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08-01-18 Board Packet
1 OTAY WATER DISTRICT AND OTAY WATER DISTRICT FINANCING AUTHORITY BOARD OF DIRECTORS MEETING DISTRICT BOARDROOM 2554 SWEETWATER SPRINGS BOULEVARD SPRING VALLEY, CALIFORNIA WEDNESDAY August 1, 2018 3:30 P.M. AGENDA 1. ROLL CALL 2. PLEDGE OF ALLEGIANCE 3. APPROVAL OF AGENDA 4. DISTRICT CONTRIBUTION TO FOUNDATION FOR GROSSMONT AND CUYAMACA COLLEGES’ CENTER FOR WATER STUDIES (PRESIDENT SMITH) 5. APPROVE THE MINUTES OF THE REGULAR BOARD MEETING OF MAY 2, 2018 6. PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JURIS- DICTION BUT NOT AN ITEM ON TODAY'S AGENDA CONSENT CALENDAR 7. ITEMS TO BE ACTED UPON WITHOUT DISCUSSION, UNLESS A REQUEST IS MADE BY A MEMBER OF THE BOARD OR THE PUBLIC TO DISCUSS A PARTICU- LAR ITEM: a) APPROVE THE ISSUANCE OF A PURCHASE ORDER TO HAWTHORNE POWER SYSTEMS FOR THE PURCHASE OF A TRAILER MOUNTED ENGINE AND PUMP IN AN AMOUNT NOT-TO-EXCEED $764,000 FOR THE TEMPO- RARY LOWER OTAY PUMP STATION REDUNDANCY PROJECT ACTION ITEMS 8. GENERAL MANAGER 2 a) CALIFORNIA WATER FIX UPDATE (AMY CHEN, SAN DIEGO COUNTY WATER AUTHORITY METROPOLITAN WATER DISTRICT PROGRAM DIRECTOR) 9. ENGINEERING AND WATER OPERATIONS a) CONSIDER THE AMENDED AND RESTATED REGIONAL WASTEWATER AGREEMENT BETWEEN THE CITY OF SAN DIEGO (CITY) AND PARTICIPAT- ING AGENCIES (PA) IN THE METROPOLITAN SEWERAGE SYSTEM (AGREE- MENT) AS PART OF A LONG-RANGE REGIONAL WATER REUSE PLAN WITH THE GOAL OF REALIZING A SECONDARY EQUIVALENT POINT LOMA WASTEWATER TREATMENT PLANT (PLWTP) AND A NEW LOCAL SUSTAINA- BLE WATER SUPPLY (KENNEDY) 10. BOARD a) DISCUSS THE 2018 BOARD MEETING CALENDAR INFORMATIONAL ITEM 11. THE FOLLOWING ITEM IS PROVIDED TO THE BOARD FOR INFORMATIONAL PUR- POSES ONLY. NO ACTION IS REQUIRED ON THE FOLLOWING AGENDA ITEM: a) INFORMATIONAL UPDATE ON THE DISTRICT’S EFFORTS TO EXPAND THE USE OF RECYCLED WATER (KENNEDY) REPORTS 12. GENERAL MANAGER’S REPORT 13. SAN DIEGO COUNTY WATER AUTHORITY UPDATE 14. DIRECTORS' REPORTS/REQUESTS 15. PRESIDENT’S REPORT/REQUESTS RECESS TO CLOSED SESSION 16. CLOSED SESSION a) PUBLIC EMPLOYEE PERFORMANCE EVALUATION [GOVERNMENT CODE §54957.6] TITLE: GENERAL MANAGER RETURN TO OPEN SESSION 17. REPORT ON ANY ACTIONS TAKEN IN CLOSED SESSION. THE BOARD MAY ALSO TAKE ACTION ON ANY ITEMS POSTED IN CLOSED SESSION 3 OTAY WATER DISTRICT FINANCING AUTHORITY 18. NO MATTERS TO DISCUSS 19. ADJOURNMENT All items appearing on this agenda, whether or not expressly listed for action, may be deliber- ated and may be subject to action by the Board. The Agenda, and any attachments containing written information, are available at the District’s website at www.otaywater.gov. Written changes to any items to be considered at the open meeting, or to any attachments, will be posted on the District’s website. Copies of the Agenda and all attachments are also available through the District Secretary by contacting her at (619) 670-2280. If you have any disability which would require accommodation in order to enable you to partici- pate in this meeting, please call the District Secretary at (619) 670-2280 at least 24 hours prior to the meeting. Certification of Posting I certify that on July 27, 2018, I posted a copy of the foregoing agenda near the regular meeting place of the Board of Directors of Otay Water District, said time being at least 72 hours in advance of the regular meeting of the Board of Directors (Government Code Section §54954.2). Executed at Spring Valley, California on July 27, 2018. /s/ Susan Cruz, District Secretary 1 MINUTES OF THE BOARD OF DIRECTORS MEETING OF THE OTAY WATER DISTRICT May 2, 2018 1. The meeting was called to order by President Smith at 3:35 p.m. 2. ROLL CALL Directors Present: Croucher, Gastelum, Robak (arrived at 4:45 p.m.), Smith and Thompson Staff Present: General Manager Mark Watton, Attorney Jeanne Blumenfeld, Chief of Engineering Rod Posada, Chief Financial Officer Joe Beachem, Chief of Administration Adolfo Segura, Chief of Operations Pedro Porras, Asst. Chief of Finance Kevin Koeppen, Asst. Chief of Operations Jose Martinez, District Secretary Susan Cruz and others per attached list. 3. PLEDGE OF ALLEGIANCE 4. APPROVAL OF AGENDA A motion was made by Director Croucher, and seconded by Director Thompson and carried with the following vote: Ayes: Directors Croucher, Gastelum, Smith and Thompson Noes: None Abstain: None Absent: Director Robak to approve the agenda. 5. LEGISLATIVE UPDATE Ms. Rosanna Carvacho of Brownstein, Hyatt, Farber and Schreck provided an update on the 2018 California Legislative session. She stated that the State of California Legislature has two-year sessions and we are in the second year of the two-year session. She indicated that because we are in the second year, any bills that do not pass before the legislature by August 31, 2018 would be considered “dead” and would need to be reintroduced in the next session (2019 to 2020). She stated that there are approximately 3100 assembly bills and 1500 senate bills introduced in the last couple years. Ms. Carvacho also noted that the budget process is underway in the legislature and hearings are being held on the budget proposed by the Governor in January. The budget only requires a simple majority (in the past it required a 2/3 vote) and 2 must be passed by June 15 as set by the State Constitution. She reviewed some of the bills that the District has interest in tracking as they have an impact on the District’s operations (please reference Attachment A to the staff report). President Smith inquired how much of the $8.88 billion bond, proposed by Dr. Jerry Meral, has been allocated for Southern California. Ms. Carvacho indicated that she would review the bond to see how it is broken down and share her findings with the board. In response to an inquiry from Director Thompson, Ms. Carvacho indicated that SB 623, the tax on water, has gotten traction as the Governor has made this bill a priority and he is pushing the bill forward. The bill is also getting support from the dairy industry and the farmers in terms of the fertilizer fee. Because the water community is on its own now, whereas in the past they all worked together as a coalition and, thus, were stronger and able to keep such legislation from moving forward. Ms. Carvacho indicated in response an inquiry from Director Gastelum, that Proposition 218 could pose a challenge to SB 623 as urban ratepayers are paying the tax and are not receiving benefit from the tax. Director Croucher also noted that SB 623 is taxing water which a basic necessity for survival, whereas food is not taxed, and that the bill could set a precedence. 6. APPROVE THE MINUTES OF THE REGULAR BOARD MEETING OF FEBRUARY 7, 2018 AND SPECIAL BOARD MEETINGS OF FEBRUARY 7, 2018 AND APRIL 11, 2018 A motion was made by Director Thompson, and seconded by Director Gastelum and carried with the following vote: Ayes: Directors Croucher, Gastelum, Smith and Thompson Noes: None Abstain: None Absent: Director Robak to approve the minutes of the regular board meeting of February 7, 2018 and special board meeting of February 7 and April 11, 2018. 7. PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JURISDICTION BUT NOT AN ITEM ON TODAY'S AGENDA General Manager Watton presented Chief of Operations Pedro Porras an award recognizing him for his 30 years-of-service to the District. He and President Smith thanked Mr. Porras for his dedicated service to the District. CONSENT CALENDAR 3 8. ITEMS TO BE ACTED UPON WITHOUT DISCUSSION, UNLESS A REQUEST IS MADE BY A MEMBER OF THE BOARD OR THE PUBLIC TO DISCUSS A PARTICULAR ITEM: A motion was made by Director Croucher, seconded by Director Thompson and carried with the following vote: Ayes: Directors Croucher, Gastelum, Smith and Thompson Noes: None Abstain: None Absent: Director Robak to approve the following consent calendar items: a) APPROVE THE FIRST AMENDMENT TO THE 2001 AGREEMENT FOR THE OPERATION AND MAINTENANCE OF THE PUMP STATION WITH THE LAKEVIEW AT HIGHLANDS RANCH HOMEOWNERS ASSOCIATION b) APPROVE AMENDED AGREEMENTS TO EXTEND THE TERMS FOR TWO (2) YEARS, PLUS THREE (3) ONE-YEAR EXTENSION OPTIONS; ONE WITH INFOSEND TO PROVIDE BILL PRINT AND ELECTRONIC BILL PRESENTMENT SERVICES IN AN AMOUNT NOT-TO-EXCEED $1,310,000 ($262,000 ANNUALLY, INCLUDING PASS-THROUGH POSTAGE COSTS OF $170,000), AND ONE WITH ELECTRONIC PAYMENT EXCHANGE TO PROVIDE ONLINE PAYMENT TRANSACTION PROCESSING SERVICES IN AN AMOUNT NOT-TO- EXCEED $1,500,000 ($250,000 ANNUALLY) c) RECEIVE THE DISTRICT’S INVESTMENT POLICY, BOARD OF DIRECTORS POLICY NO. 27, FOR REVIEW AND RE-DELEGATE AUTHORITY FOR ALL INVESTMENT RELATED ACTIVITIES TO THE CHIEF FINANCIAL OFFICER IN ACCORDANCE WITH GOVERNMENT CODE SECTION 53607 d) APPROVE THE TRANSFER OF THE SAN MIGUEL FIRE TRAINING SITE TO THE COUNTY OF SAN DIEGO FOR USE BY THE COUNTY FIRE AUTHORITY e) APPROVE CHANGE ORDER NO. 4 TO THE EXISTING CONTRACT WITH BLASTCO, INC. IN THE CREDIT AMOUNT OF <$267,197.50> FOR THE 978-1 AND 850-2 RESERVOIRS INTERIOR/EXTERIOR COATINGS AND UPGRADES PROJECT f) APPROVE CHANGE ORDER NO. 2 TO THE EXISTING CONTRACT WITH T.C. CONSTRUCTION COMPANY, INC. IN THE AMOUNT OF $149,280.00 FOR THE HILLSDALE ROAD 12-INCH WATERLINE 4 REPLACEMENT (CIP P2573) AND SEWER REPAIRS (CIP S2048) PROJECTS g) AWARD A PROFESSIONAL ENVIRONMENTAL SERVICES CONTRACT TO ICF JONES AND STOKES, INC. FOR THE MAINTENANCE AND MONITORING OF THE SAN MIGUEL HABITAT MANAGEMENT AREA AND CIP-ASSOCIATED MITIGATION PROJECTS FOR A THREE (3) YEAR PERIOD (JUNE 2018 – JUNE 2021) IN AN AMOUNT NOT-TO- EXCEED $483,787.40 ACTION ITEMS 9. ENGINEERING AND WATER OPERATIONS a) APPROVE THE WATER SUPPLY ASSESSMENT AND VERIFICATION REPORT DATED MARCH 2018 FOR THE OTAY RANCH RESORT VILLAGE PROJECT, AS REQUIRED BY SENATE BILLS 610 AND 221 Environmental Specialist Lisa Coburn-Boyd indicated that the County of San Diego submitted a request to the District for a Water Supply Assessment and Verification Report (WSAVR) for their Otay Ranch Resort Village Project pursuant to Senate Bills 610 and 221. The primary intent of the bills is to improve the link between water supply availability and land use decisions. Please reference the Committee Action notes (Attachment A) attached to the staff report for the details of Ms. Coburn-Boyd’s report. President Smith reiterated that this project is in the District’s planning documents and there is a decrease in estimated water needs of approximately 300 acre feet (AF) for the project. A motion was made by Director Thompson, seconded by Director Croucher and carried with the following vote: Ayes: Directors Croucher, Gastelum, Smith and Thompson Noes: None Abstain: None Absent: Director Robak to approve staff’s recommendation. 10. BOARD a) DISCUSSION OF 2018 BOARD MEETING CALENDAR It was indicated that the July board meeting has been moved to the following Wednesday, July 11, 2018, as the normal date of the meeting falls on the July 4th holiday. President Smith also noted that a Special Board meeting has been scheduled on Monday, May 21, 2018, for a Budget Workshop. 5 There were no other changes to the board meeting calendar. INFORMATIONAL ITEM 11. THE FOLLOWING ITEMS ARE PROVIDED TO THE BOARD FOR INFORMATIONAL PURPOSES ONLY. NO ACTION IS REQUIRED ON THE FOLLOWING AGENDA ITEMS: a) REPORT ON THE STATUS OF THE SALT CREEK GOLF COURSE PROPERTY RECEIVE INFORMATION REGARDING A LOWER COST STRATEGY FOR FUNDING CALPERS Assistant Chief of Finance Kevin Koeppen provided an update on the history of the Salt Creek Golf Course and future options that the Board could consider for the property. He reviewed information in the staff report (attached). He also presented photos of the current state of the Salt Creek Golf Course property and indicated that the Highlands Group is still exiting the property and they are up to date on their billing. In response to an inquiry from Director Croucher, General Manager Watton indicated that the District has been reaching out to the City of Chula Vista, County of San Diego, etc., to see if there is interest in the property. The District does not have any responses back yet, but staff will keep the board informed. Director Thompson indicated that though the District reduced its rent for the golf course property to $6000 per month, which he felt was very low for 270 acres, the lessees have, unfortunately, not been successful with running a golf course on the land. He suggested, for long term purposes, that staff also review the possibility of utilizing the golf course property to expand the District’s mitigation bank. He asked that staff provide a recommendation on the disposition of the property after reviewing all the facts and circumstances. He inquired if 90-days would be enough time to accomplish this review. General Manager Watton indicated that 90-days would be enough time to develop a preliminary recommendation. Director Croucher indicated that because the District has a take or pay contract with the City, he asked that staff review the possibility of utilizing the recycled water to create a park with a lake, similar to Padre Dam MWD’s Santee Lakes Park. It is a beautiful addition to their community and a benefit to their ratepayers. He indicated whether this was an opportunity that may or may not work on the golf course property, he would like staff to explore it and all possible options. He stated if 90-days is not enough time to perform such a review, he asked that staff advise the board. President Smith also suggested exploring the possibility of doing something similar to the Otay River Valley potable recharge project (potable indirect reuse) on the golf course property as well. He asked that as the District does this 6 review, that it keep in mind its ratepayers and its primary function as a water district. b) RECEIVE INFORMATION REGARDING A LOWER COST STRATEGY FOR FUNDING CALPERS Assistant Chief of Finance Kevin Koeppen presented the analysis regarding a lower cost strategy for funding CalPERS in an effort to reduce the impact on rates of the cost to fund the CalPERS unfunded liability. Please reference the Committee Action notes (Attachment A) attached to the staff report for the details of Mr. Koeppen’s report. Mr. Koeppen noted that a handout has been provided on the dias from the District’s Financial Advisor in response to an inquiry from the District’s Finance and Administration Committee regarding whether the debt payments could be modified so they would not be negative in the last few years of the 30-year debt. The handout shows on page six (6) the payment schedule which avoids negative payments. It was discussed that this strategy would save ratepayers up to $15.3 million due to interest savings (3.5 to 4% debt interest rate versus 7%). President Smith suggested that the District evaluate net revenues versus net expenses at the end of the fiscal year and if there are any excess net revenues, that staff evaluate if any of the excess monies should be placed in CalPERS. He also suggested that a Board Policy should be developed to codify this practice. In response to an inquiry from Director Thompson, staff indicated that the rating agencies look at CWA’s debt and calculate the District’s portion of that debt. Regarding the CalPERS unfunded liability, the rating agencies see it more as an optional payment. He indicated that while the District will no longer have the benefit of the optional payment, the District is receiving a great benefit from the lowered interest rate cost which improves the District’s debt coverage ratio as its payment on debt is lower. It was indicated in response to another inquiry from Director Thompson that CWA and other agencies are considering this same strategy. Director Croucher stepped off the dias at 4:55 p.m. and returned at 4:58 p.m. Staff stated in response to an inquiry from Director Gastelum that the funding of CalPERS was impacted by the 2008 recession which dropped investment values. The market is now recovering from the recession, but recently CalPERS dropped their discount rate from 7.5% to 7% which has caused the payments into CalPERS to increase. Additionally, the District has lowered its headcount and CalPERS applies it charge to the District as a percentage of payroll which is projected out to the future and this charge is based on a larger number of employees than the District currently employs. 7 General Manager Watton indicated, in response to an inquiry from Director Thompson, that the California Pension Reform Act, PEPRA, reduced pension benefits to 2% at 62. Staff could calculate the percentage drop in the District’s pension obligation on a staffing basis and share the findings with the board. REPORTS 12. GENERAL MANAGER’S REPORT General Manager Watton presented information from his report which included an update on the employee picnic scheduled on August 11, the Enterprise Content Management System and Public Portal, meter sales, discrepancy in the amount of recycled water purchased from the City of San Diego, water conservation and sales. The board had comments and questions concerning a few items in the General Manager’s report and staff responded to the questions and comments. 13. CWA REPORT Director Croucher reported that CWA has been focused on legislative matters and the proposed partial WaterFix for the Bay-Delta as it does not address storage. He stated that MWD will be financing approximately 70% of the project cost and CWA is monitoring how MWD will be allocating the cost of the WaterFix to it member agencies. He stated that CWA is also working with ACWA related to SB 623, the proposed water tax. ACWA had performed a poll and the results indicate that 73% of voters opposed the proposed tax on drinking water. ACWA should be releasing a press release on this issue soon. He also reported that CWA is working with the State Water Resources Control Board (SWRCB) on credit for new water that is produced. The SWRCB is only willing to provide a 10% credit and CWA is working with legislators for a 15% credit. He stated that they have been working with Senator Hueso to push forward the Salton Sea restoration. He shared that CWA hosted a MWD workshop to review the “Guiding Principles” to enhance the working relationship between the two agencies. He lastly shared that CWA will also be hosting a press conference on the proposed water tax and they have reached out to ACWA, the San Diego Taxpayers Association and the San Diego County Board of Supervisor to attend the press conference. President Smith added that CWA’s Engineering and Operations Committee discussed water quality management and is coordinating an outreach effort for the community in August. He shared that he had presented to CWA some things he felt that Otay WD was doing better, which included the analytics on Social Media outreach and Otay WD’s CalPERS funding option. He stated he felt that water agencies should be sharing what they feel they do better so all agencies have the benefit of each other’s expertise. 14. DIRECTORS' REPORTS/REQUESTS 8 Director Robak indicated that the District had discussed social media at its last board meeting and he wished to share his top three “tweets” during the month: 1) the wastewater plant in Tijuana; 2) the proposed water tax; and 3) the photo of the group who participated in the San Diego Regional Chamber’s 2018 Binational Delegation trip to Mexico City. He also stated that an article in the Los Angeles Times indicated that the top candidates for the Governor for the State of California, Lieutenant Governor Gavin Newsom and Los Angeles Mayor Eric Garcetti. are not big proponents of the WaterFix. He lastly shared that he attended a behind the scenes tour of the Aquatica water park which was hosted by the South County Economic Development Council and he learned that they recycled a significant amount of the water they use. Director Gastelum reported that he attended the Heritage Road Ribbon Cutting Ceremony two weeks ago. He also commented that as there was no one from the public attending today’s meeting to address the Salt Creek Golf Course matter, he felt that it spoke well for the transparency of the District. Director Thompson reported that he participated in the 13th Annual San Diego Regional Chamber’s 2018 Binational Delegation Trip to Mexico City. He stated that it was very worthwhile. There was a lot of discussion on infrastructure along the border and the Otay WD’s interest in the Rosarito Desalination Project. He stated that he wanted to share that he was very frugal in the expenditures for his participation in the Delegation Trip and stayed at a less expensive hotel than the other participants and the total cost for his participation was approximately $800. He stated if any Director would like to see the itinerary for the Delegation Trip he would be happy to share a copy. Director Robak added to his report that he attended the Water Conservation Garden Festival last Saturday and it was very well attended. 15. PRESIDENT’S REPORT President Smith indicated that the District did receive an email back from the California Attorney General’s office regarding per diems. The Attorney General indicated that they do not review special districts and he inquired if the board would like to agendize a discussion on per diems at the next scheduled board meeting. The board indicated interest in discussing the issue at the June 2018 board meeting. He reported that the Metro Commission JPA and the City of San Diego’s Pure Water Project is receiving opposition from the communities, especially Mira Mesa and University City, on their environmental report. The communities are concerned with the pipeline that will be built from the Metro Commission’s wastewater pump station to North City. The communities felt there was not enough public outreach and alternative routes. It was noted that the project has been approved to move forward, but is getting some opposition from the community. 16. CLOSED SESSION 9 The board recessed to closed session at 5:38 p.m. to discuss the following matter: a) CONFERENCE WITH LABOR NEGOTIATORS [GOVERNMENT CODE §54957.6] AGENCY DESIGNATED REPRESENTATIVES: MARK ROBAK AND TIM SMITH EMPLOYEE ORGANIZATION: OTAY WATER DISTRICT EMPLOYEES’ ASSOCIATION AND ALL REPRESENTED AND UNREPRESENTED PERSONNEL INCLUDING MANAGEMENT AND CONFIDENTIAL EMPLOYEES Director Croucher left at 5:41 p.m. The board reconvened from closed session at 6:40 p.m. Attorney Jeanne Blumenfeld indicated that the board met in closed session and took no reportable actions. 17. ADJOURNMENT With no further business to come before the Board, President Smith adjourned the meeting at 6:40 p.m. ___________________________________ President ATTEST: District Secretary 10 President’s Report Tim Smith May 2, 2018 Board Meeting # Date Meeting Purpose 1 4-Apr OWD Regular Board Meeting Monthly board meeting 2 5-Apr Metro Commission Monthly Commission Meeting 3 9-Apr Salt Creek Golf Course Condition Review Review condition of the Salt Creek Golf Course 4 11-Apr OWD Special Board Meeting Special board meeting to discuss the Salt Creek Golf Course 5 13-Apr Committee Agenda Briefing Met with General Manager Watton to review items that will be presented at the April committee meetings 6 16-Apr OWD EO&WR Committee Reviewed items that will be presented at the May board meeting. 7 19-Apr OWD Ad Hoc Employee Negotiations Committee Discussed employee negotiation matters. 8 27-Apr Board Agenda Briefing Met with General Manager Watton and General Counsel Shinoff to review items that will be presented at the May Board Meeting STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: August 1, 2018 SUBMITTED BY: Jeff Marchioro Senior Civil Engineer Bob Kennedy Engineering Manager PROJECT: P2619-001102 DIV. NO. 1 APPROVED BY: Rod Posada, Chief, Engineering Mark Watton, General Manager SUBJECT: Approval to Purchase Trailer Mounted Engine and Pump for the Temporary Lower Otay Pump Station Redundancy Project GENERAL MANAGER’S RECOMMENDATION: That the Otay Water District (District) Board of Directors (Board) authorize the General Manager to issue a Purchase Order to Hawthorne Power Systems for the purchase of a trailer mounted engine and pump in an amount not-to-exceed $764,000 (see Exhibit A for Project location). COMMITTEE ACTION: Please see Attachment A. PURPOSE: To obtain Board authorization for the General Manager to issue a Purchase Order to Hawthorne Power Systems for the purchase of a trailer mounted engine and pump in an amount not-to-exceed $764,000. 2 ANALYSIS: The District’s existing Temporary Lower Otay Pump Station (TLOPS) was installed in 2005 to provide a potable water source to the District’s Central and Otay Mesa Service Areas (South District) during San Diego County Water Authority (SDCWA) Aqueduct shutdowns. TLOPS is the primary potable water supply to the South District during SDCWA Aqueduct shutdowns or pipe breaks. The existing TLOPS facility is only used during SDCWA Aqueduct shutdowns. The District acquired property and completed the design in 2005 to build a permanent pump station intended to routinely take potable water from the City of San Diego’s (City) Lower Otay Water Treatment Plant. However, the permanent facility was not built since stakeholders were unsuccessful at negotiating a water purchase agreement for continuous delivery from the City. A second/redundant trailer is needed to provide a reliable potable water source to the South District during San Diego County Water SDCWA Aqueduct shutdowns. The existing TLOPS facility consists of a 40-foot shipping container mounted to a flatbed trailer containing a skid mounted 600 horsepower diesel engine coupled to a single large pump. A major engine failure occurred during a routine test of the existing TLOPS facility in anticipation for a scheduled SDCWA Aqueduct shutdown in February 2017. District staff successfully found the only suitable replacement engine in the continental United States and replaced the engine in little time before the SDCWA Aqueduct February 2017 shutdown. The existing TLOPS trailer was built by the local CAT dealer (Hawthorne Power Systems) teamed with Chillicothe Metal Company (CMCO) located in Illinois. Hawthorne was the only responsive bidder when the existing trailer was awarded to Hawthorne in 2005. The flow rate of the new trailer will be greater than the actual capacity of the existing engine/pump (12,500 gpm or 18 MGD rather than 10,000 gpm or 14 MGD). To accomplish this, the new trailer will have a 900 rather than 600 horsepower diesel engine. District staff prepared a performance specification in-house, similar to the performance specification used to procure the existing trailer in 2005, and reached out to the following firms to solicit quotes for the new trailer: 3 1. Hawthorne Power Systems (San Diego) 2. Power Zone (Colorado) 3. Pioneer (Oregon) represented by Rockwell Engineering (Tustin, California). Rockwell/Pioneer built two trailer mounted pumps for the District in 2016. 4. EFI (Illinois) represented by Huntington & Associates (San Diego) 5. Cummins (Indianapolis) 6. MWI Corporation (Florida) referral by Cummins 7. Pease & Sons (Washington State) referral by Cummins 8. Xylem (headquartered in New York) 9. Dependable Marine (San Diego) 10. Valley Power Systems (City of Industry) 11. Barrett Pump (San Diego) Two (2) firms submitted informal quotes and the results are shown in the table below: DEALER AMOUNT 1 Hawthorne (San Diego) $714,383 2 Power Zone (Colorado) $768,412 Both Hawthorne’s and Power Zone’s quotes include the same Caterpillar (CAT) brand diesel engine in their quotes. District staff reached out to several representatives for various brands, including CAT, Cummins, John Deere, Volvo, Yanmar, Detroit, Perkins, and Waukesha; however, CAT was found to be the only manufacturer with currently available engines with required TIER 4 emissions in the horsepower range needed for this Project. Staff anticipates some modifications will be needed after the review of shop drawings to include some additional controls, SCADA equipment and other District directed changes to meet District operating requirements. Subsequently, a five percent allowance of $36K, and a 2% contingency of $14K is included in the award amount to allow staff to modify the purchase order to make District directed changes, if any. FISCAL IMPACT: Joe Beachem, Chief Financial Officer The total budget for CIP P2619, as approved in the FY 2019 budget, is $1,800,000. Total expenditures, plus outstanding commitments and forecast including this contract, are $936,059. See Attachment B for budget detail. 4 Based on a review of the financial budgets, the Project Manager anticipates that the budget for CIP P2619 is sufficient to support the Project. The Finance Department has determined that, under the current rate model, 100% of the funding will be available from the Betterment ID 22 Fund. STRATEGIC GOAL: This Project supports the District’s Mission statement, “To provide high value water and wastewater services to the customers of the Otay Water District, in a professional, effective and efficient manner” and the General Manager’s Vision, "A District that is at the forefront in innovations to provide water services at affordable rates, with a reputation for outstanding customer service." LEGAL IMPACT: None. JM/BK:jf P:\WORKING\CIP P2619 Temp LOPS Redundancy\Staff Reports\BD 08-01-18 Staff Report TLOPS Trailer Procurement.docx Attachments: Attachment A – Committee Action Attachment B – Budget Detail Exhibit A – Location Map ATTACHMENT A SUBJECT/PROJECT: P2619-001102 Approval to Purchase Trailer Mounted Engine and Pump for the Temporary Lower Otay Pump Station Redundancy Project COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) reviewed this item at a meeting held on July 16, 2018, and the following comments were made: Staff reviewed the staff report with the Committee and recommended that the Board issue a Purchase Order to Hawthorne Power Systems (HPS) for the purchase of a trailer mounted engine and pump in an amount not-to-exceed $764,000. Staff stated that the award amount includes a 5% allowance and a 2% contingency for unanticipated modifications to include some additional controls, SCADA equipment and other District directed changes to meet District operating requirements. In response to a question from the Committee, staff stated that the separate allowance and contingency line items were intended to correspond to owner driven changes and vendor driven changes, respectively. However, the allowance and contingency items can also be viewed as similar such that the total allowance/contingency for the purpose of this award is 7%. In response to a question from the Committee, Staff stated that the main function of the trailer mounted engine and pump is to enhance the reliability of a potable water source to the South District during San Diego County Water SDCWA Aqueduct planned shutdowns if the existing facility fails. The Committee inquired if staff reached out to fire apparatus companies to solicit quotes. Staff stated that they contacted several companies that serve the fire service industry to solicit quotes for the purchase of two (2) smaller portable trailer pumps in 2016; however, the fire industry companies were not responsive in 2016. The TLOPs trailer is much bigger in comparison to the two (2) smaller portable trailer pumps purchased in 2016. It was noted that HPS’s trailer mounted engine and pump will be designed for 12,500 gallons of water per minute (gpm). In comparison, the two (2) smaller portable trailer pumps purchased in 2016 have a capacity of 2,500 gpm each. Following the discussion, the Committee supported staffs’ recommendation and presentation of this item to the full board on the consent calendar. ATTACHMENT B – Budget Detail SUBJECT/PROJECT: P2619-001102 Approval to Purchase Trailer Mounted Engine and Pump for the Temporary Lower Otay Pump Station Redundancy Project 6/28/2018 Budget 1,800,000 Planning Standard Salaries 48,934 48,934 - 48,934 Total Planning 48,934 48,934 - 48,934 Design 001102 Standard Salaries 50,915 10,915 40,000 50,915 43,008 43,008 43,008 BSE Engineering Total Design 93,923 10,915 83,008 93,923 Construction INFRASTRUCTURE EQUIPMENT & MATERIALS 3,396 3,396 - 3,396 PALMER JOHNSON POWER SYST 25,805 25,805 - 25,805 RICK'S MACHINE SHOP 714,383 714,383 714,383 Hawthorne Power Systems 35,719 35,719 35,719 Allowance (5%) 13,898 13,898 13,898 Contingency (2%) Total Construction 793,201 29,201 764,000 793,201 Grand Total 936,059 89,051 847,008 936,059 Vendor/Comments Otay Water District P2619-Temp Lower Otay Pump Station Redundancy Committed Expenditures Outstanding Commitment & Forecast Projected Final Cost OTAY WATER DISTRICTTEMP LOPS REDUNDANCYLOCATION MAP EXHIBIT A CIP P2619F P:\WORKING\CIP P2619 Temp LOPS Redundancy\Graphics\Exhibits-Figures\Exhibit A, Location Map.mxd O L Y M P I C P K W Y PROJECT SITE !\ ÃÅ125 H U N T E P K W Y PROCTOR VALLEY RD W U E S T E R D Aä LOWER OTAY LAKE UPPER OTAY LAKE E A S T L A K E P K W Y VICINITY MAP PROJECT SITE NTSDIV 5 DIV 1 DIV 2 DIV 4 DIV 3 ÃÅ54 !\ ÃÅ125 ÃÅ94 ÃÅ905 §¨¦805 F 0 2,3001,150 Feet STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: August 1, 2018 SUBMITTED BY: Tenille M. Otero, Communications Officer PROJECT: Various DIV. NO. ALL APPROVED BY: Mark Watton, General Manager SUBJECT: Presentation: California Water Fix Update (Amy Chen, San Diego County Water Authority MWD Program Director) GENERAL MANAGER’S RECOMMENDATION: No recommendation. This is an informational item only. COMMITTEE ACTION: N/A. PURPOSE: To provide the Board with an update about the California Water Fix. ANALYSIS: The Bay-Delta is the hub of the State Water Project, the nation’s largest state-built water conveyance system. That system has become less reliable as the environment has deteriorated. Throughout California, water agencies and other regulatory agencies have been evaluating how best to sustainably meet the needs of water supply reliability for millions of Californians and the extensive ecosystem. It might seem like a distant problem for San Diego County and its retail agencies, but the region could be responsible for paying a substantial piece of any solution. This could potentially impact the Otay Water District and its customers through rate increases. Historically, San Diego County has received considerable amounts of water from the Bay-Delta, though the volumes have dwindled significantly due to regulatory constraints and the San Diego County Water Authority and its member agencies’ prudent planning to develop locally controlled, drought-proof water supplies. State officials have proposed a project in the Bay-Delta known as California WaterFix that involves piping water supplies under the Bay-Delta in giant twin tunnels. It will cost at least $17 billion and the actual cost could be much higher if there are delays. Should the WaterFix move ahead, the San Diego region would be responsible for a sizable part of the bill. There is no certainty about the amount of water that the WaterFix would produce in any given year. Without supporting or opposing a specific project, the Water Authority’s Board has long been a proponent of a cost-effective fix for complex environmental and water supply challenges in the Bay- Delta. In 2012, the Water Authority Board adopted Bay-Delta Policy Principles that for the past six years have guided the agency’s efforts to review numerous Bay-Delta proposals. During that period, the Water Authority has raised several important questions related to the twin tunnels project -- particularly about funding issues -- in an effort to ensure that San Diego County ratepayers are treated equitably. In light of the recent Metropolitan Water District Board’s vote to support the California WaterFix plan and fund 64.6 percent of the cost, and as a result of the Water Authority’s Board direction to staff at its June 28 meeting, the Water Authority’s staff will recommend to its Board in July, a set of updated policy principles for adoption. The proposed Bay-Delta Policy Principles will support the current design and construction plans to complete the WaterFix. The principles will also support actions to protect the Water Authority, its member agencies, and its ratepayers from unfair financial impacts by ensuring WaterFix costs are properly allocated to MWD’s supply rates and leaving the Water Authority on equal footing with other MWD member agencies that support the WaterFix to protect an existing water supply. The Water Authority’s MWD Program Director Amy Chen manages and closely examines the details regarding the Bay-Delta and the California WaterFix. She will present an overview of the project including information on the Water Authority Board’s policies, processes, actions, next steps, and other WaterFix-related issues. FISCAL IMPACT: Joe Beachem, Chief Financial Officer None. LEGAL IMPACT: None Attachments: Attachment A – Committee Action Exhibit A - Water Authority Report on Updating the Bay Delta Policy Principles and Developing Related Policy Statement on California WaterFix (June 20, 2018) Exhibit B – Water Authority Delta Policy Principles (February 15, 2012) ATTACHMENT A SUBJECT/PROJECT: Presentation: California Water Fix Update (Amy Chen, San Diego County Water Authority MWD Program Director) COMMITTEE ACTION: The Public Relations, Legal and Legislation Committee (Committee) reviewed this item at a meeting held on July 19, 2018 and the following comments were made: Ms. Amy Chen, San Diego County Water Authority’s (CWA) Metropolitan Water District (MWD) Program Director, provided a presentation on the Bay-Delta and the California Water Fix (WaterFix). Her presentation (attached) included: - The Bay-Delta’s relevance to the CWA as water supply resource. - An overview of the proposed Twin Water Tunnels project in the Bay-Delta/WaterFix. - MWD’s board actions on the WaterFix. - The impacts of the WaterFix on CWA’s ratepayers and the reason’s CWA is not supporting the proposed WaterFix. - Cost of the WaterFix ($10.8 billion) versus alternative supplies. - Actions taken by the CWA board concerning the WaterFix. The current pumps in the Bay-Delta are extremely powerful and causes harmful reverse flows that traps endangered fish. The WaterFix will build two tunnels that will fix the reverse flows caused by the pumps and ensure sufficient river flows for the native fish and species and preserve the habitat while allowing the transport of water north of the Delta. The cost for the Twin Tunnel Project is $16.7 billion where MWD has voted to fund $10.8 billion (64.6%) of the project cost which includes $5.6 billion for the Central Valley Project. The impact to CWA depends on how MWD allocates WaterFix costs in it rates. It was noted that CWA does not derive any unique benefit from the WaterFix that should cause it to pay more than other MWD member agencies. It was discussed that the dual system provides for operational flexibility (ie., allowing inspections and repairs on one pipe, while the other is in-service transporting water), but there are no additional supply benefits. CWA is focusing on how to protect its ratepayers and will be discussing their WaterFix Policy Principles at its July 2018 board meeting: - Support the current design and construction plans for WaterFix provided the costs are properly allocated. - Support the beneficiary pays cost allocation approach. - WaterFix costs be characterized as supply costs by MWD and DWR as WaterFix costs are incurred to ensure a reliable water supply. - Oppose actions that result in San Diego ratepayers paying for unsubscribed WaterFix costs. - Support independent oversight function to monitor and provide regular updates on implementation progress. Upon completion of the discussion, the committee recommended presentation to the full board as an action item. June 20, 2018 Attention: Imported Water Committee Status Report on Updating the Bay Delta Policy Principles and Developing Related Policy Statement on California WaterFix. (Information) Purpose Progress report on the Bay Delta Policy Principles update and related Policy Statement on California WaterFix (WaterFix). Background The Water Authority has long been a proponent of a “Delta fix” in part because it recognizes that the fragile Bay Delta ecosystem is not sustainable under current conditions. The Board adopted the Bay-Delta Policy Principles in 2012 with the ultimate objective to support a Bay-Delta solution that is comprehensive, cost effective, environmentally sustainable, widely supported by stakeholders, and one that is fair to the Water Authority’s ratepayers. The Board had delayed taking a formal position on WaterFix due to lack of critical information – most importantly, how the costs of the project would be allocated. Serious concerns have also been expressed by the Water Authority Board about how much risk Metropolitan Water District (MWD) may assume for the project given the lack of funding from CVP beneficiaries. In April, the MWD Board took an action to support a WaterFix option that more than doubled MWD’s financial obligations toward the project with no increase in supply. An earlier disclosure in MWD’s cost of service report for 2019 and 2020 revealed MWD is treating WaterFix costs as a transportation rather than supply cost in rate calculations. Following MWD’s actions, Water Authority staff presented in May for the Board’s review a draft set of proposed updates to the Board’s Bay Delta Policy Principles in May intended to ensure the Water Authority, its member agencies, and their ratepayers are protected from undue financial harm. The policy update was presented as an information item so Board feedback can be incorporated into the final update. Given that the State is proceeding with WaterFix, the Board voted to “direct staff to return at the next Board meeting with a position statement and policy principles that support current design and construction plans to complete the California WaterFix, and provide for actual costs by DWR to be categorized as envisioned by DWR Bulletin 132.” Discussion July Action On June 8, the Board Officers requested that, with the exception of a few critical items, all other planned June action items be either moved to the consent agenda, or deferred to July in order to accommodate a Special Board Workshop schedule. Rather than requesting a Board action in June on the consent calendar, this memo will provide a status update and the updated policy principles and policy statement on WaterFix will be presented for Board consideration in July. Page 187 of 284 Imported Water Committee June 20, 2018 Page 2 of 3 Member Agency Managers’ Input With the deferred schedule, the updated policy principles will be presented at a planned member agency managers’ meeting on June 19. The July recommendation will incorporate feedback and input from that process. Characterization of WaterFix Costs Because MWD says it applies SWP costs to its rates and charges according to how DWR bills, if DWR changes its long-term definition of WaterFix type of facilities to be considered as transportation – as opposed to supply – it will have a disparately negative impact on the Water Authority, as it is the only MWD member agency that relies significantly on MWD to transport independent water supplies. While under the current rate structure, MWD member agencies can reduce their financial exposure to WaterFix by reducing their demand on MWD, the Water Authority’s Colorado River transfer water does not vary and will bear a disproportionate share of the cost impact. State Water Project Contract Extension and Contract Amendments The water supply related costs of the State Water Project (SWP) are paid for by the 29 SWP contractors through uniform take-or-pay contracts, most of which expire in 2035. These contracts must be extended for DWR, as owner and operator, to issue revenue bonds with maturity dates beyond the current contract terms. In 2013 and 2014, DWR and the SWP contractors conducted a public contract extension negotiation process. While the need to extend the contract jump- started the negotiation process, concerns with financial liability associated with the then-Bay Delta Conservation Plan (BDCP) and the Delta Habitat Conservation and Conveyance Program (DHCCP), predecessors of WaterFix, caused a new objective --allowing contractors the ability to opt-out of financial responsibilities for BDCP and DHCCP costs – to be added. In June 2014, DWR and the contractors reached an Agreement in Principle (AIP), without resolution on the added objective to address cost allocation for WaterFix.1 DWR and 25 SWP contractors have signed the AIP. DWR circulated the draft AIP environmental documents for review and the public comment period ended in October 2016. A SWP contract amendment has been prepared and must be submitted for review by the Legislature, pursuant to Water Code 147.5. In May, DWR submitted the proposed SWP contract extension packet and requested the Joint Legislative Budget Committee’s review. An informational hearing before the Senate Natural Resources and Water Committee on this topic has been scheduled for July 3. Following DWR’s certification of environmental documents for WaterFix last July, and several major SWP contractors’ support for the project, this February, DWR and contractors began a public negotiation process to address WaterFix allocation. This process is ongoing. A significant amount of time in the early part of the process has been spent on ways to enhance management tools (transfers, exchanges and storage). In mid-May, the