MINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORSRUNNING SPRINGS WATER DISTRICT

COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIAOCTOBER 20, 2010

The Regular Meeting of the Board of Directors of the Running Springs Water District was heldon Wednesday, October 20,2010, at the hour of6:00 P.M. at the District office located at31242 Hilltop Boulevard, Running Springs, California.

The following Directors were present:Ken Ayers, PresidentKevin Kellems, Vice-PresidentPaul Shouse, DirectorPamella Bennett, DirectorMike Terry, Director

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Also present were the following:Sam Massey, General ManagerJoan Eaton, Secretary/Treasurer/Administration SupervisorTony Grabow, Fire ChiefRandy Bobroff, Water Division SupervisorTrevor Miller, Wastewater Treatment Division SupervisorIsaiah Hall, Collections Division SupervisorBrian Thomas, Engineer, Engineering ResourcesMike Riddell, Attorney, Best, Best & Krieger, LLP

Visitors present were:Michael Bishay, 30607 Ferndale Drive

The meeting was called to order at 6:04 P.M. by President Ayers.

President Ayers led the Assembly in the Pledge of Allegiance.

Visitor Michael Bishay was introduced and will be addressedlater in the Board meeting.

Upon motion by President Ayers, second by Director Shouse andcarried by a 5 to 0 vote, the Regular Board Meeting Minutes ofSeptember 15,2010, were approved as amended.

Supervisor Eaton stated the Revenues over Expenditures report ofSeptember 30,2010 does not reflect the auditor adjustments as ofJune 30, 2010. Supervisor Eaton will collaborate with a FinancialConsultant and Comet Billing Systems Administrator in FiscalYear 2010/20 II to review District reports. Upon motion byVice-President Kellems, second by Director Bennett and carriedby a 5 to 0 vote, the expenditures of September 30,2010, wereapproved.

Called to Order

Pledge of Allegiance

Visitor

Regular BoardMinutes ofSeptember 15, 2010

September 30, 2010Expenditures

MINUTES - OCTOBER 20, 2010PAGE TWO

Customer RequestFor the Districtto Participate in theCost to ConstructRetaining WallLetter of Agreement

OPERATIONALREPORTS(Water)

President Ayers moved to Action Item IX.H. Customer Request for the Districtto Participate in the Cost to Construct a Retaining Wall at 30607 Ferndale.

Manager Massey reported on the property at 30607 Ferndale Drive that wasrecently acquired by Michael Bishay from JP Morgan Chase Bank when theprevious owner defaulted on their loan. In August of 20 10, the Districtbecame aware of an exposed sewer main located on the property. The Districtconsulted with Mike Riddell, Legal Counsel and a letter was sent to JP MorganChase Bank notifying them of the potential hazardous condition. To date, aresponse from the bank has not been received. Engineer Thomas prepared areport identifying measures at a cost of $131 ,500 to stabilize the slope andprotect the sewer main. A copy of the report was provided to the Board fortheir review.

Michael Bishay addressed the Board and provided background informationregarding his newly acquired property. Mr. Bishay shared his concernsregarding the exposed sewer line and presented a written Letter of Agreementproposal to the Board for their review and consideration that was draftedbetween Mr. Bishay and Mike Riddell, District Legal Counsel. The proposalstated that Mr. Bishay would construct a 250 foot long retaining wall with theDistrict responsible for 110 feet by contributing $36,820.00 for the project.Manager Massey stated one advantage to the proposal is the District will beprovided with an easement for the southern 110 foot of the length and widthof the wall up to the north easterly property line of 30607 Ferndale Drive.Engineer Thomas stated $36,820.00 is a reasonable amount to construct theretaining wall in addition to providing the District with an easement up to theedge of the retaining wall. Manager Massey stated the District would beresponsible for the survey and discussion continued regarding the project.Upon motion by Director Terry, second by Director Bennett and carried by a5 to 0 vote, the Letter of Agreement to participate in the cost to construct aretaining wall at 30607 Ferndale Drive at a cost not to exceed $36,820.00,and the District will bear the cost of any required survey for the easement,was approved.

Supervisor Bobroff reported pump and motor failure at the Harris Wellthat is scheduled for replacement the third week of October at an approximatecost of $5,900. Supervisor Bobroff also stated the Nob Hill generator iscurrently out of service due to an electrical short in the rotary phase selectorswitch that caused extensive damage to the wiring harnesses. The portablestandby generator is connected at the site and the repair costs are projectedto be approximately $1,800. The repairs are scheduled for October 21,2010.

