75E - PH - WATER MANAGEMENT PLAN

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2015 URBAN WATER MANAGEMENT PLAN OCWD's current Long -Term Facilities Plan (LTFP) identifies the Huntington Beach Seawater Desalination project as a priority project and determined the plant capacity of 56,000 AFY as the single largest source of new, local drinking water available to the region. In addition to offsetting imported demand, water from this project could provide OCWD with management flexibility in the OC Basin by augmenting supplies into the Talbert Seawater Barrier to prevent seawater intrusion. In May 2015, OCWD and Poseidon entered into a Term Sheet that provided the overall partner structure in order to advance the project. Based on the initial Term Sheet, Poseidon would be responsible for permitting, financing, design, construction, and operations of the treatment plant while OCWD would purchase the production volume, assuming the product water quality and quantity meet specific contract parameters and criteria. Furthermore, OCWD would then distribute the water in Orange County using one of the proposed distribution options described above. Currently, the project is in the late- stages of the regulatory permit approval process and Poseidon hopes to obtain the last discretionary permit necessary to construct the plant from the California Coastal Commission (CCC) in 2016. If the CCC permit is obtained, the plant could be operational as early as 2019. Doheny Desalination Project — In 2013, after five years and $6.2 million to investigate use of a slant well intake for the Doheny Desalination Project, it was concluded the project was feasible and could produce 15 MGD (16,800 AFY) of new potable water supplies to five participating agencies. These agencies consist of: South Coast Water District (SCWD), City of San Clemente, City of San Juan Capistrano, Laguna Beach County Water District (LBCWD) and Moulton Niguel Water District. Only SCWD and LBCWD expressed interest in moving forward after work was completed, with the other agencies electing to monitor the work and consider options to subsequently come back into the project while considering other water supply investments. More recently, LBCWD has had success in using previously held water rights in the OC Basin and may elect to move forward with that project instead of ocean desalination. A final decision is pending based on securing the necessary approvals on the groundwater agreement. SCWD has taken the lead on the desalination project and has hired a consulting team to proceed with project development for the Doheny Desalination Project. Major items scheduled over the next year include • Preliminary Design Report and Cost Estimate • Brine Outfall Analysis • EIR Process • Environmental Permitting Approvals • Public Outreach • Project Funding • Project Delivery Method • Economic Analysis arcadis.com 75E-86 7 -3