Simplify…Streamline…Stabilize

TO: BOARD OF DIRECTORS FROM: OLGA MARTIN STEELE

CEO BULLETIN Week of March 21 – March 27, 2008

INSIDE THIS ISSUE BOARD MEMBER REQUESTS

2 Recycled Water Charges: Eagle Kamei Ridge Golf Course Letter 5 TOP Plan (EL-9: Other) R-07-0136 (GP3: Monitoring)

2 Clean, Safe Creeks: Achieving 6 Santos Outcome 1 Goals (EL-9: Other) Opinion Piece on the Alviso Slough Restoration Project 3 Genetic Analysis of Santa Clara I-08-0016 (GP3: Linkage) County Steelhead/ (EL-9: Other) 6 Update: Exercise Room I-08-0004 (GP3: Other) 4 San Tomas Well Field Project (EL-9: Other) Wilson 7 Update: Director Speaking Points 5 Uvas Reservoir Operation Plan for I-08-0019 (GP3: Linkage) 2008 Includes Early Spring Attraction Flows for Steelhead.

Board Policy EL-9: Communication and Support to the Board

The BAOs shall not permit the Board to be uninformed or unsupported in its work. Further, without limiting the scope of the foregoing by this enumeration, he or she shall not: Let the Board be unaware of relevant trends, anticipated adverse media coverage, threatened or pending lawsuits, material external and internal changes, particularly changes in the assumptions upon which any Board policy has previously been established. Fail to differentiate among information of three types: monitoring, decision preparation and other.

Week of March 21 – March 27, 2008

INSIDE THIS ISSUE

Recycled Water Charges: Eagle Ridge Golf Course Letter (EL-9: Other)

Staff received a letter dated March 14, 2008, regarding recycled water charges from the Eagle Ridge Golf Course in Gilroy, as a follow-up to a verbal inquiry into a recycled water bill. The letter outlines a number of concerns, including water quality and the requirement to pay for water based on metered deliveries instead of accounting for evaporative and other losses. However, the primary concern appears to be the significant increase in recycled water charges in the last several years. The letter correctly notes that the recycled water charge increased from $157 per acre-foot in FY 2006 to $244 per acre-foot in FY 2008. The letter concludes with a statement that the golf course will need to change its practices if the recycled water charges continue to increase at the same rate.

Staff will work with staff from the City of Gilroy, the recycled water retailer, to prepare a written response to Eagle Ridge. The letter will explain that the recycled water pricing policy is to provide an economic incentive to users while recovering as much of the costs as possible of developing and maintaining a reliable recycled water system in South County. The letter will also clarify that District staff is recommending a smaller increase in the recycled water charge this year. Lastly, the letter will also offer continued technical assistance. Staff has already provided information to Eagle Ridge regarding the water charge setting process and the South County water charge hearing scheduled for April 10, 2008.

For further information, please contact Keith Whitman at (408) 265-2600, extension 2080.

Clean, Safe Creeks: Achieving Outcome 1 Goals (EL-9: Other)

The key goal of Outcome 1 of the Clean, Safe Creeks (CSC) Program is to provide flood protection to nearly 16,000 parcels in Santa Clara County through the implementation of nine capital flood protection projects. Staff informed the Board and the Independent Monitoring Committee (IMC) earlier this fiscal year that the CSC Program may be facing a deficit of $60- $70 million as a result of a dramatic rise in construction costs over the past several years that has affected project costs locally, nationally and globally.

In late January 2008, staff convened a team to develop and evaluate various strategies for addressing the challenge in CSC’s Outcome 1 and to develop a strategy, as appropriate, for outreach to the community. The team has developed and evaluated five strategies in terms of their implications on project completion and overall success of the CSC Program. These include:

1. Equal annual reductions of spending for all four CSC Program outcomes; 2. Re-scoping some of the capital projects; 3. Setting aside remaining funds in Outcomes 3 and 4 to help fund completion of Outcome 1; 4. Providing additional funding to Outcome 1 projects from the District’s Baseline Flood Protection Program; and,

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5. A “no-action” option.

