BYLAWS of the MONTEREY PENINSULA REGIONAL WATER AUTHORITY

TABLE OF CONTENTS Page

ARTICLE 1 1.1 1.2 1.3 THE AUTHORITY ......................................................................................... 1 Name of Authority ................................................................................................. 1 Office of Authority ................................................................................................ 1 Fiscal Year ............................................................................................................. 1

of each calendar year and end June 30th of the following calendar year ......................... 1

1.4
ARTICLE2 2.1 2.2 ARTICLE3 3.1 3.2

Powers .................................................................................................................... 1 BOARD OF DIRECTORS AND MEETINGS .............. ................................. 1 Board ofDirectors .................................................................................................. 1 Meetings ................................................................................................................. 1 OFFICERS ....................................................................................................... 2 Officers .................................................................................................................. 2 Election of Officers ................................................................................................ 2 Removal ofElected Officers .................................................................................. 2 Vacancies ............................................................................................................... 2 Resignation of Officers .......................................................................................... 2 Responsibilities of Officers .................................................................................... 3 ADVISORY COMMITTEES .......................................................................... 4 Establishment of Advisory Committees ................................................................ 4 Advisory Committee Powers ................................................................................. 4 Advisory Committee Meetings .............................................................................. 4 EXECUTIVE DIRECTOR AND STAFFING ................................................ 4 Appointment .......................................................................................................... 4 Powers .................................................................................................................... 4 Staffing ................................................................................................................... 5 FINANCES ...................................................................................................... 5 Deposit and Disbursement of Funds ...................................................................... 5 Budget .................................................................................................................... 5 Annual Audits ........................................................................................................ 5 Financial Report ..................................................................................................... 5 Bonding .................................................................................................................. 5

3.3

3.4
3.5

3.6
ARTICLE4 4.1 4.2 4.3 ARTICLE 5

5.1
5.2

5.3
ARTICLE 6

6.1

6.2 6.3 6.4

6.5

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TABLE OF CONTENTS (continued) Page

6.6 ARTICLE 7 ARTICLE 8 ARTICLE 9 9.1 9.2

Reserve Funds ........................................................................................................ 6 DEBTS AND LIABILITIES ........................................................................... 6 REIMBURSEMENT FOR TRAVEL EXPENSES ......................................... 6 EVENTS OF DEFAULT AND REMEDIES .................................................. 6 Events ofDefault ................................................................................................... 6 Cure Period ............................................................................................................ 7 Remedies on Default .............................................................................................. 7 No Remedy Exclusive ............................................................................................ 7 Agreement to Pay Attorneys' Fees and Expenses ................................................. 7 No Additional Waiver Implied by One Waiver ..................................................... 7 RECORDS RETENTION ................................................................................ 7 Maintenance ofthe Authority Records .................................................................. 7 Inspection Rights ................................................................................................... 8 Maintenance and Inspection of Agreement and Bylaws ........................................ 8 Inspection by Directors .......................................................................................... 8 CONFLICTS OF INTEREST CODE .............................................................. 8 LIABILITY AND INDEMNIFICATION ....................................................... 8 Indemnification of Directors, Officers and Employees ......................................... 8 Insurance ................................................................................................................ 8 Indemnification By Member Agencies .................................................................. 8 AMENDMENT ................................................................................................ 9 DEFINITIONS AND CONSTRUCTION ....................................................... 9 Principal Office of the Authority ........................................................... 10

9.3 9.4 9.5 9.6

ARTICLE 10 10.1 10.2 10.3 10.4 ARTICLE 11 ARTICLE 12 12.1 12.2 12.3 ARTICLE 13 ARTICLE 14

ATTACHMENT A

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PREAMBLE

These Bylaws are adopted and effective as of February 25, 2012 pursuant to the "Joint Exercise of Powers Agreement of the Monterey Peninsula Regional Water Authority (the "Agreement").
ARTICLE 1 THE AUTHORITY

1.1 N arne of Authority. The name of the Authority created by the Agreement shall be the Monterey Peninsula Regional Water Authority (the "Authority"). 1.2 Office of Authority. The principal office of the Authority shall be at the address listed in Attachment A to these Bylaws, or at such other location as the Board may designate by resolution. 1.3 Fiscal Year. The fiscal year for the Authority shall commence July 1st

of each calendar year and end June 30th ofthe following calendar year. 1.4 Agreement. Powers. The powers of the Authority shall be as set forth in Article 4 of the
ARTICLE2 BOARD OF DIRECTORS AND MEETINGS