contractors presented a set of “talking 1 See Water Authority July 16, 2014 memo “State Water Project Contract Extension Negotiations” for additional details on the SWP contract extension negotiations and AIP (pages 102-138): https://www.sdcwa.org/sites/default/files/files/board/2014_Agendas/2014_07_24%20Formal%20Board%20Packet %20secured.pdf Page 188 of 284 Imported Water Committee June 20, 2018 Page 3 of 3 points” that offered a new definition for WaterFix: CWF Facilities. The talking points opine that the “purpose of the CWF Facilities is water conservation and/or transportation.” This is a stark contrast to the manner in which DWR’s uniform contracts had long defined WaterFix-like facilities (i.e., peripheral canal). In both DWR’s uniform water supply contracts with contractors, and DWR’s vehicle to implement SWP (DWR’s Bulletin 132, Management of California Water Project, and Appendix B to Bulletin 132, Data and Computations Used to Determine Water Charge), WaterFix like facilities have always been defined as “project conservation facilities” and are treated as a supply cost. The Water Authority Chair Mark Muir has submitted a comment letter to DWR calling to its attention how the new definition could potentially impact the Water Authority’s ratepayers. Prepared by: Amy Chen, Director of MWD Program Reviewed by: Glenn Farrel, Government Relations Manager Approved by: Dennis A. Cushman, Assistant General Manager Attachment: Water Authority’s June 11, 2018 Comment letter on SWP Contract Amendment Page 189 of 284 Attachment 1, Page 1 of 12 June 11, 2018 Karla Nemeth, Director Department of Water Resources 1416 9th Street Sacramento, CA 95814 RE: Amendment of State Water Project Contract for California WaterFix Comments on State Water Contractors May 14, 2018 Talking Points (#SWCCWF-0038) and DWR's May 29, 2018 Consolidated Talking Points (#00086) Dear Ms. Nemeth, One of the key objectives and desired outcomes for negotiating an agreement between the Department of Water Resources (DWR) and the State Water Project (SWP) contractors is to amend the existing Water Supply Contract with DWR to implement California (CA) WaterFix in a manner that equitably allocates costs and benefits of the project (see DWR Objectives for SWP Contract Amendment, Objective 1; see also SWC Submission #SWCCWF-0001). I write to you on behalf of the San Diego County Water Authority Board of Directors to formally advise you of specific facts and circumstances concerning Water Authority ratepayers in regard to this objective, and to request your assistance to ensure that our ratepayers are not unfairly disadvantaged as result of the CA WaterFix negotiations. As you know, under the existing Water Supply Contract, costs to the contractors are made up of two major charges: 1) the Delta Water Charge (which is a supply charge); and 2) the Transportation Charge. The Delta Water Charge is the cost of conservation facilities which include the Oroville facilities, the Delta facilities, the San Luis facilities, and a portion of the aqueduct leading from the San Luis facilities to the Delta facilities. Most importantly, the Delta Water Charge was to include within it facilities for the “transfer of water across the Delta,” such as the proposed WaterFix (see below). It is a unit charge applied to each acre-foot of SWP water that SWP contractors are to receive, in accordance with their contracts. In contrast, the Transportation Charge covers the use of facilities required to deliver SWP water to the service area of each SWP water contractor. Under the existing SWP contract, the CA WaterFix would unquestionably be categorized as "project conservation facilities" as defined in Article 1(f) and (g)(2), based on Water Code § 12934(d)(3), serving the purposes of water conservation in the Delta, water supply in the Delta, and transfer of water across the Delta. The CA WaterFix costs would thus constitute a Delta Water Charge under the current agreement and law. Similarly, DWR's Bulletin 132 categorizes Peripheral Canal facilities --the forerunner of CA WaterFix --as conservation facilities, with costs generally allocated accordingly. In unexplained contrast to Water Code § 12934(d)(3), the existing SWP contract, and DWR Bulletin 132, the draft Statement of Principles abruptly, and without explanation, changes the legal and agreed-upon methodology that would define the CA WaterFix as a Delta Water Charge for conservation, now adding transportation: "[t]he purpose of the [CA WaterFix] Facilities is water conservation and/or transportation." While this statement, and any corresponding charges as “transportation,” may have no relevance to the cost share borne by other contractors or their member agency customers, it potentially has a substantial and grossly unfair impact on Water Authority ratepayers. DWR is no doubt well aware of the appellate decision San Diego County Water Authority v. Metropolitan Water District of Southern California 12 Cal. App. 5th 1124 (2017), in which the Court of Appeal applied terms of the DWR-MWD contract to allow MWD to bill transportation costs identified in the existing SWP Page 190 of 284 Attachment 1, Page 2 of 12 Ms. Nemeth June 11, 2018 Page 2 contract to the Water !uthority’s Exchange !greement payments. Conversely, the Delta Water Charge costs were not billed as transportation and there is no legal or substantive basis for changing that now in the allocation of CA WaterFix costs. MWD has widely published to San Diego ratepayers that the cost of CA WaterFix is estimated to be $3.90 per month, and in any case no more than the $5 per household per month that has been estimated for the rest of the MWD service territory (all stated in 2017 dollars). And yet, if WaterFix costs are charged to transportation (now or in the future), the estimated cost per San Diego household skyrockets to $15- 23 per month or more when the project is fully implemented. All of these numbers are estimates, but it gives you an idea of the different impacts depending on whether costs are allocated to transportation or supply. Thus, this is not an insignificant issue, but rather one that presents a material and uniquely unfair potential cost impact and future risk for San Diego County ratepayers. We request that the sentence quoted from the Statement of Principles be stricken, and that it be made clear that the CA WaterFix costs are intended to be allocated in a manner that is consistent with the existing SWP contract and Water Code § 12934(d)(3) as a Delta Water Charge supply cost. We would welcome the opportunity to meet with you to provide further information if that would be helpful. The Water Authority's Board of Directors will be meeting in the near future to adopt a formal position on the CA WaterFix and I know this issue is of critical importance. Thank you for your cooperation and understanding of the importance of this issue. Very truly yours, Mark Muir, Chairman of the Board of Directors Attachment 1: DWR SWP Contract Amendment for California Water Fix – Objective 1 Attachment 2: SWC Submission SWCCWF-0038 Attachment 3: Water Code 12934 Attachment 4: Table 2, Appendix B to Bulletin 132-17 cc:Governor Jerry Brown Senate President pro Tem Toni Atkins San Diego Legislative Delegation Water Authority Board of Directors Maureen A. Stapleton, General Manager MWD Board of Directors Jeff Kightlinger, MWD General Manager Page 191 of 284 Attachment 1, Page 1 of 1Attachment 1, Page 3 of 12 STATE OF CALIFORNIA – CALIFORNIA NATURAL RESOURCES AGENCY EDMUND G. BROWN JR., Governor DEPARTMENT OF WATER RESOURCES 1416 NINTH STREET, P.O. BOX 942836 SACRAMENTO, CA 94236-0001 (916) 653-5791 SWP CONTRACT AMENDMENT FOR CALIFORNIA WATERFIX Department of Water Resources’ Objectives WaterFix and Water Management Actions: Objective 1: The California Department of Water Resources will ensure that the terms and conditions for the proposed Contract Amendments allow for the continued financial integrity of the State Water Project (SWP). The terms and conditions will: 1) be made in compliance with all legal requirements, 2) provide a fair and equitable approach for repayment of SWP Contractor costs to address the addition of the California WaterFix facilities to the SWP, and 3) confirm and supplement DWR’s position on water management actions available to the State Water Project Contractors under the contracts. Page 192 of 284 Attachment 2, Page 1 of 5 These talking points provide a proposed Statement of Principles (Principles) for the allocation and repayment of costs for construction, operation and maintenance of facilities associated with CWF (CWF Facilities). Under these Principles, the State, acting by and through the California Department of Water Resources (DWR), would be fully reimbursed for all such costs. These costs would be billed to and collected from SWP PWAs participating in the SWP portion of CWF (Participating PWAs), except those situated north of the Delta3 (Non-Participating PWAs), through their annual Statement of Charges (SOC). The SWP portion of CWF is up to two-thirds of CWF Facilities costs. The amount remaining will be reimbursed separately from SWP and/or Central Valley Project PWAs interested in additional conveyance capacity in CWF Facilities. These Principles are intended to serve as the foundation for a contract amendment to the existing long-term water service contracts (Contracts) between DWR and the SWP PWAs. STATEMENT OF PRINCIPLES 1. CWF Facilities Definition: CWF Facilities shall mean those facilities that are constructed to convey water from the north Delta to the south Delta through facilities as described in the California WaterFix Final EIR/EIS SCH #2008032062. In general, CWF Facilities will divert water from the Sacramento River through three intakes on the east bank of the Sacramento 1 The State W ater Project is the name commonly used to refer to the State Water Resources Development System (Water Code Section 12931). 2 The SWP PWAs are those public water agencies that hold contracts with DWR for the delivery of SWP water: Alameda County Flood Control and Water Conservation District (Zone 7), Alameda County Water District, Antelope Valley-East Kern Water Agency, Castaic Lake Water Agency, City of Yuba City, Coachella Valley Water District, County of Butte, County of Kings, Crestline-Lake Arrowhead Water Agency, Desert Water Agency, Dudley Ridge Water District, Empire West Side Irrigation District, Kern County Water Agency, Littlerock Creek Irrigation District, The Metropolitan W ater District of Southern California, Mojave Water Agency, Napa County Flood Control and Water Conservation District, Oak Flat Attachment 1, Page 4 of 12 SWC Submission #: SWCCWF-0038 STATE WATER CONTRACTORS 1121 L Street, Suite 1050, Sacramento, CA 95814-3944 (916) 447-7357 | www.swc.org Page: 1 of 5 DATE:May 14, 2018 SUBJECT:The State Water Project1 (SWP) Public Water Agencies’ (PWAs)2 Talking Points for Objective Two Concerning the Allocation and Repayment of Costs Associated with California WaterFix (CWF). Water District, Palmdale Water District, Plumas County Flood Control and Water Conservation District, San Bernardino Valley Municipal Water District, San Gabriel Valley Municipal Water District, San Gorgonio Pass Water Agency, San Luis Obispo County Flood Control and Water Conservation District, Santa Barbara County Flood Control and W ater Conservation District, Santa Clara Valley Water District, Solano County Water Agency, Tulare Lake Basin W ater Storage District, and Ventura County Flood Control District. 3 These Non-Participating PWAs are.: City of Yuba City, County of Butte, Plumas County Flood Control and Water Conservation District, Napa County Flood Control and Water Conservation District, and Solano County Water Agency. Page 193 of 284 Attachment 2, Page 2 of 5 through their annual SOCs. These costs shall be allocated to and billed under two new charges as follows: a. CWF Facilities Capital Charge Component b. CWF Facilities Minimum OMP&R Component 3. CWF Capital Charge Component Method of Computation a. Recover actual annual debt service created by financing activities (Financing Method) for CWF Facilities. b. Each Financing Method shall provide an annual repayment schedule, which includes all Financing Costs. c. Financing Costs shall mean the following: i. Principal of and interest on Revenue Bonds, ii. Debt service coverage required by the applicable bond resolution or indenture in relation to such principal and interest, iii. Deposits to reserves required by the bond resolution or indenture in relation to such Revenue Bonds, and iv. Premiums for insurance or other security obtained in relation to such Revenue Bonds. d. Financing Method shall be divided into four categories: i. CWF Facilities Capital Costs paid with the proceeds of Water System Facility Revenue Bonds, ii. CWF Facilities Capital Costs paid with amounts in the State Water Resources Development System Reinvestment Account, iii. CWF Facilities Capital Costs paid annually for assets that will have a short Economic Useful Life or the costs of which are not substantial, and iv. CWF Facilities Capital Costs prepaid by the Participating PWAs. Attachment 1, Page 5 of 12 SWC Submission #: SWCCWF-0038 STATE WATER CONTRACTORS 1121 L Street, Suite 1050, Sacramento, CA 95814-3944 (916) 447-7357 | www.swc.org Page: 2 of 5 River, through pipelines and tunnels to the south Delta, to new pumping plants northeast of a reconfigured Clifton Court Forebay, and finally to connections with the Jones and Banks pumping plants. 2.CWF Facilities Charge Components - The purpose of the CWF Facilities is water conservation and/or transportation. Accordingly, all capital and minimum operations, maintenance, power and replacement (OMP&R) costs associated with the CWF Facilities are 100% reimbursable and shall be recovered by the DWR from Participating PWAs e.CWF Facilities Capital Charge Component should be allocated to the Participating PWAs in proportion to the CWF Facilities Allocation Factors for each calendar year. 4.CWF Facilities Minimum OMP&R Charge Component Method of Computation a.Recovery estimated and/or actual annual OMP&R costs for the CWF Facilities each year. Page 194 of 284 Attachment 1, Page 6 of 12 Attachment 2, Page 3 of 5 SWC Submission #: SWCCWF-0038 STATE WATER CONTRACTORS 1121 L Street, Suite 1050, Sacramento, CA 95814-3944 (916) 447-7357 | www.swc.org Page: 3 of 5 b.CWF Facilities Minimum OMP&R Charge Component shall be allocated to the Participating PWAs in proportion to the CWF Facilities Allocation Factors for each calendar year. 5.CWF Facilities Variable OMP&R Charge Component Method of Computation -The operations, maintenance, power and replacement costs for the CWF facilities pumping plants (CWF Pumping Plants) that are (1) necessary to deliver water to a Participating PWA and (2) incurred in an amount which is dependent upon and varies with the amount of project water delivered to the PWA and allocated to the PWA pursuant to Article 26 (a)(1) and (2) of the Contracts. The CWF Facilities Variable OMP&R costs are 100% reimbursable and shall be recovered by DWR from the Participating PWAs through their annual SOCs as follows: a. Costs shall be included in the Participating PWAs Variable Charge b. Costs shall not be included in the Non-Participating PWAs’ Variable Charge. i. The Non-Participating PWAs’ shall not be charged for any direct costs of conveying water through CWF Pumping Plants. ii. The unit rate for the CWF Pumping Plants shall not be included in the Non- Participating PWAs accumulated pumping plant rates used to calculate their Transportation Variable Component Charge. 6. CWF Facilities Allocation Factors. The following table is a preliminary allocation of CWF Facilities participation percentages for the Non-Participating PWAs and the Participating PWAs. Only Participating PWAs would be billed for CWF through their annual SOC, using the CWF Facility Allocation Factors described in the table. Non-Participating PWAs would not be billed for repayment of costs for construction, operation and maintenance of facilities associated with CWF, except to the extent there is a permanent transfer of Table A from a Participating PWA to a Non-Participating PWA as set forth in principle 10. Page 195 of 284 Attachment 1, Page 7 of 12 Attachment 2, Page 4 of 5 SWC Submission #: SWCCWF-0038 STATE WATER CONTRACTORS 1121 L Street, Suite 1050, Sacramento, CA 95814-3944 (916) 447-7357 | www.swc.org Page: 4 of 5 Non-Participating PWA CWF Facilities Allocation Factors City of Yuba City 0.0000% County of Butte 0.0000% Plumas County FC&WCD 0.0000% Napa County FC&WCD 0.0000% Solano County Water Agency 0.0000% Participating PWA CWF Facilities Allocation Factors Alameda County FC&WCD, Zone 7 1.9875% Alameda County Water District 1.0355% Santa Clara Valley Water District 2.4654% Dudley Ridge Water District 1.0194% Empire-West Side Irrigation District 0.0740% Kern County Water Agency-Total 24.2278% County of Kings 0.2294% Oak Flat Water District 0.1405% Tulare Lake Basin Water Storage District 2.1565% San Luis Obispo County FC&WCD 0.6163% Santa Barbara County FC&WCD 1.1214% Antelope Valley-East Kern Water Agency 3.5709% Santa Clarita Valley Water Agency 2.3470% Coachella Valley Water District 3.4108% Crestline-Lake Arrowhead Water Agency 0.1430% Desert Water Agency 1.3744% Littlerock Creek Irrigation District 0.0567% Mojave Water Agency 2.2139% Palmdale Water District 0.5251% San Bernardino Valley Municipal Water District 2.5295% San Gabriel Valley Municipal Water District 0.7100% San Gorgonio Pass Water Agency 0.4265% The Metropolitan Water District of Southern California 47.1253% Ventura County Watershed Protection District 0.4931% Total 100.000% 7.Repayment Schedule Table - The amount to be paid by the Participating PWAs for each year under the CWF Facilities Capital and Minimum OMP&R Charge Components shall be set forth in a Repayment Schedule Table. 8.Charge Redetermination - The CWF Facilities Capital and Minimum OMP&R Charge Components shall be subject to Charge Redetermination. Page 196 of 284 Attachment 1, Page 8 of 12 Attachment 2, Page 5 of 5 SWC Submission #: SWCCWF-0038 STATE WATER CONTRACTORS 1121 L Street, Suite 1050, Sacramento, CA 95814-3944 (916) 447-7357 | www.swc.org Page: 5 of 5 9.Annual Statement of Charges - The CWF Facilities Capital and Minimum OMP&R Charge Components shall be included in a separate invoice that is included in the annual SOC and shall be subject to the time and method of payment for Capital and Minimum OMP&R Components. 10. Permanent Transfer of Contract Rights – Any permanent transfer of Table A contract rights of a Participating PWA shall be accompanied by a pro-rata transfer of that PWAs rights and responsibilities with respect to CWF. the Contract. 11. CWF Facilities Use Of Facilities Charge –If a Non-Participating PWA transfers allocated Table A to a Participating PWA, then no fee will be charged to the PWAs involved in the transaction. Other transactions may result in a fee sufficient to cover all (1) capital, (2) minimum operations, maintenance, power and replacement (OMP&R) costs, and (3) variable OMP&R costs, associated with this usage. 12. Water Delivery Principles - Participating PWAs moving water in excess of their CWF Facilities Allocation Factor shall schedule deliveries in a manner that does not harm other participating PWAs and shall be subject to the delivery priorities set forth in Article 12(f) of Page 197 of 284 Attachment 3, Page 1 of 3Attachment 1, Page 9 of 12 Page 198 of 284 Cal Wat Code § 12934 Deering's California Codes are current through Chapter 10 of the 2018 Regular Session. Deering's California Codes Annotated > WATER CODE > Division 6 Conservation, Development, and Utilization of State Water Resources > Part 6 Water Development Projects > Chapter 8 Water Resources Development Bonds § 12934. Definitions As used in this chapter and for the purposes of this chapter as used in the State General Obligation Bond Law, the following words shall have the following meanings: (a) "Committee" shall mean the California Water Resources Development Finance Committee created by Sect1on 12933. (b) "Board" or "department" shall mean the Department of Water Resources. (c) "Fund" shall mean the California Water Resources Development Bond Fund created by Section 12935. (d) "State Water Facilities" shall mean the following facilities: (1) A multiple purpose dam and reservoir on the Feather River in the vicinity of Oroville, Butte County. and dams and reservoirs upstream therefrom in Plumas County in the vicinity of Frenchman, Grizzly Valley, Abbey Bridge, Dixie Refuge and Antelope Valley; (2) An aqueduct system which will provide for the transportation of water from a point or points at or near the Sacramento-San Joaquin Delta to termini in the Counties of Marin, Alameda, Santa Clara. Santa Barbara. Los Angeles and Riverside, and for delivery of water both at such termini and at canal-side points en route, for service in Solano, Napa, Sonoma, Marin, Alameda, Contra Costa, Santa Clara, San Benito, Santa Cruz, Fresno, Tulare, Kings, Kern, Los Angeles, Ventura, San Bernardino, Riverside, Orange, San Diego, San Luis Obispo, Monterey and Santa Barbara Counties. Said aqueduct system shall consist of intake and diversion works, conduits, tunnels, siphons, pipelines, dams. reservoirs, and pumping facilities, and shall be composed of a North Bay aqueduct extending to a terminal reservoir in Marin County; a South Bay aqueduct extending to terminal reservoirs in the Counties of Alameda and Santa Clara; a reservoir near Los Banos in Merced County; a Pacheco Pass Tunnel aqueduct from a reservoir near Los Banos in Merced County to a terminus in Pacheco Creek in Santa Clara County; a San Joaquin Valley-Southern California aqueduct extending to termini in the vicinity of Newhall, Los Angeles County, and Perris, Riverside County, and having a capacity of not less than 2,500 cubic feet per second at all points north of the northerly boundary of the County of Los Angeles in the Tehachapi Mountains in the vicinity of Quail Lake and a capacity of not less than 10,000 cubic feet per second at all points north of the initial offstream storage reservoir; a costal aqueduct beginning on the San Joaquin Valley-Southern California aqueduct in the vicinity of Avenal, Kings County, and extending to a terminal at the Santa Maria River; (3) Master levees. control structures, channel improvements, and appurtenant facilities in the Sacramento-San Joaquin Delta for water conservation, water supply in the Delta, transfer of water across the Delta, flood and salinity control, and related functions. (4) Facilities for removal of drainage water from the San Joaquin Valley. (5) Facilities for the generation and transmission of electrical energy. Mark Hattam Attachment 3, Page 2 of 3Attachment 1, Page 10 of 12 Page 199 of 284 Page 2 of 3 Cal Wat Code§ 12934 (6) Provision for water development facilities for local areas as provided in Chapter 5 (commencing at Section 12880) of Part 6 of Division 6 of the Water Code as the same may now or hereafter be amended. (7) Including for the foregoing (1 through 5) the relocation of utilities and highways and acquisition of all lands, rights of way, easements, machinery, equipment, apparatus, and all appurtenances necessary or convenient therefor. Added Stats 1959 ch 1762 § 1, effective November 8, 1960. Annotations Commentary --~-------------------------------------------------------------- Legislative Counsel's Opinions: State water resources development. 1963 AJ 1523. Notes to Decisions 1. Generally That Water Resources Development Bond Act lists Oroville dam as one of "State Water Facilities" enumerated in that act does not mean that Oroville dam is no longer authorized by Central Valley Project Act ryvat C §§ 11100 et seq.), which empowers Department of Water Resources to construct and operate various water facilities, including the Oroville dam; Water Resources Development Bond Act expressly continues, rather than precludes, operation of Central Valley Project Act, and nothing in former act shows that facility authorized as part of Central Valley Project is no longer to be so regarded where it is also enumerated as one of "State Water Facilities." Warne v. Harkness (Cal. Dec. 12. 1963), 60 Cal. 2d 579, 35 Cal. Rptr. 601, 387 P.2d 377. 1963 Cal. LEXIS 264. Research References & Practice Aids Cross References: Inapplicability to timberland preserve zone: Gov C § 51153. Treatises: Cal. Legal Forms, (Matthew Bender) § 280. 15f3Ual. State Notes Research References & Practice Aids Mark Hattam Attachment 3, Page 3 of 3Attachment 1, Page 11 of 12 Page 200 of 284 Page 3 of3 Cal Wat Code § 12934 Hierarchy Notes: Cal Wat Code Div. 6 Cal Wat Code Div. 6, Pt. 6 Cal Wat Code Div. 6. Pt. 6, Ch. 8 Deering's California Codes Annotated Copyright© 2018 Matthew Bender & Company, Inc. a member of the LexisNexis Group. All rights reserved. End of Document Mark Hattam APPENDIX B Attachment 4, Page 1 of 1Attachment 1, Page 12 of 12 Table 2 Project Purpose Cost Allocation Factors (percentages)a Water Supply and All Other Purposes Power Generation (Nonreimbursable) Minimum Minimum Capital OMP&R Capital OMP&R PROJECT FACILITIES Costs Costs Costs Costs Project Conservation Facilities Frenchman Dam and Lake 21.5 0.0 78.5 100.0 Antelope Dam and Lake 0.0 0.0 100.0 100.0 Grizzly Valley Dam and Lake Davis 1.0 1.8 99.0 98.2 Oroville Divisionb 97.1 99.5 2.9 0.5 California Aqueduct, Delta to Dos Amigos Pumping Plant 96.6 96.7 3.4 3.3 Delta Facilities Peripheral Canal Related 86.0 86.0 14.0 14.0 Remaining of Delta Facilities 96.6 96.7 3.4 3.3 Transportation Facilities Grizzly Valley Pipeline 100.0 100.0 0.0 0.0 North Bay Aqueduct 100.0 100.0 0.0 0.0 South Bay Aqueduct Del Valle Dam and Lake del Valle 25.2 22.0 74.8c 78.0d Remainder of South Bay Aqueduct 100.0 100.0 0.0 0.0 California Aqueduct Delta to Dos Amigos Pumping Plant 96.6 96.6 3.4 3.4 Dos Amigos Pumping Plant to termini (excluding Coastal Branch)e,f 94.3 / 99.6 96.9 / 99.6 5.7 / 0.4 3.1 / 0.4 Aqueduct and Plantse,f 94.3 / 99.6 96.9 / 99.6 5.7 / 0.4 3.1 / 0.4 Pyramid Dam and Lakee,f 94.3 / 96.1 96.9 / 96.1 5.7 / 3.9 3.1 / 3.9 Castaic Dam and Lakee,f 94.3 / 91.1 96.9 / 91.1 5.7 / 8.9 3.1 / 8.9 Silverwood Dam and Lakee,f 94.3 / 85.3 96.9 / 85.3 5.7 / 14.7 3.1 / 14.7 Perris Dam and Lakee,f 94.3 / 67.7 96.9 / 67.7 5.7 / 32.3 3.1 / 32.3 Coastal Branch 100.0 100.0 0.0 0.0 a Percentages indicated apply to the majority of the facilities with minor exceptions.b Percentages indicated are applicable to the remaining costs of division after excluding costs allocated to flood control that are reimbursed by the federal government (22 percent of capital costs) and excluding specific power costs of Hyatt and Thermalito powerplants and switchyards. c Percentage indicated consists of 48.0 percent of costs allocated to recreation and 26.8 percent to flood control. d Percentage indicated consists of 44.9 percent of costs allocated to recreation and 33.1 percent to flood control. e Percentage indicated is used for 2012 and previous years. f Percentage indicated is used for 2013 and forward. Amendment 5 to Metropolitan’s contract requires that additional costs for modifications to the Santa Ana Pipeline (required for enlargement of Lake Perris) will be allocated to Metropolitan and returned to the State through payments of the Transportation Charge. The additional costs to be repaid through Metropolitan’s capital cost component for the aqueduct reach from Devil Canyon Powerplant to Barton Road total about $6.7 million (see Bulletin 132-72, page 98). Table B-10 presents the actual and projected annual capital costs of each aqueduct reach that will eventually be returned to the State, with interest, through contractors’ payments of the capital cost component of the Transportation Charge and payment of debt service under the Devil Canyon- Castaic contracts. B–14 BULLETIN 132 - 17 Page 201 of 284 February 15, 2012 Attention: Imported Water Committee Adopt Delta Policy Principles. (Action) Staff recommendation Adopt Delta Policy Principles to guide staff in evaluating Bay-Delta initiatives and the Water Authority’s advocacy to ensure a successful implementation of a Delta solution. Alternatives 1. Modify one or more draft principles. 2. Do not adopt Delta Policy Principles. Fiscal impact None. Background The Sacramento-San Joaquin Bay Delta is an important water supply source for Southern California. Metropolitan Water District (MWD) purchases water from the Department of Water Resources through its State Water Project (SWP) contract. MWD is the SWP’s largest customer, providing more than50 percent of its revenues. As such, MWD is the principle source of revenue under the current SWP as it will be for any proposed Bay Delta solution. As the largest steady purchaser of MWD water, the Water Authority has a vital interest in assuring that any Bay Delta solution is financially sustainable. The Water Authority has advocated for a number of changes in the MWD rate structure, including securing take-or-pay contracts with its member agencies or other firm commitments to pay the fixed costs of a Delta conveyance project. Discussion The Water Authority has been a strong advocate for a sustainable Bay Delta solution. The Water Authority actively engages in Bay Delta issues at the MWD board and other forums including the State Capitol, where it lobbied for passage of the 2009 comprehensive Bay Delta bill package. The 2009 bill package approved as state policy the co-equal status of restoring the Delta ecosystem and creating a more reliable water supply for California. Recently, the Water Authority held two Bay- Delta workshops receiving input from stakeholders on their views of the issues and a Bay Delta solution. The Water Authority also participates directly on three Bay Delta Conservation Plan (BDCP) working groups on Conveyance, Governance and Finance. The Water Authority has consistently advocated for a “right-size” solution in the Delta that is also supported by a broad range of stakeholders in order to reduce challenges to implementation. A central point of the Water Authority’s advocacy position in determining the “right size” of a Bay Imported Water Committee February 15, 2012 Page 2 of 4 Delta solution is clear commitments to pay through take-or-pay contracts or legal equivalent to pay the fixed costs of a project. The Delta Policy Principles will help guide staff as they evaluate the BDCP and other projects and actions relating to the Bay Delta solution. Draft principles were presented to this committee for review last month; the attached recommended principles reflect comments received on the prior draft. Prepared by: Debbie S. Discar-Espe, Senior Water Resources Specialist Reviewed by: Jeff Volberg, Government Relations Manager Amy I. Chen, MWD Program Chief Approved by: Dennis A. Cushman, Assistant General Manager Attachment: Delta Policy Principles Imported Water Committee February 15, 2012 Page 3 of 4 San Diego County Water Authority Delta Policy Principles The San Diego County Water Authority Board of Directors supports a Bay Delta solution that will meet the co-equal goals and provide San Diego County with a reliable, high-quality supply of affordable, imported water consistent with the Water Authority’s Urban Water Management Plan and Regional Facilities Optimization and Master Plan. The adopted policy principles will guide staff in evaluating projects and actions concerning the Bay-Delta. Water Supply Reliability Continue to support the co-equal goals of water supply reliability and environmental restoration embodied in the 2009 Delta bill package. Support deliberative processes that are designed to ensure a meaningful dialogue with all stakeholders in order to reduce future conflicts and challenges to implementation of a Bay Delta solution. Provide regulatory certainty and predictable supplies to help meet California’s water needs in the long-term. Encourage a Bay Delta solution that acknowledges, integrates and supports the development of water resources at the local level including water use efficiency, seawater and brackish water desalination, groundwater storage and conjunctive use, and recycled water including direct and indirect potable reuse. Improve the ability of water-users to divert water from the Delta during wet periods, when impacts on fish and ecosystem are lower and water quality is higher. Encourage the development of a statewide water transfer market that will improve water management. Support improved coordination of Central Valley Project and State Water Project (SWP) operations. Ecosystem Restoration Restore the Bay-Delta ecosystem consistent with the requirements established under the state Natural Community Conservation Plan and the federal Habitat Conservation Plan, taking into account all factors that have degraded Bay-Delta habitat and wildlife. Work with all stakeholders to ensure a meaningful dialogue and that ecosystem restoration issues are addressed in an open and transparent process. Finance and Funding Encourage and support a Bay Delta solution and facilities that are cost-effective when compared with other water supply development options for meeting Southern California’s water needs. Require the total cost of any Bay Delta solution be identified before financing and funding decisions are made. The total cost must include the cost of facilities, mitigation and required or negotiated ecosystem restoration. Allocate costs of the Bay-Delta solution to stakeholders in proportion to benefits they receive. Imported Water Committee February 15, 2012 Page 4 of 4 Seek and support independent financial analyses of Bay-Delta solution including the ability of all parties to pay their proportional costs. Require a firm commitment and funding stream by all parties to pay for the fixed costs associated with the proportional benefits they will receive from a Bay Delta solution, through take-or-pay contracts or legal equivalent. Condition financial support on provisions allowing access to any water conveyance or storage facilities that are included in the Bay Delta solution. Support the use of public funds to support specific projects and actions with identified costs that protect and restore the environment and provide broad-based public benefits. Oppose water user fees to fund ecosystem restoration and other public purpose, non-water- supply improvements in the Delta that benefit the public at large. Facilities Require independent technical analysis of proposed key elements of the Bay-Delta solution, including forecasting future urban and agricultural demands and size and cost of any proposed conveyance facility, to ensure the solution realistically matches statewide needs. Support “right-sized” facilities to match firm commitments to pay for the Bay Delta solution. Allow access to all SWP facilities to facilitate water transfers. Governance Support continued state ownership and operation of the SWP as a public resource. Support improved efficiency and transparency of all SWP operations. Oppose any transfer of operational control of the SWP or any of its facilities to MWD, the State Water Project Contractors, Central Valley Project Contractors, the State and Federal Contractors Water Agency, any entity comprised of MWD or other water project contractors, or any other special interest group. STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: August 1, 2018 SUBMITTED BY: Bob Kennedy Engineering Manager PROJECT: S1502- 001000 DIV. NO. All APPROVED BY: Rod Posada, Chief, Engineering Mark Watton, General Manager SUBJECT: Amended and Restated Regional Wastewater Agreement Between the City of San Diego and Participating Agencies in the Metropolitan Sewerage System GENERAL MANAGER’S RECOMMENDATION: Consider the Amended and Restated Regional Wastewater Agreement between the City of San Diego (City) and the Participating Agencies (PA) in the Metropolitan Sewerage System (Agreement) as part of a long-range regional water reuse plan with the goal of realizing a secondary equivalent Point Loma Wastewater Treatment Plant (PLWTP) and a new local sustainable water supply. Staff are unable to provide a recommendation unless more information is provided to better understand and negotiate terms into the Agreement and to understand how it will be implemented by the City. COMMITTEE ACTION: Please see Attachment A. PURPOSE: On October 1, 2014, the Board approved a resolution in support of the City’s National Pollution Discharge Elimination System (NPDES) permit as part of a long-range regional water reuse plan with the goal of realizing a secondary equivalent PLWTP. The Pure Water San Diego Program (Pure Water), as a new local sustainable water supply, could also avoid or downsize future imported water projects. In order to comprehensively and equitably address the costs and revenues 2 associated with the Pure Water project and the related construction, expansion, and modification of the Metro wastewater facilities, the City and the PAs wish to amend and restate the Regional Wastewater Disposal Agreement. ANALYSIS: The Metropolitan Wastewater Joint Powers Authority (JPA) is a coalition of municipalities and special districts in the southern and central portions of San Diego County that share in the use of the City's regional wastewater collection and treatment facilities. Otay Water District is one of twelve (12) PAs party to agreements with the City for wastewater treatment. This coalition of PAs represents 35% of the flow and over $70 million of the annual budget in relation to the Metro wastewater system. Other JPA member agencies include the cities of Chula Vista, Coronado, Del Mar, El Cajon, Imperial Beach, La Mesa, National City, Poway, the County of San Diego Sanitation District, the Lemon Grove Sanitation District, and Padre Dam Municipal Water District. Otay Water District contributes approximately 0.5% of the wastewater flow to the Metro wastewater system. The City’s sewage system dates back to 1885, but a formal agreement between the PAs was not established until 1998. The Metropolitan Wastewater Commission (Metro Commission) was formed at that time pursuant to the terms of the first Regional Wastewater Disposal Agreement between PAs and San Diego. In 2001, the Metro Joint Powers Authority (Metro JPA) was formed to provide the PAs with a stronger voice in the operations of the Metro System, for which the PAs collectively pay approximately 35% of the operation and capital costs. Secondary Equivalency Members of the JPA believe that permanent acceptance of a smaller PLWTP as an advanced primary treatment plant can be achieved through development of a comprehensive, systematic regional water reuse plan to implement a variety of agency-specific and collaborative large- scale potable water reuse projects. These include indirect potable reuse (IPR) projects that could result in significant off-loading of the treatment demand on the PLWTP. The City’s PLWTP is currently permitted to treat 240-million gallons of wastewater per day (MGD) and allows treatment to an advanced primary level, but must obtain a waiver every five (5) years from the United States Environmental Protection Agency issued pursuant to the 3 Clean Water Act. The City has more than 20 years of ocean monitoring data demonstrating that the advanced primary PLWTP consistently protects the ocean. The City has estimated the cost of upgrading the PLWTP from advanced primary to Full Secondary Treatment Level to $3.5 billion. This high cost of the upgrade, combined with the projected high costs for creating a reliable potable water supply, has led the City to the conclusion that it is possible to divert flow from PLWTP and to treat a portion of this diverted flow to a level suitable for IPR and maintain PLWTP at Advanced Primary without impacting the ocean environment. The first phase of the Pure Water project is expected to produce 30 MGD of product water to be conveyed to Miramar reservoir. The ultimate goal of the Recycled Water Study outlines a concept to divert almost 100 MGD of wastewater that would otherwise have been treated. If this goal can be achieved, the lower flow to the PLWTP could preclude the need for upgrading to a Full Secondary Level, and use the diverted flow to offset the region’s future potable water import needs. To achieve any offloading of flow to PLWTP, a fail- safe design with full redundant infrastructure and a commitment by the City that the Pure Water infrastructure must operate continuously. To continue to operate the PLWTP at the advanced primary treatment level, the City is seeking passage of federal legislation, with support from the environmental community, the proposal called Ocean Pollution Reduction Act II (OPRA II). OPRA II will allow the City’s NPDES permit to be based on secondary equivalency with a commitment to implement potable reuse of wastewater. Until permanent federal legislation is adopted, to recognize secondary equivalence, there is uncertainty about the total financial cost strategy for wastewater associated with the Pure Water project. Pure Water Phase I cost projection dated March 2018 estimated the total cost are $1.4 billion. Metro Wastewater allocation is thirty nine percent (39%) of the overall estimated cost and City Water allocation is sixty one percent (61%). See Attachment B for the cost breakdown for this project. Amended and Restated Regional Wastewater Agreement On May 15, 2018, staff received a draft of the Agreement, however, it was incomplete with many of the exhibits missing and dollar values left blank. On May 17, 2018, District staff discussed the elements of the agreement with the ad hoc group for Metro Technical Advisory Committee’s (Metro TAC) working on the agreement. On June 22, 2018, staff received the latest version of the Agreement (see Exhibit A) 4 and also an explanation of some of the basic principles that are now incorporated into the agreement (see Exhibit B). Staff from the City’s Public Utilities Department and the City Attorney’s Office are continuing to work with Metro JPA staff on the Agreement and have come to conceptual agreement on most terms, however, the individual agencies that make up Metro JPA are waiting to receive more complete information on the Agreement. The District provided comments on the draft version of the Agreement to Metro JPA’s General Counsel, Best Best & Krieger LLP (BB&K). BB&K is planning to provide a joint meeting or conference call with all agencies to discuss the Agreement and provide an update on the revisions being negotiated. District’s staff has suggested clarification on what expenses will be included in a cap on the maximum capital Metro should contribute to the Pure Water project to assure the capital and operating costs don’t exceed the estimated cost for improvements at PLWTP to meet secondary treatment standards. Staff are also concerned about how the Pure Water project is designed. It must be built with the redundant equipment and operated as a “must-run” facility to offload flows permanently to PLWTP. On November 21, 2017, the Metro JPA provided comments on the City’s EIR/EIS (see Exhibit C) noting the City’s own environmental document states, “The NCPWF is not an essential facility.” On February 28, 2018, the Metro JPA provided comments on the draft Title 22 Engineers Report noting the project, as designed, would not benefit Metro JPA if the project doesn’t off-load PLWTP (see Exhibit D). This basic design and operating principle has not been resolved between the City and Metro JPA and the Agreement doesn’t address this adequately. Metro JPA Chairman prepared talking points (see Exhibit E) for a meeting between Board of Supervisor Greg Cox and Mayor Kevin L. Faulconer in May 2018. The chairman included his concerns about the aggressive timeline to bid construction contracts and noted that a secured agreement with the City may be difficult, if not impossible. He noted that mitigation of future costs is necessary, in the event secondary equivalency cannot be secured. He also noted that the North County wastewater agencies that include the San Elijo Joint Powers Authority, the Leucadia Wastewater District, and the Encina Wastewater Authority are currently paying less for full secondary treatment even before the Pure Water costs are added. At the last June 20, 2018 Metro TAC meeting, an updated Agreement is scheduled to be provided to the member agencies before their next meeting on July 19, 2018. The City is planning to request authorization for advertisement for construction of the first phase of the Pure Water project at the City’s September 2018 Environment 5 Committee meeting and the October 2018 City Council meeting. Current indications are that the City will request, at the Metro Commission meeting of August 2, 2018, the Commission’s approval or support of the Agreement. FISCAL IMPACT: Joe Beachem, Chief Financial Officer Unknown at this time. STRATEGIC GOAL: This Resolution supports the District’s Mission statement, “To provide high value water and wastewater services to the customers of the Otay Water District in a professional, effective, and efficient manner” and the General Manager’s Vision, “A District that is innovative in providing water services at affordable rates, with a reputation for outstanding customer service.” LEGAL IMPACT: Unknown at this time. BK/RP:jf P:\WORKING\CIP S1502 - City of San Diego Metro Water Issues\Staff Reports\Bd 08-01-18, Staff Report Metro JPA Restated Wastewater Agreement\BD 