Supervisor Bobroff stated there was one odor complaint for a house that wasunoccupied for an extended period of time.

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MINUTES - OCTOBER 20, 2010PAGE THREE

The total water loss for twelve months was reported at 9,356,380 gallons ata cost of approximately $33,000.

Supervisor Miller opened by stating his reports will be addressed later in themeeting. Supervisor Miller added that the Outfall Line Bypass is beingmonitored regularly.

(Treatment)

Supervisor Hall stated everything is going well in the Collections Departmentand the equipment is in good order. The Sancon Project to seal manholes hasbeen completed at a cost of $20,500. Collections has also purchased andinstalled the plow for Utility Unit #75 at a cost of $5,400. Supervisor Halladded that Utility Unit #75 was transferred over from the Water Department.

(Collections)

Supervisor Hall then stated a company in the northwest has expressed interestin purchasing the old Sewer Jetter for $2,000. Supervisor Hall also stated theconcrete slab project has been completed at Harich Ranch. Supervisor Hallclosed by reporting on the Southern California Edison energy conservationprogram.

Chief Grabow opened by reporting on the recent Prevention Program held at (Fire)Charles Hoffman Elementary School (CHE) and the Emergency Service DayOpen House at Fire Station 51 that was held on October 9,2010. Flu shotswere.available to the community at the Open House. Chief Grabow continuedby reporting on various meetings the Department has attended and specificallymentioned the Community Emergency Response Team (CERT) Meeting,Shakeout drill at CHE Elementary School and a Community PreparednessMeeting that will be held at the Lake Arrowhead Resort. Chief Grabowdistributed a Personal Wildfire Action Plan pamphlet to the Board and staff.

Supervisor Eaton stated that several District staff members received fraudlentemails regarding First Mountain Bank accounts and to please be aware of anyemail that requests personal information.

(Administration)

Rogers, Anderson, Malody and Scott auditors are finalizing the 2009/2010District Audit. Financial statements are expected to be presented at theNovember, 2010 Board Meeting.

Supervisor Eaton provided the Board with a summary of meetings attendedand stated that Administration has been actively consulting with severaltelecommunications companies in pursuit of the most appropriate telephonesystem for the District. A proposal for the new telephone system is projectedfor the November, 2010 Board Meeting

MINUTES - OCTOBER 20,2010PAGE FOUR

Supervisor Eaton closed by explaining the Revenues over ExpendituresReport in detail to the Board and staff.

(General Manager) Manager Massey reported on several completed projects within the District.The Harris Property Fence Project is now installed and Manager Masseystated the project is aesthetically pleasing to the community. The SecuritySystem for the Treatment Plant has been received and will be installed.The survey for Lift Station No. 1 Overflow Tank is almost complete withthe project commencing next Fiscal Year.

A meeting with the Local Agency Formation Commission (LAFCO)Executive Officer Kathleen Rollings-McDonald and Arrowbear ParkCounty Water District has been scheduled for November 4,2010 at10:00 A.M. in the District Board Room with President Ayers,Director Bennett and District staff

Manager Massey reported on the Fats, Oil and Grease Program (FOG) andstated letters were mailed to restaurant owners in the community regardinga meeting that has been scheduled for November 3, 2010 at 9:00 A.M. inthe District Board Room. Engineer Brian Thomas and District staff will bepresent at the meeting to discuss state requirements.

Manager Massey then mentioned that the District has been correspondingwith a company called Paymentus that provides a bill payment solution thatsimplifies functionality by providing customers the option of paying theirmonthly water/sewer bills by credit card, debit card and/or electronic checks.There would be minimal charges to the customer to utilize this program butno cost to the District. Attorney Riddell is currently reviewing the contractand Manager Massey and Supervisor Eaton are consulting with First MountainBank and Grant Foraker, Comet Systems Administrator to ensure the programis compatible with our systems and maintains customer confidentiality. Districtstaff will research the program and bring additional information to the Boardregarding this issue in November 2010.

Engineer's ReportRunning SpringsSchool RoadNobHilVWWTreatment IrrigationProject

Manager Massey turned the forum over to Engineer Thomas for his commentsregarding the Running Springs School Road Paving Project and the Nob HillWastewater Treatment Irrigation Projects.

Engineer Thomas distributed progression pictures of the Running SpringsSchool Road Paving project to the Board and staff and stated with weatherpermitting, paving could begin on Thursday, October 21,2010.

Engineer Thomas then reported on the Nob HilllWastewater TreatmentIrrigation Project and stated the project went well and was completed in 10(ten) days. A Notice of Completion will be presented to the Board onNovember 17,2010.