2.1 Board of Directors. The Authority shall be governed by a Board of Directors (the "Board") as set forth in Article 6 of the Agreement. 2.2 Meetings. Meetings of the Board may be called by the President, Vice-President, or any four directors by written request. Board meetings shall be conducted in compliance with Article 7 of the Agreement, all applicable laws, and as further specified herein. 2.2.1 Order of Business. At the regular meetings of the Board, the following shall be the order of business: 1. ii.
111.

Call to Order Roll Call. Pledge of Allegiance Report from Board Members and Staff Public Comment Approval of Minutes of the Previous Meeting. Agenda Items.

1v. v. v1. vn.

vm.

Adjournment

2.2.2 Action by the Board. All resolutions ofthe Board shall be in writing, signed by the President and attested to by the Secretary. All other actions of the Board shall be by motion recorded in written minutes. 2.2.3 Rule of Order. All rules of order not otherwise provided for shall be determined, to the extent practicable, in accordance with "Rosenberg's Rules of Order;" provided, however, that no action of the Board shall be invalidated or its legality otherwise affected by the failure or omission to observe or follow "Rosenberg's Rules of Order."

ARTICLE3 OFFICERS
3 .1 Officers. The Officers of the Authority are the President, Vice-President, Secretary and Treasurer, as provided for in Article 6 of the Agreement. All Directors are eligible to serve as an Officer. The President, the Vice President, and the Secretary must be Directors. The Treasurer shall be appointed consistent with the provisions of Section 12.3 of the Agreement, and may, but need not, be a Director. The Treasurer shall serve at the pleasure of the Board, subject to an employment contract, if any, with the Authority. 3.2 Election of Officers. At the first meeting of the Board of each fiscal year, nominations for the Officers will be made and seconded by a Director. If more than two (2) Directors are nominated for any one office, balloting occurs until a nominee receives a majority of the votes cast; provided that after the first ballot the nominee receiving the fewest votes will be dropped from the balloting. The initial term of the elected Officers shall run from the date of their election to office until June 30, 2013. Thereafter, each Officer shall serve a term of one (1) year. An Officer may succeed himself/herself and may serve any number of consecutive or nonconsecutive terms. 3.3 Removal of Elected Officers. An Officer may be removed, with or without cause, by a majority vote of the Board at a regular or special meeting. 3.4 Vacancies. Any vacancy in the offices because of death, resignation, removal, disqualification, or any other cause will be filled for the balance of the vacated term in the manner prescribed in these Bylaws for regular appointments to that office; provided, however, that such vacancies may be filled at any regular or special meeting of the Board. 3.5 Resignation of Officers. Any Officer may resign at any time by giving written notice to the Executive Director or Secretary. Any resignation takes effect at the date of the receipt ofthat notice or at any later time specified in that notice. Unless otherwise specified in that notice, the acceptance of the resignation is not necessary to make it effective.

3.6

Responsibilities of Officers.

3.6.1 President of the Board. The President of the Board shall preside at meetings of the Board and exercise and perform such other powers and duties as may be assigned to him/her by the Board or prescribed by these Bylaws. 3.6.2 Vice-President of the Board. The Vice-President of the Board shall fulfill all the duties of the President in his/her absence, and exercise and perform such other powers and duties as may be assigned to him/her by the Board. 3.6.3 following duties: Secretary. The Secretary shall perform, but not be limited to, the