08-01-18, Staff Report, Metro JPA-Restated Wastewater Agreement, (BK-RP).docx Attachments: Attachment A – Committee Action Attachment B – Pure Water Phase I Cost Estimate Exhibit A – Draft Amended and Restated Regional Wastewater Agreement Exhibit B – Agreement Basic Principles Exhibit C – Metro Comments on Draft EIR/EIS Exhibit D – Metro Comments Title 22 Engineers Report Exhibit E – Metro JPA Chairman Meeting Talking Points ATTACHMENT A SUBJECT/PROJECT: S1502-001000 Amended and Restated Regional Wastewater Agreement Between the City of San Diego and Participating Agencies in the Metropolitan Sewerage System COMMITTEE ACTION: The Finance and Administration Committee (Committee) reviewed this item at a meeting held on July 18, 2018 and the following comments were made: Staff is requesting that the board consider the Amended and Restated Regional Wastewater Agreement between the City of San Diego (City) and the Participating Agencies (PA) in the Metropolitan Sewerage System (Agreement) as part of a long-range regional waste reuse plan with the goal of realizing a secondary equivalent Point Loma Wastewater Treatment Plant (PLWTP) and a new locals sustainable water supply. Staff is unable to provide a recommendation unless more information is provided to better understand and negotiate terms into the Agreement and to understand how it will be implemented by the City. Staff reviewed information in the staff report. It was indicated that the District had provided comments on the draft version of the Agreement to Metro JPA’s General Counsel, Best Best & Krieger LLP (BB&K) and they indicated that they are planning to coordinate a joint meeting or conference call with all the agencies to discuss the Agreement and provide an update on the revisions being negotiated. As of the committee meeting date, July 18, this meeting has not yet been scheduled. The Metro JPA Chairman, Mr. Jerry Jones, had noted that the Agreement needed to include a clause for the mitigation of future costs in the event secondary equivalency could not be secured for the PLWTP. This was included in the Agreement as a cap of $1.8 billion on costs to the PA’s. Staff indicated that on Monday July 16, 2018, members of the Ad Hoc Committee who are charged with developing the Agreement, Mr. Dexter Wilson, the Metro TAC representative for Lemon Grove and also a consultant hired by Metro JPA, and Mr. Roberto Yano, the National City Metro TAC representative, dropped off a new revised copy of the proposed Agreement. The new draft of the Agreement included a clause that was requested by the District. They also shared that the City of San Diego is committed to amending this Agreement within the next year, but only on specific items identified during this review. Under the new Agreement, Phase 1 of the Pure Water Project will provide 30 MGD at a cost of $1.4 billion where 39% will be funded by the sewer customers and 61% by water customers. The Agreement would go through 2065. The District has concerns with the proposed amended Agreement and many of its concerns has not yet been addressed. It was discussed that the District’s experience with the City is that once an agreement is signed, it is not likely that it will be reopened for changes. It was indicated in response to an inquiry from the Committee that the District has 3600 to 3800 sewer connections (approximately 6700 EDUs). The District’s current capacity in the existing Agreement is 1.287 MGD. It was discussed, that if the Metro Commission needed to build new infrastructure, per the current Agreement, 35% of the cost would be broken out to the PA’s based on flow and strength to the Metro Commission during the year. The District’s portion would be approximately 0.5%. Staff explained that, in the existing agreement, if a PA exceeds the capacity identified for the agency during the year, the agency would need to purchase additional capacity from either one of the PA’s or the City directly. The cost would be approximately $18 to $20 million per MGD and the PA’s capacity would be adjusted to this new capacity level going forward. Staff noted that the District has never exceeded its capacity at the Metro Commission. The District feels the proposed Agreement is better than the existing contract as it caps the PA’s cost exposure to the City’s proposed projects to $1.8 billion. It was discussed that if the PA’s do not sign the proposed Agreement, the existing agreement will stay in place. If the PA’s continue with the existing agreement, it does not cap the PA’s cost exposure to $1.8 billion. It was also discussed that the proposed Agreement has new definitions identified as “Basic Capacity” (Exhibit B) and “10-year Wet Weather Capacity” (Exhibit G). Staff indicated that they are reviewing the numbers within this new exhibit (Exhibit G) based on the proposed amended agreement. The new proposed “Basic Capacity” in the amendment refers to the District’s capacity on the Metro System. If it is exceeded, the District must purchase additional capacity or make the other PA’s whole by paying the District’s fair share of its use of the system. There is a 2-year pay-in for the amount the District exceeds its “Basic Capacity” and staff indicated that they are reviewing the numbers within this exhibit. In the current agreement, the District’s cost is based on “flow” and “strength’ to the system. In response an inquiry from the Committee, the District’s Attorney indicated that she would characterize the legal language as “fair” on a scale that includes “good, fair and poor.” She noted that there is some language that is ambiguous in the proposed amendment. The Committee also inquired why there are special capacities identified for three (3) agencies to 2025 (Padre Dam MWD, City of El Cajon and the County of San Diego). It was indicated that these agencies expect to contribute to “off-loading” on the Metro system, so they will be sending less flow to the Metro Commission system. It was indicated that Otay WD’s cost for the Pure Water Project is approximately $3.1 million and the District’s portion of the $1.8 billion cap is approximately $4 million. It was noted that this is only for the increase in capital costs. There will also be an increase in Operations and Maintenance costs. Staff indicated that Mr. Scott Tullock (with NV5) and Mr. Dexter Wilson (Dexter Wilson Engineering), consultants working for the Metro JPA, will be available to answer questions at the District’s August 1, 2018 Board meeting. It was noted that at the Metro TAC Committee held, July 18, the Committee members voted to approve the proposed amended Agreement with Padre Dam MWD voting “no” and the Cities of Coronado and El Cajon “abstaining”. Upon completion of the discussion, the committee recommended that the board allow the District’s representative to the Metro Commission JPA to decide on how he will vote on the proposed Agreement based on information received at the Metro Commission JPA board meeting and to present this item to the full board as an action item. 60409.00001\30914102.9 AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT BETWEEN THE CITY OF SAN DIEGO AND Attachment A-1 7/16/18 Version 60409.00001\30914102.9 THE PARTICIPATING AGENCIES IN THE METROPOLITAN SEWERAGE SYSTEM 60409.00001\30914102.9 -i- AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT TABLE OF CONTENTS Page I. DEFINITIONS ................................................................................................................... 2 II. OWNERSHIP AND OPERATION OF THE METRO SYSTEM .................................... 6 III. PAYMENT AND MONITORING PROVISIONS ......................................................... 11 IV. CAPACITY RIGHTS ...................................................................................................... 14 V. SYSTEM OF CHARGES ................................................................................................ 15 VI. PLANNING ..................................................................................................................... 20 VII. FACILITIES SOLELY FOR NEW CONTRACT CAPACITY ..................................... 20 VIII. THE METRO COMMISSION ........................................................................................ 23 IX. DISPUTE RESOLUTION ............................................................................................... 23 X. INSURANCE AND INDEMNITY ................................................................................. 24 XI. INTERRUPTION OF SERVICE ..................................................................................... 25 XII. NOTICES REQUIRED UNDER AGREEMENT ........................................................... 25 XIII. EFFECTIVE DATE AND TERMINATION .................................................................. 26 XIV. GENERAL ....................................................................................................................... 26 Exhibits A. Metro Facilities B. Contract Capacities C. Allocation of Operating Reserves and Debt Service Coverage to Participating Agencies D. Notice Listing E. Reclaimed Water Distribution System F. Pure Water Cost Allocation and Revenues G. 2050 Flow Projections 60409.00001\30914102.9 -1- AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT THIS AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT is made and entered into this _____ day of _________________, 2018, by and between the CITY OF SAN DIEGO, a municipal corporation (“the City”); and the CITY OF CHULA VISTA, a municipal corporation; the CITY OF CORONADO, a municipal corporation; the CITY OF DEL MAR, a municipal corporation; the CITY OF EL CAJON, a municipal corporation; the CITY OF IMPERIAL BEACH, a municipal corporation; the CITY OF LA MESA, a municipal corporation; the LEMON GROVE SANITATION DISTRICT, a political subdivision of the State of California; the CITY OF NATIONAL CITY, a municipal corporation; the CITY OF POWAY, a municipal corporation; the OTAY WATER DISTRICT, a political subdivision of the State of California; the PADRE DAM MUNICIPAL WATER DISTRICT, a political subdivision of the State of California; and the SAN DIEGO COUNTY SANITATION DISTRICT, a political subdivision of the State of California (the “Participating Agencies”). RECITALS WHEREAS, the City and the Participating Agencies (or their predecessors in interest) entered into that certain Regional Wastewater Disposal Agreement dated May 18, 1998 (the “1998 Agreement”), which provided, among other things, for certain contract rights to capacity in the Metropolitan Sewerage System, a system of wastewater conveyance, treatment, and disposal facilities (“Metro System”) and the establishment of a mechanism to fund the planning, design, construction, operation, and maintenance of the Metro System by the City and the Participating Agencies; and WHEREAS, the purposes of the 1998 Agreement were: (1) to replace the prior-existing sewage disposal agreements between the City and the Participating Agencies; (2) to provide certain contract rights to capacity in the Metro System to the Participating Agencies; (3) to establish a mechanism to fund the planning, design, construction, operation and maintenance of the Metro System by the City and the Participating Agencies as necessary to provide hydraulic capacity, and to comply with applicable law and with generally accepted engineering practices; and (4) to establish a system of charges which allocates the costs of the planning, design and construction of such new wastewater conveyance, treatment and disposal facilities as are necessary solely to provide for new capacity on a fair and equitable basis; and WHEREAS, on April 29, 2014 the San Diego City Council gave its approval and support for the Pure Water San Diego program by adoption of Resolution No. R-308906. The Resolution approved and supported the City’s efforts to develop an implementation strategy to offload wastewater flow from the Point Loma Wastewater Treatment Plant through implementation of potable reuse, resulting in effluent discharged to the Pacific Ocean being equivalent to what would be achieved by upgrading the Point Loma Wastewater Treatment Plant to a secondary treatment plant (secondary equivalency); and WHEREAS, the City is implementing a phased, multi-year program designed to regionally produce at least 83 million gallons per day of safe, reliable potable water using new, expanded, or modified facilities, some of which will include Metro System facilities, in order to achieve secondary equivalency at the Point Loma Wastewater Treatment Plant; and -2- 60409.00001\30914102.9 WHEREAS, the Pure Water Program will not only benefit the City by producing repurified water, but also the Participating Agencies and their wastewater customers, especially if secondary equivalency is recognized through federal legislation amending the Clean Water Act. Specifically, implementation of the Pure Water Program will reduce wastewater discharges to the Point Loma Wastewater Treatment Plant, part of the Metro System where a large portion of the Participating Agencies’ wastewater is currently treated and disposed by discharging it into the Pacific Ocean. By diverting wastewater from the Point Loma Wastewater Treatment Plant and reducing the effluent discharged into the Pacific Ocean, the City and the Participating Agencies will potentially avoid billions of dollars in unnecessary capital, financing, energy, and operating costs to upgrade the Point Loma plant to secondary treatment at full capacity. Avoiding such costs would result in significant savings for regional wastewater customers; and WHEREAS, the Padre Dam Municipal Water District, San Diego County Sanitation District, and the City of El Cajon have proposed a program to produce up to 15 million gallons per day of safe, reliable potable water for East San Diego County using wastewater that would otherwise be disposed of in the Metro System (“East County AWP Program”). By offloading wastewater and wastewater contents from the Point Loma Wastewater Treatment Plant, the East County AWP Program would, if implemented, help the City’s and region’s efforts to achieve long- term compliance with the Clean Water Act by producing a regional annual average of at least 83 million gallons per day of water suitable for potable reuse by December 31, 2035, as described in the Cooperative Agreement in Support of Pure Water San Diego entered into by the City and certain environmental stakeholders on December 9, 2014. WHEREAS, Section XIV, subsection B, of the 1998 Agreement provided that the Parties may amend the Agreement by a written agreement between the City and all Participating Agencies stating the parties’ intent to amend the Agreement; and WHEREAS, in order to comprehensively and equitably address the costs and revenues associated with the Pure Water Program and the related construction, expansion, and/or modification of Metro System facilities, the City and Participating Agencies wish to amend and restate the Regional Wastewater Disposal Agreement as provided herein. THEREFORE, in consideration of the mutual promises set forth herein, the City and the Participating Agencies agree as follows: I. DEFINITIONS A. Annual Average Daily Flow is the number, in millions of gallons of wastewater per day (“MGD”), calculated by dividing total Flow on a fiscal year basis by 365 days. B. Brine is a waste byproduct of the demineralization process at an upstream Water Repurification System facility or a Reclaimed Water facility. C. Capital Expense Rate is the cost per acre foot that will apply if the Metro System’s Capital Improvement Costs for the Pure Water Program and/or upgrading of the Point Loma WTP to secondary treatment exceed $1.8 billion, as further described in Exhibit F. -3- 60409.00001\30914102.9 D. Capital Improvement Costs are costs associated with the planning, design, financing, construction, or reconstruction of facilities. E. Chemical Oxygen Demand or “COD” means the measure of the chemically decomposable material in wastewater, as determined by the procedures specified in the most current edition of “Standard Methods for the Examination for Water and Wastewater,” or any successor publication which establishes the industry standard. F. City Water Utility PW Costs are those Pure Water Program costs allocated to the City’s water utility and therefore excluded as Metro System costs under Exhibit F. G. Contract Capacity is the contractual right possessed by each Participating Agency to discharge wastewater into the Metro System pursuant to this Agreement up to the limit set forth in Exhibit B attached hereto. Contract Capacity is stated in terms of Annual Average Daily Flow. H. Flow is the amount of wastewater discharged by the City and each Participating Agency. I. Functional-Design Methodology shall mean the process of allocating Operation and Maintenance Costs and Capital Improvement Costs to Flow and Strength parameters recognizing the benefits of both the design criteria and the primary function of a unit process. J. Metro Commission is the advisory body created under Section VIII. K. Metro System Costs are those costs set forth in Section 5.2.1. L. Metro System Revenues are those revenues set forth in Section 5.2.2. M. Metropolitan Sewerage System or Metro System shall mean and consist of those facilities and contract rights to facilities which are shown and/or described in Exhibit A attached hereto and incorporated by this reference, including any amendments thereto authorized by this Agreement. N. Municipal System shall mean the City’s wastewater collection system, which consists of pipelines and pump stations, that collects wastewater within the City of San Diego and conveys it to the Metropolitan Sewerage System for treatment and disposal. O. New Capacity is the capacity to discharge wastewater outside the Metro System, above the Contract Capacity set forth in Exhibit B attached hereto. P. New Contract Capacity is the capacity to discharge wastewater into the Metro System, above the Contract Capacity set forth in Exhibit B attached hereto. Q. North City Water Reclamation Plant or North City WRP is the 30 million gallons per day (as of the date of this Agreement) wastewater treatment facility -4- 60409.00001\30914102.9 located at 4949 Eastgate Mall in San Diego, which includes four major processes: primary treatment, secondary treatment, tertiary treatment, and disinfection. R. Operation and Maintenance Costs are the costs of those items and activities required by sound engineering and management practices to keep the conveyance, disposal, treatment, and reuse facilities functioning in accordance with all applicable laws, rules, and regulations. S. Point Loma Wastewater Treatment Plant or Point Loma WTP is the 240 million gallons per day (as of the date of this Agreement) advanced primary treatment plant which includes four major processes: screening, grit removal, sedimentation, and digestion. T. Pure Water Program is the City’s phased, multi-year program designed to produce at least 83 million gallons per day of Repurified Water using new, expanded, or modified facilities, some of which will include Metro System facilities. U. Reclaimed Water (or Recycled Water) shall have the definition set forth in Title 22, Division 4 of the California Code of Regulations and shall mean water which, as a result of treatment of wastewater, is suitable for a direct beneficial use or a controlled use that otherwise could not occur. V. Reclaimed Water (or Recycled Water) Distribution System shall mean and consist of those eight (8) reclaimed water projects listed in Attachment B of the Stipulated Final Order for Injunctive Relief approved by the U.S. District Court on June 6, 1997 in U.S.A. v. City of San Diego, Case No. 88-1101-B, and attached hereto as Exhibit E. W. Repurified Water shall mean water which, as a result of advanced treatment of Reclaimed Water, is suitable for use as a source of domestic (or potable) water supply. X. Repurified Water Revenue is the cost savings that will be realized when the City water utility’s annual costs per-acre foot for Repurified Water are less than the purchase costs per-acre foot for comparable water from the San Diego County Water Authority, as further described in Exhibit F. Y. Return Flow shall mean the effluent created by the dewatering of digested biosolids, which includes centrate. Z. Reuse shall mean to use again, such as water which has been reclaimed or repurified, or sludge that has been converted to biosolids for beneficial use. AA. South Bay Land/Ocean Outfall is the facility that is jointly owned by the International Boundary & Water Commission (U.S. Section IBWC) and the City of San Diego. The Outfall is planned to convey and discharge treated effluent from the IBWC’s International Wastewater Treatment Plant and treated effluent from the -5- 60409.00001\30914102.9 City’s South Bay Water Reclamation Plant and the South Bay Secondary Treatment Plant. As of the date of this Agreement, the Outfall has a current Average Daily Flow Capacity of 174 million gallons per day. As of the date of this Agreement, the City owns 39.94% of the capacity of the Outfall and the balance of the capacity is owned by the IBWC. BB. South Bay Water Reclamation Plant is the 15 million gallons per day (as of the date of this Agreement) wastewater treatment facility located at 2411 Dairy Mart Road in San Diego, which includes four major processes: primary treatment, secondary treatment, tertiary treatment, and disinfection. CC. Strength means the measurement of Suspended Solids (SS) and Chemical Oxygen Demand (COD) within the wastewater Flow and any other measurement required by law after the date of this Agreement. DD. Suspended Solids or SS means the insoluble solid matter in wastewater that is separable by laboratory filtration, as determined by the procedures specified in the most current edition of “Standard Methods for the Examination of Water and Wastewater,” or any successor publication which establishes the industry standard. EE. Tertiary Component is that portion of the wastewater treatment process that currently filters the secondary treated wastewater effluent through fine sand and/or anthracite coal to remove fine Suspended Solids and disinfects it to meet the requirements of the California Administrative Code, Title 22, or its successor for filtered and disinfected wastewater. FF. Water Repurification System shall mean any facilities, including treatment and conveyance facilities, the purpose of which is the production or conveyance of Repurified Water. Water Repurification System includes, but is not limited to: the Tertiary Component of the North City Water Reclamation Plant to the extent being used to produce Repurified Water, the North City Advanced Water Purification Facility to be located across the street from the North City Water Reclamation Plant (“North City AWP Facility”); the Repurified Water conveyance system, which will transport Repurified Water from the North City AWP Facility and/or other facilities to the Miramar Reservoir or other alternative location(s) as determined by the City; and any other Repurified Water treatment or conveyance facilities which are part of the Pure Water Program. GG. Wet Weather Flow is Flow entering the Metro System during rainy weather. Peak 24-Hour Wet Weather Flow is the highest measured Wet Weather Flow occurring in a 24 hour period during a fiscal year. Wet Weather Flow Rights are the estimated amounts of Wet Weather Flow, stated in millions of gallons per day (MGD), that the City and each Participating Agency are projected to have in the 2050 fiscal year. Wet Weather Flow Rights are the 10-year average of Wet Weather Flow for 2050, and are calculated by dividing total estimated annual Wet Weather Flow by 365 days. Wet Weather -6- 60409.00001\30914102.9 Flow Rights are stated in Column 7 of Exhibit G. II. OWNERSHIP AND OPERATION OF THE METRO SYSTEM 2.1 Rights of the Parties. The City is the owner of the Metro System, and of any additions to the Metro System or other facilities constructed pursuant to this Agreement. All decisions with respect to the planning, design, construction, operation and maintenance of the Metro System shall rest with the City, in consultation with the Metro Commission. The Participating Agencies shall have a contractual right to use the Metro System and to participate in its operation as set forth in this Agreement. Subject to the terms of this Agreement, and in conformance with all applicable laws, the City may transfer ownership of all or part of the Metro System at any time. In the event of a transfer, the City’s successor shall be bound by the terms of this Agreement. Subject to the terms of this Agreement, any Participating Agency may transfer or assign its rights and obligations under this Agreement. Any transfer shall first be approved by the City. No transfer may occur if the City reasonably determines, after consultation with the Participating Agencies involved, that the proposed transfer will imbalance, or will otherwise adversely impact the City’s ability to operate the Metro System. 2.2 Metro System Services. 2.2.1 The City shall provide wastewater conveyance, treatment and disposal services to the Participating Agencies through the Metro System, under the terms set forth in this Agreement. 2.2.2 The City shall operate the Metro System in an efficient and economical manner, maintaining it in good repair and working order, all in accordance with recognized sound engineering and management practices. 2.2.3 The City shall convey, treat, and dispose of or reuse all wastewater received under this Agreement in such a manner as to comply with all applicable laws, rules and regulations. 2.3 Flow Commitment. 2.3.1 Absent agreement of the parties, all Flow from the Participating Agencies and the City, up to the capacity limits set forth in Exhibit B or any amendments thereto, shall remain in the Metro System. 2.3.2 This Agreement shall not preclude any Participating Agency from diverting Flow from the Metro System as a result of the construction of reclamation facilities or New Capacity outside of the Metro System. 2.3.3 Any Participating Agency may negotiate an agreement with the City to withdraw all Flow from the Metro System, which at a minimum requires the Agency to pay its proportionate share of Capital Improvement Costs. -7- 60409.00001\30914102.9 If a Participating Agency enters into an agreement with the City by December 31, 2019, to withdraw all Flow from the Metro System by January 1, 2035, such Participating Agency shall not pay Pure Water Program Capital Improvement Costs except for Phase I (as defined below in Section 2.8). 2.4 Funding Obligations. Nothing in this Section or in this Agreement shall obligate the City to make any payment for the acquisition, construction, maintenance or operation of the Metro System from moneys derived from taxes or from any income and revenue of the City other than moneys in or sewer revenues which go into the Sewer Revenue Fund for the Metro System and from construction funds derived from the sale of such sewer revenue bonds for the Metro System as are duly authorized. Nothing in this Agreement shall be construed to obligate the City to pay from its annual income and revenues any sum which would create an indebtedness, obligation or liability within the meaning of the provisions of Section 18 of Article XVI of the Constitution of the State of California. Nothing in this Section, however, or in this Agreement shall prevent the City, in its discretion, from using tax revenues or any other available revenues or funds of the City for any purpose for which the City is empowered to expend moneys under this Agreement. Nothing herein shall relieve the City from its obligations to fund and carry out this Agreement. Nothing in this Section or in this Agreement shall obligate any Participating Agency to make any payment which would create an indebtedness, obligation or liability within the meaning of the provisions of Section 18 of Article XVI of the Constitution of the State of California, or which is not authorized by law. 2.5 Financial Statements. 2.5.1 The City shall keep appropriate records and accounts of all costs and expenses relating to conveyance, treatment, disposal, and reuse of wastewater, and production of Repurified Water, and the acquisition, planning, design, construction, administration, monitoring, operation and maintenance of the Metro System and Water Repurification System, and any grants, loans, or other revenues received therefor. The City shall keep such records and accounts for at least four (4) years, or for any longer period required by law or outside funding sources. 2.5.2 Said records and accounts shall be subject to reasonable inspection by any authorized representative of any Participating Agency at its expense. Further, said accounts and records shall be audited annually by an independent certified public accounting firm appointed by the City pursuant to generally accepted accounting principles. A copy of said report shall be available to any Participating Agency. As part of said audit, the actual amount of City Water Utility’s PW Costs, Pure Water Program costs attributable to the Metro System, Repurified Water Revenue, and the Capital Expense Rate shall be determined and audited by the City’s external auditors and Participating Agency representatives, and a cumulative and annual summary of such amounts shall be included as a footnote or -8- 60409.00001\30914102.9 attachment to the audit of the Metro System. Cost summaries shall include separate lines for Capital Improvement Costs and Operation and Maintenance Costs. 2.5.3 The City shall make a good faith effort to complete the annual audit, and any related adjustments under this Agreement, by the end of the following fiscal year. 2.6 Limitations on Types and Condition of Wastewater. 2.6.1 Each Participating Agency will comply with all applicable laws, rules and regulations including its regulatory obligations associated with the discharge of wastewater into its respective system and from such system into the Metro System. 2.6.2 Each Participating Agency will minimize to the maximum extent practicable, the infiltration and inflow of surface, ground or stormwaters into its respective wastewater systems. 2.6.3 Each Participating Agency will insure that all industrial users of its wastewater system are regulated by an effective industrial pretreatment program that conforms to all to all applicable laws, rules and regulations and that is acceptable to the City. Provided, however, that the City shall not require the Participating Agencies to take any actions beyond that which is required under applicable laws, rules and regulations that can be taken but are not being taken by the City. 2.6.4 The City and the Participating Agencies agree that nothing in this Agreement, including the termination of the existing sewage disposal agreements, shall affect the validity of the Interjurisdictional Pretreatment Agreements, or the separate transportation agreements that are currently in effect between or among the City and the Participating Agencies. 2.6.5 Each Participating Agency will not discharge a substantial amount of sewage originating outside its respective boundaries into the Metro System without the approval of the City. 2.6.6 Each Participating Agency shall be responsible for the violation of any applicable laws, rules or regulations associated with its respective discharge of wastewater into the Metro System. Nothing in this Agreement shall affect the ability of any Participating Agency to hold third parties responsible for such violations. 2.6.7 In the event a regulatory agency imposes any penalty or takes other enforcement action relating to the conveyance, treatment, and disposal of wastewater in or from the Metro System, the City shall determine if the City or a Participating Agency or Agencies caused or contributed to the violation -9- 60409.00001\30914102.9 by exceeding its Contract Capacity or by the contents of its wastewater. The City shall allocate the penalty or other relief, including the costs of defense, to the party or parties responsible. Each responsible party, whether a Participating Agency or the City, shall be obligated to pay its share of such penalty or other relief, and any costs of defense. In the event that the City cannot make such an allocation, the cost of such penalty or other relief shall be shared by the Participating Agencies and the City proportionately based on Flow and Strength. 2.7 Right of First Refusal. 2.7.1 The City shall not sell or agree to sell the Metro System without first offering it to the Participating Agencies. For the purposes of this section, “Participating Agencies” shall mean a Participating Agency, a group of Participating Agencies, or a third party representing one or more Participating Agencies. The term “sell” shall include any transfer or conveyance of the Metro System or of any individual treatment or reclamation facility or outfall within the Metro System. 2.7.2 The City and the Participating Agencies recognize that transfer of ownership of the Metro System is currently restricted by Sections 6.04 and 6.20 of the Installment Purchase Agreement between the City and the Public Facilities Financing Authority of the City, which inter alia restricts the transfer of ownership to the Metropolitan Wastewater Sewage District or other governmental agency whose primary purpose is to provide wastewater treatment. The City shall not seek to impose on bond holders a waiver of Section 6.04 or 6.20. Absent such a restriction, before the City sells or agrees to sell the Metro System, or any portion of it, the City shall offer to sell the Metro System to the Participating Agencies (“the Offer”) on the terms and at a price equal to that proposed for the sale of the Metro System to a third party. The Participating Agencies shall have thirty days from receipt of the Offer (“the Intent to Respond Period”) in which to notify the City of their intent to respond to the Offer. The Participating Agencies shall have five months from the expiration of the Intent to Respond Period in which to accept or reject the Offer. The Offer shall contain the name of the proposed purchaser, the proposed sale price, the terms of payment, the required deposit, the time and place for the close of escrow, and any other material terms and conditions on which the sale is to be consummated. 2.7.3 If the Participating Agencies give timely notice of their intent to respond and timely notice of their acceptance of the Offer, then the City shall be obligated to sell and the Participating Agencies shall be obligated to purchase the Metro System or any individual treatment or reclamation facility or outfall within the Metro System, as applicable, at the price and on the terms and conditions of the Offer. If the Participating Agencies do not give timely notice of their intent to respond or their acceptance of the Offer, or do not submit an offer on the same terms and conditions as the -10- 60409.00001\30914102.9 Offer, the City may, following the end of the Offer period, sell the Metro System, or any portion of it, at a price and on terms and conditions no less favorable to the City than those in the Offer. The City shall not sell the Metro System to any third party on terms or at a price less favorable to the City from the terms and price contained in the Offer absent compliance with the terms of this Section. 2.7.4 Nothing herein shall prevent the City from entering into a financing agreement which may impose limits on the City’s power to sell the Metro System to the Participating Agencies pursuant to Section 2.7.1. if the City reasonably believes that such a financing agreement is in the City’s best interest. Neither the entry into such a financing agreement by the City nor the performance thereof by the City shall constitute a breach or default by the City hereunder. 2.8 Pure Water San Diego Program. Each new, expanded, or modified Metro System facility which is used in relation to the production of Repurified Water (in addition to the modification and expansion of the North City Water Reclamation Facility) shall be governed by this Agreement and Exhibit F, attached hereto and incorporated herein. 2.9 Future Negotiations and Cooperation. 2.9.1 This Agreement and Exhibit F specifically contemplate Phase I of the Pure Water Program, which consists of new, expanded, or modified Metro System facilities and Water Repurification System facilities designed to produce only up to 30 million gallons per day of Repurified Water (“Phase I”). During the planning process for later phases of the Pure Water Program, the parties shall meet and negotiate in good faith regarding one or more amendments to this Agreement or its Exhibits to address: 2.9.1.1 The allocation of specific Pure Water Program costs between City’s water utility and the Metro System for such later phases; 2.9.1.2 Whether, and to what extent, certain Metro System costs should be charged based on volume capacity rights, Strength capacity rights, Peak 24-Hour Wet Weather Flow, and/or other factors; 2.9.1.3 The exclusion of costs related to the industrial discharges inspection and monitoring program within San Diego under Section 5.2.1.2.3 of the Agreement; and 2.9.1.4 The handling of waste generated at United States military bases under this Agreement. If such negotiations do not result in an amendment to this Agreement or its Exhibits concerning these subjects, this Agreement shall remain in full force -11- 60409.00001\30914102.9 and effect as set forth herein. Further, if the City proceeds with a later phase of the Pure Water Program as authorized under Section 2.1 of this Agreement, and the Parties have not yet amended this Agreement or Exhibit F to specifically address such costs by the time they are incurred, all costs listed in Section I of Exhibit F shall nonetheless be excluded as Metro System costs under this Agreement. 2.9.2 The City and the Participating Agencies shall cooperate and coordinate in good faith with the Padre Dam Municipal Water District, San Diego County Sanitation District, and City of El Cajon on issues that relate to the East County AWP Program, including, but not limited to, the transfer of the Mission Gorge Pump Station; disposal of residuals; and a source control program. III. PAYMENT AND MONITORING PROVISIONS 3.1 Payment for Metro System Facilities. Through the system of charges set forth in Article V of this Agreement, each Participating Agency shall pay its share of the costs of planning, design and construction of all of the Metro System facilities which are identified in Exhibit A hereto, which is incorporated herein by reference. 3.2 Payment for Additional Metro System Facilities. Through the system of charges set forth in Article V of this Agreement, each Participating Agency shall pay its share of the costs of acquisition, or planning, design and construction of such facilities in addition to those set forth on Exhibit A as are necessary for the Metro System to maintain compliance with applicable laws, rules and regulations, including the Ocean Pollution Reduction Act of 1994 and its successor(s), present and future waivers of applicable treatment standards at any Metro System treatment facility, and all facilities as are necessary to convey, treat, dispose, and reuse wastewater in the Metro System to provide the Contract Capacity set forth in Exhibit B, to maintain hydraulic capacity and as otherwise required by sound engineering principles. As a ministerial matter, the City shall amend Exhibit A from time to time to reflect such additional facilities and shall give notice of any amendments to the Participating Agencies. The City shall keep an updated version of Exhibit A on file with the City Public Utilities Department. Exhibit A may be amended to reflect other changes to the Metro System only as expressly provided in this Agreement. 3.3 Payment for Operation and Maintenance. Through the system of charges set forth in Article V of this Agreement, each Participating Agency shall pay its share of the Operation and Maintenance Costs of all Metro System facilities. The Participating Agencies shall not pay for the Operation and Maintenance Costs of Water Repurification System, which are City Water Utility PW Costs. 3.4 Charges Based on Flow and Strength; Exception. -12- 60409.00001\30914102.9 3.4.1 Except as otherwise described in this Section 3.4, a Participating Agency’s share of the charges in this Article III shall be assessed pursuant to Article V of this Agreement based on its proportionate Flow in the Metro System and the Strength of its wastewater. 3.4.2 Notwithstanding section 3.4.1, or any other provision of this Agreement, a Participating Agency’s share of Pure Water Program Capital Improvement Costs and Pure Water Program revenues attributable to the Metro System under Exhibit F shall be assessed or credited based on the parties’ proportionate share of Wet Weather Flow Rights. Wet Weather Flow Rights are based on projections of each party’s 10-year average of Wet Weather Flow in the year 2050 as set forth in Column 7 of Exhibit G, which is attached hereto and incorporated herein. The City shall annually allocate the estimated and actual Pure Water Program Capital Improvement Costs and revenues which are attributable to the Metro System under Exhibit F in proportion to each party’s share of Wet Weather Flow Rights (Column 8 of Exhibit G) when estimating quarterly payments and conducting year-end adjustments under Article V. 3.4.3 Each party recognizes that operation within respective Wet Weather Flow Rights is essential to the accurate allocation of costs and revenues under the Pure Water Program. In recognition of same, the parties agree as follows: 3.4.3.1 Beginning in the next fiscal year after the effective date of this Agreement, if any party’s Annual Average Daily Flow exceeds its Wet Weather Flow Rights for any two (2) consecutive fiscal years, the City shall prepare an amendment to Exhibit G that adjusts projections of each party’s 10-year average of Wet Weather Flow in 2050 based on information about such party’s exceedance and other relevant information. Upon approval by a majority of the Metro Commission, the City shall, as a ministerial matter, amend the Wet Weather Flow Rights in Column 7 of Exhibit G (and the percentages in Column 8 of Exhibit G) to reflect the new projections of 10-year average of Wet Weather Flow. The City shall keep an updated version of Exhibit G on file with the City Public Utilities Department. If the City and the Metro Commission cannot agree on an amendment to Exhibit G, the matter shall be submitted to dispute resolution pursuant to Article IX. 3.4.3.2 Notwithstanding the amounts set forth in Column 7 of Exhibit G, the following parties will have the following Wet Weather Flow Rights until July 1, 2025: 3.4.3.2.1 Padre Dam: 2.797 MGD 3.4.3.2.2 San Diego County Sanitation District: 22.844 MGD -13- 60409.00001\30914102.9 3.4.3.2.3 El Cajon: 8.542 MGD 3.4.3.3 If Exhibit G is amended to update one or more parties’ Wet Weather Flow Rights, the change in Wet Weather Flow Rights shall be retroactive in effect, and the City shall use the updated amounts in estimating quarterly payments and conducting year-end adjustments for Pure Water Program costs and revenues. Therefore, any party that underpaid based on previous Wet Weather Flow Rights (which were based on prior projections of 2050 Flow) shall pay the retroactive amount due in its quarterly payments the following fiscal year; any party that overpaid based on previous Wet Weather Flow Rights shall receive a credit in its quarterly payments the following fiscal year. Notwithstanding the preceding sentence, if the retroactive amount due exceeds 20% of a party’s average annual Metro System payments for the previous four (4) years, such party may elect to pay the retroactive amount due in its quarterly payments over the subsequent four (4) fiscal years; any party that overpaid based on previous Wet Weather Flow Rights shall receive a credit in its quarterly payments the following four (4) fiscal years. 3.5 Monitoring Flow and Strength. 3.5.1 The City shall monitor wastewater that is discharged into the Metro System for Flow and Strength. The City shall own and operate as part of the Metro System monitoring devices which will measure the amount of daily wastewater discharged into the Metro System. These devices shall be installed at locations appropriate to accurately monitor Flow and Strength. The City may also monitor wastewater Flow and Strength at other locations as it deems appropriate. 3.5.2 In measuring Strength, the frequency and nature of the monitoring shall not be more stringent for the Participating Agencies than it is for the City. 3.5.3 The City shall, at least once every five (5) years, update and provide its plans for the monitoring system and for the procedures it will use to determine Strength to the Participating Agencies. The Participating Agencies shall have the opportunity to review and comment prior to implementation. 