is estimated to be in the range of $4,000 to
$6,000 per acre foot. He said the benefit to MMWD participating in NBWRA project
depends on whether the EIR was a project-level EIR with focus on projects where
MMWD has an interest. He said MMWD is discussing the possibility of expand the
water recycling operation with LGVSD as well as the potential for federal funding.
He said MMWD participation in NBWRA depends on the timing.

Director Behar asked if there was a commitment from NSD to sharing in the cost of
building and operating the facility.

Mr. DeGabriele responded that NMWD has an agreement for development of
recycled water that contemplates future expansion. He noted that NMWD has
shared in development of planning for recycled water production and delivery with
NSD since 1993 and that NSD is currently starting construction on their treatment
plant upgrade. He provided additional information on North Marin’s Recycled Water
program and the Director Forman asked that information on the Recycled Water
Implementation Plan be provided to them. A period of questions, comments and
discussion on costs, rates, and use of recycled water.

Director Gibson asked if other areas have been identified for recycled water in
Novato. Mr. DeGabriele said the implementation plan identified areas for recycled
water in north and central Novato and that in south Novato, the big end user would
be the US Coast Guard housing facility. He said that partnering with the federal
government would provide more opportunity to explore a joint project with NMWD,
NSD, LGVSD and MMWD. He said NMWD has evaluated Reservoir Hill tank as a
potential storage facility for recycled water in the Hamilton field area. Additional
discussion on safety and agricultural uses of reclaimed water followed.

** D R A F T ** Special Board meeting – May 22, 2007


Libby Pischel, MMWD Public Information Officer, reported that at the direction of the
MMWD Board, a dry-year message campaign addressing voluntary water
conservation measures is being developed. She said it is hoped that MMWD and
NMWD can work together to get the message out and share costs. She explained
the importance of developing a county-wide campaign and composing ads jointly.

Chris DeGabriele advised that SCWA is developing ads now and perhaps the
districts can join with them. He said he attended a meeting last week of the North
Coast Water Conservation Group and they developed a top ten list of ways for
customers to reduce water usage with the priority being reducing irrigation by 20%.
He said the plan is to produce ads throughout the region, focusing on three items at
a time.

Director Koehler said MMWD’s revised Water Conservation Master Plan is about to
be released and a part of that is doing a comprehensive communications plan with
a marketing campaign and invited NMWD to participate with MMWD.

Chris DeGabriele said he would be willing to listen to MMWD’s plan, but he noted
that NMWD has already plans in place that work well in Novato. He said that North
Marin is one community whereas Marin Municipal covers a wide area with different
micro-climates and needs.

Director Koehler said that there are communication outreach opportunities that can
be seized throughout the county, i.e. bus ads, grocery store bags and it would make
sense to do these jointly with NMWD.

Director Gibson said the collaboration should start soon.

Director Rodoni suggested the two districts on collaborate on rebates as the
different rebate programs are confusing to customers and retailers.

Libby Pischel said she and Ryan Grisso, NMWD’s Water Conservation Coordinator,
have been working together on the Marin County Fair “Eco-Sperience”.

Mr. DeGabriele distributed a chart depicting the past, present and projected levels
of Lake Mendocino noting the flattening of the downward trend, that urban
conservation makes sense but it will not have an impact on storage in the lake. He
said that lake levels will be controlled by limitation on agricultural use in Ukiah and
inflow diversions from the Potter Valley project.


Paul Helliker distributed a chart depicting MMWD water demand, operational yield
and Urban Water Management Plan projections to the year 2025. He said the
current deficit of 2,000 AF is projected to grow to 7,000 to 9,000 AF by 2025. He

** D R A F T ** Special Board meeting – May 22, 2007

said MMWD is looking at ways to resolve the imbalance between supply and
demand and during the course of studying alternatives, there will be opportunities to
look at joint projects that could result in water supply or demand reductions that will
be cost effective and help to resolve the operational yield decline. He also said
MMWD’s draft environmental impact report would be released shortly and will add
to the mix in terms of how desalination could affect supply.

Director Rodoni pointed out that NMWD had secured senior water rights on
Lagunitas Creek from the State Water Board. He said in the event MMWD were to
seek flow reductions during a dry year, NMWD would likely oppose MMWD due to
salinity issues. He further stated that models show that anything below current
release levels in a normal year would impact the West Marin water supply.

Director Forman said that this situation highlights the interdependency of the whole
system and exemplifies why the agencies should be compelled to work together on
regional issues.

6.   SONOMA     COUNTY    WATER                     AGENCY          (SCWA):       EIR

Paul Helliker said the latest projection from the Technical Advisory Committee
indicates the draft EIR will be released in the spring of 2008 with the Water Supply
and South Transmission System Improvements EIR completed one year later. He
noted that complications may arise from the Biological Opinion, although not yet
released, it is expected the Biological Opinion will identify impacts of current
operations of SCWA reservoirs and river diversions to endangered species but not
contain reasonable and prudent alternatives to mitigate these impacts.

Chris DeGabriele said he believed the Biological Opinion would be released in draft
form and there would be opportunity to negotiate reasonable and prudent
alternatives before the Biological Opinion is finalized. He said the Districts should
not expect the process to go quickly and should focus on how to extend available
water supplies as long as possible while the SCWA works on resolving the situation.

Paul Helliker noted there could be some debate about whether the Biological
Opinion would have any impact on SCWA operations other than to the extent that
operations are identified as creating a “take” of endangered species. He said the
National Marin Fisheries Services opinion will have to be included in mitigation
measures that SCWA would be required to implement as part of any water rights
that would be provided by the State Water Resources Control Board.

Chris DeGabriele said he saw two big risks on the Russian River. He said one is
the operation of the rubber dam and whether that impoundment restricts the out-
migration of the fish, however there is a plan to put a notch in the dam and the
National Marine Fisheries Service may be receptive to that plan. He said the other
risk is related to flow in Dry Creek during the summer months when Coho salmon
are rearing. He said higher flows are needed at Dry Creek in order to meet

** D R A F T ** Special Board meeting – May 22, 2007

everyone’s needs including instream flows downstream however they can
potentially wash out the fish.

Chris DeGabriele raised the question of why MMWD did not opt to become a prime
contractor. He said believed the water will be available and this appears to be the
least expensive option to increase operational yield although there is the issue of
time. He wanted to know some idea of what direction MMWD was headed in terms
of future water supply.

Director Gibson said regarding the opportunity to become a prime water contractor,
there were a number of issues to negotiate that were less then encouraging and
there was not a unanimous vote from the other water contractors.

Director Koehler said the question is whether there will be water available and noted
that she did not see evidence that SCWA would be successful in securing additional
water rights from the State Water Resources Control Board.

Chris DeGabriele said going alone with desalination was risky and noted that he
believed the South Transmission Project will eventually happen. Discussion
followed on the possibility of a regional desalination option.

Director Russell said MMWD is in the process of studying all of the options.


At Director Rodoni s suggestion, both Boards agreed to exchange to contact
information. A general discussion followed that included SCWA’s next Impairment
MOU, Restructured Agreement and LRT2 Program.


The Special Meeting of May 22, 2007 was adjourned at 9:30 p.m.

                                                 President, Board of Directors



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