Preliminary results of the team’s effort indicate that Strategy #2, re-scoping a limited number of capital projects, may be the most effective means of addressing the challenge and still meet the goals of Outcome 1. Project progress since the beginning of this fiscal year indicates that:

• The Calabazas Creek project cost has been reduced, due in part to updated watershed hydrology, which has reduced the need for extensive flood protection work. • Three projects (Permanente, Mid-Coyote, and San Francisquito Creeks) will proceed to meet our commitment with the available CSC funding. • The outlook for receiving full State subvention reimbursements on the three federally cost-shared projects (Upper Guadalupe River, Upper Berryessa and Upper Llagas Creeks) is currently good; the subventions would supplement the CSC allocations to complete each of these projects. • Two projects (Sunnyvale East and Sunnyvale West Channels) are still in the planning phase. Their inflated cost projections, based on 1998 project information, are driving most of the Program’s projected deficit. As these projects are better defined over the next 1 to 2 years, they may be re-scoped to maximize the number of parcels protected within available CSC funding.

Staff is providing this information to the Outcome 1 Subcommittee and the Chair of the IMC and will make a presentation at the next IMC meeting on May 1, 2008. Staff plans to present the Board with its recommendations for action later in May 2008.

For further information, please contact Katherine Oven at (408) 265-2600, extension 3126.

Genetic Analysis of Santa Clara County Steelhead/Rainbow Trout (EL-9: Other)

As a component of a commitment made as part of the Stream Maintenance Program Environmental Impact Report, the District conducted a county-wide steelhead/rainbow trout (SH/RT) genetic study. The purpose of the study was to increase the understanding of SH/RT and to apply this knowledge in making informed fishery management decisions for our projects and operations in regard to this listed threatened species. District biologists worked in cooperation with a National Marine Fisheries Service geneticist to analyze the results and recently completed the final report.

A total of 977 SH/RT samples were successfully analyzed using the latest genetic analysis techniques that can determine heredity characteristics and define distinct populations across individuals in a single breed. The SH/RT samples were collected in the Coyote, Guadalupe, Pajaro, Stevens, San Francisquito, and watersheds. In addition, SH/RT samples from the in Santa Cruz County, other locations, and from Central Valley were analyzed for comparative purposes.

The results of this study predominately revealed that SH/RT in Santa Clara County (SCC) have retained historical genetic integrity and are closely related to coastal SH/RT from two Distinct population segments that include other San Francisco and Monterey Bay populations. In addition, SCC SH/RT showed clear separation from California Central Valley SH/RT populations and hatchery trout strains.

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Some of the highlights from this study include:

1) Urbanization and other anthropogenic influences (including District activities) have not eliminated native SCC SH/RT, although the current populations of SCC SH/RT are presumed to be reduced from historical levels in most streams. 2) Past hatchery stocking of SH/RT originating in other parts of the state or country have not had genetic influence on indigenous SCC SH/RT, although ecological considerations such as effects on carrying capacity, competition, predation, and disease are continued reasons for concern. 3) Sampling for this study increased the distribution knowledge of SCC SH/RT.

The report is available at: http://www.scvwd.gov/library/reports/PopGenOncorhynchus.pdf

For further information, please contact Marc Klemencic at (408) 265-2600, extension 2084.

San Tomas Well Field Project (EL-9: Other)

In 2001, the District Board directed the CEO to negotiate the acquisition of the San Tomas Well Field property at San Tomas Expressway and West Campbell Avenue in Campbell due to its unique water supply value and strategic proximity to the District’s treated water distribution system. The District purchased the 3.02 acre property from San Jose Water Company (SJWC) in 2002. Upon learning the City of Campbell Redevelopment Agency (RDA) also had interest in the property for the development of affordable housing, the Board directed staff to pursue joint development of the property to meet both water supply and affordable housing goals. To expedite both the water supply and housing projects and preserve external funding for the housing project, the City of Campbell is managing the design and construction contracts for the District well field project, with ongoing District technical review and approval. The City recently awarded the contract for pump station construction, which is expected to begin in mid-April 2008.

Due to the tightening of credit markets, the depressed housing market, and overall economic downturn, Charities Housing, the non-profit developer, is having some difficulty securing funds for the housing project at this time. Although they continue to meet with lenders and are evaluating other options, they are no longer confident the close of escrow can occur by the end of Fiscal Year 2008, as planned. This may have an effect on the completion of the well field project, as several utilities necessary for pump station startup and testing will be installed by the housing contractor. As a result of the later closing date, the $4.5 million in revenue for the sale of the property is expected to be received in FY 09 rather than FY 08. Charities Housing expects to have a better sense of available options within the next month, and District staff will continue to keep the Board informed.

For further information, please contact Keith Whitman at (408) 265-2600, extension 2080.

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Uvas Reservoir Operation Plan for 2008 Includes Early Spring Attraction Flows for Steelhead.