IMINUTES - OCTOBER 20,2010PAGE FIVE

Manager Massey acknowledged Danny Wagner for a great job with theNob Hill/Wastewater Treatment Plant project and stated that Mr. Wagneralso provided and installed additional sprinklers at the plant and Nob Hilllocations without charge.

Manager Massey will convey the Board's acknowledgement to Cole Gunnoefor taking an active role in the Basketball Court Project by providing neededactivities for the area's youth and demonstrating his desire to improve theRunning Springs Community.

Manager Massey mentioned that the District received a notice of violationfrom Arrowbear Park County Water District (Arrowbear) on September 29,2010 concerning failed bacteriological samples from their distribution systemduring the month of November 2009. Arrowbear identified a faulty test sitevalve as the source of contamination and indicated it was replaced, correctingthe problem and stated no water in the distribution system was affected.Arrowbear has installed site specific testing equipment which will preventthis from happing in the future. The District reviewed the bacteriologicalsample results from October, November and December 2009 and determinedthere were no failed samples in the District's water distribution system.

Supervisor Miller updated the Board regarding the Outfall Line Repair Projectand stated after review of the CEQA documents by Engineering Resourcesandthe District, the revised documents were returned to Tom Dodson andAssociates where they will be finalized and forwarded to the State ClearingHouse to circulate for public review. The public review process takesapproximately 45 days, then the document is sent to any responsible stateagency i.e.; Department ofFish and Game and Regional Water Quality ControlBoard as well as any "affected land owners". After circulation of the document,the permit applications can be submitted. Supervisor Miller stated they areprojecting the permitting process will be complete in February 2011, but due topossible inclement weather, the repairs will probably begin in the spring of 2011.Supervisor Miller stated once the CEQA document is complete, the District canmake repairs to the line that do not involve getting into the creek crossing ordraining the outfall line. A temporary bypass line will serve as the primary routefor permeate to the ponds through the winter. Supervisor Miller stated the Districtwould like the temporary bypass line reinforced by the end of2010. Discussioncontinued regarding the project and the possibility of a temporary road to thecreek crossing that would require permission by the Forest Service. SupervisorMiller added a meeting with the Forest Service, a representative from TomDodson and Associates, Dan Wagner, Bacon/Wagner (grading contractor) andthe District will be scheduled to discuss the details of a temporary route necessaryto gain access to the bottom of the outfall line. Manager Massey noted thecompleted CEQA document will require Board approval and will be returnedwith any new information to the Board Meeting on November 17,2010.

Arrowbear ParkCounty Water DistrictNotice of DrinkingWater Violation

Wastewater TreatmentPlant Outfall LineRepair Project

MINUTES - OCTOBER 20, 2010PAGE SIX

WastewaterTreatment PlantExpansion Project

Ayers Acres WaterDevelopmentProject

District TelephoneSystem

Eagle ScoutBasketball CourtProject

California PublicRecords Act Request

Supervisor Miller then reported on the Wastewater Treatment PlantExpansion Project that will increase the capacity by installing moreefficient cassettes and stated the equipment for the expansion wasprovided by Enviroquip and arrived to the site on September 20,2010.The expansion of the plant will be completed in two phases andconstruction is scheduled to begin on October 25,2010. SupervisorMiller stated it is expected to take three weeks for completion ofPhase I and Phase II will not begin until after the Thanksgiving holiday.A representative from Enviroquip will visit the site on November 8, 2010to perform a mechanical inspection of the equipment. Supervisor Millerstated the new equipment is projected to be online November 15,2010if the inspection and tests results are satisfactory.

Manager Massey updated the Board regarding the Ayers AcresDevelopment Project and stated Engineer Thomas provided revisedeasement documents to the District at the October 12,2010 Engineer'sMeeting. Manager Massey has contacted one property owner regardinggranting new easements to the District and is waiting for the notarizeddocumentation. The second property owner will be contacted byManager Massey to discuss granting an easement to the District.Manager Massey will keep the Board apprised of the situation at theupcoming November Board Meeting.

Manager Massey and Administration Supervisor Eaton reported onthe proposed District telephone system during the Operations Reportsearlier in the meeting.

Manager Massey reported on the Eagle Scout Basketball Court Projectduring the General Manager's Operational Report but added that theDistrict was assisting Cole Gunnoe in finding and placing a flat rocknear the basketball court project so that he could attach plaquescommending the project participants.