3.5.4 The City shall report Flow and Strength data to the Participating Agencies at least quarterly. IV. CAPACITY RIGHTS 4.1 Contract Capacity. In consideration of the obligations in this Agreement, each Participating Agency shall have a contractual right to discharge wastewater to the Metro System up to the Contract -14- 60409.00001\30914102.9 Capacity set forth in Exhibit B. The Wet Weather Flow Rights stated in Exhibit G, which are used solely for the purpose of allocating Pure Water Program costs and revenues attributable to the Metro System under this Agreement, do not replace or limit Contract Capacity. Each party’s Contract Capacity takes into account Wet Weather Flow. 4.2 Transfers of Contract Capacity. The Participating Agencies and the City may buy, sell or exchange all or part of their Contract Capacity among themselves on such terms as they may agree upon. The City shall be notified prior to any transfer. Any transfer shall be first approved by the City. No Contract Capacity may be transferred if the City determines, after consultation with the Participating Agencies involved in the transaction, that said transfer will unbalance, or will otherwise adversely impact the City’s ability to operate the Metro System. Provided, however, that the Participating Agency seeking the transfer may offer to cure such imbalance at its own expense. Following the City’s consent, as a ministerial matter, the Contract Capacity set forth in Exhibit B shall be adjusted to reflect the approved transfer. 4.3 Allocation of Additional Capacity. The parties recognize that the City’s applicable permits for the Metro System may be modified to create capacity in the Metro System beyond that set forth in Exhibit B as a result of the construction of additional facilities or as a result of regulatory action. This additional capacity shall be allocated as follows: 4.3.1 Except as provided in section 4.3.2 below, in the event that the Metro System is rerated so that additional permitted capacity is created, said capacity shall be allocated proportionately based upon the Metro System charges that have been paid since July 1, 1995 to the date of rerating. 4.3.2 In the event that the additional permitted capacity is created as the result of the construction of non-Metro System facilities, or as the result of the construction of facilities pursuant to Article VII, such additional capacity shall be allocated proportionately based on the payments made to plan, design and construct such facilities. 4.4 Deductions in Contract Capacity. The parties further recognize that the Contract Capacity in Exhibit B and Wet Weather Flow Rights in Exhibit G may be modified to comply with, or in response to, applicable permit conditions, or related regulatory action, or sound engineering principles. In the event that the capacity of the Metro System is rerated to a level below the total capacity set forth in Exhibit B, the Contract Capacity in Exhibit B and Wet Weather Flow Rights in Exhibit G shall be reallocated proportionately pending the acquisition or construction of new facilities. The City shall acquire or construct such facilities as necessary to provide the Contract Capacity rights set forth in Exhibit B, as planning and capacity needs require. The costs of such facilities shall be assessed pursuant to Section 3.2. 4.5 Amendments to Exhibits B and C. -15- 60409.00001\30914102.9 As a ministerial matter, the City shall prepare amendments to Exhibits B and C to reflect any adjustment in Contract Capacity pursuant to this Article within ninety (90) days after the adjustment is made. The City shall give notice of the amendments to each Participating Agency, and shall provide copies of the amendments with the notice. The City shall keep an updated version of Exhibits B and C on file with the City Public Utilities Department. 4.6 The South Bay Land/Ocean Outfall. Nothing in this Article shall limit the City’s right to transfer capacity service rights in that portion of the South Bay Land/Ocean Outfall which is not part of the Metro System. V. SYSTEM OF CHARGES 5.1 Charges Authorized. The City agrees to implement and the Participating Agencies agree to abide by a new system of charges. This new system allows the City to equitably recover from all Participating Agencies their proportional share of the net Metro System Costs through the imposition of the following charges: 5.1.1 SSC (Sewer System Charge); 5.1.2 NCCC (New Contract Capacity Charge). 5.2 SSC (Sewer System Charge). The City shall determine the SSC based on the projected Metro System Costs (as defined below) for the forthcoming fiscal year, less all Metro System Revenues (as defined below). 5.2.1 Metro System Costs 5.2.1.1 The following shall at a minimum be considered Metro System Costs for purposes of calculating the annual SSC: 5.2.1.1.1 Except as provided in section 5.2.1.2 (Excluded Costs), the annual costs associated with administration, operation, maintenance, replacement, annual debt service costs and other periodic financing costs and charges, capital improvement, insurance premiums, claims payments and claims administration costs of the Metro System, including projected overhead. Overhead shall be calculated using accepted accounting practices to reflect the overhead costs of the Metro System. 5.2.1.1.2 Fines or penalties imposed on the City as a result of the operation of the Metro System, unless the fine/penalty is allocated to the City or a Participating Agency as provided in Section 2.6.7. -16- 60409.00001\30914102.9 5.2.1.2 Excluded Costs. The following items shall not be considered Metro System Costs for purposes of calculating the annual SSC: 5.2.1.2.1 Costs related to the City of San Diego’s Municipal System as determined by reasonable calculations; 5.2.1.2.2 Costs related to the treatment of sewage from any agency which is not a party to this Agreement; 5.2.1.2.3 Costs related to the inspection and monitoring program for the industrial dischargers located in San Diego, including associated administrative and laboratory services; 5.2.1.2.4 Right-of-way charges for the use of public streets of the City or any Participating Agency. The City and the Participating Agencies agree not to impose a right-of- way charge for the use of its public rights-of-way for Metro System purposes; 5.2.1.2.5 Capital Improvement Costs of any non-Metro System facility; 5.2.1.2.6 Capital Improvement Costs for which an NCCC is paid; and 5.2.1.2.7 City Water Utility PW Costs. 5.2.2 Metro System Revenues. 5.2.2.1 The following revenues shall be at a minimum considered Metro System Revenues for purposes of determining the annual SSC: 5.2.2.1.1 Any grant or loan receipts or any other receipts that are attributable to the Metro System, including, but not limited to, all compensation or receipts from the sale, lease, or other conveyance or transfer of any asset of the Metro System; provided, however, that this shall not include any grant, loan, or other receipts attributable to the Metro System components of the Pure Water Program, which are specifically addressed in Section 5.2.2.1.8. 5.2.2.1.2 All compensation or receipts from the sale or other conveyance or transfer of any Metro System by- products, including, but not limited to gas, electrical energy, sludge products, and Reclaimed Water -17- 60409.00001\30914102.9 (excepting therefrom any receipts allocated pursuant to section 5.2.2.1.3). 5.2.2.1.3 The distribution of revenue from the sale of Reclaimed Water from the North City Water Reclamation Plant, including incentives for the sale of Reclaimed Water, shall first be used to pay for the cost of the Reclaimed Water Distribution System, then the cost of the Operation and Maintenance of the Tertiary Component of the North City Water Reclamation Plant that can be allocated to the production of Reclaimed Water, and then to the Metro System. 5.2.2.1.4 Any portion of an NCCC that constitutes reimbursement of costs pursuant to Section 7.1.4. 5.2.2.1.5 Any penalties paid under Section 7.3. 5.2.2.1.6 Proceeds from the Capital Expense Rate, as calculated under Exhibit F and allocated among the City and Participating Agencies in the proportions set forth in Column 8 of Exhibit G. 5.2.2.1.7 Those portions of Repurified Water Revenue attributable to the Metro System, as calculated under Exhibit F and allocated among the Participating Agencies in the proportions set forth in Column 8 of Exhibit G. 5.2.2.1.8 Any grant or loan receipts or any other receipts that are attributable to the Metro System components of the Pure Water Program, including, but not limited to, all compensation or receipts from the sale, lease, or other conveyance or transfer of any asset of the Metro System components of the Pure Water Program. Any proceeds under this section shall be allocated among the City and the Participating Agencies in the proportions set forth in Column 8 of Exhibit G. 5.2.2.2 Excluded Revenue 5.2.2.2.1 Capital Improvement Costs for which an NCCC is paid; 5.2.2.2.2 Proceeds from the issuance of debt for Metro System projects. 5.2.2.2.3 Proceeds from the sale of Reclaimed Water used to pay for the Reclaimed Water Distribution System pursuant to section 5.2.2.1.3 above. -18- 60409.00001\30914102.9 5.2.3 Calculation of SSC Rates. 5.2.3.1 Prior to the initial implementation of the new system of charges, the City shall prepare a sample fiscal year estimate setting forth the methodology and sampling data used as a base for Strength based billing (SBB) which includes Flow and Strength (Chemical Oxygen Demand (COD) and Suspended Solids (SS)). The analysis shall be submitted to each Participating Agency. 5.2.3.2 The City shall determine the unit SSC rates by allocating net costs (Metro System Costs less Metro System Revenues) between parameters of Flow, COD and SS. This allocation is based on the approved Functional-Design Methodology analyses for individual Capital Improvement Projects (CIPs) and estimated Operation and Maintenance (O&M) Costs allocated to the three parameters. The City may revise the calculations to include any other measurement required by law after the effective date of this Agreement. 5.2.3.3 The net cost allocated to each of the three parameters (Flow, COD and SS) shall be divided by the total Metro System quantity for that parameter to determine the unit rates for Flow, COD and SS. These unit rates shall apply uniformly to all Participating Agencies. 5.2.4 Estimate and Billing Schedule and Year End Adjustment 5.2.4.1 The City shall estimate the SSC rates on an annual basis prior to January 15. The City shall quantify the SSC rates by estimating the quantity of Flow, COD and SS for each party, based on that party’s actual flow and the cumulative data of sampling for COD and SS over the preceding years. If cumulative data is no longer indicative of discharge from a Participating Agency due to the implementation of methods to reduce Strength, previous higher readings may be eliminated. 5.2.4.2 Costs of treating Return Flow for solids handling will be allocated to the Participating Agencies in proportion to their Flow and Strength. Return Flow will not be counted against the Participating Agencies’ Contract Capacity as shown in Exhibit B. 5.2.4.3 The City shall bill the Participating Agencies quarterly, invoicing on August 1 , November 1, February 1 and May 1. Each bill shall be paid within thirty (30) days of mailing. Quarterly payments will consist of the total estimated cost for each Participating Agency, based on their estimated Flow, COD and SS, divided by four. 5.2.4.4 At the end of each fiscal year, the City shall determine the actual Metro System Costs and the actual Flow as well as the cumulative Strength data for the City and each of the Participating Agencies. -19- 60409.00001\30914102.9 The City shall make any necessary adjustments to the unit rates for Flow, COD and SS based on actual costs for the year. The City shall then recalculate the SSC for the year using actual costs for the year, actual Flow, and cumulative Strength factors (COD, SS and Return Flow) for the City and for each Participating Agency. The City shall credit any future charges or bill for any additional amounts due, the quarter after the prior year costs have been audited. 5.3 NCCC (New Contract Capacity Charge). If New Contract Capacity is required or requested by a Participating Agency, pursuant to Article VII, the Metro System shall provide the needed or requested capacity, provided that the Participating Agency agrees to pay an NCCC in the amount required to provide the New Contract Capacity. New Contract Capacity shall be provided pursuant to Article VII. 5.4 Debt Financing. The City retains the sole right to determine the timing and amount of debt financing required to provide Metro System Facilities. 5.5 Allocation of Operating Reserves and Debt Service Coverage. The parties shall continue to comply with the 2010 Administrative Protocol on Allocation of Operating Reserves and Debt Service Coverage to Participating Agencies, attached hereto and incorporated herein as Exhibit C. VI. PLANNING 6.1 Projected Flow and Capacity Report. Commencing on July 1, 1999, each Participating Agency shall provide the City and the Metro Commission with a ten-year projection of its Flow and capacity requirements from the Metro System. The Agencies shall disclose any plans to acquire New Capacity outside the Metro System. This “Projected Flow and Capacity Report” shall be updated annually. 6.2 Other Planning Information. Each Participating Agency shall provide the City with such additional information as requested by the City as necessary for Metro System planning purposes. 6.3 Ten-Year Capital Improvement Plan. The City shall prepare a Ten-Year Capital Improvement Plan for the Metro System that describes the facilities necessary to convey, treat, and dispose of, or reuse all Flow in the Metro System in compliance with all applicable rules, laws and regulations. The plan shall be updated annually. -20- 60409.00001\30914102.9 6.4 Notice to Metro Commission. In the event that the City is not able to include a facility in the Ten-Year Capital Improvement Plan, the City shall notify the Metro Commission as soon as possible before the detailed design or construction of such facility provided that the facility will significantly impact the Metro System. VII. FACILITIES SOLELY FOR NEW CONTRACT CAPACITY The Participating Agencies and City are obligated to pay for the acquisition or planning, design, and construction of new facilities in the Metro System that are needed solely to provide New Contract Capacity only under the terms provided below. 7.1 Determination of Need for New Contract Capacity. 7.1.1 As part of its planning efforts, and considering the planning information provided to the City by the Participating Agencies, the City shall determine when additional facilities beyond those acquired or constructed pursuant to Article III above will be necessary solely to accommodate a need for New Contract Capacity in the Metro System, whether by the City or by the Participating Agencies. The City shall determine: (1) the amount of New Contract Capacity needed; (2) the Participating Agency or Agencies, or the City, as the case may be, in need of the New Contract Capacity; (3) the type and location of any capital improvements necessary to provide the New Contract Capacity; (4) the projected costs of any necessary capital improvements; and, (5) the allocation of the cost of any such facilities to the Participating Agency and/or the City for which any New Contract Capacity is being developed. The City shall notify the Participating Agencies of its determination within sixty days of making such determination. 7.1.2 The City or Participating Agency or Agencies in need of New Contract Capacity as determined by the City pursuant to section 7.1.1 above, may choose, in their sole discretion, to obtain New Capacity outside of. the Metro System in lieu of New Contract Capacity. Under such circumstances, the Participating Agency or Agencies shall commit to the City in writing their intent to obtain such New Capacity. Upon such commitment, the City shall not be required to provide New Contract Capacity to such Agency or Agencies as otherwise required under this Agreement. 7.1.3 The Participating Agencies shall have six months from the date of notice of the determination within which to comment on or challenge all or part of the City’s determination regarding New Contract Capacity, or to agree thereto or to commit, in writing, to obtain New Capacity outside of the Metro System. Any Participating Agency objecting to the City’s determination shall have the burden to commence and diligently pursue the formal dispute resolution procedures of this Agreement within said six month period. The City’s determination shall become final at the close of -21- 60409.00001\30914102.9 the six month comment and objection period. The City’s determination shall remain valid notwithstanding commencement of dispute resolution unless and until otherwise agreed to pursuant to the dispute resolution process in Article IX, or pursuant to a final court order. 7.1.4 The City and the Participating Agency or Agencies which need New Contract Capacity shall thereafter enter into an agreement specifying the terms and conditions pursuant to which the New Contract Capacity will be provided, including the amount of capacity and the New Contract Capacity. Each party obtaining New Contract Capacity shall reimburse the Metro System for the costs of acquisition, planning, design, and construction of facilities necessary to provide the New Contract Capacity that have been paid by other parties under Section 7.2.3. 7.1.5 The parties recognize that the City may acquire and plan, design and construct facilities that are authorized pursuant to both Article III and Article VII of this Agreement. Under such circumstances, the City shall allocate the costs and capacity of such facilities pursuant to Article III and Section 7.1.1 as applicable. 7.2 Charges for Facilities Providing New Contract Capacity 7.2.1 The expense of acquisition, planning, design, and construction of New Contract Capacity shall be borne by the City or the Participating Agency or Agencies in need of such New Contract Capacity. 7.2.2 Notwithstanding any provision in this Agreement, the City and the Participating Agencies shall pay for the Operation and Maintenance Costs of all facilities pursuant to the payment provisions of Article III, including those facilities acquired and constructed to provide New Contract Capacity in the Metro System. 7.2.3 Charges for the acquisition, planning, design and construction of facilities solely to provide New Contract Capacity shall be paid for by the Participating Agencies and the City pursuant to the payment provisions in Article III of this Agreement until an agreement is reached under Section 7.1.4. or pending the resolution of any dispute relating to the City’s determination with respect to New Contract Capacity. 7.2.4 As a ministerial matter, the City shall prepare amendments to Exhibits A and B to reflect the acquisition or construction of facilities to provide New Contract Capacity pursuant to this Article. The City shall give notice of the Amendments to the Participating Agencies, and shall provide copies of the Amendments with the notice. 7.3 Liquidated Damages. -22- 60409.00001\30914102.9 7.3.1 The parties recognize that appropriate capacity and long term planning for same are essential to the proper provision of sewerage service. In recognition of same, the parties agree that discharge beyond Contract Capacity will result in damages that are difficult to determine. Therefore, the damages are being liquidated in an amount estimated to the actual damage that will be incurred by the City, and is not a penalty. In the event that a Participating Agency exceeds its Contract Capacity after the City has given notice that New Capacity is required, said Participating Agency shall be assessed and pay a liquidated damages until such time as the Participating Agency obtains the required New Capacity. The liquidated damages shall be fifteen percent (15%) of the quarterly charges authorized pursuant to this Agreement times the amount of Flow which exceeds the Participating Agency’s Contract Capacity for the each quarter in which any exceedance occurs. 7.3.2 In the event that a Participating Agency fails to pay the charges imposed under this Article after the City has given notice that payment is required, said Participating Agency shall be assessed and shall pay liquidated damages of ten percent (10%) of the total outstanding charges each quarter until said charges are paid in full. VIII. THE METRO COMMISSION 8.1 Membership. The Metro Commission shall consist of one representative from each Participating Agency. Each Participating Agency shall have the right to appoint a representative of its choice to the Metro Commission. If a Participating Agency is a dependent district whose governing body is that of another independent public agency that Participating Agency shall be represented on the Metro Commission by a representative appointed by the governing body which shall have no more than one representative no matter how many Participating Agencies it governs. Each member has one vote in any matter considered by the Metro Commission. The Metro Commission shall establish its own meeting schedule and rules of conduct. The City may participate in the Metro Commission on an ex officio, non-voting basis. -23- 60409.00001\30914102.9 8.2 Advisory Responsibilities of Metro Commission. 8.2.1 The Metro Commission shall act as an advisory body, advising the City on matters affecting the Metro System. The City shall present the position of the majority of the Metro Commission to the City’s governing body in written staff reports. The Metro Commission may prepare and submit materials in advance and may appear at any hearings on Metro System matters and present its majority position to the governing body of the City. 8.2.2 The Metro Commission may advise the City of its position on any issue relevant to the Metro System. IX. DISPUTE RESOLUTION This Section governs all disputes arising out of this Agreement. 9.1 Mandatory Non-Binding Mediation. If a dispute arises among the parties relating to or arising from a party’s obligations under this Agreement that cannot be resolved through informal discussions and meetings, the parties involved in the dispute shall first endeavor to settle the dispute in an amicable manner, using mandatory non-binding mediation under the rules of JAMS, AAA, or any other neutral organization agreed upon by the parties before having recourse in a court of law. Mediation shall be commenced by sending a Notice of Demand for Mediation to the other party or parties to the dispute. A copy of the notice shall be sent to the City, all other Participating Agencies, and the Metro Commission. 9.2 Selection of Mediator. A single mediator that is acceptable to the parties involved in the dispute shall be used to mediate the dispute. The mediator will be knowledgeable in the subject matter of this Agreement, if possible, and chosen from lists furnished by JAMS, AAA, or any other agreed upon mediator. 9.3 Mediation Expenses. The expenses of witnesses for either side shall be paid by the party producing such witnesses. All mediation costs, including required traveling and other expenses of the mediator, and the cost of any proofs or expert advice produced at the direct request of the mediator, shall be Metro System costs. 9.4 Conduct of Mediation. Mediation hearings will be conducted in an informal manner. Discovery shall not be allowed. The discussions, statements, writings and admissions and any offers to compromise during the proceedings will be confidential to the proceedings (pursuant to California Evidence -24- 60409.00001\30914102.9 Code Sections 1115 – 1128 and 1152) and will not be used for any other purpose unless otherwise agreed by the parties in writing. The parties may agree to exchange any information they deem necessary. The parties involved in the dispute shall have representatives attend the mediation who are authorized to settle the dispute, though a recommendation of settlement may be subject to the approval of each agency’s boards or legislative bodies. Either party may have attorneys, witnesses or experts present. 9.5 Mediation Results. Any resultant agreements from mediation shall be documented in writing. The results of the mediation shall not be final or binding unless otherwise agreed to in writing by the parties. Mediators shall not be subject to any subpoena or liability and their actions shall not be subject to discovery. 9.6 Performance Required During Dispute. Nothing in this Article shall relieve the City and the Participating Agencies from performing their obligations under this Agreement. The City and the Participating Agencies shall be required to comply with this Agreement, including the performance of all disputed activity and disputed payments, pending the resolution of any dispute under this Agreement. 9.7 Offers to Compromise Any offers to compromise before or after mediation proceedings will not be used to prove a party’s liability for loss or damage unless otherwise agreed by the parties in writing (pursuant to Evidence Code Section 1152.) X. INSURANCE AND INDEMNITY 10.1 City Shall Maintain All Required Insurance. 10.1.1 The City shall maintain all insurance required by law, including workers’ compensation insurance, associated with the operation of the Metro System. 10.1.2 Throughout the term of this Agreement the City shall procure and maintain in effect liability insurance covering, to the extent reasonably available, any and all liability of the City, the Metro System and the Participating Agencies, including their respective officers, directors, agents, and employees, if any, with respect to or arising out of the ownership, maintenance, operation, use and/or occupancy of the Metro System and all operations incidental thereto, including but not limited to structural alterations, new construction and demolition, including coverage for those hazards generally known in the insurance industry as exploding, collapse and underground property damage. 10.1.3 Said insurance shall name the City, and its respective officers, employees, and agents, and shall have a limit of not less than $24,000,000 combined single limit per occurrence for bodily injury, personal injury and property -25- 60409.00001\30914102.9 damage suffered by any person. Said insurance may provide for a deduction from coverage, which deductible shall not be more than $1,000,000. Said limits and/or deductible may be adjusted from time to time. Said insurance may be evidenced by a policy or policies covering only the Metro System or by endorsement to bring the same within a blanket policy or policies held by the City covering other properties in which the City has an interest provided the policy or policies have a location aggregate provision. The City may satisfy the first $1,000,000 per occurrence with a self-insurance retention program for public liability claims. The policy or policies shall name the Participating Agencies as additional insureds with evidence of same supplied to each. Insurance premiums, claims payments and claims administration costs shall be included in the computation of the SSC. 10.2 Substantially Equivalent Coverage. In the event of a transfer of the Metro System to a nonpublic entity pursuant to Article II, coverage substantially equivalent to all the above provisions shall be maintained by any successor in interest. XI. INTERRUPTION OF SERVICE Should the Metro System services to the Participating Agencies be interrupted as a result of a major disaster, by operation of federal or state law, or other causes beyond the City’s control, the Participating Agencies shall continue all payments required under this Agreement during the period of the interruption. XII. NOTICES REQUIRED UNDER AGREEMENT The City and each Participating Agency shall give notice when required by this Agreement. All notices must be in writing and either served personally, or mailed by certified mail. The notices shall be sent to the officer listed for each party, at the address listed for each party in Exhibit D in accordance with this Article. If a party wishes to change the officer and/or address to which notices are given, the party shall notify all other parties in accordance with this Article. Upon such notice, as a ministerial matter, the City shall amend Exhibit D to reflect the changes. The amendment shall be made within thirty (30) days after the change occurs. The City shall keep an updated version of Exhibit D on file with the City Public Utilities Department. The City shall provide a copy of the amended Exhibit D to all parties. XIII. EFFECTIVE DATE AND EXPIRATION 13.1 Effective Date. This Agreement shall be effective thirty (30) days after execution by the City and all of the Participating Agencies, and shall be dated as of the signature date of the last executing party. 13.2 Expiration. -26- 60409.00001\30914102.9 Subject to the rights and obligations set forth in Section 13.4, this Agreement shall expire on December 31, 2065. This Agreement is subject to extension by agreement of the parties. The parties shall commence discussions on an agreement to provide wastewater treatment services beyond the year 2065 on or before December 31, 2055. 13.3 Contract Capacity Rights Survive Expiration. The Participating Agencies’ right to obtain wastewater treatment services from the facilities referred to in, or constructed pursuant to this Agreement shall survive the expiration of the Agreement. Provided however, upon expiration of this Agreement, the Participating Agencies shall be required to pay their proportional share based on Flow and Strength of all Metro System Costs (Capital Improvement Costs and Operation and Maintenance) to maintain their right to such treatment services. Provided further, that in the event that the Participating Agencies exercise their rights to treatment upon expiration of this Agreement, the City shall have the absolute right, without consultation, to manage, operate and expand the Metro System in its discretion. 13.4 Abandonment. After December 31, 2065, the City may abandon the Metro System upon delivery of notice to the Participating Agencies ten (10) years in advance of said abandonment. Upon notice by the City to abandon the Metro System, the parties shall meet and confer over the nature and conditions of such abandonment. In the event the parties cannot reach agreement, the matter shall be submitted to mediation under Article IX. In the event of abandonment, the City shall retain ownership of all Metro System assets free of any claim of the Participating Agencies. XIV. GENERAL 14.1 Exhibits. 1. This Agreement references Exhibits A through G. Each exhibit is attached to this Agreement, and is incorporated herein by reference. The exhibits are as follows: Exhibit A Metro Facilities; Exhibit B Contract Capacities; Exhibit C Allocation of Operating Reserves and Debt Service Coverage to Participating Agencies; Exhibit D Notice Listing; Exhibit E Map of Reclaimed Water Projects; Exhibit F Pure Water Cost Allocation and Revenues; and Exhibit G 2050 Flow Projections -27- 60409.00001\30914102.9 14.2 Amendment of Agreement. Except as provided in this Agreement, and recognizing that certain amendments are ministerial and preapproved, this Agreement may be amended or supplemented only by a written agreement between the City and the Participating Agencies stating the parties’ intent to amend or supplement the Agreement. 14.3 Construction of Agreement. 14.3.1 Drafting of Agreement It is acknowledged that the City and the Participating Agencies, with the assistance of competent counsel, have participated in the drafting of this Agreement and that any ambiguity should not be construed for or against the City or any Participating Agency on account of such drafting. 14.3.2 Entire Agreement The City and each Participating Agency represent, warrant and agree that no promise or agreement not expressed herein has been made to them, that this Agreement contains the entire agreement between the parties, that this Agreement supersedes any and all prior agreements or understandings between the parties unless otherwise provided herein, and that the terms of this Agreement are contractual and not a mere recital; that in executing this Agreement, no party is relying on any statement or representation made by the other party, or the other party’s representatives concerning the subject matter, basis or effect of this Agreement other than as set forth herein; and that each party is relying solely on its own judgement and knowledge. 14.3.3 Agreement Binding on All This Agreement shall be binding upon and shall inure to the benefit of each of the parties, and each of their respective successors, assigns, trustees or receivers. All the covenants contained in this Agreement are for the express benefit of each and all such parties. This Agreement is not intended to benefit any third parties, and any such third party beneficiaries are expressly disclaimed. 14.3.4 Severability 14.3.4.1 Should any provision of this Agreement be held invalid or illegal, such invalidity or illegality shall not invalidate the whole of this Agreement, but, rather, the Agreement shall be construed as if it did not contain the invalid or illegal part, and the rights and obligations of the parties shall be construed and enforced accordingly except to the extent that enforcement of this Agreement without the invalidated provision would materially and adversely frustrate either the City’s or a Participating Agency’s essential objectives set forth in this Agreement. -28- 60409.00001\30914102.9 14.3.4.2 Should a court determine that one or more components of the allocation of costs set forth in this Agreement places the City or a Participating Agency in violation of Article XIII, Section 6 of the California Constitution with respect to their ratepayers, such components shall no longer be of force or effect. In such an event, the City and the Participating Agencies shall promptly meet to renegotiate the violative component of the cost allocation to comply with Article XIII, Section 6 of the California Constitution, and use the dispute resolution process in Article IX of this Agreement if an agreement cannot be reached through direct negotiation. 14.3.5 Choice of Law This Agreement shall be construed and enforced pursuant to the laws of the State of California. 14.3.6 Recognition of San Diego Sanitation District as Successor to Certain Parties. The parties hereby acknowledge and agree that the San Diego County Sanitation District is a Participating Agency under this Agreement as the successor in interest to the Alpine Sanitation District, East Otay Mesa Sewer Maintenance District, Lakeside Sanitation District, Spring Valley Sanitation District, and Winter Gardens Sewer Maintenance District. 14.4 Declarations Re: Agreement. 14.4.1 Understanding of Intent and Effect of Agreement The parties expressly declare and represent that they have read the Agreement and that they have consulted with their respective counsel regarding the meaning of the terms and conditions contained herein. The parties further expressly declare and represent that they fully understand the content and effect of this Agreement and they approve and accept the terms and conditions contained herein, and that this Agreement is executed freely and voluntarily. 14.4.2 Warranty Regarding Obligation and Authority to Enter Into This Agreement Each party represents and warrants that its respective obligations herein are legal and binding obligations of such party, that each party is fully authorized to enter into this Agreement, and that the person signing this Agreement hereinafter for each party has been duly authorized to sign this Agreement on behalf of said party. 14.5 Restrictions on Veto of Transfers and Acquisitions of Capacity -29- 60409.00001\30914102.9 Each party understands and agrees that this Agreement governs its respective rights and responsibilities with respect to the subject matter hereto and specifically recognizes that with respect to the transfer and acquisition of Contract Capacity (Section 4.2) or the creation of New Contract Capacity for any Participating Agency (Article VII), no Participating Agency has a right to veto or prevent the transfer of capacity by and among other Participating Agencies or with the City, or to veto or prevent the creation or acquisition capacity for another Participating Agency or Agencies, recognizing that by signing this Agreement each Participating Agency has expressly preapproved such actions. The sole right of a Participating Agency to object to any of the foregoing shall be through expression of its opinion to the Metro Commission and, where applicable, through exercise of its rights under the dispute resolution provisions of this Agreement. 14.6 Right to Make Other Agreements Nothing in this Agreement limits or restricts the right of the City or the Participating Agencies to make separate agreements among themselves without the need to amend this Agreement, provided that such agreements are consistent with this Agreement. Nothing in this Agreement or Exhibit F limits or restricts the right of the City or the Participating Agencies to enter into separate agreements for the purchase or sale of Repurified Water produced by the Water Repurification System or sharing in City Water Utility PW Costs. Such agreements shall not affect the cost allocation and Metro System revenues delineated in Exhibit F. 14.7 Limitation of Claims Notwithstanding any longer statute of limitations in State law, for purposes of any claims asserted by the City or a Participating Agency for refunds of overpayments or collection of undercharges arising under this Agreement, the parties agree that such refunds or collections shall not accrue for more than four years prior to the date that notice of such claim is received by the City or a Participating Agency. This also applies to any related adjustments to each Participating Agency’s share of net Metro System costs or revenues resulting from the resolution of such claims. The City and the Participating Agencies hereby waive any applicable statute of limitations available under State law that exceed four years. In no case shall the limitations period stated in this section begin to accrue until the date that the annual audit and year-end adjustment from which the claim arises are complete. 14.8 Counterparts This Agreement may be executed in counterparts. This Agreement shall become operative as soon as one counterpart hereof has been executed by each party. The counterparts so executed shall constitute one Agreement notwithstanding that the signatures of all parties do not appear on the same page. 14.9 No Third Party Beneficiaries This Agreement is intended to benefit only the parties hereto and no other person or entity has or shall acquire any rights hereunder. This Agreement does not create any third party beneficiary rights. -30- 60409.00001\30914102.9 SIGNATURES ON FOLLOWING PAGES -31- 60409.00001\30914102.9 IN WITNESS WHEREOF, the Parties have executed this Amendment and Restated Regional Wastewater Disposal Agreement as of the date first set forth above. CITY OF CHULA VISTA Approved as to Form: Name: Name: Title: Title: CITY OF CORONADO Approved as to Form: Name: Name: Title: Title: CITY OF DEL MAR Approved as to Form: Name: Name: Title: Title: CITY OF EL CAJON Approved as to Form: Name: Name: Title: Title: CITY OF IMPERIAL BEACH Approved as to Form: Name: Name: Title: Title: CITY OF LA MESA Approved as to Form: Name: Name: Title: Title: LEMON GROVE SANITATION DISTRICT Approved as to Form: Name: Name: Title: Title: CITY OF NATIONAL CITY Approved as to Form: Name: Name: Title: Title: -32- 60409.00001\30914102.9 OTAY WATER DISTRICT Approved as to Form: Name: Name: Title: Title: PADRE DAM MUNICIPAL WATER DISTRICT Approved as to Form: Name: Name: Title: Title: CITY OF POWAY Approved as to Form: Name: Name: Title: Title: CITY OF SAN DIEGO Approved as to Form: Name: Name: Title: Title: SAN DIEGO COUNTY SANITATION DISTRICT Approved as to Form: Name: Name: Title: Title: EXHIBIT A 60409.00001\30914102.9 EXHIBIT A METRO FACILITIES AS OF 6/27/18 Existing Facilities Pt. Loma Wastewater Treatment Plant Pt. Loma Ocean Outfall Pump Station #1 Pump Station #2 South Metro Interceptor North Metro Interceptor Metro Force Mains 1 & 2 Digested Sludge Pipeline North City Water Reclamation Plant Metro Biosolids Center (NCWR Plant Related Facilities) North City Tunnel Connector North City Raw Sludge Pipeline Centrate Pipeline Rose Canyon Parallel Trunk Sewer Second Rose Canyon Trunk Sewer East Mission Bay Trunk Sewer Morena Blvd. Interceptor South Bay Water Reclamation-Plant Dairy Mart Road & Bridge Rehab Grove Avenue Pump Station Grove Avenue Pump Station Sewer Pipeline South Bay Raw Sludge Pipeline South Bay Land/Ocean Outfall1 Environmental Monitoring & Technical Services Laboratory Centrate Treatment Facility at Metropolitan Biosolids Center Metro Operations Center (Iv10C) Complex (based on annual facilities allocation) Additional Metro Facilities Note: The below listed facilities could be required as part of the Metro System for hydraulic capacity, good engineering practices and/or compliance with applicable law, rules or regulations, including OPRA, and the continuation of the City's waiver of applicable treatment standards at the Point Loma Wastewater Treatment Plant ("Waiver"). South Bay Sludge Processing Facility 1 The South Bay Land/Ocean Outfall is jointly owned by the International Boundary and Water Commission, U.S. Section (60.06%) and the City of San Diego (39.94%). The capacity of the City’s portion of the outfall as of the date of this Agreement is 74 MDG average dry weather flow, of which the Metro System has a capacity right to 69.2 MGD and the City as an exclusive right to 4.8 MGD. EXHIBIT A-2 60409.00001\30914102.9 South Bay Secondary Treatment Plant, Phase I (21 MGD) South Bay Secondary Sewers, Phase I Note: These facilities could be required as part of the Metro System for hydraulic capacity, good engineering practices, compliance with OPRA, and to maintain the City's Waiver. In the event that hydraulic capacity demands, or the obligations of OPRA (or its successor) or the terms of the City's Waiver change, these facilities may not be required or may be modified or supplemented, as appropriate, pursuant to the terms of this Agreement. South Bay Secondary Treatment Plant, Phase II (28 MGD) South Bay Secondary Sewers, Phase II Note: These facilities could be added to the Metro System as part of Phase I of the Pure Water Program. Expansion of North City Water Reclamation Plant Morena Pump Station EXHIBIT B 60409.00001\30914102.9 EXHIBIT B CONTRACT CAPACITIES EXHIBIT C 60409.00001\30914102.9 1. Additional Contract Capacity is capacity allocated pursuant to Section 4.3.1 of the Agreement. 2. New Contract Capacity is capacity obtained pursuant to Section 6 of the Agreement. 