(a) Book ofMinutes. Keep or cause to be kept, at the principal executive office of the Authority or such other place as the Board may direct, a book of minutes of all meetings and actions of directors and committees of the Authority, with the time and place of holding the meeting, whether regular or special, and, if special, how authorized, the notice given, the names of those present and absent at such meetings and the proceedings of such meetings. (b) Notices and Other Duties. Prepare, give, or cause to be given, notice of, and agendas for, all meetings of the Board and committees of the Authority. (c) Exercise and perform such other powers and perform such other duties as may be assigned to him/her by the Board. 3.6.4 Treasurer. The Treasurer shall be the depository and have custody of all the money of the Authority from whatever source, and shall provide strict accountability of said funds in accordance with Government Code Sections 6505 and 6505.5. The Treasurer shall possess the powers of, and shall perform those functions required by, Government Code Sections 6505, 6505.5, and all other applicable laws and regulations, including any subsequent amendments thereto. Particularly, the Treasurer shall perform, but not be limited to, the following duties:: (a) Books of Account. Keep and maintain, or causes to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of Authority, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and other matters customarily included in financial statements. The books of account will be open to inspection by any Director at all reasonable times. (b) Deposit and Disbursement of Money and Valuables. Consistent with the provisions of Article 6, deposit all money and other valuables in the name and to the credit of the Authority within such depository accounts as may be designated by the Board; disburse the funds of the Authority as may be ordered by the Board; and render to the Board, whenever requested, an account of all of his/her transactions as Treasurer and of the financial condition of the Authority.

(c) Exercise and perform such other powers and perform such other duties as may be assigned to him/her by the Board.
ARTICLE4 ADVISORY COMMITTEES

4.1 Establishment of Advisory Committees. Pursuant to Section 11 of the Agreement, the Board may establish one or more advisory committees or establish standing or ad hoc committees to assist in carrying out the purposes and objectives of the Authority. 4.2 Advisory Committee Powers. Any advisory committee shall exercise such powers as may be delegated to it, except that no committee may: 4.2.1 Take any final action on matters which, under the Agreement, require approval by a majority or two-thirds (2/3) vote of the Board; 4.2.2 4.2.3 4.2.4 committees; or 4.2.5 Approve any transaction which would violate the Political Reform Act (commencing with Section 81000 ofthe Government Code of the State of California) and/or Section 1090 of the Government Code of the State of California. 4.3 Advisory Committee Meetings. Advisory committees shall meet at the call of their respective committee chairs. All advisory committee meetings shall be conducted in accordance with the Ralph M. Brown Act (California Government Code sections 54950 et seq.). Minutes of committee meetings shall be recorded and upon approval shall be distributed to the Board.
ARTICLES EXECUTIVE DIRECTOR AND STAFFING

Amend or repeal the Bylaws or adopt new Bylaws; Amend or repeal any resolution of the Board; Appoint any other committees ofthe Board or the members of these

5.1 Appointment. The Board shall appoint an Executive Director in accordance with Article 9 of the Agreement. 5.2 Powers. In accordance with Article 9 ofthe Agreement, the Executive Director shall administer the business and activities ofthe Authority, and shall execute all resolutions and agreements on behalf of the Board. The Executive Director shall have such powers, duties and responsibilities as set forth in the Agreement, these Bylaws and as may be provided by agreement between the Executive Director and the Authority or as otherwise delegated to the Executive Director by the Board. [note: Board to discuss specific Executive Director Duties for inclusion in this Section 5.2]. The Executive Director shall coordinate staff resources toward the completion of tasks assigned by these Bylaws or other order ofthe Board. To the extent cost-

effective and efficient, the Executive Director shall seek the provision of staff resources from the Members and coordinate among Members to accomplish said tasks. Staffing. Subject to the Board's prior approval, the Executive Director may 5.3 employ additional staff and/or contract for consultant, legal, or technical services to implement or to assist in the implementation of tasks assigned by these Bylaws or other order of the Board. Unless directed otherwise by the Board, the responsibilities of the individuals assigned to tasks shall be determined by the Executive Director.
ARTICLE 6 FINANCES

6.1

Deposit and Disbursement of Funds.

All funds of the Authority shall be deposited in one or more depository accounts as may be designated by the Board. Such accounts shall be independent of any account owned by or exclusively controlled by any ofthe Members. No disbursements of such funds shall be made unless the same shall have been approved in the annual operating budget, or otherwise specifically approved by the Board. All disbursements shall be by check. Disbursements of not more than five thousand dollars ($5,000) may be issued pursuant to the Treasurer's sole signature. Disbursements in excess of five thousand dollars ($5,000) may only be issued upon the signature of the Treasurer and President, or in the President's absence, the Vice-President. 6.2 Budget. The Authority shall operate pursuant to a budget to be adopted pursuant to Article 13 of the Agreement. Unless it is necessary to incur debt in conjunction with the development of capital facilities, the Authority shall endeavor to operate each year pursuant to an annually balanced budget so that projected annual expenses do not exceed projected annual revenues. 6.3 Annual Audits. The accounts of the Authority shall be reviewed as of the close of business on June 30th by a certified public accountant. A Full Opinion Audit will be provided to the Board by the reviewing certified public accountant. The statement shall at all times be available to members of the organization within the offices of the Authority. 6.4 Financial Report.