Manager Massey stated the District received a California Public RecordsAct request from James Rufus Koren with the Sun and Inland ValleyDaily Bulletin. Mr. Koren requested a copy of the current employeecontract and Fiscal Year 2009110 compensation for the General Manager.Supervisor Eaton compiled the requested information and forwardedthe documents to Attorney Riddell for his approval. Copies of therequested documents were thenelectronically provided.to Mr. Korento satisfy the request within the 10 (ten) day requirement per GovernmentCode Section 6250.

MINUTES - OCTOBER 20, 2010PAGE SEVEN

Supervisor Hall reported on the Collection Division Utility Vehicle #551993 Ford F250 Pickup with 116,264 miles that was approved for surplusand authorized to sell utilizing the sealed bid process with a minimum bidof $3,000 by the Board of Directors at the August 18,2010 Board Meeting.The vehicle received no bids during the bid process and staff believes thatby lowering the bid amount to $1,500, the District will be successful inliquidating the vehicle. Upon motion by Vice-President Kellems, second byDirector Shouse and carried by a 5 to 0 vote, Authorizing Staff to SurplusUtility Vehicle #55 with a Lower Minimum Bid of $1 ,500, was approved.

Manager Massey stated on April 1, 2010, the Running Springs FireDepartment transported Joseph Brod from Chabad in Rimwood to MountainsCommunity Hospital. Mr. Brod was billed $1,863.56 for the services renderedin accordance with fees established by Inland Counties Emergency MedicalAgency (lCEMA). On September 22,2010, the District received a letter fromMr. Brod asking if the medical transport bill could be reconsidered. A copy ofthe letter was provided to the Board for review and consideration. After furtherdiscussion, the Board recognized that billing adjustments and exceptions arenot made for services provided within a public agency. Upon motion byPresident Ayers, second by Vice-President Kellems and carried by a 5 to 0 vote,the customer request for ambulance bill adjustment was denied. SupervisorEaton will draft a letter to Mr. Brod notifying him of the Board's decision andoffering Mr. Brod the option of making payments on the account over a 12(twelve) month period.

Manager Massey continued by reporting on the San Bernardino CountySpecial Districts Department (Special Districts) rate increase to homeownerson Preston Drive and Cannon Way concerning road maintenance and snowplowing. The District received a letter on October 4,2010 from Robert Lark,2772 Preston Drive asking the District to intercede for the road maintenance,repair and snow plowing of Preston Drive. A copy of the letter was providedto the Board for their review and consideration. Discussion continued andSupervisor Hall stated the District only has an interest in accessing theDistrict Collections facility at the end of Preston Drive. Attorney Riddellstated the District would exceed legal authority by using public funds tomaintain roads. Manager Massey will draft a response letter to Mr. Larkregarding his request.

Manager Massey stated Resolution No. 19-09, authorized the Board President,General Manager and Secretary/Treasurer to deposit or withdraw monies in theLocal Agency Investment Fund (LAIF). Resolution No. 20-10 identifies SamMassey as being named to the General Manager position. Upon motion byDirector Bennett, second by Director Terry and carried by a 5 to 0 vote,RESOLUTION NO. 20-J O. AUTHORIZING TN..\[ESTMENT OJ:; MONIESIN THE LOCAL AGENCY INVESTMENT FUND, was adopfeu.(Resolution No. 20-10 on file in the District file room)

Surplus CollectionsUtility Vehicle #55Lowering Bid

Customer Requestfor Ambulance BillAdjustment

Customer Request forDistrict to Intercede onBehalf of Preston Driveand Cannon WayProperty OwnersRegarding MaintenanceRepair and SnowPlowing

RESOLUTIONNO. 20-10,INVESTMENT OFMONIES IN THELOCAL AGENCYINVESTMENT FUND

MINUTES - OCTOBER 20, 2010PAGE EIGHT

Safety CommitteeMinutes ofSeptember 7,2010

2009 HomelandSecurity Grant forFire DepartmentVHF Radios

Customer RequestsTo Install IrrigationWater Meters

The September 7, 2010 Safety Committee Minutes were provided tothe Board for their review and consideration. Upon motion by DirectorShouse, second by President Ayers and carried by a 5 to 0 vote, theSafety Committee Minutes of September 7, 2010 for Submittal toSDRMA (Special District Risk Management Authority) for Reductionin Liability Premium, were approved.

Fire Chief Grabow stated the San Bernardino County Office of EmergencyServices has advised the Department that the 2009 Homeland SecurityGrant has been accepted in the amount of $10,000.00 for six (6) DigitalP25 Bendix King Portable Radio and batteries. The grant has no (0)matching funds and will be at zero (0) cost to the District. Upon motionby Director Shouse, second by Vice-President Kellems and carried bya 5 to 0 vote, the 2009 Homeland Security Grant for Fire DepartmentVHF Radios in the amount of $10,000.00, was accepted.