3. Transferred Contract Capacity is capacity obtained pursuant to Section 4.2 of the Agreement. EXHIBIT C 60409.00001\30914102.9 EXHIBIT C ADMINISTRATIVE PROTOCOL ON ALLOCATION OF OPERATING RESERVES AND DEBT SERVICE COVERAGE TO PARTICIPATING AGENCIES EXHIBIT D 60409.00001\30914102.9 EXHIBIT D NOTICE LISTING City Manager City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91919 Phone: 691-5031 Fax: 585-5612 City Manager City of La Mesa 8130 Allison Avenue La Mesa, CA 91942 Phone: 667-1101 Fax: 462-7528 City Manager City of San Diego 202 “C” Street San Diego, CA 92101 Phone: 236-5949 Fax: 236-6067 City Manager City of Coronado 1825 Strand Way Coronado, CA 92113 Phone: 522-7335 Fax: 522-7846 City Manager City of Lemon Grove 3232 Main Street Lemon Grove, CA 91945 Phone: 464-6934 Fax: 460-3716 Chief Administrative Officer County of San Diego 1600 Pacific Highway, Rm. 209 San Diego, CA 92101 Phone: 531-5250 Fax: 557-4060 City Manager City of Del Mar 1050 Camino Del Mar Del Mar, CA 92014 Phone: 755-9313 ext. 25 Fax: 755-2794 City Manager City of National City 1243 National City Blvd. National City, CA 91950 Phone: 336-4240 Fax: 336-4327 General Manager Otay Water District 2554 Sweetwater Springs Blvd. Spring Valley, CA 91977 Phone: 670-2210 Fax: 670-2258 City Manager City of El Cajon 200 Civic Center Way El Cajon, CA 92020 Phone: 441-1716 Fax: 441-1770 City Manager City of Poway 13325 Civic Center Drive Poway, CA 92064 Phone: 679-4200 Fax: 679-4226 General Manager Padre Dam Municipal Water District 9300 Fanita Pkwy Santee, CA 92071 Phone: 258-4610 Fax: 258-4794 City Manager City of Imperial Beach 825 Imperial Beach Blvd. Imperial Beach, CA 91932 Phone: 423-8300 ext. 7 Fax: 429-9770 EXHIBIT E 60409.00001\30914102.9 EXHIBIT E MAP OF RECLAIMED WATER PROJECTS EXHIBIT F 60409.00001\30914102.9 EXHIBIT F PURE WATER COST ALLOCATION AND REVENUES EXHIBIT G 60409.00001\30914102.9 EXHIBIT G 2050 FLOW PROJECTIONS 7/16/18 Version AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT BETWEEN THE CITY OF SAN DIEGO AND THE PARTICIPATING AGENCIES IN THE METROPOLITAN SEWERAGE SYSTEM 60409.00001\30817939.130914102.9 AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT TABLE OF CONTENTS Page I. DEFINITIONS 2 II. OWNERSHIP AND OPERATION OF THE METRO SYSTEM 46 III. PAYMENT AND MONITORING PROVISIONS 811 IV. CAPACITY RIGHTS 914 V. SYSTEM OF CHARGES 1015 VI. PLANNING 1420 VII. FACILITIES SOLELY FOR NEW CONTRACT CAPACITY 1420 VIII. THE METRO COMMISSION 1623 IX. DISPUTE RESOLUTION 1723 X. INSURANCE AND INDEMNITY 1824 XI. INTERRUPTION OF SERVICE 1925 XII. NOTICES REQUIRED UNDER AGREEMENT 1925 XIII. EFFECTIVE DATE AND TERMINATION 1926 XIV. GENERAL 2026 Exhibits A. Metro Facilities B. Contract Capacities C.Existing Capacity Charge ListingAllocation of Operating Reserves and Debt Service Coverage to Participating Agencies D. Notice Listing E. Reclaimed Water Distribution System F.Pure Water Cost Allocation and Revenues G.2050 Flow Projections 60409.00001\30817939.130914102.9 -i- AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT THIS AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT is made and entered into this _____ day of _________________, 19982018, by and between the CITY OF SAN DIEGO, a municipal corporation (“the City”); and the CITY OF CHULA VISTA, a municipal corporation; the CITY OF CORONADO, a municipal corporation; the CITY OF DEL MAR, a municipal corporation; the CITY OF EL CAJON, a municipal corporation; the CITY OF IMPERIAL BEACH, a municipal corporation; the CITY OF LA MESA, a municipal corporation; the LEMON GROVE SANITATION DISTRICT, a political subdivision of the State of California; the CITY OF NATIONAL CITY, a municipal corporation; the CITY OF POWAY, a municipal corporation; the WINTER GARDENS SEWER MAINTENANCE DISTRICT, a maintenance district established pursuant to California Streets & Hwys. Code section 5820 et seq.; the ALPINE SANITATION DISTRICT, a political subdivision of the State of California; the LAKESIDE SANITATION DISTRICT, a political subdivision of the State of California; the SPRING VALLEY SANITATION DISTRICT, a political subdivision of the State of California; the OTAY WATER DISTRICT, a political subdivision of the State of California; and the PADRE DAM MUNICIPAL WATER DISTRICT, a political subdivision of the State of California; and the SAN DIEGO COUNTY SANITATION DISTRICT, a political subdivision of the State of California (the “Participating Agencies”). RECITALS WHEREAS, the City and the Participating Agencies (or their predecessors in interest) entered into that certain Regional Wastewater Disposal Agreement dated May 18, 1998 (the “1998 Agreement”), which provided, among other things, for certain contract rights to capacity in the Metropolitan Sewerage System, a system of wastewater conveyance, treatment, and disposal facilities (“Metro System”) and the establishment of a mechanism to fund the planning, design, construction, operation, and maintenance of the Metro System by the City and the Participating Agencies; and WHEREAS, the City and the Participating Agencies are autonomous entities each having the authority to provide and to contract for the conveyance, treatment and disposal of wastewater. WHEREAS, each Participating Agency currently has a contract with the City to provide wastewater conveyance, treatment and disposal services through the Metropolitan Sewerage System (Metro System), a system of wastewater conveyance, treatment and disposal facilities. WHEREAS, each of the Participating Agencies has specified capacity service rights in the existing Metro System pursuant to pre-existing agreements with the City. WHEREAS, the purposes of thisthe 1998 Agreement arewere: (1) to replace the existingprior-existing sewage disposal agreements between the City and the Participating Agencies; (2) to provide certain contract rights to capacity in the Metro System to the Participating Agencies; (3) to establish a mechanism to fund the planning, design, construction, 60409.00001\30817939.130914102.9 -1- operation and maintenance of the Metro System by the City and the Participating Agencies as necessary to provide hydraulic capacity, and to comply with applicable law and with generally accepted engineering practices; and (4) to establish a system of charges which allocates the costs of the planning, design and construction of such new wastewater conveyance, treatment and disposal facilities as are necessary solely to provide for new capacity on a fair and equitable basis.; and WHEREAS, on April 29, 2014 the San Diego City Council gave its approval and support for the Pure Water San Diego program by adoption of Resolution No. R-308906. The Resolution approved and supported the City’s efforts to develop an implementation strategy to offload wastewater flow from the Point Loma Wastewater Treatment Plant through implementation of potable reuse, resulting in effluent discharged to the Pacific Ocean being equivalent to what would be achieved by upgrading the Point Loma Wastewater Treatment Plant to a secondary treatment plant (secondary equivalency); and WHEREAS, the City is implementing a phased, multi-year program designed to regionally produce at least 83 million gallons per day of safe, reliable potable water using new, expanded, or modified facilities, some of which will include Metro System facilities, in order to achieve secondary equivalency at the Point Loma Wastewater Treatment Plant; and WHEREAS, the Pure Water Program will not only benefit the City by producing repurified water, but also the Participating Agencies and their wastewater customers, especially if secondary equivalency is recognized through federal legislation amending the Clean Water Act. Specifically, implementation of the Pure Water Program will reduce wastewater discharges to the Point Loma Wastewater Treatment Plant, part of the Metro System where a large portion of the Participating Agencies’ wastewater is currently treated and disposed by discharging it into the Pacific Ocean. By diverting wastewater from the Point Loma Wastewater Treatment Plant and reducing the effluent discharged into the Pacific Ocean, the City and the Participating Agencies will potentially avoid billions of dollars in unnecessary capital, financing, energy, and operating costs to upgrade the Point Loma plant to secondary treatment at full capacity. Avoiding such costs would result in significant savings for regional wastewater customers; and WHEREAS, the Padre Dam Municipal Water District, San Diego County Sanitation District, and the City of El Cajon have proposed a program to produce up to 15 million gallons per day of safe, reliable potable water for East San Diego County using wastewater that would otherwise be disposed of in the Metro System (“East County AWP Program”). By offloading wastewater and wastewater contents from the Point Loma Wastewater Treatment Plant, the East County AWP Program would, if implemented, help the City’s and region’s efforts to achieve long-term compliance with the Clean Water Act by producing a regional annual average of at least 83 million gallons per day of water suitable for potable reuse by December 31, 2035, as described in the Cooperative Agreement in Support of Pure Water San Diego entered into by the City and certain environmental stakeholders on December 9, 2014. -2- 60409.00001\30817939.130914102.9 WHEREAS, Section XIV, subsection B, of the 1998 Agreement provided that the Parties may amend the Agreement by a written agreement between the City and all Participating Agencies stating the parties’ intent to amend the Agreement; and WHEREAS, in order to comprehensively and equitably address the costs and revenues associated with the Pure Water Program and the related construction, expansion, and/or modification of Metro System facilities, the City and Participating Agencies wish to amend and restate the Regional Wastewater Disposal Agreement as provided herein. THEREFORE, in consideration of the mutual promises set forth herein, the City and the Participating Agencies agree as follows: DEFINITIONSI. Annual Average Daily Flow is the number, in millions of gallons of wastewaterA. per day (“MGD”), calculated by dividing total Flow on a fiscal year basis by 365 days. Brine is a waste byproduct of the demineralization process at an upstreamB. Water Repurification System facility or a Reclaimed Water facility. Capital Expense Rate is the cost per acre foot that will apply if the MetroC. System’s Capital Improvement Costs for the Pure Water Program and/or upgrading of the Point Loma WTP to secondary treatment exceed $1.8 billion, as further described in Exhibit F. B. Capital Improvement Costs are costs associated with the planning, design,D. financing, construction, or reconstruction of facilities. C. Chemical Oxygen Demand or “COD” means the measure of the chemicallyE. decomposable material in wastewater, as determined by the procedures specified in the most current edition of “Standard Methods for the Examination for Water and Wastewater,” or any successor publication which establishes the industry standard. City Water Utility PW Costs are those Pure Water Program costs allocated toF. the City’s water utility and therefore excluded as Metro System costs under Exhibit F. D. Contract Capacity is the contractual right possessed by each ParticipatingG. Agency to discharge wastewater into the Metro System pursuant to this Agreement up to the limit set forth in Exhibit B attached hereto. Contract Capacity is stated in terms of Annual Average Daily Flow. E. Flow is the amount of wastewater discharged by the City and eachH. Participating Agency. F. Functional-Design Methodology shall mean the process of allocatingI. -3- 60409.00001\30817939.130914102.9 Operation and Maintenance Costs and Capital Improvement Costs to Flow and Strength parameters recognizing the benefits of both the design criteria and the primary function of a unit process. Metro Commission is the advisory body created under Section VIII.J. G. Metro System Costs are those costs set forth in Section V.B.15.2.1.K. H. Metro System Revenues are those revenues set forth in Section V.B.25.2.2.L. I. Metropolitan Sewerage System or Metro System shall mean and consist ofM. those facilities and contract rights to facilities which are shown and/or described in Exhibit A attached hereto and incorporated by this reference, including any amendments thereto authorized by this Agreement. J. Municipal System shall mean the City’s wastewater collection system, whichN. consists of pipelines and pump stations, that collects wastewater within the City of San Diego and conveys it to the Metropolitan Sewerage System for treatment and disposal. K. New Capacity is the capacity to discharge wastewater outside the MetroO. System, above the Contract Capacity set forth in Exhibit B attached hereto. L. New Contract Capacity is the capacity to discharge wastewater into theP. Metro System, above the Contract Capacity set forth in Exhibit B attached hereto. M. North City Water Reclamation Plant or North City WRP is the 30Q. million gallons per day (as of the date of this Agreement) wastewater treatment facility located at 4949 Eastgate Mall in San Diego, which includes four major processes: primary treatment, secondary treatment, tertiary treatment, and disinfection. N. Operation and Maintenance Costs are the costs of those items andR. activities required by sound engineering and management practices to keep the conveyance, disposal, treatment, and reuse facilities functioning in accordance with all applicable laws, rules, and regulations. O. Point Loma Wastewater Treatment Plant or Point Loma WTP is the 240S. million gallons per day (as of the date of this Agreement) advanced primary treatment plant which includes four major processes: screening, grit removal, sedimentation, and digestion. Pure Water Program is the City’s phased, multi-year program designed toT. produce at least 83 million gallons per day of Repurified Water using new, expanded, or modified facilities, some of which will include Metro System facilities. -4- 60409.00001\30817939.130914102.9 P. Reclaimed Water (or Recycled Water) shall have the definition set forth inU. Title 22, Division 4 of the California Code of Regulations and shall mean water which, as a result of treatment of wastewater, is suitable for a direct beneficial use or a controlled use that otherwise could not occur. Q. Reclaimed Water (or Recycled Water) Distribution System shall meanV. and consist of those eight (8) reclaimed water projects listed in Attachment B of the Stipulated Final Order for Injunctive Relief approved by the U.S. District Court on June 6, 1997 in U.S.A. v. City of San Diego, Case No. 88-1101-B, and attached hereto as Exhibit E. R. Repurified Water shall mean water which, as a result of advanced treatmentW. of Reclaimed Water, is suitable for use as a source of domestic (or potable) water supply. Repurified Water Revenue is the cost savings that will be realized when theX. City water utility’s annual costs per-acre foot for Repurified Water are less than the purchase costs per-acre foot for comparable water from the San Diego County Water Authority, as further described in Exhibit F. S. Return Flow shall mean the effluent created by the dewatering of digestedY. biosolids, which includes centrate. T. Reuse shall mean to use again, such as water which has been reclaimed orZ. repurified, or sludge that has been converted to biosolids for beneficial use. U. South Bay Land/Ocean Outfall is the facility that is jointly owned by theAA. International Boundary & Water Commission (U.S. Section IBWC) and the City of San Diego. The Outfall is planned to convey and discharge treated effluent from the IBWC’s International Wastewater Treatment Plant and treated effluent from the City’s South Bay Water Reclamation Plant and the South Bay Secondary Treatment Plant. As of the date of this Agreement, the Outfall has a current Average Daily Flow Capacity of 174 million gallons per day. As of the date of this Agreement, the City owns 39.94% of the capacity of the Outfall and the balance of the capacity is owned by the IBWC. South Bay Water Reclamation Plant is the 15 million gallons per day (as ofBB. the date of this Agreement) wastewater treatment facility located at 2411 Dairy Mart Road in San Diego, which includes four major processes: primary treatment, secondary treatment, tertiary treatment, and disinfection. V. Strength means the measurement of Suspended Solids (SS) and ChemicalCC. Oxygen Demand (COD) within the wastewater Flow and any other measurement required by law after the date of this Agreement. W. “Suspended Solids” or “SS” means the insoluble solid matter in wastewaterDD. that is separable by laboratory filtration, as determined by the procedures -5- 60409.00001\30817939.130914102.9 specified in the most current edition of “Standard Methods for the Examination of Water and Wastewater,” or any successor publication which establishes the industry standard. X. Tertiary Component is that portion of the wastewater treatment processEE. that currently filters the secondary treated wastewater effluent through fine sand and/or anthracite coal to remove fine Suspended Solids and disinfects it to meet the requirements of the California Administrative Code, Title 22, or its successor for filtered and disinfected wastewater. Y. Water Repurification System includes the Advanced Water Treatment (AWT) Facility located at or near the North City Water Reclamation Plant site and the Repurified Water Conveyance System which will transport repurified water from the AWT Facility to the San Vicente Reservoir. The major processes of the AWT Facility include: ultra or micro filtration, reverse osmosis, and ozonation. Water Repurification System shall mean any facilities, including treatment andFF. conveyance facilities, the purpose of which is the production or conveyance of Repurified Water. Water Repurification System includes, but is not limited to: the Tertiary Component of the North City Water Reclamation Plant to the extent being used to produce Repurified Water, the North City Advanced Water Purification Facility to be located across the street from the North City Water Reclamation Plant (“North City AWP Facility”); the Repurified Water conveyance system, which will transport Repurified Water from the North City AWP Facility and/or other facilities to the Miramar Reservoir or other alternative location(s) as determined by the City; and any other Repurified Water treatment or conveyance facilities which are part of the Pure Water Program. Wet Weather Flow is Flow entering the Metro System during rainy weather.GG. Peak 24-Hour Wet Weather Flow is the highest measured Wet Weather Flow occurring in a 24 hour period during a fiscal year. Wet Weather Flow Rights are the estimated amounts of Wet Weather Flow, stated in millions of gallons per day (MGD), that the City and each Participating Agency are projected to have in the 2050 fiscal year. Wet Weather Flow Rights are the 10-year average of Wet Weather Flow for 2050, and are calculated by dividing total estimated annual Wet Weather Flow by 365 days. Wet Weather Flow Rights are stated in Column 7 of Exhibit G. OWNERSHIP AND OPERATION OF THE METRO SYSTEMII. A. Rights of the Parties.2.1 The City is the owner of the Metro System, and of any additions to the Metro System or other facilities constructed pursuant to this Agreement. All decisions with respect to the planning, design, construction, operation and maintenance of the Metro System shall rest -6- 60409.00001\30817939.130914102.9 with the City, in consultation with the Metro Commission. The Participating Agencies shall have a contractual right to use the Metro System and to participate in its operation as set forth in this Agreement. Subject to the terms of this Agreement, and in conformance with all applicable laws, the City may transfer ownership of all or part of the Metro System at any time. In the event of a transfer, the City’s successor shall be bound by the terms of this Agreement. Subject to the terms of this Agreement, any Participating Agency may transfer or assign its rights and obligations under this Agreement. Any transfer shall first be approved by the City. No transfer may occur if the City reasonably determines, after consultation with the Participating Agencies involved, that the proposed transfer will imbalance, or will otherwise adversely impact the City’s ability to operate the Metro System. B. Metro System Services.2.2 1. The City shall provide wastewater conveyance, treatment and disposal2.2.1 services to the Participating Agencies through the Metro System, under the terms set forth in this Agreement. 2. The City shall operate the Metro System in an efficient and2.2.2 economical manner, maintaining it in good repair and working order, all in accordance with recognized sound engineering and management practices. 3. The City shall convey, treat, and dispose of or reuse all wastewater2.2.3 received under this Agreement in such a manner as to comply with all applicable laws, rules and regulations. C. Flow Commitment.2.3 1. Absent agreement of the parties, all Flow from the Participating2.3.1 Agencies and the City, up to the capacity limits set forth in Exhibit B or any amendments thereto, shall remain in the Metro System. 2. This Agreement shall not preclude any Participating Agency from2.3.2 diverting Flow from the Metro System as a result of the construction of reclamation facilities or New Capacity outside of the Metro System. 3. Any Participating Agency may negotiate an agreement with the City to2.3.3 withdraw all Flow from the Metro System, which at a minimum requires the Agency to pay its proportionate share of Capital Improvement Costs. If a Participating Agency enters into an agreement with the City by December 31, 2019, to withdraw all Flow from the Metro System by January 1, 2035, such Participating Agency shall not pay Pure Water Program Capital Improvement Costs except for Phase I (as defined below in Section 2.8). D. Funding Obligations.2.4 -7- 60409.00001\30817939.130914102.9 Nothing in this Section or in this Agreement shall obligate the City to make any payment for the acquisition, construction, maintenance or operation of the Metro System from moneys derived from taxes or from any income and revenue of the City other than moneys in or sewer revenues which go into the Sewer Revenue Fund for the Metro System and from construction funds derived from the sale of such sewer revenue bonds for the Metro System as are duly authorized. Nothing in this contractAgreement shall be construed to obligate the City to pay from its annual income and revenues any sum which would create an indebtedness, obligation or liability within the meaning of the provisions of Section 18 of Article XVI of the Constitution of the State of California. Nothing in this Section, however, or in this Agreement shall prevent the City, in its discretion, from using tax revenues or any other available revenues or funds of the City for any purpose for which the City is empowered to expend moneys under this Agreement. Nothing herein shall relieve the City from its obligations to fund and carry out this Agreement. Nothing in this Section or in this Agreement shall obligate any Participating Agency to make any payment which would create an indebtedness, obligation or liability within the meaning of the provisions of Section 18 of Article XVI of the Constitution of the State of California, or which is not authorized by law. E. Financial Statements.2.5 1. The City shall keep appropriate records and accounts of all costs and2.5.1 expenses relating to conveyance, treatment, disposal, and reuse of wastewater, and production of Repurified Water, and the acquisition, planning, design, construction, administration, monitoring, operation and maintenance of the Metro System. and Water Repurification System, and any grants, loans, or other revenues received therefor. The City shall keep such records and accounts for at least four (4) years, or for any longer period required by law or outside funding sources. 2. Said records and accounts shall be subject to reasonable inspection by2.5.2 any authorized representative of any Participating Agency at its expense. Further, said accounts and records shall be audited annually by an independent certified public accounting firm appointed by the City pursuant to generally accepted accounting principles. A copy of said report shall be available to any Participating Agency. As part of said audit, the actual amount of City Water Utility’s PW Costs, Pure Water Program costs attributable to the Metro System, Repurified Water Revenue, and the Capital Expense Rate shall be determined and audited by the City’s external auditors and Participating Agency representatives, and a cumulative and annual summary of such amounts shall be included as a footnote or attachment to the audit of the Metro System. Cost summaries shall include separate lines for Capital Improvement Costs and Operation and Maintenance Costs. The City shall make a good faith effort to complete the annual audit, and2.5.3 any related adjustments under this Agreement, by the end of the following fiscal year. -8- 60409.00001\30817939.130914102.9 F. Limitations on Types and Condition of Wastewater.2.6 1. Each Participating Agency will comply with all applicable laws, rules2.6.1 and regulations including its regulatory obligations associated with the discharge of wastewater into its respective system and from such system into the Metro System. 2. Each Participating Agency will minimize to the maximum extent2.6.2 practicable, the infiltration and inflow of surface, ground or stormwaters into its respective wastewater systems. 3. Each Participating Agency will insure that all industrial users of its2.6.3 wastewater system are regulated by an effective industrial pretreatment program that conforms to all to all applicable laws, rules and regulations and that is acceptable to the City. Provided, however, that the City shall not require the Participating Agencies to take any actions beyond that which is required under applicable laws, rules and regulations that can be taken but are not being taken by the City. 4. The City and the Participating Agencies agree that nothing in this2.6.4 Agreement, including the termination of the existing sewage disposal agreements, shall affect the validity of the Interjurisdictional Pretreatment Agreements, or the separate transportation agreements that are currently in effect between or among the City and the Participating Agencies. 5. Each Participating Agency will not discharge a substantial amount of2.6.5 sewage originating outside its respective boundaries into the Metro System without the approval of the City. 6. Each Participating Agency shall be responsible for the violation of any2.6.6 applicable laws, rules or regulations associated with its respective discharge of wastewater into the Metro System. Nothing in this Agreement shall affect the ability of any Participating Agency to hold third parties responsible for such violations. 7. In the event a regulatory agency imposes any penalty or takes other2.6.7 enforcement action relating to the conveyance, treatment, and disposal or reuse of wastewater in or from the Metro System, the City shall determine whetherif the City or a Participating Agency or Agencies caused or contributed to such penalty or enforcement actionsthe violation by exceeding its Contract Capacity or by the contents of its wastewater. The City shall allocate the penalty or other relief, including the costs of defense, to the party or parties responsible. Each responsible party, whether a Participating Agency or the City, shall be obligated to pay its share of such penalty or other relief, and any costs of defense. In the event that the City cannot make such an allocation, the cost of such -9- 60409.00001\30817939.130914102.9 penalty or other relief shall be shared by the Participating Agencies and the City proportionately based on Flow and Strength. G. Right of First Refusal.2.7 1. The City shall not sell or agree to sell the Metro System without first2.7.1 offering it to the Participating Agencies. For the purposes of this section, “Participating Agencies” shall mean a Participating Agency, a group of Participating Agencies, or a third party representing one or more Participating Agencies. The term “sell” shall include any transfer or conveyance of the Metro System or of any individual treatment or reclamation facility or outfall within the Metro System. 2. The City and the Participating Agencies recognize that transfer of2.7.2 ownership of the Metro System is currently restricted by Sections 6.04 and 6.20 of the Installment Purchase Agreement between the City and the Public Facilities Financing Authority of the City, which inter alia restricts the transfer of ownership to the Metropolitan Wastewater Sewage District or other governmental agency whose primary purpose is to provide wastewater treatment. The City shall not seek to impose on bond holders a waiver of Section 6.04 or 6.20. Absent such a restriction, before the City sells or agrees to sell the Metro System, or any portion of it, the City shall offer to sell the Metro System to the Participating Agencies (“the Offer”) on the terms and at a price equal to that proposed for the sale of the Metro System to a third party. The Participating Agencies shall have thirty days from receipt of the Offer (“the Intent to Respond Period”) in which to notify the City of their intent to respond to the Offer. The Participating Agencies shall have five months from the expiration of the Intent to Respond Period in which to accept or reject the Offer. The Offer shall contain the name of the proposed purchaser, the proposed sale price, the terms of payment, the required deposit, the time and place for the close of escrow, and any other material terms and conditions on which the sale is to be consummated. 3. If the Participating Agencies give timely notice of their intent to2.7.3 respond and timely notice of their acceptance of the Offer, then the City shall be obligated to sell and the Participating Agencies shall be obligated to purchase the Metro System or any individual treatment or reclamation facility or outfall within the Metro System, as applicable, at the price and on the terms and conditions of the Offer. If the Participating Agencies do not give timely notice of their intent to respond or their acceptance of the Offer, or do not submit an offer on the same terms and conditions as the Offer, the City may, following the end of the Offer period, sell the Metro System, or any portion of it, at a price and on terms and conditions no less favorable to the City than those in the Offer. The City shall not sell the Metro System to any third party on terms or at a price -10- 60409.00001\30817939.130914102.9 less favorable to the City from the terms and price contained in the Offer absent compliance with the terms of this Section. 4. Nothing herein shall prevent the City from entering into a financing2.7.4 agreement which may impose limits on the City’s power to sell the Metro System to the Participating Agencies pursuant to Section H.12.7.1. if the City reasonably believes that such a financing agreement is in the City’s best interest. Neither the entry into such a financing agreement by the City nor the performance thereof by the City shall constitute a breach or default by the City hereunder. Pure Water San Diego Program.2.8 Each new, expanded, or modified Metro System facility which is used in relation to the production of Repurified Water (in addition to the modification and expansion of the North City Water Reclamation Facility) shall be governed by this Agreement and Exhibit F, attached hereto and incorporated herein. Future Negotiations and Cooperation.2.9 This Agreement and Exhibit F specifically contemplate Phase I of the2.9.1 Pure Water Program, which consists of new, expanded, or modified Metro System facilities and Water Repurification System facilities designed to produce only up to 30 million gallons per day of Repurified Water (“Phase I”). During the planning process for later phases of the Pure Water Program, the parties shall meet and negotiate in good faith regarding one or more amendments to this Agreement or its Exhibits to address: The allocation of specific Pure Water Program costs between2.9.1.1 City’s water utility and the Metro System for such later phases; Whether, and to what extent, certain Metro System costs should2.9.1.2 be charged based on volume capacity rights, Strength capacity rights, Peak 24-Hour Wet Weather Flow, and/or other factors; The exclusion of costs related to the industrial discharges2.9.1.3 inspection and monitoring program within San Diego under Section 5.2.1.2.3 of the Agreement; and The handling of waste generated at United States military bases2.9.1.4 under this Agreement. If such negotiations do not result in an amendment to this Agreement or its Exhibits concerning these subjects, this Agreement shall remain in full force and effect as set forth herein. Further, if the City proceeds with a later phase of the Pure Water Program as authorized under Section 2.1 -11- 60409.00001\30817939.130914102.9 of this Agreement, and the Parties have not yet amended this Agreement or Exhibit F to specifically address such costs by the time they are incurred, all costs listed in Section I of Exhibit F shall nonetheless be excluded as Metro System costs under this Agreement. The City and the Participating Agencies shall cooperate and coordinate in2.9.2 good faith with the Padre Dam Municipal Water District, San Diego County Sanitation District, and City of El Cajon on issues that relate to the East County AWP Program, including, but not limited to, the transfer of the Mission Gorge Pump Station; disposal of residuals; and a source control program. III. III.PAYMENT AND MONITORING PROVISIONS A. Payment for Metro System Facilities.3.1 Through the system of charges set forth in SectionArticle V of this Agreement, each Participating Agency shall pay its share of the costs of planning, design and construction of all of the Metro System facilities which are identified in Exhibit A hereto, which is incorporated herein by reference. B. Payment for Additional Metro System Facilities.3.2 Through the system of charges set forth in SectionArticle V of this Agreement, each Participating Agency shall pay its share of the costs of acquisition, or planning, design and construction of such facilities in addition to those set forth on Exhibit A as are necessary for the Metro System to maintain compliance with applicable laws, rules and regulations, including the Ocean Pollution Reduction Act of 1994 and its successor(s), present and future waivers of applicable treatment standards at any Metro System treatment facility, and all facilities as are necessary to convey, treat, dispose, and reuse wastewater in the Metro System to provide the Contract Capacity set forth in Exhibit B, to maintain hydraulic capacity and as otherwise required by sound engineering principles. As a ministerial matter, the City shall amend Exhibit A from time to time to reflect such additional facilities and shall give notice of any amendments to the Participating Agencies. The City shall keep an updated version of Exhibit A on file with the City ClerkPublic Utilities Department. Exhibit A may be amended to reflect other changes to the Metro System only as expressly provided in this Agreement. C. Payment for Operation and Maintenance.3.3 Through the system of charges set forth in SectionArticle V of this Agreement, each Participating Agency shall pay its share of the Operation and Maintenance Costs of all Metro System facilities. Provided however, that The Participating Agencies shall not pay for the Operation and Maintenance Costs of the Tertiary Component of the North Water Repurification System, which are City Water Reclamation Plant that can be allocated solely to the production of Repurified WaterUtility PW Costs. -12- 60409.00001\30817939.130914102.9 D. Charges Based on Flow and Strength; Exception.3.4 Except as otherwise described in this Section 3.4, a Participating3.4.1 Agency’s share of the charges in this SectionArticle III shall be assessed pursuant to SectionArticle V of this Agreement based on its proportionate Flow in the Metro System and the Strength of its wastewater. Notwithstanding section 3.4.1, or any other provision of this Agreement,3.4.2 a Participating Agency’s share of Pure Water Program Capital Improvement Costs and Pure Water Program revenues attributable to the Metro System under Exhibit F shall be assessed or credited based on the parties’ proportionate share of Wet Weather Flow Rights. Wet Weather Flow Rights are based on projections of each party’s 10-year average of Wet Weather Flow in the year 2050 as set forth in Column 7 of Exhibit G, which is attached hereto and incorporated herein. The City shall annually allocate the estimated and actual Pure Water Program Capital Improvement Costs and revenues which are attributable to the Metro System under Exhibit F in proportion to each party’s share of Wet Weather Flow Rights (Column 8 of Exhibit G) when estimating quarterly payments and conducting year-end adjustments under Article V. Each party recognizes that operation within respective Wet Weather3.4.3 Flow Rights is essential to the accurate allocation of costs and revenues under the Pure Water Program. In recognition of same, the parties agree as follows: Beginning in the next fiscal year after the effective date of this3.4.3.1 Agreement, if any party’s Annual Average Daily Flow exceeds its Wet Weather Flow Rights for any two (2) consecutive fiscal years, the City shall prepare an amendment to Exhibit G that adjusts projections of each party’s 10-year average of Wet Weather Flow in 2050 based on information about such party’s exceedance and other relevant information. Upon approval by a majority of the Metro Commission, the City shall, as a ministerial matter, amend the Wet Weather Flow Rights in Column 7 of Exhibit G (and the percentages in Column 8 of Exhibit G) to reflect the new projections of 10-year average of Wet Weather Flow. The City shall keep an updated version of Exhibit G on file with the City Public Utilities Department. If the City and the Metro Commission cannot agree on an amendment to Exhibit G, the matter shall be submitted to dispute resolution pursuant to Article IX. -13- 60409.00001\30817939.130914102.9 Notwithstanding the amounts set forth in Column 7 of Exhibit G,3.4.3.2 the following parties will have the following Wet Weather Flow Rights until July 1, 2025: Padre Dam: 2.797 MGD3.4.3.2.1 San Diego County Sanitation District: 22.8443.4.3.2.2 MGD El Cajon: 8.542 MGD3.4.3.2.3 If Exhibit G is amended to update one or more parties’ Wet3.4.3.3 Weather Flow Rights, the change in Wet Weather Flow Rights shall be retroactive in effect, and the City shall use the updated amounts in estimating quarterly payments and conducting year- end adjustments for Pure Water Program costs and revenues. Therefore, any party that underpaid based on previous Wet Weather Flow Rights (which were based on prior projections of 2050 Flow) shall pay the retroactive amount due in its quarterly payments the following fiscal year; any party that overpaid based on previous Wet Weather Flow Rights shall receive a credit in its quarterly payments the following fiscal year. Notwithstanding the preceding sentence, if the retroactive amount due exceeds 20% of a party’s average annual Metro System payments for the previous four (4) years, such party may elect to pay the retroactive amount due in its quarterly payments over the subsequent four (4) fiscal years; any party that overpaid based on previous Wet Weather Flow Rights shall receive a credit in its quarterly payments the following four (4) fiscal years. E. Monitoring Flow and Strength.3.5 1. The City shall monitor wastewater that is discharged into the Metro3.5.1 System for Flow and Strength. The City shall own and operate as part of the Metro System monitoring devices which will measure the amount of daily wastewater discharged into the Metro System. These devices shall be installed at locations appropriate to accurately monitor Flow and Strength. The City may also monitor wastewater Flow and Strength at other locations as it deems appropriate. 2. In measuring Strength, the frequency and nature of the monitoring3.5.2 shall not be more stringent for the Participating Agencies than it is for the City. 3. The City shall, at least once every five (5) years, update and provide3.5.3 its plans for the monitoring system and for the procedures it will use to determine Strength to the Participating Agencies for. The Participating -14- 60409.00001\30817939.130914102.9 Agencies shall have the opportunity to review and comment prior to implementation. 4. The City shall report Flow and Strength data to the Participating3.5.4 Agencies at least quarterly. CAPACITY RIGHTSIV. A. Contract Capacity.4.1 In consideration of the obligations in this Agreement, each Participating Agency shall have a contractual right to discharge wastewater to the Metro System up to the Contract Capacity set forth in Exhibit B. The Wet Weather Flow Rights stated in Exhibit G, which are used solely for the purpose of allocating Pure Water Program costs and revenues attributable to the Metro System under this Agreement, do not replace or limit Contract Capacity. Each party’s Contract Capacity takes into account Wet Weather Flow. B. Transfers of Contract Capacity.4.2 The Participating Agencies and the City may buy, sell or exchange all or part of their Contract Capacity among themselves on such terms as they may agree upon. The City shall be notified prior to any transfer. Any transfer shall be first approved by the City. No Contract Capacity may be transferred if the City determines, after consultation with the Participating Agencies involved in the transaction, that said transfer will unbalance, or will otherwise adversely impact the City’s ability to operate the Metro System. Provided, however, that the Participating Agency seeking the transfer may offer to cure such imbalance at its own expense. Following the City’s consent, as a ministerial matter, the Contract Capacity set forth in Exhibit B shall be adjusted to reflect the approved transfer. C. Allocation of Additional Capacity.4.3 The parties recognize that the City’s applicable permits for the Metro System may be modified to create capacity in the Metro System beyond that set forth in Exhibit B as a result of the construction of additional facilities or as a result of regulatory action. This additional capacity shall be allocated as follows: 1. Except as provided in subsection 2section 4.3.2 below, in the event4.3.1 that the Metro System is rerated so that additional permitted capacity is created, said capacity shall be allocated proportionately based upon the Metro System charges that have been paid since July 1, 1995 to the date of rerating. 2. In the event that the additional permitted capacity is created as the4.3.2 result of the construction of non-Metro System facilities, or as the result of the construction of facilities pursuant to SectionArticle VII, such additional capacity shall be allocated proportionately based on the payments made to plan, design and construct such facilities. -15- 60409.00001\30817939.130914102.9 D. Deductions in Contract Capacity.4.4 The parties further recognize that the Contract Capacity in Exhibit B and Wet Weather Flow Rights in Exhibit G may be modified to comply with, or in response to, applicable permit conditions, or related regulatory action, or sound engineering principles. In the event that the capacity of the Metro System is rerated to a level below the total capacity set forth in Exhibit B, the Contract Capacity in Exhibit B and Wet Weather Flow Rights in Exhibit G shall be reallocated proportionately pending the acquisition or construction of new facilities. The City shall acquire or construct such facilities as necessary to provide the Contract Capacity rights set forth in Exhibit B, as planning and capacity needs require. The costs of such facilities shall be assessed pursuant to Section III.B. above3.2. E. Amendments to Exhibits B and C.4.5 As a ministerial matter, the City shall prepare amendments to Exhibits B and C to reflect any adjustment in Contract Capacity pursuant to this SectionArticle within ninety (90) days after the adjustment is made. The City shall give notice of the amendments to each Participating Agency, and shall provide copies of the amendments with the notice. The City shall keep an updated version of Exhibits B and C on file with the City ClerkPublic Utilities Department. F. The South Bay Land/Ocean Outfall.4.6 Nothing in this SectionArticle shall limit the City’s right to transfer capacity service rights in that portion of the South Bay Land/Ocean Outfall which is not part of the Metro System. V. V. SYSTEM OF CHARGES A. Charges Authorized.5.1 The City agrees to implement and the Participating Agencies agree to abide by a new system of charges. This new system allows the City to equitably recover from all Participating Agencies their proportional share of the net Metro System Costs through the imposition of the following charges: 1. SSC (Sewer System Charge);5.1.1 2. ECC (Existing Capacity Charge); 3. NCCC (New Contract Capacity Charge).5.1.2 B. SSC (Sewer System Charge).5.2 The City shall determine the SSC based on the projected Metro System Costs (as defined below) for the forthcoming fiscal year, less all Metro System Revenues (as defined below). -16- 60409.00001\30817939.130914102.9 1. Metro System Costs5.2.1 a. The following shall at a minimum be considered Metro System5.2.1.1 Costs for purposes of calculating the annual SSC: (i) Except as provided in section 5.2.1.2 (Excluded5.2.1.1.1 Costs, subsection b. below), the annual costs associated with administration, operation, maintenance, replacement, annual debt service costs and other periodic financing costs and charges, capital improvement, insurance premiums, claims payments and claims administration costs of the Metro System, including projected overhead. Overhead shall be calculated using accepted accounting practices to reflect the overhead costs of the Metro System. (ii) Fines or penalties imposed on the City as a5.2.1.1.2 result of the operation of the Metro System, unless the fine/penalty is allocated to the City or a Participating Agency as provided in Section II.F.72.6.7. (iii) Costs incurred by the City, including attorneys’ fees, necessary to implement the terms of this Agreement. b. Excluded Costs Excluded Costs. The following items shall not be considered5.2.1.2 Metro System Costs for purposes of calculating the annual SSC: (i) Costs related to the City of San Diego’s5.2.1.2.1 Municipal System as determined by reasonable calculations; (ii) Costs related to the treatment of sewage from5.2.1.2.2 any agency which is not a party to this Agreement; (iii) Costs related to the inspection and monitoring5.2.1.2.3 program for the industrial dischargers located in San Diego, including associated administrative and laboratory services; (iv) Right-of-way charges for the use of public5.2.1.2.4 streets of the City or any Participating Agency. The City and the Participating Agencies agree not to impose a right-of-way charge for the use of its public rights-of-way for Metro System purposes.; -17- 60409.00001\30817939.130914102.9 (v) Capital Improvement Costs of any non-Metro5.2.1.2.5 System facility.; (vi) Capital Improvement Costs for which an5.2.1.2.6 NCCC is paid.; and (vii) Excluded Operation and Maintenance Costs set forth in Section III.C. City Water Utility PW Costs.5.2.1.2.7 2. Metro System Revenues.5.2.2 a. The following revenues shall be at a minimum considered5.2.2.1 Metro System Revenues for purposes of determining the annual SSC: (i) Any grant or loan receipts or any other receipts5.2.2.1.1 that are attributable to the Metro System, including, but not limited to, all compensation or receipts from the sale, lease, or other conveyance or transfer of any asset of the Metro System; provided, however, that this shall not include any grant, loan, or other receipts attributable to the Metro System components of the Pure Water Program, which are specifically addressed in Section 5.2.2.1.8. (ii) All compensation or receipts from the sale or5.2.2.1.2 other conveyance or transfer of any Metro System by- products, including, but not limited to gas, electrical energy, sludge products, and Reclaimed Water (excepting therefrom any receipts allocated pursuant to subsection 2.a.