South Coast Water District September 16,2 The Honorable Kim Dunning Presiding Judge of the Superior Court*

Water Districts' procedures for the selection of professional consultants' contracts The Respondent disagrees wholly with the finding as related to SCWD. SCWD is not in a position to either evaluate or comment on the procedures utilized by all other water districts. The SCWD has completed a procurement policy update in November 2008, attached. It details our procedure for the selection of professional consultants and the policy was also approved by the Board in November 2008. District believes the policy as written reflects best practices and complies with California law. We have hired a full-time Contracts Officer, who has been in residence at the District since April 2007. The Contracts Officer prepares and has oversight of all professional consulting services. Additionally, a standard professional consulting services agreement is in use at the District which protects the District's interests in obtaining outside consulting services, including detailed insurance and indemnification requirements (see attached). Employees have been specifically trained on the use of the policy, and Departments work directly with the Contracts Officer to insure their compliance. SCWD hired Ergun Bakall in June 2005 to prepare the update to the 2005 Urban Water Management Plan, and to our knowledge this is the only occasion in which a standing board member of a neighboring agency has worked for the District. Mr. Bakall's hiring was the result of an RFP process. ı

Some Board members are conducting their professional practices with member agencies Sep. 17. 2009 2:25PM No. 0990 P. SCWD disagrees wholly with the finding as related to SCWD. SCWD is not in a position to comment on or evaluate the conduct of all other water districts. SCWD does not believe this finding applies to the activities of any of its Board Members. No current director works in business. All SCWD Board Members are retired and devote their time to public service in varying venues.

Codes of ethics among districts are quite varied SCWD disagrees wholly with the finding as related to SCWD. The District is not in a position to comment on or evaluate the policies of all other water districts. The District Board understands its role as stewards of public resources, and complies with the numerous State laws governing ethics and the prohibitions on personal benefit gained from public service, including the requirement for bi-annual ethics training under Government Code Section 53235. See also Government Code Section 54202. These State standards are further amplified through a series of additional detailed polices contained in the District Board Policy Handbook, including: 1) Expense and Reimbursement Policy for Directors and Employees Resolution 13-03-04,; (2) Rules of Procedure for the Conduct of District Business, Resolution 12-03/04; (3) Policy Pertaining to Governance of the Board of Directors, Resolution 11-04/05; (4) Policy Stating Official Duties of the Board of Directors for which Compensation May be Paid; (5) Conflict of Interest Code, Resolution 3-09/10 (recently updated). Copies available on request.

Water board meetings are frequently scheduled for times that discourage public attendance SCWD disagrees wholly with the finding as related to SCWD. The District is not in a position to comment on or evaluate the practices of all other water districts. SCWD Board policy supports full transparency of meetings as follows (1) bi-monthly board meetings are held at 6 p.m. in the Dana Point City Council Chambers which are aired on live television on Cox Channel 3 and Channel 855 as well as from the District's own website as a webcast. Meetings are replayed on Cox Channels 3 and 855 multiple times over the following two weeks (until the next scheduled meeting); (2) Meeting videos are archived at the District's website for viewing 24/7 by the public (see SCWD.org); (3) Standing Committee meetings are held at 2:00 p.m. – two meetings per month. These meetings are held at the District's Administrative Center and can be viewed live from our website and are available post meeting on video playback from the District's website (see SCWD.org); (4) In addition, for purpose of greater public outreach on important issues, the District utilizes outside venues well known in the community, such as the Ocean Institute, to hold community forums which are also taped and replayed on the public access channels and on our website. Such topics of recent interest have included rate changes and the public review and input to the important water conservation ordinance and implementation plan. 2. Sep. 17. 2009 2:25PM No. 0990 P. 4

An unusually high percentage of water board directors were originally appointed, not elected to their position SCWD disagrees wholly with the finding as related to SCWD. The District is not in a position to comment on or evaluate the practices of all other water districts. By law, SCWD directors serve through the general election process; none of the current directors have been "appointed" by other bodies. The District's history would include few appointments as well. In 1991, 1992 and 1993 due to a Director resigning, the Board appointed one Director each time. This District does not have a pattern of political appointments to its board offices.

Some board members hold multiple elected positions SCWD disagrees wholly with the finding as related to SCWD. The District is not in a position to comment on or evaluate the activities of the Directors of all other water districts. The District Board has never had a Director that held another elected position while serving on the SCWD Board. On the current Board, Director Rayfield serves as an appointed member of the San Diego Regional Water Quality Control Board, by appointment of Governor Schwarzenegger, and he recuses himself from participation in any issue involving the Regional Water Board that may come before the District Board.

There are no time limits for how long individuals can serve on any water district board in Orange County SCWD agrees wholly with the finding as related to SCWD. The District is not in a position to comment on or evaluate the laws applicable to all other water districts in Orange County. The District has no self-imposed or statutory term limits. The Board believes that term limits would be counter-productive to the complex issues of water management and the necessary history and background to competent service. Nonetheless, over the District's history, it is typical that every 4 years at least one incumbent is replaced by a new member from the community. Recommendations