6.4.1 Not later than December 1st after the close of Authority's fiscal year, the Board will cause an annual report, prepared by a certified public accountant, to be sent to the governing body of each Member. 6.4.2 The report required by this Section will be accompanied by the Full Opinion Audit to be developed and provided to the Board pursuant to Section 6.3. 6.5 Bonding. The President, Treasurer, and such other officers and staff who have charge of, handle, or have access to any property of the Authority shall be bonded by a sufficient fidelity bond in the amount set by the Board and paid for by the Authority.

6.6 Reserve Funds. One or more reserve funds for the Authority shall be created in the amount( s) determined by the Board, and administered to fund expenses arising from emergencies or extenuating situations or circumstances. Disbursements from a reserve fund may only be made upon the affirmative agreement of the Board by a supermajority of at least seventy (70) percent of the votes held among all Directors.
ARTICLE7 DEBTS AND LIABILITIES

The debts, liabilities and obligations of the Authority are not and will not be the debts, liabilities or obligations of any or all of the Members. However, nothing in this Article or in the Agreement prevents, or impairs the ability of, a Member or Members, from agreeing, in a separate agreement, to be jointly and/or severally liable, in whole or in part, for any debt, obligation or liability of the Authority, including but not limited to, any bond or other debt instrument issued by the Authority.

ARTICLES REIMBURSEMENT FOR TRAVEL EXPENSES

Directors and the Executive Director shall be reimbursed for all reasonable and necessary travel expenses when required or incurred by those persons in attending meetings or events pertinent to the business and operation of the Authority. Reimbursable expenses shall include all charges for meals, lodging, air fare and costs of travel by automobile at the rate per mile allowed as a business expense by the Internal Revenue Service. The Treasurer, upon approval of the President, shall be authorized to pay all such expenses deemed reasonable and necessary so long as sufficient funds have been budgeted therefore. Payments for amounts in excess of that budgeted must be approved by the Board.
Reasonable and Necessary is defined as those expenses which the member would not have incurred in performing the normal business of its agency. ARTICLE9 EVENTS OF DEFAULT AND REMEDIES

9.1 Events of Default. Subject to the cure period provided in Section 9.2 below, an event of default occurs if a Member does or omits from doing any of the following: 9.1.1 9.1.2 Fails to appoint a director and/or an alternate to serve on the Board; Fails to comply with the Agreement or these Bylaws;

9.1.3 Fails to comply with any contract executed by the Member with the Authority, or any bond or other evidence of indebtedness for which the Member has agreed to assume responsibility, in whole or in part; or 9.1.4 Fails to pay fees, if any, assessed by the Board;

9.2 Cure Period. A Member shall not be in default under the Agreement or these Bylaws unless such Member shall fail to correct such default for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied has been given to such Member by the Authority or the Executive Director; provided, however, if the failure stated in the notice cannot be corrected within the applicable period; the Authority, or the Executive Director, as the case may be, will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by the Member within the applicable period and diligently pursued until the default is corrected. After such an extension, failure to diligently pursue or to achieve corrective action is a separate "event of default" under these Bylaws requiring notice but not requiring that Authority consent to any extension; 9.3 Remedies on Default. The Authority may exercise any and all remedies available pursuant to law, or granted pursuant to the Agreement or these Bylaws to remedy an event of default by a Member. 9.4 No Remedy Exclusive. No remedy conferred herein upon or reserved to the Authority is intended to be exclusive and every such remedy is cumulative and is in addition to every other remedy given under the Agreement or these Bylaws, now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any default impairs any such right or power or will be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Authority to exercise any remedy reserved to it in these Bylaws, it is not necessary to give any notice, other than such notice as may be required in these Bylaws or by law. 9.5 Agreement to Pay Attorneys' Fees and Expenses. In the event a Member should be in default under any of the provisions of these Bylaws and the Authority should employ attorneys or incur other expenses for the collection of moneys or the enforcement of performance or observance of any obligation or agreement on the part of the defaulting Member, the defaulting Member agrees that it will on demand therefore pay to the Authority the reasonable fees of such attorneys and such other expenses so incurred by the Authority. 9.6 No Additional Waiver Implied by One Waiver. In the event any agreement contained in the Agreement or these Bylaws should be breached by any Member and thereafter waived by the other Members, such waiver will be limited to the particular breach so waived and will not be deemed to waive any other breach hereunder.