(3) below.section 5.2.2.1.3). (iii) The distribution of revenue from the sale of5.2.2.1.3 Reclaimed Water from the North City Water Reclamation Plant, including incentives for the sale of Reclaimed Water, shall first be used to pay for the cost of the Reclaimed Water Distribution System, then the cost of the Operation and Maintenance of the Tertiary Component of the North City Water Reclamation Plant that can be allocated to the production of Reclaimed Water, and then to the Metro System. -18- 60409.00001\30817939.130914102.9 (iv) Any portion of an NCCC that constitutes5.2.2.1.4 reimbursement of costs pursuant to Section VII.A.47.1.4. (v) Any penalties paid under Section VII.C7.3.5.2.2.1.5 Proceeds from the Capital Expense Rate, as5.2.2.1.6 calculated under Exhibit F and allocated among the City and Participating Agencies in the proportions set forth in Column 8 of Exhibit G. Those portions of Repurified Water Revenue5.2.2.1.7 attributable to the Metro System, as calculated under Exhibit F and allocated among the Participating Agencies in the proportions set forth in Column 8 of Exhibit G. Any grant or loan receipts or any other receipts5.2.2.1.8 that are attributable to the Metro System components of the Pure Water Program, including, but not limited to, all compensation or receipts from the sale, lease, or other conveyance or transfer of any asset of the Metro System components of the Pure Water Program. Any proceeds under this section shall be allocated among the City and the Participating Agencies in the proportions set forth in Column 8 of Exhibit G. b. Excluded Revenue5.2.2.2 (i) Capital Improvement Costs for which an NCCC5.2.2.2.1 is paid; (ii) Proceeds from the issuance of debt for Metro5.2.2.2.2 System projects. (iii) Proceeds from the sale of Reclaimed Water5.2.2.2.3 used to pay for the Reclaimed Water Distribution System pursuant to subsection 2.a.(3)section 5.2.2.1.3 above. (iv) All revenues, including incentives, attributable to Repurified Water from the Water Repurification System. 3. Calculation of SSC Rates.5.2.3 a. Prior to the initial implementation of the new system of5.2.3.1 charges, the City shall prepare a sample fiscal year estimate setting forth the methodology and sampling data used as a base -19- 60409.00001\30817939.130914102.9 for Strength based billing (SBB) which includes Flow and Strength (Chemical Oxygen Demand (COD) and Suspended Solids (SS)). The analysis shall be submitted to each Participating Agency. b. The City shall determine the unit SSC rates by allocating net5.2.3.2 costs (Metro System Costs less Metro System Revenues) between parameters of Flow, COD and SS. This allocation is based on the approved Functional-Design Methodology analyses for individual Capital Improvement Projects (CIPs) and estimated Operation and Maintenance (O&M) Costs allocated to the three parameters. The City may revise the calculations to include any other measurement required by law after the effective date of this Agreement. c. The net cost allocated to each of the three parameters (Flow,5.2.3.3 COD and SS) shall be divided by the total Metro System quantity for that parameter to determine the unit rates for Flow, COD and SS. These unit rates shall apply uniformly to all Participating Agencies. 4. Estimate and Billing Schedule and Year End Adjustment5.2.4 a. Estimate - The City shall estimate the SSC rates on an annual5.2.4.1 basis prior to January 15. The City shall quantify the SSC rates by estimating the quantity of Flow, COD and SS for each party, based on that party’s actual flow and the cumulative data of sampling for COD and SS over the preceding years. If cumulative data is no longer indicative of discharge from a Participating Agency due to the implementation of methods to reduce Strength, previous higher readings may be eliminated. b. Costs of treating Return Flow for solids handling will be5.2.4.2 allocated to the Participating Agencies in proportion to their Flow and Strength. Return Flow will not be counted against the Participating Agencies’ Contract Capacity as shown in Exhibit B. c. SSC Billing Schedule - The City shall bill the Participating5.2.4.3 Agencies quarterly, invoicing on August 1 , November 1, February 1 and May 1. Each bill shall be paid within thirty (30) days of mailing. Quarterly payments will consist of the total estimated cost for each Participating Agency, based on their estimated Flow, COD and SS, divided by four. d. Year-End Adjustments - At the end of each fiscal year, the5.2.4.4 City shall determine the actual Metro System. Costs and the actual Flow as well as the cumulative Strength data for the City and each of the Participating Agencies. The City shall make any -20- 60409.00001\30817939.130914102.9 necessary adjustments to the unit rates for Flow, COD and SS based on actual costs for the year. The City shall then recalculate the SSC for the year using actual costs for the year, actual Flow, and cumulative Strength factors (COD, SS and Return Flow) for the City and for each Participating Agency. The City shall credit any future charges or bill for any additional amounts due, the quarter after the prior year costs have been audited. C. ECC (Existing Capacity Charge). In addition to paying an SSC, each Participating Agency shall pay an ECC. The ECC shall be paid only for the period specified in Exhibit C. The amount and nature of each Participating Agency’s obligation, and the date on which the obligation shall expire, are set forth in Exhibit C. The ECC is billed annually, invoiced by January 2, due February 1. D. NCCC (New Contract Capacity Charge).5.3 If New Contract Capacity is required or requested by a Participating Agency, pursuant to SectionArticle VII, the Metro System shall provide the needed or requested capacity, provided that the Participating Agency agrees to pay an NCCC in the amount required to provide the New Contract Capacity. New Contract Capacity shall be provided pursuant to SectionArticle VII. E. Debt Financing.5.4 The City retains the sole right to determine the timing and amount of debt financing required to provide Metro System Facilities. Allocation of Operating Reserves and Debt Service Coverage.5.5 The parties shall continue to comply with the 2010 Administrative Protocol on Allocation of Operating Reserves and Debt Service Coverage to Participating Agencies, attached hereto and incorporated herein as Exhibit C. PLANNINGVI. A. Projected Flow and Capacity Report.6.1 Commencing on July 1, 1999, each Participating Agency shall provide the City and the Metro Commission with a ten-year projection of its Flow and capacity requirements from the Metro System. The Agencies shall disclose any plans to acquire New Capacity outside the Metro System. This “Projected Flow and Capacity Report” shall be updated annually. B. Other Planning Information.6.2 -21- 60409.00001\30817939.130914102.9 Each Participating Agency shall provide the City with such additional information as requested by the City as necessary for Metro System planning purposes. C. Ten-Year Capital Improvement Plan.6.3 The City shall prepare a Ten-Year Capital Improvement Plan for the Metro System that describes the facilities necessary to convey, treat, and dispose of, or reuse all Flow in the Metro System in compliance with all applicable rules, laws and regulations. The plan shall be updated annually. D. Notice to Metro Commission.6.4 In the event that the City is not able to include a facility in the Ten-Year Capital Improvement Plan, the City shall notify the Metro Commission as soon as possible before the detailed design or construction of such facility provided that the facility will significantly impact the Metro System. FACILITIES SOLELY FOR NEW CONTRACT CAPACITYVII. The Participating Agencies and City are obligated to pay for the acquisition or planning, design, and construction of new facilities in the Metro System that are needed solely to provide New Contract Capacity only under the terms provided below. A. Determination of Need for New Contract Capacity.7.1 1. As part of its planning efforts, and considering the planning7.1.1 information provided to the City by the Participating Agencies, the City shall determine when additional facilities beyond those acquired or constructed pursuant to SectionArticle III above will be necessary solely to accommodate a need for New Contract Capacity in the Metro System, whether by the City or by the Participating Agencies. The City shall determine: (1) the amount of New Contract Capacity needed; (2) the Participating Agency or Agencies, or the City, as the case may be, in need of the New Contract Capacity; (3) the type and location of any capital improvements necessary to provide the New Contract Capacity; (4) the projected costs of any necessary capital improvements; and, (5) the allocation of the cost of any such facilities to the Participating Agency and/or the City for which any New Contract Capacity is being developed. The City shall notify the Participating Agencies of its determination within sixty days of making such determination. 2. The City or Participating Agency or Agencies in need of New7.1.2 Contract Capacity as determined by the City pursuant to Paragraph 1section 7.1.1 above, may choose, in their sole discretion, to obtain New Capacity outside of. the Metro System in lieu of New Contract Capacity. Under such circumstances, the Participating Agency or Agencies shall commit to the City in writing their intent to obtain such New Capacity. -22- 60409.00001\30817939.130914102.9 Upon such commitment, the City shall not be required to provide New Contract Capacity to such Agency or Agencies as otherwise required under this Agreement. 3. The Participating Agencies shall have six months from the date of7.1.3 notice of the determination within which to comment on or challenge all or part of the City’s determination regarding New Contract Capacity, or to agree thereto or to commit, in writing, to obtain New Capacity outside of the Metro System. Any Participating Agency objecting to the City’s determination shall have the burden to commence and diligently pursue the formal dispute resolution procedures of this Agreement within said six month period. The City’s determination shall become final at the close of the six month comment and objection period. The City’s determination shall remain valid notwithstanding commencement of dispute resolution unless and until set aside by a final, binding, determination of an arbitratorotherwise agreed to pursuant to the dispute resolution process set forth in this Agreementin Article IX, or pursuant to a final court order. 4. The City and the Participating Agency or Agencies which need New7.1.4 Contract Capacity shall thereafter enter into an agreement specifying the terms and conditions pursuant to which the New Contract Capacity will be provided, including the amount of capacity and the New Contract Capacity. Each party obtaining New Contract Capacity shall reimburse the Metro System for the costs of acquisition, planning, design, and construction of facilities necessary to provide the New Contract Capacity that have been paid by other parties under Section VII.B.37.2.3. 5. The parties recognize that the City may acquire and plan, design and7.1.5 construct facilities that are authorized pursuant to both SectionArticle III and SectionArticle VII of this Agreement. Under such circumstances, the City shall allocate the costs and capacity of such facilities pursuant to SectionArticle III and Section VII.A.17.1.1 as applicable. B. Charges for Facilities Providing New Contract Capacity7.2 1. The expense of acquisition, planning, design, and construction of New7.2.1 Contract Capacity shall be borne by the City or the Participating Agency or Agencies in need of such New Contract Capacity. 2. Notwithstanding any provision in this Agreement, the City and the7.2.2 Participating Agencies shall pay for the Operation and Maintenance Costs of all facilities pursuant to the payment provisions of SectionArticle III, including those facilities acquired and constructed to provide New Contract Capacity in the Metro System. -23- 60409.00001\30817939.130914102.9 3. Charges for the acquisition, planning, design and construction of7.2.3 facilities solely to provide New Contract Capacity shall be paid for by the Participating Agencies and the City pursuant to the payment provisions in SectionArticle III of this Agreement until an agreement is reached under Section VII.A.47.1.4. or pending the resolution of any dispute relating to the City’s determination with respect to New Contract Capacity. 4. As a ministerial matter, the City shall prepare amendments to Exhibits7.2.4 A and B to reflect the acquisition or construction of facilities to provide New Contract Capacity pursuant to this SectionArticle. The City shall give notice of the Amendments to the Participating Agencies, and shall provide copies of the Amendments with the notice. C. Penalty for Failure to Pay. Liquidated Damages.7.3 1. The parties recognize that appropriate capacity and long term7.3.1 planning for same are essential to the proper provision of sewerage service. In recognition of same, the parties agree that discharge beyond Contract Capacity should be penalizedwill result in damages that are difficult to determine. Therefore, the damages are being liquidated in an amount estimated to the actual damage that will be incurred by the City, and is not a penalty. In the event that a Participating Agency exceeds its Contract Capacity after the City has given notice that New Capacity is required, said Participating Agency shall be assessed and pay a quarterly penaltyliquidated damages until such time as the Participating Agency obtains the required New Capacity. The penaltyliquidated damages shall be fifteen percent (15%) of the quarterly charges authorized pursuant to this Agreement times the amount of Flow which exceeds the Participating Agency’s Contract Capacity for the first quarter, twenty-five percent (25%) of such amount for the second quarter, thirty percent (30%) of such amount for the third quarter, and thirty-five percent (35%) of such amount for every quarter thereafter.each quarter in which any exceedance occurs. 2. In the event that a Participating Agency fails to pay the charges7.3.2 imposed under this Article after the City has given notice that payment is required, said Participating Agency shall be assessed and shall pay a penalty of fifteenliquidated damages of ten percent (1510%) of the total outstanding charges each quarter until said charges are paid in full. -24- 60409.00001\30817939.130914102.9 THE METRO COMMISSIONVIII. A. Membership.8.1 The Metro Commission shall consist of one representative from each Participating Agency. Each Participating Agency shall have the right to appoint a representative of its choice to the Metro Commission. If a Participating Agency is a dependent district whose governing body is that of another independent public agency that Participating Agency shall be represented on the Metro Commission by a representative appointed by the governing body which shall have no more than one representative no matter how many Participating Agencies it governs. Each member has one vote in any matter considered by the Metro Commission. The Metro Commission shall establish its own meeting schedule and rules of conduct. The City may participate in the Metro Commission on an ex officio, non-voting, basis. B. Advisory Responsibilities of Metro Commission.8.2 1. The Metro Commission shall act as an advisory body, advising the8.2.1 City on matters affecting the Metro System. The City shall present the position of the majority of the Metro Commission to the City’s governing body in written staff reports. The Metro Commission may prepare and submit materials in advance and may appear at any hearings on Metro System matters and present its majority position to the governing body of the City. 2. The Metro Commission may advise the City of its position on any8.2.2 issue relevant to the Metro System. DISPUTE RESOLUTIONIX. This Section governs all disputes arising out of this Agreement. A. VoluntaryMandatory Non-Binding Mediation.9.1 Upon notice to all of the parties involved, any dispute may be submitted to a mutually-acceptable mediator, including a consultant specializing in the subject matter of the dispute, for determination of the issue(s) raised. Unless the parties involved agree in writing otherwise, the decision of the mediator or consultant shall not be final and binding. In the event that there is no agreement to mediate the dispute, any party may proceed directly to Arbitration. B. Arbitration. ArbitrationIf a dispute arises among the parties relating to or arising from a party’s obligations under this Agreement that cannot be resolved through informal discussions and meetings, the parties involved in the dispute shall first endeavor to settle the dispute in an amicable manner, using mandatory non-binding mediation under the rules of JAMS, AAA, or any other neutral organization agreed upon by the parties before having recourse in a court of law. Mediation shall be commenced by sending a Notice of Demand for ArbitrationMediation -25- 60409.00001\30817939.130914102.9 to the other party or parties to the dispute. A copy of the notice shall be sent to the City, all other Participating Agencies, and the Metro Commission. Notice shall be given in accordance with Section XII. After such notice, any party that fails to timely participate by giving notice within forty-five (45) days thereafter, shall be barred from the noticed action. The scope of the arbitrator’s jurisdiction shall not include the authority to amend the terms of this Agreement. Selection of Mediator.9.2 A single mediator that is acceptable to the parties involved in the dispute shall be used to mediate the dispute. The mediator will be knowledgeable in the subject matter of this Agreement, if possible, and chosen from lists furnished by JAMS, AAA, or any other agreed upon mediator. 1. The arbitration shall be conducted by a mutually-acceptable dispute resolution entity which utilizes retired judges as arbitrators or arbitrators agreed to by the parties. If the parties cannot agree on such an entity, then the American Arbitration Association shall be used. 2. All arbitrations shall be conducted in accordance within California Code of Civil Procedure Sections 1282 et seq., provided, however, that in the event of a conflict between the Code of Civil Procedure arbitration provisions and the provisions of this Agreement, the provisions of this Agreement control. 3. Discovery regarding the subject matter of the arbitration shall be allowed as provided in Code of Civil Procedure Section 1283.05 (or its successors), except that depositions may be taken without first obtaining permission from the arbitrator. The arbitrator’s fee shall be paid in equal shares by the parties who participate in the arbitration. The arbitrator may award costs to the prevailing party, except, however, all costs incurred by the City for arbitration arising under Section VII shall be a Metro System cost and charged accordingly. The decision of the arbitrator shall be final and binding. Mediation Expenses.9.3 The expenses of witnesses for either side shall be paid by the party producing such witnesses. All mediation costs, including required traveling and other expenses of the mediator, and the cost of any proofs or expert advice produced at the direct request of the mediator, shall be Metro System costs. Conduct of Mediation.9.4 Mediation hearings will be conducted in an informal manner. Discovery shall not be allowed. The discussions, statements, writings and admissions and any offers to compromise during the proceedings will be confidential to the proceedings (pursuant to California Evidence Code Sections 1115 – 1128 and 1152) and will not be used for any other purpose unless otherwise agreed by the parties in writing. The parties may agree to exchange any information they deem necessary. The parties involved in the dispute shall have representatives attend the mediation who are authorized to settle the dispute, though a recommendation of settlement -26- 60409.00001\30817939.130914102.9 may be subject to the approval of each agency’s boards or legislative bodies. Either party may have attorneys, witnesses or experts present. Mediation Results.9.5 Any resultant agreements from mediation shall be documented in writing. The results of the mediation shall not be final or binding unless otherwise agreed to in writing by the parties. Mediators shall not be subject to any subpoena or liability and their actions shall not be subject to discovery. C. Performance Required During Dispute.9.6 Nothing in this SectionArticle shall relieve the City and the Participating Agencies from performing their obligations under this Agreement. The City and the Participating Agencies shall be required to comply with this Agreement, including the performance of all disputed activity and disputed payments, pending the resolution of any dispute under this Agreement. Offers to Compromise9.7 Any offers to compromise before or after mediation proceedings will not be used to prove a party’s liability for loss or damage unless otherwise agreed by the parties in writing (pursuant to Evidence Code Section 1152.) INSURANCE AND INDEMNITYX. A. City Shall Maintain All Required Insurance.10.1 1. The City shall maintain all insurance required by law, including10.1.1 workers’ compensation insurance, associated with the operation of the Metro System. 2. Throughout the term of this Agreement the City shall procure and10.1.2 maintain in effect liability insurance covering, to the extent reasonably available, any and all liability of the City, the Metro System and the Participating Agencies, including their respective officers, directors, agents, and employees, if any, with respect to or arising out of the ownership, maintenance, operation, use and/or occupancy of the Metro System and all operations incidental thereto, including but not limited to structural alterations, new construction and demolition, including coverage for those hazards generally known in the insurance industry as exploding, collapse and underground property damage. 3. Said insurance shall name the City, and its respective officers,10.1.3 employees, and agents, and shall have a limit of not less than $24,000,000 combined single limit per occurrence for bodily injury, personal injury and property damage suffered by any person. Said insurance may provide for a deduction from coverage, which deductible -27- 60409.00001\30817939.130914102.9 shall not be more than $1,000,000. Said limits and/or deductible may be adjusted from time to time. Said insurance may be evidenced by a policy or policies covering only the Metro System or by endorsement to bring the same within a blanket policy or policies held by the City covering other properties in which the City has an interest provided the policy or policies have a location aggregate provision. The City may satisfy the first $1,000,000 per occurrence with a self-insurance retention program for public liability claims. The policy or policies shall name the Participating Agencies as additional insureds with evidence of same supplied to each. Insurance premiums, claims payments and claims administration costs shall be included in the computation of the SSC. B. Substantially Equivalent Coverage.10.2 In the event of a transfer of the Metro System to a nonpublic entity pursuant to SectionArticle II, coverage substantially equivalent to all the above provisions shall be maintained by any successor in interest. INTERRUPTION OF SERVICEXI. Should the Metro System services to the Participating Agencies be interrupted as a result of a major disaster, by operation of federal or state law, or other causes beyond the City’s control, the Participating Agencies shall continue all payments required under this Agreement during the period of the interruption. NOTICES REQUIRED UNDER AGREEMENTXII. The City and each Participating Agency shall give notice when required by this Agreement. All notices must be in writing and either served personally, or mailed by certified mail. The notices shall be sent to the officer listed for each party, at the address listed for each party in Exhibit D in accordance with this SectionArticle. If a party wishes to change the officer and/or address to which notices are given, the party shall notify all other parties in accordance with this SectionArticle. Upon such notice, as a ministerial matter, the City shall amend Exhibit D to reflect the changes. The amendment shall be made within thirty (30) days after the change occurs. The City shall keep an updated version of Exhibit D on file with the City ClerkPublic Utilities Department. The City shall provide a copy of the amended Exhibit D to all parties. EFFECTIVE DATE AND TERMINATIONEXPIRATIONXIII. A. Effective Date.13.1 This Agreement shall be effective thirty (30) days after execution by the City and at least fifty percent (50%)all of the Participating Agencies. Participating Agencies which have not executed the Agreement on the effective date will not be Participating Agencies under this Agreement until the Agreement is amended pursuant to paragraph XIV(B) hereof. Nothing -28- 60409.00001\30817939.130914102.9 in this paragraph shall limit the City’s discretion in determining whether to execute this Agreement., and shall be dated as of the signature date of the last executing party. B. PreferencesExpiration.13.2 In the event one or more agencies which are subject to Wastewater Agreements with the City before the effective date of this Agreement do not execute this Agreement, the City agrees not to enter into any new agreements with said agency or agencies without first offering the Participating Agencies agreements under substantially the same terms and conditions for any proposed agreement covering the same subject matter and issues. C. Termination. Subject to the rights and obligations set forth in Section XIII.C. below13.4, this Agreement shall terminateexpire on December 31, 20502065. This Agreement is subject to extension by agreement of the parties. The parties shall commence discussions on an agreement to provide wastewater treatment services beyond the year 20502065 on or before December 31, 20402055. D. Contract Capacity Rights Survive TerminationExpiration.13.3 The Participating Agencies’ right to obtain wastewater treatment services from the facilities referred to in, or constructed pursuant to this Agreement shall survive the terminationexpiration of the Agreement. Provided however, upon expiration of this Agreement, the Participating Agencies shall be required to pay their proportional share based on Flow and Strength of all Metro System Costs (Capital Improvement Costs and Operation and Maintenance) to maintain their right to such treatment services. Provided further, that in the event that the Participating Agencies exercise their rights to treatment upon expiration of this Agreement, the City shall have the absolute right, without consultation, to manage, operate and expand the Metro System in its discretion. E. Abandonment.13.4 After December 31, 20502065, the City may abandon the Metro System upon delivery of notice to the Participating Agencies ten (10) years in advance of said abandonment. Upon notice by the City to abandon the Metro System, the parties shall meet and confer over the nature and conditions of such abandonment. In the event the parties cannot reach agreement, the matter shall be submitted to arbitrationmediation under the provisions of SectionArticle IX. In the event of abandonment, the City shall retain ownership of all Metro System assets free of any claim of the Participating Agencies. GENERALXIV. A. Exhibits.14.1 -29- 60409.00001\30817939.130914102.9 This Agreement references Exhibits A through EG. Each exhibit is1. attached to this Agreement, and is incorporated herein by reference. The exhibits are as follows: Exhibit A Metro Facilities; Exhibit B Contract Capacities; Exhibit C Existing Capacity Charge ListingAllocation of Operating Reserves and Debt Service Coverage to Participating Agencies; Exhibit D Notice Listing; and Exhibit E Map of Reclaimed Water Projects.; Exhibit F Pure Water Cost Allocation and Revenues; and Exhibit G 2050 Flow Projections B. Amendment of Agreement.14.2 Except as provided in this Agreement, and recognizing that certain amendments are ministerial and preapproved, this Agreement may be amended or supplemented only by a written agreement between the City and the Participating Agencies stating the parties’ intent to amend or supplement the Agreement. C. Construction of Agreement.14.3 1. Drafting of Agreement14.3.1 It is acknowledged that the City and the Participating Agencies, with the assistance of competent counsel, have participated in the drafting of this Agreement and that any ambiguity should not be construed for or against the City or any Participating Agency on account of such drafting. 2. Entire Agreement14.3.2 The City and each Participating Agency represent, warrant and agree that no promise or agreement not expressed herein has been made to them, that this Agreement contains the entire agreement between the parties, that this Agreement supersedes any and all prior agreements or understandings between the parties unless otherwise provided herein, and that the terms of this Agreement are contractual and not a mere recital; that in executing this Agreement, no party is relying on any statement or representation made by the other party, or the other party’s representatives concerning the subject matter, basis or effect of this -30- 60409.00001\30817939.130914102.9 Agreement other than as set forth herein; and that each party is relying solely on its own judgement and knowledge. 3. Agreement Binding on All14.3.3 This Agreement shall be binding upon and shall inure to the benefit of each of the parties, and each of their respective successors, assigns, trustees or receivers. All the covenants contained in this Agreement are for the express benefit of each and all such parties. This Agreement is not intended to benefit any third parties, and any such third party beneficiaries are expressly disclaimed. 4. Severability14.3.4 14.3.4.1 Should any provision of this Agreement be held invalid or illegal, such invalidity or illegality shall not invalidate the whole of this Agreement, but, rather, the Agreement shall be construed as if it did not contain the invalid or illegal part, and the rights and obligations of the parties shall be construed and enforced accordingly except to the extent that enforcement of this Agreement without the invalidated provision would materially and adversely frustrate either the City’s or a Participating Agency’s essential objectives set forth in this Agreement. 14.3.4.2 Should a court determine that one or more components of the allocation of costs set forth in this Agreement places the City or a Participating Agency in violation of Article XIII, Section 6 of the California Constitution with respect to their ratepayers, such components shall no longer be of force or effect. In such an event, the City and the Participating Agencies shall promptly meet to renegotiate the violative component of the cost allocation to comply with Article XIII, Section 6 of the California Constitution, and use the dispute resolution process in Article IX of this Agreement if an agreement cannot be reached through direct negotiation. 5. Choice of Law14.3.5 This Agreement shall be construed and enforced pursuant to the laws of the State of California. Recognition of San Diego Sanitation District as Successor to Certain14.3.6 Parties. The parties hereby acknowledge and agree that the San Diego County Sanitation District is a Participating Agency under this Agreement as the successor in interest to the Alpine Sanitation District, East Otay Mesa -31- 60409.00001\30817939.130914102.9 Sewer Maintenance District, Lakeside Sanitation District, Spring Valley Sanitation District, and Winter Gardens Sewer Maintenance District. D. Declarations Re: Agreement.14.4 1. Understanding of Intent and Effect of Agreement14.4.1 The parties expressly declare and represent that they have read the Agreement and that they have consulted with their respective counsel regarding the meaning of the terms and conditions contained herein. The parties further expressly declare and represent that they fully understand the content and effect of this Agreement and they approve and accept the terms and conditions contained herein, and that this Agreement is executed freely and voluntarily. 2. Warranty Regarding Obligation and Authority to Enter Into This14.4.2 Agreement Each party represents and warrants that its respective obligations herein are legal and binding obligations of such party, that each party is fully authorized to enter into this Agreement, and that the person signing this Agreement hereinafter for each party has been duly authorized to sign this Agreement on behalf of said party. 3. Restrictions on Veto of Transfers and Acquisitions of Capacity14.5 Each party understands and agrees that this Agreement governs its respective rights and responsibilities with respect to the subject matter hereto and specifically recognizes that with respect to the transfer and acquisition of Contract Capacity (Section IV.B4.2) or the creation of New Contract Capacity for any Participating Agency (SectionArticle VII), no Participating Agency has a right to veto or prevent the transfer of capacity by and among other Participating Agencies or with the City, or to veto or prevent the creation or acquisition capacity for another Participating Agency or Agencies, recognizing that by signing this Agreement each Participating Agency has expressly preapproved such actions. The sole right of a Participating Agency to object to any of the foregoing shall be through expression of its opinion to the Metro Commission and, where applicable, through exercise of its rights under the dispute resolution provisions of this Agreement. 4. Right to Make Other Agreements14.6 Nothing in this Agreement limits or restricts the right of the City or the Participating Agencies to make separate agreements among themselves without the need to amend this Agreement, provided that such agreements are consistent with this Agreement. Nothing in this Agreement or Exhibit F limits or restricts the right of the City or the Participating Agencies to enter into separate agreements for the purchase or sale of Repurified Water produced by the Water Repurification System or sharing in City Water Utility PW -32- 60409.00001\30817939.130914102.9 Costs. Such agreements shall not affect the cost allocation and Metro System revenues delineated in Exhibit F. Limitation of Claims14.7 Notwithstanding any longer statute of limitations in State law, for purposes of any claims asserted by the City or a Participating Agency for refunds of overpayments or collection of undercharges arising under this Agreement, the parties agree that such refunds or collections shall not accrue for more than four years prior to the date that notice of such claim is received by the City or a Participating Agency. This also applies to any related adjustments to each Participating Agency’s share of net Metro System costs or revenues resulting from the resolution of such claims. The City and the Participating Agencies hereby waive any applicable statute of limitations available under State law that exceed four years. In no case shall the limitations period stated in this section begin to accrue until the date that the annual audit and year-end adjustment from which the claim arises are complete. 5. Counterparts14.8 This Agreement may be executed in counterparts. This Agreement shall become operative as soon as one counterpart hereof has been executed by each party. The counterparts so executed shall constitute one Agreement notwithstanding that the signatures of all parties do not appear on the same page. No Third Party Beneficiaries14.9 This Agreement is intended to benefit only the parties hereto and no other person or entity has or shall acquire any rights hereunder. This Agreement does not create any third party beneficiary rights. SIGNATURES ON FOLLOWING PAGES -33- 60409.00001\30817939.130914102.9 IN WITNESS WHEREOF, the Parties have executed this Amendment and Restated Regional Wastewater Disposal Agreement as of the date first set forth above. CITY OF CHULA VISTA Approved as to Form: Name:Name: Title:Title: CITY OF CORONADO Approved as to Form: Name:Name: Title:Title: CITY OF DEL MAR Approved as to Form: Name:Name: Title:Title: CITY OF EL CAJON Approved as to Form: Name:Name: Title:Title: CITY OF IMPERIAL BEACH Approved as to Form: Name:Name: Title:Title: CITY OF LA MESA Approved as to Form: Name:Name: Title:Title: LEMON GROVE SANITATION DISTRICT Approved as to Form: Name:Name: Title:Title: CITY OF NATIONAL CITY Approved as to Form: Name:Name: Title:Title: -34- 60409.00001\30817939.130914102.9 OTAY WATER DISTRICT Approved as to Form: Name:Name: Title:Title: PADRE DAM MUNICIPAL WATER DISTRICT Approved as to Form: Name:Name: Title:Title: CITY OF POWAY Approved as to Form: Name:Name: Title:Title: CITY OF SAN DIEGO Approved as to Form: Name:Name: Title:Title: SAN DIEGO COUNTY SANITATION DISTRICT Approved as to Form: Name:Name: Title:Title: -35- 60409.00001\30817939.130914102.9 -36- 60409.00001\30817939.130914102.9 EXHIBIT A-1A 60409.00001\30817939.130914102.9 EXHIBIT A METRO FACILITIES AS OF 6/27/18 I. ORIGINALExisting Facilities · Pt. Loma Wastewater Treatment Plant · Pt. Loma Ocean Outfall · Pump Station #1 · Pump Station #2 · South Metro Interceptor · North Metro Interceptor · Metro Force Mains 1 & 2 · Digested Sludge Pipeline · Fiesta Island Sludge Processing Facility · Fiesta Island Centrate Pipeline. II. FIESTA ISLAND REPLACEMENT PROJECT (FIRP) AND STATE OCEAN PLAN (SOP) COMPLIANCE FACILITIES · Pt. Loma Outfall Extension · Fiesta Island Replacement Project Digested Sludge Pipeline Fiesta Island Replacement Project Pump Station · Metro Biosolids Center (FIRP Facilities) III. OTHER METRO FACILITIES · North City Water Reclamation Plant · Metro Biosolids Center (NCWR Plant Related Facilities) · North City Tunnel Connector · North City Raw Sludge Pipeline · Centrate Pipeline · Rose Canyon Parallel Trunk Sewer · Second Rose Canyon Trunk Sewer · East Mission Bay Trunk Sewer · Morena Blvd. Interceptor · South Bay Water Reclamation PlantReclamation-Plant · Dairy Mart Road & Bridge Rehab1 · Grove Avenue Pump Station · Grove Avenue Pump Station Sewer Pipeline 1 The City and the Participating Agencies shall continue their joint effort to seek federal funding for the Dairy Mart Road and Bridge Rehabilitation Project with a goal of requiring 60% federal participation. EXHIBIT A-2 60409.00001\30817939.130914102.9 CITY OF SAN DIEGO Metropolitan Sewerage System METRO FACILITIES III.OTHER METRO FACILITIES (CONTINUED) · South Bay Raw Sludge Pipeline · South Bay Land/Ocean Outfall21 · Environmental Monitoring & Technical Services Laboratory · Centrate Treatment Facility at Metropolitan Biosolids Center · Sludge & Biosolids Management Facility (Monofill) · Metro Operations Center (MOCIv10C) Complex (based on annual facilities allocation) · Additional 8 mgd Water Reclamation Treatment Capacity VI.Additional Metro Facilities A.Note: The below listed facilities willcould be required as part of the Metro System for hydraulic capacity, good engineering practices and/or compliance with applicable law, rules or regulations, including OPRA, and the continuation of the City’sCity's waiver of applicable treatment standards at the Point Loma Wastewater Treatment Plant (“"Waiver”"). · South Bay Sludge Processing Facility · South Bay Secondary Treatment Plant, Phase I (21 MGD) · South Bay Secondary Sewers, Phase I B.Note: These facilities willcould be required as part of the Metro System for hydraulic capacity, good engineering practices, compliance with OPRA, and to maintain the City’sCity's Waiver. In the event that hydraulic capacity demands, or the obligations of OPRA (or its successor) or the terms of the City’sCity's Waiver change, these facilities may not be required or may be modified or supplemented, as appropriate, pursuant to the terms of this Agreement. · South Bay Secondary Treatment Plant, Phase II (28 MGD) · South Bay Secondary Sewers, Phase II Note: These facilities could be added to the Metro System as part of Phase I of the Pure Water Program. 21 The South Bay Land/Ocean Outfall is jointly owned by the International Boundary and Water Commission, U.S. Section (60.06%) and the City of San Diego (39.94%). The capacity of the City’s portion of the outfall as of the date of this Agreement is 74 MGDMDG average dry weather flow, of which the Metro System has a capacity right to 69.2 MGD and the City hasas an exclusive right to 4.8 MGD. Expansion of North City Water Reclamation Plant Morena Pump Station EXHIBIT A-3 60409.00001\30817939.130914102.9 EXHIBIT B CITY OF SAN DIEGO METROPOLITAN SEWERAGE SYSTEM CONTRACT CAPACITIES EXHIBIT B 60409.00001\30817939.130914102.9 AN NUAL AVERAGE DAILY FLOW IN MILLIONS OF GALLONS PER DAY Original Contract Additional Contract EXHIBIT C 60409.00001\30817939.130914102.9 EXHIBIT D 60409.00001\30817939.130914102.9 New Contract Capacity4 Transferred Contract Capacity5 Total Contract Capacity Percent of Total Chula Vista 19.843 0.000 0.000 0.000 19.843 8.268% Coronado 3.078 0.000 0.000 0.000 3.078 1.283% Del Mar 0.821 0.000 0.000 0.000 0.821 0.342% El Cajon 10.260 0.000 0.000 0.000 10.260 4.275% Imperial Beach 3.591 0.000 0.000 0.000 3.591 1.496% La Mesa 6.464 0.000 0.000 0.000 6.464 2.693% Lakeside-Alpine 4.586 0.000 0.000 0.000 4.586 1.911% Lemon Grove 2.873 0.000 0.000 0.000 2.873 1.197% National City 7.141 0.000 0.000 0.000 7.141 2.975% Otay 1.231 0.000 0.000 0.000 1.231 0.513% Padre Dam 6.382 0.000 0.000 0.000 6.382 2.659% Poway 5.130 0.000 0.000 0.000 5.130 2.138% San Diego 156.381 0.000 0.000 0.000 156.381 65.159% Spring Valley 10.978 0.000 0.000 0.000 10.978 4.574% Wintergardens 1.241 0.000 0.000 0.000 1.241 0.517% Total 240.000 0.000 0.000 0.000 240.000 100.00% Metro Agency Capacity Capacity3 3 Additional Contract Capacity is capacity allocated pursuant to Section N.C. of this Agreement. 4 New Contract Capacity is capacity obtained pursuant to Section VII of this Agreement. 