Under direction of the Department of Fish and Game (DFG) and National Marine Fisheries Service (NMFS), a three day release of 75 cubic feet per second (cfs) will be made from Uvas Reservoir beginning Friday, March 28, 2008. The purpose of the release is to attract Steelhead Trout into for spawning and summer rearing. The release is part of a coordinated fishery and water supply management plan for Uvas Reservoir for 2008. The 2008 plan is a variance from the 1956 Memorandum of Agreement between the DFG and the South Santa Clara County Water District. In addition to the attraction flow, the plan provides for 3 short term spring out-migration flow releases of 25 cfs, and summer and fall releases sufficient to keep the stream flowing throughout the groundwater recharge zone. The November 1, 2008, storage target for Uvas Reservoir is 2,500 acre-feet, which is about 25% full. The 2008 operation closely reflects the strategy that is expected to be presented to the Board later this summer.

For the past few years a resource management team has been meeting periodically to develop a long term operating strategy for Uvas Reservoir that would replace the 1956 DFG Agreement, and could be incorporated into the Countywide Habitat Conservation Plan for compliance with the Endangered Species Act. The operating strategy is being developed to provide rules for year round water supply management in consideration of fisheries needs and water supply reliability for all water year types. In addition to District staff, the team includes representatives from DFG (Tami Schane), NMFS (Jonathon Ambrose), San Jose State University (Jerry Smith), and South County Streams for Tomorrow (Keith Anderson, DFG Retired).

For further information, please contact Keith Whitman at (408) 265-2600, extension 2080.

BOARD MEMBER REQUESTS

Kamei TOP Plan R-07-0136 (GP3: Monitoring)

Staff is to come back during the October 2007 Board work/study sessions, with discussion on how the TOP/GM Work Plan can be divided into areas of accountability that reflect the new Board direct-report employees structure.

The Board Appointed Officers (BAO) report directly to the Board and have had initial discussions with the Board on accountability and responsibilities. The BAO’s will discuss and provide recommendations to the newly formed Board committee, “Organizational Change Board Ad-Hoc Committee” Ad Hoc Committee). The first Ad-Hoc Committee meeting is expected to be held in March 2008. The Ad-Hoc Committee’s role will include reviewing the expectations and performance goals, accountability, and the process for BAO performance review and monitoring. Subsequently, recommendations will be provided to the Board for consideration.

For further information, please contact Mary Ann Ruiz at (408) 265-2600, extension 2633.

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Santos Opinion Piece on the Alviso Slough Restoration Project I-08-0016 (GP3: Linkage)

Staff to write an opinion piece on the Alviso Slough Restoration Project on Santos’ behalf to be submitted to the Mercury News and Business Journal.

The article has been written and submitted to the San Jose Silicon Valley Business Journal as the more appropriate publication rather than the San Jose Mercury News because of the potential economic benefits of the project. Staff has not received word yet as to whether the article will be published.

For further information, please contact Rick Callender at (408) 265-2600, extension 2017.

Santos Update: Exercise Room I-08-0004 (GP3: Other)

Staff to submit proposal to Board for modest (600 sq ft) employee exercise facility on campus, for use during off-work periods.

Staff met with Director Santos in January 2008, to discuss the possibility of an exercise room on the Almaden Campus. At that time, staff obtained further information on the scope and size of the facility and agreed to investigate two options. Staff work is complete and was delivered to Director Santos on March 20, 2008.

The best site for a modest exercise room of 500 square feet is in offices on the ground floor of the Administration Building once the current occupants move to the Crest Building in July 2008. The total cost of the office modifications and exercise equipment would be approximately $17,200. Since this is substantive and unplanned work, with no funds dedicated to the project, the Board will need to consider whether staff is to move forward and authorize the necessary funds.

Staff currently plans to use this space to better organize Watershed staff to increase their effectiveness by consolidating them within one building. It would help resolve staff issues for a unit that is currently split between two buildings. If the space is used for an exercise room, staff will need to re-address these consolidation issues.

For further information, please contact Frank Maitski at (408) 265-2600, extension 2284.

CEO Bulletin Page 6 of 7 Week of March 21 – March 27, 2008

Wilson Update: Director Speaking Points I-08-0019 (GP3: Linkage)

Staff to include updates in Director Wilson's speaking points for future Guad/West Valley FCWAC mtgs, on local municipal compliance/enforcement of WRPO Guidelines and Standards.

Staff is requesting a 30 days extension to develop a proper response to this request.

For further information, please contact Rudy Medina at (408) 265-2600, extension 2162.

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