Manager Masssey stated at the October 28, 2009 Board Meeting, theBoard adopted Ordinance No. 31, allowing a property owner to installa residential landscape irrigation water meter at their property.Ordinance No. 31 stipulates that a District customer who has an activeresidential meter serving a single family residence on one acre or lessin size, may request that a separate residential landscape irrigation meterbe installed to service the same property. There are no exceptionsoutlined in the District's current policy.

The District has received two separate requests from customers askingif the District would consider installing meters on their vacant propertiesfor irrigation or landscaping purposes. Both requests are from SlideFire victims who are interested in beautifying their property after thedevastating fire destroyed the surrounding vegetation. The Board andstaff discussed the benefits and any disadvantage to a customer installinga meter on vacant land. Manager Massey stated one concern would beif the District were in a drought situation and a moratorium was issuedin Running Springs. Manager Massey added that the water conservationordinance would be revised at a later date to address deactivating thelandscape meters if the District were in a water shortage. Discussioncontinued regarding the appropriate fees for a residential meter usedfor landscaping purposes on a vacant lot that had a structure and paidservice availability fees prior to a fire. Manager Massey provided theBoard with a document outlining the additional information that wouldamend provisions of the District Rules and Regulations pertaining towater supplied for undeveloped properties for irrigation purposes.

MINUTES r-r- OCTOBER 20,2010PAGE NINE

Attorney Riddell stated the Rules and Regulations Ordinance No.8 amendedby Ordinance No. 27 could be amended by approving Ordinance No. 32 andadding the following information to the Ordinance under Section 6.3Undeveloped Property.

The District may, however, install a water meter to an undeveloped lot ifin the opinion of the General Manager, a vacant lot has suffered substantialvegetation damage from afire and the owner of the property wishes toinstall a meter solely for irrigation purpose.

A meter may be installed in accordance with the following provisions:

1) Customer will pay the Residential meter installation charge thenin effect.

2) A monthly charge will be billed to the customer equal to theMonthly Residential meter fee then in effect.

3) Customer will be billed jar any and all additional assessmentsand fees normally billed to Residential metered customers,including the DWR loan repayment charge.

4) Customer will not incur any sewer installation or sewer monthlyfees until after a structure has been connected to the sewer system.

5) If customer decides to build a structure at a later date, he/she willbe required to pay the Water Facilities Capacity Charge then ineffect in addition to all applicable sewer fees.

Upon motion by Director Terry, second by Director Bennett and carried by a5 to 0 vote, Ordinance No. 32 amending provisions ofthe District Rules andRegulations pertaining to water supplied for undeveloped properties forirrigation purposes, was approved.

Supervisor Miller stated that due to the upcoming construction at theWastewater Treatment Plant and the need for confined space entry (permitand non-permit entries) as well as confined spaces at the Treatment Plantthat must be accessed on a routine basis, he felt the Treatment Divisionshould have a reliable confined space atmosphere monitoring device.Supervisor Miller then proposed that the District purchase two newunits to replace the existing outdated units. Upon motion by DirectorTerry, second by President Ayers and carried by a 5 to 0 vote, the purchaseof two new atmosphere monitoring devices for the Wastewater TreatmentDivision at a cost of $2,064.03 excluding shipping charges to replace theexisting Treatment Division monitoring equipment, was approved.

There were no further comments from Engineer Thomas and AttorneyRiddell.

Amend Rules andRegulations OrdinanceBy Approving OrdinanceNo. 32 Water SuppliedFor UndevelopedProperty

Wastewater TreatmentPlant Purchase ofAtmosphere MonitoringDevices

MINUTES - OCTOBER 20,2010PAGE TEN

Closed Session The meeting moved into closed session at 8:38 P.M. to consider the followingitems:

A. Conference with Legal CounselWorkers Compensation ClaimPursuant to Government Code Section 54956.9Steven Dvorak vs. Running Springs Water DistrictWorkers Compensation EAMS Case No. 07-0500-0083

Open Session The meeting moved into open session at 8:50 P.M.

With respect to the item of closed session regarding Conference with LegalCounsei, Attorney Riddeii stated that was nothing to report.

Discussion of responses to requests for information under the Public RecordsAct.

Discussion of e-mailed communications between the District and Board Membersand staff.

Adjournment The meeting was adjourned at 9:08 P.M.

Respectfully Submitted,