ARTICLE 10 RECORDS RETENTION

10.1 Maintenance of the Authority Records. The Authority will keep: 10.1.1 Adequate and correct books and records of account; and 10.1.2 Minutes in written form of the proceedings of its Board, and committees of the Board. All such records will be kept at the Authority's principal office.

10.2

Inspection Rights.

10.2.1 Any Member may inspect the accounting books and records and minutes of the proceedings of the Board and committees of the Board, at any reasonable time, for a purpose reasonably related to such person's interest. 10.2.2 Any inspection and copying under this Section may be made in person or by an agent or attorney or the entity entitled thereto and the right of inspection includes the right to copy and make extracts. 10.3 Maintenance and Inspection of Agreement and Bylaws. The Authority will keep at its principal executive office the original or copy of the Agreement and these Bylaws as amended to date, which will be open to inspection by the Authority or any Member at all reasonable times during office hours. 10.4 Inspection by Directors. Every Director has the absolute right at any reasonable time to inspect all non-confidential books, records, and documents of every kind and the physical properties of the Authority. This inspection by a Director may be made in person or by an agent or attorney, and the right of inspection includes the right to copy and make extracts of documents. ARTICLE 11 CONFLICTS OF INTEREST CODE The Authority shall be subject to the conflict of interest rules set forth in the Political Reform Act (commencing with Section 81000 of the Government Code of the State of California) and Sections 1090 et seq. ofthe Government Code ofthe State of California, and the Authority shall adopt a conflict of interest code as required and as provided by the implementing regulations of the Political Reform Act. ARTICLE 12 LIABILITY AND INDEMNIFICATION 12.1 Indemnification of Directors, Officers and Employees. The Authority shall defend and indemnify its directors, officers and employees to the same extent as any public agency of the State of California is obliged to defend and indemnify its public employees pursuant to California Government Code 825 et seq. or other applicable provisions oflaw. 12.2 Insurance. The Authority may insure itself to the extent deemed necessary by the Board against loss, liability and claims arising out of or connected to the conduct of the Authority's activities. 12.3 Indemnification By Member Agencies. To the extent any Member Agency's negligent or wrongful act or omission is the cause of an injury for which other Member Agencies may be, or are sought to be, held liable pursuant to California Government Code section 895 et seq., the Member Agency which is legally responsible for the injury shall, at its own expenses, defend, indemnify and hold harmless all of such other Member Agencies from any and all legal consequences of the negligent or wrongful conduct or omission. Nothing in this Section shall be

deemed to preclude a Member Agency having the duty to defend, indemnify and hold harmless, from resorting to any insurance or other form of coverage for losses available to the Member Agency, including insurance or coverage for losses procured through the Authority.
ARTICLE 13 AMENDMENT

These Bylaws may be amended from time to time by resolution of the Board duly adopted upon a two-thirds vote of the entire Board at a regular or special meeting of the Board; provided, however, that no such amendment shall be adopted unless at least thirty (30) days written notice thereof has previously been given to all members of the Board. Such notice shall identify the Article to be amended, the proposed amendment, and the reason for the proposed amendment.
ARTICLE 14 DEFINITIONS AND CONSTRUCTION

Unless specifically defined in these Bylaws, all defined terms shall have the same meaning ascribed to them in the Agreement. If any term of these Bylaws conflicts with any term of the Agreement, the Agreement's terms shall prevail, and these Bylaws shall be amended to eliminate such conflict of terms. Unless the context or reference to the Agreement requires otherwise, the general provisions, rules of construction, and definitions in the California Civil Code will govern the construction of these Bylaws.

ATTACHMENT A Principal Office of the Authority

The principal office of the Authority shall be located at the City of Monterey.

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