5 Transferred Contract Capacity is capacity obtained pursuant to Section N.B. of this Agreement. Additional Contract Capacity is capacity allocated pursuant to Section 4.3.1 of the Agreement.1. New Contract Capacity is capacity obtained pursuant to Section 6 of the Agreement.2. Transferred Contract Capacity is capacity obtained pursuant to Section 4.2 of the Agreement.3. EXHIBIT E 60409.00001\30817939.130914102.9 EXHIBIT C ADMINISTRATIVE PROTOCOL ON ALLOCATION OF OPERATING RESERVES AND DEBT SERVICE COVERAGE TO PARTICIPATING AGENCIES CITY OF SAN DIEGO METROPOLITAN SEWERAGE SYSTEM EXISTING CAPACITY CHARGE LISTING PARTICIPATING AGENCY ANNUAL CAPACITY CHARGE THROUGH FEBRUARY 1, 2003 Chula Vista $219,892 Coronado 25,613 El Cajon 108,277 Imperial Beach 33,138 La Mesa 62,334 Lemon Grove 22,872 National City 71,495 Spring Valley 114,663 Del Mar 20,408 Otay Water District 14,581 Lakeside/Alpine 155,901 Padre Dam Muni. Water District 151,888 Poway 162,949 Wintergardens 33,856 EXHIBIT C 60409.00001\30817939.130914102.9 AGENCIES TOTAL $1,197,804 EXHIBIT D 60409.00001\30817939.130914102.9 CITY OF SAN DIEGO METROPOLITAN SEWERAGE SYSTEMEXHIBIT D NOTICE LISTING City Manager City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91919 Phone: 691-5031 Fax: 585-5612 City Manager City of La Mesa 8130 Allison Avenue La Mesa, CA 9194191942 Phone: 667-1101 Fax: 462-7528 City Manager City of San Diego 202 “C” Street San Diego, CA 92101 Phone: 236-5949 Fax: 236-6067 City Manager City of Coronado 1825 Strand Way Coronado, CA 92113 Phone: 522-7335 Fax: 522-7846 City Manager City of Lemon Grove 3232 Main Street Lemon Grove, CA 91945 Phone: 464-6934 Fax: 460-3716 Chief Administrative Officer County of San Diego 1600 Pacific Highway, Rm. 209 San Diego, CA 92101 Phone: 531-5250 Fax: 557-4060 City Manager City of Del Mar 1050 Camino Del Mar Del Mar, CA 92014 Phone: 755-9313 ext. 25 Fax: 755-2794 City Manager City of National City 1243 National City Blvd. National City, CA 91950 Phone: 336-4240 Fax: 336-4327 General Manager Otay Water District 2554 Sweetwater Springs Blvd. Spring Valley, CA 91977 Phone: 670-2210 Fax: 670-2258 City Manager City of El Cajon 200 E. Main StreetCivic Center Way El Cajon, CA 92020 Phone: 441-1716 Fax: 441-1770 City Manager City of Poway 13325 Civic Center Drive Poway, CA 92064 Phone: 679-4200 Fax: 679-4226 General Manager Padre Dam Municipal Water District 10887 Woodside Avenue9300 Fanita Pkwy Santee, CA 92071 Phone: 258-4610 Fax: 258-4794 City Manager City of Imperial Beach 825 Imperial Beach Blvd. Imperial Beach, CA 91932 Phone: 423-8300 ext. 7 Fax: 429-9770 EXHIBIT D 60409.00001\30817939.130914102.9 EXHIBIT E MAP OF RECLAIMED WATER PROJECTS EXHIBIT E 60409.00001\30817939.130914102.9 EXHIBIT F PURE WATER COST ALLOCATION AND REVENUES EXHIBIT F 60409.00001\30914102.9 EXHIBIT G 2050 FLOW PROJECTIONS EXHIBIT G 60409.00001\30914102.9 EXHIBIT H 60409.00001\30914102.9 Summary report: Litéra® Change-Pro 7.5.0.135 Document comparison done on 7/16/2018 4:22:29 PM Style name: Default Style Intelligent Table Comparison: Active Original DMS:iw://iManage/iManage/30817939/1 Modified DMS: iw://iManage/iManage/30914102/9 Changes: Add 451 Delete 396 Move From 6 Move To 6 Table Insert 17 Table Delete 4 Table moves to 0 Table moves from 0 Embedded Graphics (Visio, ChemDraw, Images etc.)4 Embedded Excel 0 Format changes 0 Total Changes:884 DRAFT – 5/14/187/16/18 Version AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT BETWEEN THE CITY OF SAN DIEGO AND THE PARTICIPATING AGENCIES IN THE METROPOLITAN SEWERAGE SYSTEM 60409.00001\30914102.330914102.8 AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT TABLE OF CONTENTS Page I. DEFINITIONS 2 II. OWNERSHIP AND OPERATION OF THE METRO SYSTEM 46 III. PAYMENT AND MONITORING PROVISIONS 811 IV. CAPACITY RIGHTS 914 V. SYSTEM OF CHARGES 1015 VI. PLANNING 1420 VII. FACILITIES SOLELY FOR NEW CONTRACT CAPACITY 1420 VIII. THE METRO COMMISSION 1623 IX. DISPUTE RESOLUTION 1723 X. INSURANCE AND INDEMNITY 1824 XI. INTERRUPTION OF SERVICE 1925 XII. NOTICES REQUIRED UNDER AGREEMENT 1925 XIII. EFFECTIVE DATE AND TERMINATION 1926 XIV. GENERAL 2026 Exhibits A. Metro Facilities B. Contract Capacities C. Allocation of Operating Reserves and Debt Service Coverage to Participating Agencies D. Notice Listing E. Reclaimed Water Distribution System F. Pure Water Cost Allocation and Commodity RateRevenues G.Metro System Capacity Pool Allocation2050 Flow Projections 60409.00001\30914102.330914102.8 -i- 60409.00001\30914102.330914102.8 -1- AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT THIS AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT is made and entered into this _____ day of _________________, 2018, by and between the CITY OF SAN DIEGO, a municipal corporation (“the City”); and the CITY OF CHULA VISTA, a municipal corporation; the CITY OF CORONADO, a municipal corporation; the CITY OF DEL MAR, a municipal corporation; the CITY OF EL CAJON, a municipal corporation; the CITY OF IMPERIAL BEACH, a municipal corporation; the CITY OF LA MESA, a municipal corporation; the LEMON GROVE SANITATION DISTRICT, a political subdivision of the State of California; the CITY OF NATIONAL CITY, a municipal corporation; the CITY OF POWAY, a municipal corporation; the OTAY WATER DISTRICT, a political subdivision of the State of California; the PADRE DAM MUNICIPAL WATER DISTRICT, a political subdivision of the State of California; and the SAN DIEGO COUNTY SANITATION DISTRICT, a political subdivision of the State of California (the “Participating Agencies”). RECITALS WHEREAS, the City and the Participating Agencies are autonomous entities each having the authority to provide and to contract for the conveyance, treatment and disposal of wastewater; and WHEREAS, the City and the Participating Agencies (or their predecessors in interest) entered into that certain Regional Wastewater Disposal Agreement dated May 18, 1998 (the “1998 Agreement”), which provided, among other things, for certain contract rights to capacity in the Metropolitan Sewerage System, a system of wastewater conveyance, treatment, and disposal facilities (“Metro System”) and the establishment of a mechanism to fund the planning, design, construction, operation, and maintenance of the Metro System by the City and the Participating Agencies; and WHEREAS, the purposes of the 1998 Agreement were: (1) to replace the prior-existing sewage disposal agreements between the City and the Participating Agencies; (2) to provide certain contract rights to capacity in the Metro System to the Participating Agencies; (3) to establish a mechanism to fund the planning, design, construction, operation and maintenance of the Metro System by the City and the Participating Agencies as necessary to provide hydraulic capacity, and to comply with applicable law and with generally accepted engineering practices; and (4) to establish a system of charges which allocates the costs of the planning, design and construction of such new wastewater conveyance, treatment and disposal facilities as are necessary solely to provide for new capacity on a fair and equitable basis; and WHEREAS, on April 29, 2014 the San Diego City Council gave its approval and support for the Pure Water San Diego program by adoption of Resolution No. RR-308906. The Resolution approved and supported the City’s efforts to develop an implementation strategy to accomplish secondary equivalency atoffload wastewater flow from the Point Loma Wastewater Treatment Plant through implementation of potable reuse, resulting in effluent discharged to the Pacific Ocean being equivalent to what would be achieved by upgrading the General comments from Otay regarding draft Amended and Restated Agreement: All Exhibits must be provided1. before Otay WD can complete its review of this agreement. The following question has been2. asked at several meetings and has never been answered: What happens if an agency does not approve this agreement? A legal opinion should be presented to the Metro JPA at a closed hearing so they understand the pros and cons of staying with the original agreement vs. signing on to this agreement. This agreement should only3. address the cost allocation for the first phase of secondary equivalency since there are many unknowns still to be resolved concerning the ultimate size and scope of the full implementation. Prior to the start of construction of the ultimate design, a replacement agreement will be required. All parties and the flow that they are committing to the project will be known, as well as the reimbursements that will need to be provided to those agencies opting out of the agreement. Provide a lot more time for4. review and comment. An alternate approach is to set a5. time limit on this agreement. Based on the draft restated agreement, all agencies need an off-ramp after eight years - a no fault period that allows Otay WD, or other agencies, to opt out of the agreement and pay only what is due at that time but with no penalty fees. It will take the City ... ... -2- 60409.00001\30914102.330914102.8 Point Loma Wastewater Treatment Plant to a secondary treatment plant (secondary equivalency); and WHEREAS, the City intends to implementis implementing a phased, multi-year program todesigned to regionally produce up toat least 83 million gallons per day of safe, reliable potable water for the City using the new, expanded, or modified facilities, some of which will include Metro System facilities, in order to achieve secondary equivalency under the Clean Water Act at the Point Loma Wastewater Treatment Plant by offloading wastewater from the Point Loma plant; and WHEREAS, if secondary equivalency is recognized through federal legislation amending the Clean Water Act, the Pure Water Program will not only benefit the City by producing repurified water, but also the Participating Agencies and their wastewater customers. , especially if secondary equivalency is recognized through federal legislation amending the Clean Water Act. Specifically, implementation of the Pure Water Program will reduce wastewater discharges to the Point Loma Wastewater Treatment Plant, part of the Metro System where a large portion of the Participating Agencies’ wastewater is currently treated and disposed by discharging it into the Pacific Ocean. By diverting wastewater from the Point Loma Wastewater Treatment Plant and reducing the effluent discharged into the Pacific Ocean, the City and the Participating Agencies will potentially avoid billions of dollars in unnecessary capital, financing, energy, and operating costs to upgrade the Point Loma plant to secondary treatment at full capacity. Avoiding such costs would result in significant savings for regional wastewater customers; and WHEREAS, the Padre Dam Municipal Water District, San Diego County Sanitation District, and the City of El Cajon have proposed a program to produce up to 15 million gallons per day of safe, reliable potable water for East San Diego County using wastewater that would otherwise be disposed of in the Metro System (“East County AWP Program”). By offloading wastewater and wastewater contents from the Point Loma Wastewater Treatment Plant, the East County AWP Program would, if implemented, help the City’s and region’s efforts to achieve long-term compliance with the Clean Water Act by producing a regional annual average of at least 83 million gallons per day of water suitable for potable reuse by December 31, 2035, as described in the Cooperative Agreement in Support of Pure Water San Diego entered into by the City and certain environmental stakeholders on December 9, 2014. WHEREAS, Section XIV, subsection B, of the 1998 Agreement provided that the Parties may amend the Agreement by a written agreement between the City and all Participating Agencies stating the parties’ intent to amend the Agreement; and WHEREAS, in order to comprehensively and equitably address the costs and revenues associated with the Pure Water Program and the related construction, expansion, and/or modification of Metro System facilities, the City and Participating Agencies wish to amend and restate the Regional Wastewater Disposal Agreement as provided herein. THEREFORE, in consideration of the mutual promises set forth herein, the City and the Participating Agencies agree as follows: Suggested language changes by Tom Zeleny (City of SD). Suggested language changes by Tom Zeleny (City of SD). Comment from Otay: The discussion about offloading Point Loma must be specific about Pure Water being more than just a scalping plant. Stronger language must be used to insure Pure Water as a must-run facility so that we don’t overbuild secondary treatment facilities that are not used. This is what happened with the NCWRP and the SBWRP. City staff have mentioned many times that the Judge said the City had to build them but he didn’t say they had to operate them. Response from Metro TAC PW Ad Hoc Committee: Under the Cooperative Agreement and proposed OPRA II legislation, the 83 mgd of potable reuse facilities is “must run.” Additional language requested by Padre Dam. -3- 60409.00001\30914102.330914102.8 DEFINITIONSI. Annual Average Daily Flow is the number, in millions of gallons of wastewaterA. per day (“MGD”), calculated by dividing total Flow on a fiscal year basis by 365 days. Brine is a waste byproduct of the demineralization process at an upstreamB. Water Repurification System facility or a Reclaimed Water facility. Capital Expense Rate is the cost per acre foot that will apply if the MetroC. System’s Capital Improvement Costs for the Pure Water Program and/or upgrading of the Point Loma WTP to secondary treatment exceed $1.8 billion, as further described in Exhibit F. B. Capital Improvement Costs are costs associated with the planning, design,D. financing, construction, or reconstruction of facilities. C. Chemical Oxygen Demand or “COD” means the measure of the chemicallyE. decomposable material in wastewater, as determined by the procedures specified in the most current edition of “Standard Methods for the Examination for Water and Wastewater,” or any successor publication which establishes the industry standard. D. City Water Utility PW Costs are those Pure Water Program costs whichF. areallocated to the City’s water utility and therefore excluded as Metro System costs under Exhibit F and are the responsibility of City’s water utility. E. Contract Capacity is the contractual right possessed by each ParticipatingG. Agency to discharge wastewater into the Metro System pursuant to this Agreement up to the limit set forth in Exhibit B attached hereto. Contract Capacity is stated in terms of Annual Average Daily Flow. F. Flow is the amount of wastewater discharged by the City and eachH. Participating Agency. G. Functional-Design Methodology shall mean the process of allocatingI. Operation and Maintenance Costs and Capital Improvement Costs to Flow and Strength parameters recognizing the benefits of both the design criteria and the primary function of a unit process. Metro Commission is the advisory body created under Section VIII.J. H. Metro System Costs are those costs set forth in Section V.B.15.2.1.K. I. Metro System Revenues are those revenues set forth in Section V.B.25.2.2.L. J. Metropolitan Sewerage System or Metro System shall mean and consist ofM. those facilities and contract rights to facilities which are shown and/or described in Exhibit A attached hereto and incorporated by this reference, including any amendments thereto authorized by this Agreement. Comment from Otay: Label each section of the agreement. There are several cross references in the agreement referencing “Section__”. Follow through by referencing the sections accordingly. Comment from Otay: This section has not been appropriately updated as there are some very obvious omissions such as the South Bay Water Reclamation Plant is not defined or mentioned in this agreement. Comment from Otay: Why isn’t the existing advanced water purification demonstration plant mentioned. Shouldn’t the Metro JPA get reimbursed for their investment if it will be removed or demolished with the first phase? Comment from Otay: Brine discharge needs to be defined so it is clear the City Water Utility PW is responsible for the cost of conveyance and treatment of this effluent. Definition added at suggestion of Otay WD. Suggested language changes by Tom Zeleny (City of SD). Comment from Otay: This needs to be consistent with the section that mentions capacity as the basis for some of the billing. Tom Zeleny (City of SD) suggested adding Metro JPA as party to the agreement so that Metro JPA could represent the PAs in approving certain ministerial amendments to the Agreement. BB&K recommends using Metro Commission for this purpose because the Metro Commission will exist for the term of this Agreement and would not require the addition of a new party. -4- 60409.00001\30914102.330914102.8 K. Municipal System shall mean the City’s wastewater collection system, whichN. consists of pipelines and pump stations, that collects wastewater within the City of San Diego and conveys it to the Metropolitan Sewerage System for treatment and disposal. L. New Capacity is the capacity to discharge wastewater outside the MetroO. System, above the Contract Capacity set forth in Exhibit B attached hereto. M. New Contract Capacity is the capacity to discharge wastewater into theP. Metro System, above the Contract Capacity set forth in Exhibit B attached hereto. N. North City Water Reclamation Plant or North City WRP is the 30Q. million gallons per day (as of the date of this Agreement) wastewater treatment facility located at 4949 Eastgate Mall in San Diego, which includes four major processes: primary treatment, secondary treatment, tertiary treatment, and disinfection. O. Operation and Maintenance Costs are the costs of those items andR. activities required by sound engineering and management practices to keep the conveyance, disposal, treatment, and reuse facilities functioning in accordance with all applicable laws, rules, and regulations. P. Point Loma Wastewater Treatment Plant or Point Loma WTP is the 240S. million gallons per day (as of the date of this Agreement) advanced primary treatment plant which includes four major processes: screening, grit removal, sedimentation, and digestion. Q. Pure Water Program is the City’s phased, multi-year program designed toT. produce up to at least 83 million gallons per day of Repurified Water using new, expanded, or modified facilities, some of which will include Metro System facilities. R. Reclaimed Water (or Recycled Water) shall have the definition set forth inU. Title 22, Division 4 of the California Code of Regulations and shall mean water which, as a result of treatment of wastewater, is suitable for a direct beneficial use or a controlled use that otherwise could not occur. S. Reclaimed Water (or Recycled Water) Distribution System shall meanV. and consist of those eight (8) reclaimed water projects listed in Attachment B of the Stipulated Final Order for Injunctive Relief approved by the U.S. District Court on June 6, 1997 in U.S.A. v. City of San Diego, Case No. 88-1101-B, and attached hereto as Exhibit E. T. Repurified Water shall mean water which, as a result of advanced treatmentW. of reclaimed waterReclaimed Water, is suitable for use as a source of domestic Suggested language change by Tom Zeleny (City of SD). -5- 60409.00001\30914102.330914102.8 (or potable) water supply. Repurified Water Revenue is the cost savings that will be realized when theX. City water utility’s annual costs per-acre foot for Repurified Water are less than the purchase costs per-acre foot for comparable water from the San Diego County Water Authority, as further described in Exhibit F. U. Return Flow shall mean the effluent created by the dewatering of digestedY. biosolids, which includes centrate. V. Reuse shall mean to use again, such as water which has been reclaimed orZ. repurified, or sludge that has been converted to biosolids for beneficial use. W. South Bay Land/Ocean Outfall is the facility that is jointly owned by theAA. International Boundary & Water Commission (U.S. Section IBWC) and the City of San Diego. The Outfall is planned to convey and discharge treated effluent from the IBWC’s International Wastewater Treatment Plant and treated effluent from the City’s South Bay Water Reclamation Plant and the South Bay Secondary Treatment Plant. As of the date of this Agreement, the Outfall has a current Average Daily Flow Capacity of 174 million gallons per day. As of the date of this Agreement, the City owns 39.94% of the capacity of the Outfall and the balance of the capacity is owned by the IBWC. South Bay Water Reclamation Plant is the 15 million gallons per day (as ofBB. the date of this Agreement) wastewater treatment facility located at 2411 Dairy Mart Road in San Diego, which includes four major processes: primary treatment, secondary treatment, tertiary treatment, and disinfection. X. Strength means the measurement of Suspended Solids (SS) and ChemicalCC. Oxygen Demand (COD) within the wastewater Flow and any other measurement required by law after the date of this Agreement. Y. “Suspended Solids” or “SS” means the insoluble solid matter in wastewaterDD. that is separable by laboratory filtration, as determined by the procedures specified in the most current edition of “Standard Methods for the Examination of Water and Wastewater,” or any successor publication which establishes the industry standard. Z. Tertiary Component is that portion of the wastewater treatment processEE. that currently filters the secondary treated wastewater effluent through fine sand and/or anthracite coal to remove fine Suspended Solids and disinfects it to meet the requirements of the California Administrative Code, Title 22, or its successor for filtered and disinfected wastewater. AA. Water Repurification System shall mean any facilities, including treatmentFF. and conveyance facilities, the purpose of which is the production or conveyance of Repurified Water. Water Repurification System includes, but is not limited Suggested addition by Otay WD. -6- 60409.00001\30914102.330914102.8 to: the Tertiary Component of the North City Water Reclamation Plant to the extent being used to produce Repurified Water, the North City Advanced Water Purification Facility to be located across the street from the North City Water Reclamation Plant (“North City AWP Facility”); the Repurified Water conveyance system, which will transport Repurified Water from the North City AWP Facility and/or other facilities to the Miramar Reservoir or other alternative location(s) as determined by the City; and any other Repurified Water treatment or conveyance facilities which are part of the City’s 83 million gallons per day Pure Water Program. Wet Weather Flow is Flow entering the Metro System during rainy weather.GG. Peak 24-Hour Wet Weather Flow is the highest measured Wet Weather Flow occurring in a 24 hour period during a fiscal year. Wet Weather Flow Rights are the estimated amounts of Wet Weather Flow, stated in millions of gallons per day (MGD), that the City and each Participating Agency are projected to have in the 2050 fiscal year. Wet Weather Flow Rights are the 10-year average of Wet Weather Flow for 2050, and are calculated by dividing total estimated annual Wet Weather Flow by 365 days. Wet Weather Flow Rights are stated in Column 7 of Exhibit G. OWNERSHIP AND OPERATION OF THE METRO SYSTEMII. Rights of the Parties.2.1 The City is the owner of the Metro System, and of any additions to the Metro System or other facilities constructed pursuant to this Agreement. All decisions with respect to the planning, design, construction, operation and maintenance of the Metro System shall rest with the City, in consultation with the Metro Commission. The Participating Agencies shall have a contractual right to use the Metro System and to participate in its operation as set forth in this Agreement. Subject to the terms of this Agreement, and in conformance with all applicable laws, the City may transfer ownership of all or part of the Metro System at any time. In the event of a transfer, the City’s successor shall be bound by the terms of this Agreement. Subject to the terms of this Agreement, any Participating Agency may transfer or assign its rights and obligations under this Agreement. Any transfer shall first be approved by the City. No transfer may occur if the City reasonably determines, after consultation with the Participating Agencies involved, that the proposed transfer will imbalance, or will otherwise adversely impact the City’s ability to operate the Metro System. B. Metro System Services.2.2 1. The City shall provide wastewater conveyance, treatment and disposal2.2.1 services to the Participating Agencies through the Metro System, under the terms set forth in this Agreement. Comment from Tom Zeleny (City of SD): Not all of the tertiary component is for repurified water. Some is for reclaimed water. Suggested addition by Tom Zeleny (City of SD). Comment from Otay: This definition should include mention of Pure Water and should be clear this is not a Metro cost. Response to comment from Otay: Section 5.2.1.2.7 excludes “City Water Utility PW Costs” from Metro Costs. Costs related to the Water Repurification System fall within that category. Comment from Otay: There should also be some limitation on the member agencies’ liability for O&M and other costs attributable to Pure Water. Response to comment from Otay WD: Exhibit F describes which costs are Metro System costs and which costs are City Water Utility costs. All O&M, capital, and other costs associated with non-Metro PW facilities are City Water Utility costs. Comment from County: Add exception for LAFCO-approved changes in organization, which should not require City pre-approval. Suggested addition by El Cajon. A. Comment from Otay: The original agreement is twenty years old and this new agreement replaces the old agreement. It is important that the facilities built by Metro during the original time frame are included in this agreement or by omission they could be lost or in dispute. This includes the SBWRF and the Advanced Water Purification facility. Comment from Otay: Metro JPA should have a bigger role than just an advisory role. A 35% stake in the cost of wastewater capital costs and higher O&M justifies a bigger role in the decision making process. -7- 60409.00001\30914102.330914102.8 2. The City shall operate the Metro System in an efficient and2.2.2 economical manner, maintaining it in good repair and working order, all in accordance with recognized sound engineering and management practices. 3. The City shall convey, treat, and dispose of or reuse all wastewater2.2.3 received under this Agreement in such a manner as to comply with all applicable laws, rules and regulations. C. Flow Commitment.2.3 Absent agreement of the parties, all Flow from the Participating Agencies2.3.1 and the City, up to the capacity limits set forth in Exhibit B or any amendments thereto, shall remain in the Metro System. 2. This Agreement shall not preclude any Participating Agency from2.3.2 diverting Flow from the Metro System as a result of the construction of reclamation facilities or New Capacity outside of the Metro System. 3. Any Participating Agency may negotiate an agreement with the City to2.3.3 withdraw all Flow from the Metro System, which at a minimum requires the Agency to pay its proportionate share of Capital Improvement Costs. If a Participating Agency enters into an agreement with the City by December 31, 2019, to withdraw all Flow from the Metro System by January 1, 2035, such Participating Agency shall not pay Pure Water Program Capital Improvement Costs except for Phase I (as defined below in Section 2.8). D. Funding Obligations.2.4 Nothing in this Section or in this Agreement shall obligate the City to make any payment for the acquisition, construction, maintenance or operation of the Metro System from moneys derived from taxes or from any income and revenue of the City other than moneys in or sewer revenues which go into the Sewer Revenue Fund for the Metro System and from construction funds derived from the sale of such sewer revenue bonds for the Metro System as are duly authorized. Nothing in this contractAgreement shall be construed to obligate the City to pay from its annual income and revenues any sum which would create an indebtedness, obligation or liability within the meaning of the provisions of Section 18 of Article XVI of the Constitution of the State of California. Nothing in this Section, however, or in this Agreement shall prevent the City, in its discretion, from using tax revenues or any other available revenues or funds of the City for any purpose for which the City is empowered to expend moneys under this Agreement. Nothing herein shall relieve the City from its obligations to fund and carry out this Agreement. Nothing in this Section or in this Agreement shall obligate any Participating Agency to make any payment which would create an indebtedness, obligation or liability within Comment from Otay: Please add: “This Agreement shall not preclude any Participating Agency from diverting Flow from Metro System as a result of the construction of El Cajon suggests adding “some or,” so that the provision would read as follows: “Any Participating Agency may Comment from Poway: Statement needs to be clarified with Section III.D (now Section 3.4) with regard to Padre Dam, San Diego County Sanitation District and El Cajon. Response to Poway comment: Even with the East County project online, Padre Dam, the County, and El Cajon will still be sending some Flow to the Metro System, so they will not be withdrawing all Flow as described here. Also, the East County project would fall under Section 2.3.2, which allows diversion to reclamation facilities without agreement of the City. ... ... ... ... ... -8- 60409.00001\30914102.330914102.8 the meaning of the provisions of Section 18 of Article XVI of the Constitution of the State of California, or which is not authorized by law. E. Financial Statements.2.5 1. The City shall keep appropriate records and accounts of all costs and2.5.1 expenses relating to conveyance, treatment, disposal, and reuse of wastewater, and production of Repurified Water, and the acquisition, planning, design, construction, administration, monitoring, operation and maintenance of the Metro System. and Water Repurification System, and any grants, loans, or other revenues received therefor. The City shall keep such records and accounts for at least four (4) years, or for any longer period required by law or outside funding sources. 2. Said records and accounts shall be subject to reasonable inspection by2.5.2 any authorized representative of any Participating Agency at its expense. Further, said accounts and records shall be audited annually by an independent certified public accounting firm appointed by the City pursuant to generally accepted accounting principles. A copy of said report shall be available to any Participating Agency. As part of said audit, the actual amount of City Water Utility’s PW Costs, Pure Water Program costs attributable to the Metro System, Repurified Water Revenue, and the Capital Expense Rate shall be determined and audited by the City’s external auditors and Participating Agency representatives, and a cumulative and annual summary of such amounts shall be included as a footnote or attachment to the audit of the Metro System. Cost summaries shall include separate lines for Capital Improvement Costs and Operation and Maintenance Costs. The City shall make a good faith effort to complete the annual audit, and2.5.3 any related adjustments under this Agreement, by the end of the following fiscal year. F. Limitations on Types and Condition of Wastewater.2.6 1. Each Participating Agency will comply with all applicable laws, rules2.6.1 and regulations including its regulatory obligations associated with the discharge of wastewater into its respective system and from such system into the Metro System. 2. Each Participating Agency will minimize to the maximum extent2.6.2 practicable, the infiltration and inflow of surface, ground or stormwaters into its respective wastewater systems. 3. Each Participating Agency will insure that all industrial users of its2.6.3 wastewater system are regulated by an effective industrial pretreatment program that conforms to all to all applicable laws, rules and regulations Comment from Otay: The City needs to commit to debt financing of this project. The original commitment by the Metro JPA was for a 15 MGD project that would have required little infrastructure for Metro to build. This larger project was the City’s idea and since the JPA didn’t sign on to this bigger project, the City should get bonds to cover the PAs cost for the project. Response to Otay WD: Please touch base with Karyn Keze, who can discuss City’s financing of Metro System projects. Language moved from Exhibit F. Language moved from Exhibit F. Added at suggestion of County, after discussions with City. -9- 60409.00001\30914102.330914102.8 and that is acceptable to the City. Provided, however, that the City shall not require the Participating Agencies to take any actions beyond that which is required under applicable laws, rules and regulations that can be taken but are not being taken by the City. 4. The City and the Participating Agencies agree that nothing in this2.6.4 Agreement, including the termination of the existing sewage disposal agreements, shall affect the validity of the Interjurisdictional Pretreatment Agreements, or the separate transportation agreements that are currently in effect between or among the City and the Participating Agencies. 5. Each Participating Agency will not discharge a substantial amount of2.6.5 sewage originating outside its respective boundaries into the Metro System without the approval of the City. 6. Each Participating Agency shall be responsible for the violation of any2.6.6 applicable laws, rules or regulations associated with its respective discharge of wastewater into the Metro System. Nothing in this Agreement shall affect the ability of any Participating Agency to hold third parties responsible for such violations. 7. In the event a regulatory agency imposes any penalty or takes other2.6.7 enforcement action relating to the conveyance, treatment, and disposal or reuse of wastewater in or from the Metro System, the City shall determine whetherif the City or a Participating Agency or Agencies caused or contributed to such penalty or enforcement actionsthe violation by exceeding its Contract Capacity or by the contents of its wastewater. The City shall allocate the penalty or other relief, including the costs of defense, to the party or parties responsible. Each responsible party, whether a Participating Agency or the City, shall be obligated to pay its share of such penalty or other relief, and any costs of defense. In the event that the City cannot make such an allocation, the cost of such penalty or other relief shall be shared by the Participating Agencies and the City proportionately based on Flow and Strength. Coronado requested the following addition: For the purposes of this Agreement, the United States Naval Bases in Coronado shall not be considered outside the boundaries of the City of Coronado. Comment from Coronado: There should be something that defines and codifies the handling of wastewater from the Naval facilities located in the City of Coronado. The Navy is not a participating agency, their waste is generated in Coronado; however, they pay the City of San Diego directly for disposal. I’m not sure where this should be inserted, perhaps a special note under Section 2.F Limitations on Types andResponse to Coronado: Due to the potential complexity of this issue, the City suggests putting this in the list of items that will be discussed between the Parties during Phase II planning and may potentially be in a future amendment. (See Section 2.9.) Specific language requested by Coronado, with minor edits suggested by City of SD. “Or reuse” language removed at suggestion of Otay WD. Suggested edits by the City of San Diego in response to language proposed by City of El Cajon. (see comment below). ... ... G. Right of First Refusal.2.7 1. The City shall not sell or agree to sell the Metro System without first2.7.1 offering it to the Participating Agencies. For the purposes of this section, “Participating Agencies” shall mean a Participating Agency, a group of Participating Agencies, or a third party representing one or more Participating Agencies. The term “sell” shall include any transfer or conveyance of the Metro System or of any individual treatment or reclamation facility or outfall within the Metro System. 2. The City and the Participating Agencies recognize that transfer of2.7.2 ownership of the Metro System is currently restricted by Sections 6.04 and 6.20 of the Installment Purchase Agreement between the City and the Public Facilities Financing Authority of the City, which inter alia restricts the transfer of ownership to the Metropolitan Wastewater Sewage District or other governmental agency whose primary purpose is to provide wastewater treatment. The City shall not seek to impose on bond holders a waiver of Section 6.04 or 6.20. Absent such a restriction, before the City sells or agrees to sell the Metro System, or any portion of it, the City shall offer to sell the Metro System to the Participating Agencies (“the Offer”) on the terms and at a price equal to that proposed for the sale of the Metro System to a third party. The Participating Agencies shall have thirty days from receipt of the Offer (“the Intent to Respond Period”) in which to notify the City of their intent to respond to the Offer. The Participating Agencies shall have five months from the expiration of the Intent to Respond Period in which to accept or reject the Offer. The Offer shall contain the name of the proposed purchaser, the proposed sale price, the terms of payment, the required deposit, the time and place for the close of escrow, and any other material terms and conditions on which the sale is to be consummated. 3. If the Participating Agencies give timely notice of their intent to2.7.3 respond and timely notice of their acceptance of the Offer, then the City shall be obligated to sell and the Participating Agencies shall be obligated to purchase the Metro System or any individual treatment or reclamation facility or outfall within the Metro System, as applicable, at the price and on the terms and conditions of the Offer. If the Participating Agencies do not give timely notice of their intent to respond or their acceptance of the Offer, or do not submit an offer on the same terms and conditions as the Offer, the City may, following the end of the Offer period, sell the Metro System, or any portion of it, at a price and on terms and conditions no less favorable to the City than those in the Offer. The City shall not sell the Metro System to any third party on terms or at a price less favorable to the City from the terms and price contained in the Offer absent compliance with the terms of this Section. -10- 60409.00001\30914102.330914102.8 -11- 60409.00001\30914102.330914102.8 4. Nothing herein shall prevent the City from entering into a financing2.7.4 agreement which may impose limits on the City’s power to sell the Metro System to the Participating Agencies pursuant to Section H.12.7.1. if the City reasonably believes that such a financing agreement is in the City’s best interest. Neither the entry into such a financing agreement by the City nor the performance thereof by the City shall constitute a breach or default by the City hereunder. H. Pure Water San Diego Program.2.8 1. Each new, expanded, or modified Metro System facility which is used in relation to the production of Repurified Water (in addition to the modification and expansion of the North City Water Reclamation Facility) shall be governed by this Agreement and Exhibit F, attached hereto and incorporated herein. The parties acknowledge and agree that additional amendments to Exhibit F will be necessary based on the actual Repurified Water processes selected and the nature of specific facilities. Therefore, notwithstanding Section XIV, subsection B (Amendment of Agreement), the City’s Mayor and the chief executive officer of each of the Participating Agencies shall have the authority to execute ministerial amendments to Exhibit F. For purposes of this provision, a “ministerial amendment” is a written amendment that: (1) allocates costs related to new, expanded, or modified Metro System facilities in connection with the production of Repurified Water, and (2) is generally consistent with the cost allocation principles set forth in the original Exhibit F, which is attached to this Agreement. 2. Nothing in this Agreement or Exhibit F limits or restricts the right of the City or the Participating Agencies to enter into separate agreements the purchase or sale of Repurified Water produced by the Water Repurification System or sharing in City Water Utility’s associated capital, debt, operation, and maintenance costs. Under such circumstances, the cost allocation and commodity rate delineated in Exhibit F will remain unchanged. Future Negotiations and Cooperation.2.9 This Agreement and Exhibit F specifically contemplate Phase I of the2.9.1 Pure Water Program, which consists of new, expanded, or modified Metro System facilities and Water Repurification System facilities designed to produce only up to 30 million gallons per day of Repurified Water (“Phase I”). During the planning process for later phases of the Pure Water Program, the parties shall meet and negotiate in good faith regarding one or more amendments to this Agreement or its Exhibits to address: The allocation of specific Pure Water Program costs between2.9.1.1 City’s water utility and the Metro System for such later phases; Whether, and to what extent, certain Metro System costs should2.9.1.2 be charged based on volume capacity rights, Strength capacity rights, Peak 24-Hour Wet Weather Flow, and/or other factors; Suggested addition by El Cajon. -12- 60409.00001\30914102.330914102.8 The exclusion of costs related to the industrial discharges2.9.1.3 inspection and monitoring program within San Diego under Section 5.2.1.2.3 of the Agreement; and The handling of waste generated at United States military bases2.9.1.4 under this Agreement. If such negotiations do not result in an amendment to this Agreement or its Exhibits concerning these subjects, this Agreement shall remain in full force and effect as set forth herein. Further, if the City proceeds with a later phase of the Pure Water Program as authorized under Section 2.1 of this Agreement, and the Parties have not yet amended this Agreement or Exhibit F to specifically address such costs by the time they are incurred, all costs listed in Section I of Exhibit F shall nonetheless be excluded as Metro System costs under this Agreement. The City and the Participating Agencies shall cooperate and coordinate in2.9.2 good faith with the Padre Dam Municipal Water District, San Diego County Sanitation District, and City of El Cajon on issues that relate to the East County AWP Program, including, but not limited to, the transfer of the Mission Gorge Pump Station; disposal of residuals; and a source control program. III. III.PAYMENT AND MONITORING PROVISIONS Payment for Metro System Facilities.3.1 Through the system of charges set forth in SectionArticle V of this Agreement, each Participating Agency shall pay its share of the costs of planning, design and construction of all of the Metro System facilities which are identified in Exhibit A hereto, which is incorporated herein by reference. B. Payment for Additional Metro System Facilities.3.2 Through the system of charges set forth in SectionArticle V of this Agreement, each Participating Agency shall pay its share of the costs of acquisition, or planning, design and construction of such facilities in addition to those set forth on Exhibit A as are necessary for the Metro System to maintain compliance with applicable laws, rules and regulations, including the Ocean Pollution Reduction Act of 1994 and its successor(s), present and future waivers of applicable treatment standards at any Metro System treatment facility, and all facilities as are necessary to convey, treat, dispose, and reuse wastewater in the Metro System to provide the Contract Capacity set forth in Exhibit B, to maintain hydraulic capacity and as otherwise required by sound engineering principles. As a ministerial matter, the City shall amend Exhibit A from time to time to reflect such additional facilities and shall give notice of any amendments to the Participating Agencies. The City shall keep an updated version of Exhibit A on file with Added at request of Padre Dam. Comment from Otay: There needs to be a clear distinction between how capital costs for secondary equivalency are being charged and how O&M costs are calculated and billed since the Flow bases are different. Response to comment from Otay WD: Please contact Karyn Keze, who can discuss calculation and billing issues. -13- 60409.00001\30914102.330914102.8 the City ClerkPublic Utilities Department. Exhibit A may be amended to reflect other changes to the Metro System only as expressly provided in this Agreement. C. Payment for Operation and Maintenance.3.3 Through the system of charges set forth in SectionArticle V of this Agreement, each Participating Agency shall pay its share of the Operation and Maintenance Costs of all Metro System facilities. The Participating Agencies shall not pay for the Operation and Maintenance Costs of Water Repurification System, which are City Water Utility PW Costs. D. Charges Based on Flow and Strength; Exception.3.4 1. Except as otherwise described in this subsection DSection 3.4, a3.4.1 Participating Agency’s share of the charges in this SectionArticle III shall be assessed pursuant to SectionArticle V of this Agreement based on its proportionate Flow in the Metro System and the Strength of its wastewater. 2. Notwithstanding the abovesection 3.4.1, or any other provision of this3.4.2 Agreement, a Participating Agency’s share of Pure Water Program Capital Improvement Costs and Pure Water Program revenues attributable to the Metro System under Exhibit F shall be assessed or credited based on the parties’ “Metro Capacity Rights,” whichproportionate share of Wet Weather Flow Rights. Wet Weather Flow Rights are based on projections of each party’s 2050 Flow. Metro Capacity Rights are10-year average of Wet Weather Flow in the year 2050 as set forth in Column 7 of Exhibit G, which is attached hereto and incorporated herein. The City shall annually determineallocate the estimated and actual costs Pure Water Program Capital Improvement Costs and revenues which are attributable to the Metro System under Exhibit F and take into account the above assessment methodin proportion to each party’s share of Wet Weather Flow Rights (Column 8 of Exhibit G) when estimating quarterly payments and conducting year- end adjustments under SectionArticle V. 3. Each party recognizes that operation within respective Metro3.4.3 CapacityWet Weather Flow Rights is essential to the accurate allocation of costs and revenues under the Pure Water Program. In recognition of same, the parties agree as follows: a. If any party’s Flow exceeds the sum of its Metro Capacity Rights and its portion of the Reserve Capacity Pool (as shown in Exhibit G) for any continuous three (3) month period, such party shall pay for the use of such capacity from the Reserve Capacity Pool. Payment for such use of the Reserve Capacity Pool shall be made as part of the yearly billing adjustments under Section V.B.4 and shall be credited to offset the other parties’ Pure Water Program Capital Improvement Costs. Such payments shall be based on the following amounts, which shall be annually adjusted each July 1 (starting on July 1, 2018) to reflect the Comment from Nick Norvell (Metro JPA): The City has explained that the City Clerk no longer maintains records for the entire City. The successor for this purpose would be the City Public Utilities Department. Similar changes have been made in other sections of this draft Agreement. A. Comment from Otay: Shouldn’t the capital costs for the secondary equivalency improvements be covered under either of these sections rather than Section III.D? Response to comment from Otay WD: Please contact Karyn Keze, who can discuss cost allocation and billing issues. Comment from Poway: Need to clarify that Exhibit B is no longer governing capacity rights. Response to comment from Poway: The revised Agreement would not entirely do away with the Contract Capacities in Exhibit B. Each party would retain its Contract Capacity in the system, but would have a financial incentive to keep its Flow under the amounts that will be used for determining Pure Water Program capital costs. Comment from Otay: It is not clear how the capital improvements for secondary equivalency will take into consideration sewer strength in the allocation of these costs. The SSC as defined and set in Section V.B. leaves this to the City to calculate. It appears that there would need to be a change to how the capital costs are determined separate from how the O&M costs are calculated. Also, if Otay WD were to stop treatment at RWCWRF and increase its allocation, there would need to be a credit for reducing the strength of the existing capacity? Or if Otay WD did solids handling and reduced strength but kept flow the same. What assumptions are being made for ultimate strength? Comment from Tom Zeleny (City of SD): Probably need to specify which column. -14- 60409.00001\30914102.330914102.8 annual percentage change in the Engineering News Record – Los Angeles construction cost index: (1) $_____ per MGD (for use of any portion of the Reserve Capacity Pool up to four (4) times such party’s share of the Reserve Capacity Pool) (2) $_____ per MGD (for use of any portion of the Reserve Capacity Pool over four (4) times such party’s share of the Reserve Capacity Pool) Beginning in the next fiscal year after the effective date of this3.4.3.1 Agreement, if any party’s Annual Average Daily Flow exceeds its Wet Weather Flow Rights for any two (2) consecutive fiscal years, the City shall prepare an amendment to Exhibit G that adjusts projections of each party’s 10-year average of Wet Weather Flow in 2050 based on information about such party’s exceedance and other relevant information. Upon approval by a majority of the Metro Commission, the City shall, as a ministerial matter, amend the Wet Weather Flow Rights in Column 7 of Exhibit G (and the percentages in Column 8 of Exhibit G) to reflect the new projections of 10-year average of Wet Weather Flow. The City shall keep an updated version of Exhibit G on file with the City Public Utilities Department. If the City and the Metro Commission cannot agree on an amendment to Exhibit G, the matter shall be submitted to dispute resolution pursuant to Article IX. b. Notwithstanding the amounts set forth in Column 7 of Exhibit3.4.3.2 G, the following parties will have the following Metro CapacityWet Weather Flow Rights until July 1, 20232025: (1) Padre Dam: 2.482.797 MGD3.4.3.2.1 (2) San Diego County Sanitation District:3.4.3.2.2 10.95922.844 MGD (3) El Cajon: 7.88.542 MGD3.4.3.2.3 c. Notwithstanding the amounts set forth in Exhibit G, the following parties will have the following Metro Capacity Rights until July 1, 2028: (1) San Diego County Sanitation District: 5.739 MGD (2) El Cajon: 7.8 MGD d. If any party’s Flow exceeds the sum of its Metro Capacity Rights and its portion of the Reserve Capacity Pool (as shown in Exhibit G) for any continuous six (6) month period, the City shall contract with an independent consultant (who shall be approved by a majority of the Metro Commission) to prepare an amendment to Exhibit G that accurately Comment from Otay: Otay doesn’t have any land use authority so is unable to determine ultimate buildout flows and as a wastewater treatment plant may send flows during periods of maintenance. Also how will I & I be addressed? If a series of rain events increase flows, due to poor maintenance by the City and the way they measure flow (spot checks a couple of times a year) will spread this flow increase to all agencies. The agency that has the high I & I gets subsidized by the JPA. County suggests deleting and made this comment: ECAWP is planned to be constructed in one initial phase to be completed by July 1, 2028. Comment from Otay: Off-ramps provided to some agencies. Otay wants an off-ramp as well. Comment from Poway: San Diego County Sanitation District and El Cajon will be allowed higher capacities for a 5-year period with the first phase of Pure Water on-line. They should have to contribute a pre- determined share for this period. Response to comment from Poway: All parties, including the East County parties, will pay O&M based solely on Flow and Strength for the PW Metro facilities. For capital improvements, the parties are paying based on long- term capacity needs. The committee believes this combination of charges is a fair way to charge for actual current use and long-term capacity planning. Response to comment from Poway: That concern would be addressed by 3.4.3.1 and 3.4.3.4. Like all parties, if the East County parties exceed their average wet weather flows for two consecutive years, Exhibit G would be amended, and the exceeding parties would make retroactive payments for their fair share of Pure Water costs. Comment from Poway: Need a clause if Padre Dam, San Diego County, El Cajon do not meet established timelines for reducing flows, what portion of Capital Costs will they incur? In other words, if their project does not come to fruition, they will still be a stakeholder in Pure Water and the Metro System. Will other agencies be reimbursed? -15- 60409.00001\30914102.330914102.8 reflects projections of 2050 Flow. The revised Exhibit G prepared by the consultant shall, as a ministerial matter, be adopted by the City within 180 days of such exceedance. The City shall give notice of the amendment of Exhibit G to each Participating Agency, and shall provide copies of the amendment with the notice. The City shall keep an updated version of Exhibit G on file with the City Clerk. e. If Exhibit G is amended to update one or more parties’ Metro3.4.3.3 CapacityWet Weather Flow Rights, the change in Metro CapacityWet Weather Flow Rights shall be retroactive in effect, and the City shall use the updated amounts in estimating quarterly payments and conducting year-end adjustments for Pure Water Program costs and revenues. Therefore, any party that underpaid based on previous Metro CapacityWet Weather Flow Rights (which were based on prior projections of 2050 Flow) shall pay the differenceretroactive amount due in its quarterly payments the following fiscal year; any party that overpaid based on previous Metro CapacityWet Weather Flow Rights shall receive a credit in its quarterly payments the following fiscal year. Notwithstanding the preceding sentence, if the retroactive amount due exceeds 20% of a party’s average annual Metro System payments for the previous four (4) years, such party may elect to pay the retroactive amount due in its quarterly payments over the subsequent four (4) fiscal years; any party that overpaid based on previous Wet Weather Flow Rights shall receive a credit in its quarterly payments the following four (4) fiscal years. E. Monitoring Flow and Strength.3.5 1. The City shall monitor wastewater that is discharged into the Metro3.5.1 System for Flow and Strength. The City shall own and operate as part of the Metro System monitoring devices which will measure the amount of daily wastewater discharged into the Metro System. These devices shall be installed at locations appropriate to accurately monitor Flow and Strength. The City may also monitor wastewater Flow and Strength at other locations as it deems appropriate. 2. In measuring Strength, the frequency and nature of the monitoring3.5.2 shall not be more stringent for the Participating Agencies than it is for the City. 3. The City shall, at least once every five (5) years, update and provide3.5.3 its plans for the monitoring system and for the procedures it will use to determine Strength to the Participating Agencies for . The Participating Agencies shall have the opportunity to review and comment prior to implementation. Comment from Tom Zeleny (City of SD): This could be quite large if a PA exceeds its capacity late in the game, like after 2040. County comment: Need to have a statute of limitations on how far back true-up can go. Response from Nick Norvell (Metro JPA): Agreed. Please review new suggested language at bottom of this paragraph, which allows for payment of retroactive costs over multiple years where the amount would be substantial for a particular PA. Comment from Otay: Will Strength need to be potentially redefined to include TDS? What are the impacts of higher TDS on the long term life and maintenance of the facilities? Added by Metro TAC Ad Hoc Committee in response to comment from Otay WD. Comment from Otay: Change; “The City shall prepare and update a monitoring plan every five years for the monitoring system… The City has multiple connections that aren’t monitored for flow or strength. The City also has significant issues with TDS that increase the cost of treatment for agencies that have spent a considerable capital investment in reducing I & I. -16- 60409.00001\30914102.330914102.8 4. The City shall report Flow and Strength data to the Participating3.5.4 Agencies at least quarterly. CAPACITY RIGHTSIV. A. Contract Capacity.4.1 In consideration of the obligations in this Agreement, each Participating Agency shall have a contractual right to discharge wastewater to the Metro System up to the Contract Capacity set forth in Exhibit B. The Wet Weather Flow Rights stated in Exhibit G, which are used solely for the purpose of allocating Pure Water Program costs and revenues attributable to the Metro System under this Agreement, do not replace or limit Contract Capacity. Each party’s Contract Capacity takes into account Wet Weather Flow. B. Transfers of Contract Capacity.4.2 The Participating Agencies and the City may buy, sell or exchange all or part of their Contract Capacity among themselves on such terms as they may agree upon. The City shall be notified prior to any transfer. Any transfer shall be first approved by the City. No Contract Capacity may be transferred if the City determines, after consultation with the Participating Agencies involved in the transaction, that said transfer will unbalance, or will otherwise adversely impact the City’s ability to operate the Metro System. Provided, however, that the Participating Agency seeking the transfer may offer to cure such imbalance at its own expense. Following the City’s consent, as a ministerial matter, the Contract Capacity set forth in Exhibit B shall be adjusted to reflect the approved transfer. C. Allocation of Additional Capacity.4.3 The parties recognize that the City’s applicable permits for the Metro System may be modified to create capacity in the Metro System beyond that set forth in Exhibit B as a result of the construction of additional facilities or as a result of regulatory action. This additional capacity shall be allocated as follows: 1. Except as provided in subsection 2section 4.3.2 below, in the event4.3.1 that the Metro System is rerated so that additional permitted capacity is created, said capacity shall be allocated proportionately based upon the Metro System charges that have been paid since July 1, 1995 to the date of rerating. 2. In the event that the additional permitted capacity is created as the4.3.2 result of the construction of non-Metro System facilities, or as the result of the construction of facilities pursuant to SectionArticle VII, such additional capacity shall be allocated proportionately based on the payments made to plan, design and construct such facilities. Comment from Poway: Need clarification on how this fits in given Capacity Rights have been redistributed with Pure Water (Section III and Exhibit G). Note this is also defined under Section I(E). Response to comment from Poway: The revised Agreement would not entirely do away with the Contract Capacities in Exhibit B. Each party would retain its Contract Capacity in the system, but would have a financial incentive to keep its Flow under the amounts that will be used for determining Pure Water Program capital costs. A sentence has been added to Section 4.1 to clarify this issue. Comment from Coronado: Capacity Rights are going to be redefined with Pure Water; the new Capacity Rights need to be clearly detailed. -17- 60409.00001\30914102.330914102.8 D. Deductions in Contract Capacity.4.4 The parties further recognize that the Contract Capacity in Exhibit B and Wet Weather Flow Rights in Exhibit G may be modified to comply with, or in response to, applicable permit conditions, or related regulatory action, or sound engineering principles. In the event that the capacity of the Metro System is rerated to a level below the total capacity set forth in Exhibit B, the Contract Capacity in Exhibit B and Wet Weather Flow Rights in Exhibit G shall be reallocated proportionately pending the acquisition or construction of new facilities. The City shall acquire or construct such facilities as necessary to provide the Contract Capacity rights set forth in Exhibit B, as planning and capacity needs require. The costs of such facilities shall be assessed pursuant to Section III.B. above3.2. E. Amendments to Exhibits B and C.4.5 As a ministerial matter, the City shall prepare amendments to Exhibits B and C to reflect any adjustment in Contract Capacity pursuant to this SectionArticle within ninety (90) days after the adjustment is made. The City shall give notice of the amendments to each Participating Agency, and shall provide copies of the amendments with the notice. The City shall keep an updated version of Exhibits B and C on file with the City ClerkPublic Utilities Department. F. The South Bay Land/Ocean Outfall.4.6 Nothing in this SectionArticle shall limit the City’s right to transfer capacity service rights in that portion of the South Bay Land/Ocean Outfall which is not part of the Metro System. V. V. SYSTEM OF CHARGES A. Charges Authorized.5.1 The City agrees to implement and the Participating Agencies agree to abide by a new system of charges. This new system allows the City to equitably recover from all Participating Agencies their proportional share of the net Metro System Costs through the imposition of the following charges: 1. SSC (Sewer System Charge);5.1.1 2. NCCC (New Contract Capacity Charge).5.1.2 B. SSC (Sewer System Charge).5.2 The City shall determine the SSC based on the projected Metro System Costs (as defined below) for the forthcoming fiscal year, less all Metro System Revenues (as defined below). 1. Metro System Costs5.2.1 Comment from Otay: The City should not be able to transfer capacity that would strand an asset paid for by Metro, and the City must reimburse Metro for the capital cost to replace the lost treatment capacity at Point Loma WWTP including any incremental cost to increase conveyance capacity to transfer wastewater that would have been treated at the SBWRP. Response to comment from Otay: Of the portions of the Outfall owned by the City, the Metro System has a capacity right to 69.2 MGD and the City as a separate and exclusive right to 4.8 MGD. This provision only relates to the exclusive portion, not the portion owned as part of the Metro System. (See Exhibit A, FN 1 for further discussion.) Comment from Otay: This section must be updated. Comment from Nick Norvell (Metro JPA): References to the Existing Capacity Charge have been removed because all payments for existing capacity were completed in 2003 as provided under the original Agreement. -18- 60409.00001\30914102.330914102.8 a. The following shall at a minimum be considered Metro System5.2.1.1 Costs for purposes of calculating the annual SSC: (1) Except as provided in section 5.2.1.25.2.1.1.1 (Excluded Costs, subsection b. below), the annual costs associated with administration, operation, maintenance, replacement, annual debt service costs and other periodic financing costs and charges, capital improvement, insurance premiums, claims payments and claims administration costs of the Metro System, , including projected overhead. Overhead shall be calculated using accepted accounting practices to reflect the overhead costs of the Metro System. (2) Fines or penalties imposed on the City as a5.2.1.1.2 result of the operation of the Metro System, unless the fine/penalty is allocated to the City or a Participating Agency as provided in Section II.F.72.6.7. (3) Costs incurred by the City, including attorneys’ fees, necessary to implement the terms of this Agreement. b. Excluded Costs. The following items shall not be considered5.2.1.2 Metro System Costs for purposes of calculating the annual SSC: (1) Costs related to the City of San Diego’s5.2.1.2.1 Municipal System as determined by reasonable calculations; (2) Costs related to the treatment of sewage from5.2.1.2.2 any agency which is not a party to this Agreement; (3) Costs related to the inspection and monitoring5.2.1.2.3 program for the industrial dischargers located in San Diego, including associated administrative and laboratory services; (4) Right-of-way charges for the use of public5.2.1.2.4 streets of the City or any Participating Agency. The City and the Participating Agencies agree not to impose a right-of-way charge for the use of its public rights-of-way for Metro System purposes.; (5) Capital Improvement Costs of any non-Metro5.2.1.2.5 System facility.; County comment: Claims costs should exclude any costs resulting from negligence of City or a PA. Response to County comment: The Committee discussed this with the City, but the City explained that excluding costs for some types of claims would raise other types of costs associated with the system. Section 5.2.1.2.8 added in response to County comment. Comment from Nick Norvell (Metro JPA): Removal of this language has been suggested by the City of SD because it is duplicative of Section 5.2.1.1.1, which already includes costs of administration of the Metro System. Comment from Tom Zeleny (City of SD): Re deleted language, it could be construed as an attorney’s fee provision. Additional comment based on phone discussion between Tom Zeleny and Nick Norvell: Removal of this language entirely would be appropriate because it is duplicative of Section 5.2.1.1.1. That section already includes costs of administration of the Metro System. Comment from Otay: Excluded costs must include “Operation and Maintenance Costs of the Water Purification System.” (as referenced in Section III.C) Response to comment from Otay WD: Section 5.2.1.2.7 excludes “City Water Utility PW Costs.” Under Exhibit F, City Water Utility PW Costs means all costs, including O&M and Capital Improvement costs for the Water Repurification System (as well as other excluded costs). Comment from Coronado: What about effluent from the Navy? They are not a party to the Agreement. For City review/comment. -19- 60409.00001\30914102.330914102.8 (6) Capital Improvement Costs for which an5.2.1.2.6 NCCC is paid.; and (7) City Water Utility PW Costs as defined in5.2.1.2.7 Exhibit F. 2. Metro System Revenues.5.2.2 a. The following revenues shall be at a minimum considered5.2.2.1 Metro System Revenues for purposes of determining the annual SSC: (1) Any grant or loan receipts or any other receipts5.2.2.1.1 that are attributable to the Metro System, including, but not limited to, all compensation or receipts from the sale, lease, or other conveyance or transfer of any asset of the Metro System, and ; provided, however, that this shall not include any grant, loan, or other receipts attributable to the Metro System components of the Pure Water Program, which are specifically addressed in Section 5.2.2.1.8. (2) All compensation or receipts from the sale or5.2.2.1.2 other conveyance or transfer of any Metro System by- products, including, but not limited to gas, electrical energy, sludge products, and Reclaimed Water (excepting therefrom any receipts allocated pursuant to subsection 2.a.(3) below); provided however, that this shall not include the Secondary Effluent Commodity Rate, which is specifically addressed in subsection 2.a.(6) below.section 5.2.2.1.3). (3) The distribution of revenue from the sale of5.2.2.1.3 Reclaimed Water from the North City Water Reclamation Plant, including incentives for the sale of Reclaimed Water, shall first be used to pay for the cost of the Reclaimed Water Distribution System, then the cost of the Operation and Maintenance of the Tertiary Component of the North City Water Reclamation Plant that can be allocated to the production of Reclaimed Water, and then to the Metro System. (4) Any portion of an NCCC that constitutes5.2.2.1.4 reimbursement of costs pursuant to Section VII.A.47.1.4. Comment from Tom Zeleny (City of SD): Regarding this new language, does this really go into the SSC, or does it only go into the calculation in section 3.4.2? Response from Nick Norvell (Metro JPA): Language changed based on comment from T. Zeleny. -20- 60409.00001\30914102.330914102.8 (5) Any penalties paid under Section VII.C7.3.5.2.2.1.5 (6) Proceeds from the Secondary Effluent5.2.2.1.6 CommodityCapital Expense Rate, as calculated under Exhibit F and allocated among the City and Participating Agencies in the proportions set forth in Column 8 of Exhibit G. Those portions of Repurified Water Revenue5.2.2.1.7 attributable to the Metro System, as calculated under Exhibit F and allocated among the Participating Agencies in the proportions set forth in Column 8 of Exhibit G. Any grant or loan receipts or any other receipts5.2.2.1.8 that are attributable to the Metro System components of the Pure Water Program, including, but not limited to, all compensation or receipts from the sale, lease, or other conveyance or transfer of any asset of the Metro System components of the Pure Water Program. Any proceeds under this section shall be allocated among the City and the Participating Agencies in the proportions set forth in Column 8 of Exhibit G. b. Excluded Revenue5.2.2.2 (1) Capital Improvement Costs for which an5.2.2.2.1 NCCC is paid; (2) Proceeds from the issuance of debt for Metro5.2.2.2.2 systemSystem projects. (3) Proceeds from the sale of Reclaimed Water5.2.2.2.3 used to pay for the Reclaimed Water Distribution System pursuant to subsection 2.a.(3)section 5.2.2.1.3 above. 3. Calculation of SSC Rates.5.2.3 a. Prior to the initial implementation of the new system of5.2.3.1 charges, the City shall prepare a sample fiscal year estimate setting forth the methodology and sampling data used as a base for Strength based billing (SBB) which includes Flow and Strength (Chemical Oxygen Demand (COD) and Suspended Solids (SS)). The analysis shall be submitted to each Participating Agency. Comment from Tom Zeleny (City of SD): Is this really allocated to each PA, or should it simply be Metro System revenue that offsets Metro System costs? Comment from Otay: This sample fiscal year estimate should be done now to identify costs. This is so the City can plan for the electrical and flow meters needed to separate costs and to identify how staff full time equivalent charges will be split for this calculation. Will the City be reimbursing Metro for all of its legal costs as well? This section states that Metro will reimburse the City for its legal costs. Is this allocation similar to the Metro allocation where the City will end up being responsible for the majority of legal costs, or will all the member agencies, excluding the City pick up the legal tab? All of the member agencies are incurring legal costs related to this contract amendment, so each agency should be responsible for its own legal costs. Response to comment from Otay WD: Attachment 1 of Exhibit F will be an example of how costs are allocated for Pure Water. Please see the new paragraph of Section 2.8 regarding electric and flow meters and tracking of labor costs. Question from Committee to City based on comment from Otay WD: Is City Attorney time for developing this amendment being tracked such that it can be excluded as a Metro System cost? All other parties are bearing their own costs/time for review by their individual attorneys. -21- 60409.00001\30914102.330914102.8 b. The City shall determine the unit SSC rates by allocating net5.2.3.2 costs (Metro System Costs less Metro System Revenues) between parameters of Flow, COD and SS. This allocation is based on the approved Functional-Design Methodology analyses for individual Capital Improvement Projects (CIPs) and estimated Operation and Maintenance (O&M) Costs allocated to the three parameters. The City may revise the calculations to include any other measurement required by law after the effective date of this Agreement. c. The net cost allocated to each of the three parameters (Flow,5.2.3.3 COD and SS) shall be divided by the total Metro System quantity for that parameter to determine the unit rates for Flow, COD and SS. These unit rates shall apply uniformly to all Participating Agencies. 4. Estimate and Billing Schedule and Year End Adjustment5.2.4 a. Estimate - The City shall estimate the SSC rates on an annual5.2.4.1 basis prior to January 15. The City shall quantify the SSC rates by estimating the quantity of Flow, COD and SS for each party, based on that party’s actual flow and the cumulative data of sampling for COD and SS over the preceding years. If cumulative data is no longer indicative of discharge from a Participating Agency due to the implementation of methods to reduce Strength, previous higher readings may be eliminated. b. Costs of treating Return Flow for solids handling will be5.2.4.2 allocated to the Participating Agencies in proportion to their Flow and Strength. Return Flow will not be counted against the Participating Agencies’ Contract Capacity as shown in Exhibit B. c. SSC Billing Schedule - The City shall bill the Participating5.2.4.3 Agencies quarterly, invoicing on August 1 , November 1, February 1 and May 1. Each bill shall be paid within thirty (30) days of mailing. Quarterly payments will consist of the total estimated cost for each Participating Agency, based on their estimated Flow, COD and SS, divided by four. d. Year-End Adjustments - At the end of each fiscal year, the5.2.4.4 City shall determine the actual Metro System. Costs and the actual Flow as well as the cumulative Strength data for the City and each of the Participating Agencies. The City shall make any necessary adjustments to the unit rates for Flow, COD and SS based on actual costs for the year. The City shall then recalculate the SSC for the year using actual costs for the year, actual Flow, and cumulative Strength factors (COD, SS and Return Flow) for the City and for each Participating Agency. The City shall credit County comment: Consider adding a time limit to complete true-up. -22- 60409.00001\30914102.330914102.8 any future charges or bill for any additional amounts due, the quarter after the prior year costs have been audited. C. NCCC (New Contract Capacity Charge).5.3 If New Contract Capacity is required or requested by a Participating Agency, pursuant to SectionArticle VII, the Metro System shall provide the needed or requested capacity, provided that the Participating Agency agrees to pay an NCCC in the amount required to provide the New Contract Capacity. New Contract Capacity shall be provided pursuant to SectionArticle VII. D. Debt Financing.5.4 The City retains the sole right to determine the timing and amount of debt financing required to provide Metro System Facilities. E. Allocation of Operating Reserves and Debt Service Coverage.5.5 The parties shall continue to comply with the 2010 Administrative Protocol on Allocation of Operating Reserves and Debt Service Coverage to Participating Agencies, attached hereto and incorporated herein as Exhibit C. PLANNINGVI. A. Projected Flow and Capacity Report.6.1 Commencing on July 1, 1999, each Participating Agency shall provide the City and the Metro Commission with a ten-year projection of its Flow and capacity requirements from the Metro System. The Agencies shall disclose any plans to acquire New Capacity outside the Metro System. This “Projected Flow and Capacity Report” shall be updated annually. B. Other Planning Information.6.2 Each Participating Agency shall provide the City with such additional information as requested by the City as necessary for Metro System planning purposes. C. Ten-Year Capital Improvement Plan.6.3 The City shall prepare a Ten-Year Capital Improvement Plan for the Metro System that describes the facilities necessary to convey, treat, and dispose of, or reuse all Flow in the Metro System in compliance with all applicable rules, laws and regulations. The plan shall be updated annually. D. Notice to Metro Commission.6.4 Comment from Nick Norvell (Metro JPA): In 2010, the City and Metro JPA agreed to a protocol related to operating reserves and debt service under the agreement and have been operating in accordance with the protocol since that time. This will add the protocol as a formal part of the Agreement. In the event that the City is not able to include a facility in the Ten-Year Capital Improvement Plan, the City shall notify the Metro Commission as soon as possible before the detailed design or construction of such facility provided that the facility will significantly impact the Metro System. FACILITIES SOLELY FOR NEW CONTRACT CAPACITYVII. The Participating Agencies and City are obligated to pay for the acquisition or planning, design, and construction of new facilities in the Metro System that are needed solely to provide New Contract Capacity only under the terms provided below. A. Determination of Need for New Contract Capacity.7.1 1. As part of its planning efforts, and considering the planning7.1.1 information provided to the City by the Participating Agencies, the City shall determine when additional facilities beyond those acquired or constructed pursuant to SectionArticle III above will be necessary solely to accommodate a need for New Contract Capacity in the Metro System, whether by the City or by the Participating Agencies. The City shall determine: (1) the amount of New Contract Capacity needed; (2) the Participating Agency or Agencies, or the City, as the case may be, in need of the New Contract Capacity; (3) the type and location of any capital improvements necessary to provide the New Contract Capacity; (4) the projected costs of any necessary capital improvements; and, (5) the allocation of the cost of any such facilities to the Participating Agency and/or the City for which any New Contract Capacity is being developed. The City shall notify the Participating Agencies of its determination within sixty days of making such determination. 2. The City or Participating Agency or Agencies in need of New7.1.2 Contract Capacity as determined by the City pursuant to Paragraph 1section 7.1.1 above, may choose, in their sole discretion, to obtain New Capacity outside of. the Metro System in lieu of New Contract Capacity. Under such circumstances, the Participating Agency or Agencies shall commit to the City in writing their intent to obtain such New Capacity. Upon such commitment, the City shall not be required to provide New Contract Capacity to such Agency or Agencies as otherwise required under this Agreement. 3. The Participating Agencies shall have six months from the date of7.1.3 notice of the determination within which to comment on or challenge all or part of the City’s determination regarding New Contract Capacity, or to agree thereto or to commit, in writing, to obtain New Capacity outside of the Metro System. Any Participating Agency objecting to the City’s determination shall have the burden to commence and diligently pursue the formal dispute resolution procedures of this Agreement within said six month period. The City’s determination shall become final at the -23- 60409.00001\30914102.330914102.8 close of the six month comment and objection period. The City’s determination shall remain valid notwithstanding commencement of dispute resolution unless and until set aside by a final, binding, determination of an arbitratorotherwise agreed to pursuant to the dispute resolution process set forth in this Agreementin Article IX, or pursuant to a final court order. 4. The City and the Participating Agency or Agencies which need New7.1.4 Contract Capacity shall thereafter enter into an agreement specifying the terms and conditions pursuant to which the New Contract Capacity will be provided, including the amount of capacity and the New Contract Capacity. Each party obtaining New Contract Capacity shall reimburse the Metro System for the costs of acquisition, planning, design, and construction of facilities necessary to provide the New Contract Capacity that have been paid by other parties under Section VII.B.37.2.3. 5. The parties recognize that the City may acquire and plan, design and7.1.5 construct facilities that are authorized pursuant to both SectionArticle III and SectionArticle VII of this Agreement. Under such circumstances, the City shall allocate the costs and capacity of such facilities pursuant to SectionArticle III and Section VII.A.17.1.1 as applicable. B. Charges for Facilities Providing New Contract Capacity7.2 1. The expense of acquisition, planning, design, and construction of New7.2.1 Contract Capacity shall be borne by the City or the Participating Agency or Agencies in need of such New Contract Capacity. 2. Notwithstanding any provision in this Agreement, the City and the7.2.2 Participating Agencies shall pay for the Operation and Maintenance Costs of all facilities pursuant to the payment provisions of SectionArticle III, including those facilities acquired and constructed to provide New Contract Capacity in the Metro System. 3. Charges for the acquisition, planning, design and construction of7.2.3 facilities solely to provide New Contract Capacity shall be paid for by the Participating Agencies and the City pursuant to the payment provisions in SectionArticle III of this Agreement until an agreement is reached under Section VII.A.47.1.4. or pending the resolution of any dispute relating to the City’s determination with respect to New Contract Capacity. 4. As a ministerial matter, the City shall prepare amendments to Exhibits7.2.4 A and B to reflect the acquisition or construction of facilities to provide New Contract Capacity pursuant to this SectionArticle. The City shall give notice of the Amendments to the Participating Agencies, and shall provide copies of the Amendments with the notice. -24- 60409.00001\30914102.330914102.8 -25- 60409.00001\30914102.330914102.8 C. Penalty for Failure to Pay. Liquidated Damages.7.3 1. The parties recognize that appropriate capacity and long term7.3.1 planning for same are essential to the proper provision of sewerage service. In recognition of same, the parties agree that discharge beyond Contract Capacity should be penalizedwill result in damages that are difficult to determine. Therefore, inthe damages are being liquidated in an amount estimated to the actual damage that will be incurred by the City, and is not a penalty. In the event that a Participating Agency exceeds its Contract Capacity after the City has given notice that New Capacity is required, said Participating Agency shall be assessed and pay a quarterly penaltyliquidated damages until such time as the Participating Agency obtains the required New Capacity. The penaltyliquidated damages shall be fifteen percent (15%) of the quarterly charges authorized pursuant to this Agreement times the amount of Flow which exceeds the Participating Agency’s Contract Capacity for the first quarter, twenty-five percent (25%) of such amount for the second quarter, thirty percent (30%) of such amount for the third quarter, and thirty-five percent (35%) of such amount for every quarter thereafter.each quarter in which any exceedance occurs. 2. In the event that a Participating Agency fails to pay the charges7.3.2 imposed under this Article after the City has given notice that payment is required, said Participating Agency shall be assessed and shall pay a penalty of fifteenliquidated damages of ten percent (1510%) of the total outstanding charges each quarter until said charges are paid in full. THE METRO COMMISSIONVIII. A. Membership.8.1 The Metro Commission shall consist of one representative from each Participating Agency. Each Participating Agency shall have the right to appoint a representative of its choice to the Metro Commission. If a Participating Agency is a dependent district whose governing body is that of another independent public agency that Participating Agency shall be represented on the Metro Commission by a representative appointed by the governing body which shall have no more than one representative no matter how many Participating Agencies it governs. Each member has one vote in any matter considered by the Metro Commission. The Comment from Tom Zeleny (City of SD): With all respect to our legal predecessors, this is an unenforceable penalty provision. We need to convert this to a liquidated damages provision. Note: The City has suggested the changes shown to Section 7.3. -26- 60409.00001\30914102.330914102.8 Metro Commission shall establish its own meeting schedule and rules of conduct. The City may participate in the Metro Commission on an ex officio, non-voting, basis. B. Advisory Responsibilities of Metro Commission.8.2 1. The Metro Commission shall act as an advisory body, advising the8.2.1 City on matters affecting the Metro System. The City shall present the position of the majority of the Metro Commission to the City’s governing body in written staff reports. The Metro Commission may prepare and submit materials in advance and may appear at any hearings on Metro System matters and present its majority position to the governing body of the City. 2. The Metro Commission may advise the City of its position on any8.2.2 issue relevant to the Metro System. DISPUTE RESOLUTIONIX. This Section governs all disputes arising out of this Agreement. A. VoluntaryMandatory Non-Binding Mediation.9.1 Upon notice to all of the parties involved, any dispute may be submitted to a mutually-acceptable mediator, including a consultant specializing in the subject matter of the dispute, for determination of the issue(s) raised. Unless the parties involved agree in writing otherwise, the decision of the mediator or consultant shall not be final and binding. In the event that there is no agreement to mediate the dispute, any party may proceed directly to Arbitration. B. Arbitration. ArbitrationIf a dispute arises among the parties relating to or arising from a party’s obligations under this Agreement that cannot be resolved through informal discussions and meetings, the parties involved in the dispute shall first endeavor to settle the dispute in an amicable manner, using mandatory non-binding mediation under the rules of JAMS, AAA, or any other neutral organization agreed upon by the parties before having recourse in a court of law. Mediation shall be commenced by sending a Notice of Demand for ArbitrationMediation to the other party or parties to the dispute. A copy of the notice shall be sent to the City, all other Participating Agencies, and the Metro Commission. Notice shall be given in accordance with Section XII. After such notice, any party that fails to timely participate by giving notice within forty-five (45) days thereafter, shall be barred from the noticed action. The scope of the arbitrator’s jurisdiction shall not include the authority to amend the terms of this Agreement. Selection of Mediator.9.2 A single mediator that is acceptable to the parties involved in the dispute shall be used to mediate the dispute. The mediator will be knowledgeable in the subject matter of City of SD suggests moving to non- binding mediation, rather than binding arbitration. -27- 60409.00001\30914102.330914102.8 this Agreement, if possible, and chosen from lists furnished by JAMS, AAA, or any other agreed upon mediator. 1. The arbitration shall be conducted by a mutually-acceptable dispute resolution entity which utilizes retired judges as arbitrators or arbitrators agreed to by the parties. If the parties cannot agree on such an entity, then the American Arbitration Association shall be used. 2. All arbitrations shall be conducted in accordance within California Code of Civil Procedure Sections 1282 et seq., provided, however, that in the event of a conflict between the Code of Civil Procedure arbitration provisions and the provisions of this Agreement, the provisions of this Agreement control. 3. Discovery regarding the subject matter of the arbitration shall be allowed as provided in Code of Civil Procedure Section 1283.05 (or its successors), except that depositions may be taken without first obtaining permission from the arbitrator. The arbitrator’s fee shall be paid in equal shares by the parties who participate in the arbitration. The arbitrator may award costs to the prevailing party, except, however, all costs incurred by the City for arbitration arising under Section VII shall be a Metro System cost and charged accordingly. The decision of the arbitrator shall be final and binding. Mediation Expenses.9.3 The expenses of witnesses for either side shall be paid by the party producing such witnesses. All mediation costs, including required traveling and other expenses of the mediator, and the cost of any proofs or expert advice produced at the direct request of the mediator, shall be Metro System costs. Conduct of Mediation.9.4 Mediation hearings will be conducted in an informal manner. Discovery shall not be allowed. The discussions, statements, writings and admissions and any offers to compromise during the proceedings will be confidential to the proceedings (pursuant to California Evidence Code Sections 1115 – 1128 and 1152) and will not be used for any other purpose unless otherwise agreed by the parties in writing. The parties may agree to exchange any information they deem necessary. The parties involved in the dispute shall have representatives attend the mediation who are authorized to settle the dispute, though a recommendation of settlement may be subject to the approval of each agency’s boards or legislative bodies. Either party may have attorneys, witnesses or experts present. Mediation Results.9.5 Any resultant agreements from mediation shall be documented in writing. The results of the mediation shall not be final or binding unless otherwise agreed to in writing by the parties. Mediators shall not be subject to any subpoena or liability and their actions shall not be subject to discovery. C. Performance Required During Dispute.9.6 Based on suggested addition by El Cajon. -28- 60409.00001\30914102.330914102.8 Nothing in this SectionArticle shall relieve the City and the Participating Agencies from performing their obligations under this Agreement. The City and the Participating Agencies shall be required to comply with this Agreement, including the performance of all disputed activity and disputed payments, pending the resolution of any dispute under this Agreement. Offers to Compromise9.7 Any offers to compromise before or after mediation proceedings will not be used to prove a party’s liability for loss or damage unless otherwise agreed by the parties in writing (pursuant to Evidence Code Section 1152.) INSURANCE AND INDEMNITYX. A. City Shall Maintain All Required Insurance.10.1 1. The City shall maintain all insurance required by law, including10.1.1 workers’ compensation insurance, associated with the operation of the Metro System. 2. Throughout the term of this Agreement the City shall procure and10.1.2 maintain in effect liability insurance covering, to the extent reasonably available, any and all liability of the City, the Metro System and the Participating Agencies, including their respective officers, directors, agents, and employees, if any, with respect to or arising out of the ownership, maintenance, operation, use and/or occupancy of the Metro System and all operations incidental thereto, including but not limited to structural alterations, new construction and demolition, including coverage for those hazards generally known in the insurance industry as exploding, collapse and underground property damage. 3. Said insurance shall name the City, and its respective officers,10.1.3 employees, and agents, and shall have a limit of not less than $24,000,000 combined single limit per occurrence for bodily injury, personal injury and property damage suffered by any person. Said insurance may provide for a deduction from coverage, which deductible shall not be more than $1,000,000. Said limits and/or deductible may be adjusted from time to time. Said insurance may be evidenced by a policy or policies covering only the Metro System or by endorsement to bring the same within a blanket policy or policies held by the City covering other properties in which the City has an interest provided the policy or policies have a location aggregate provision. The City may satisfy the first $1,000,000 per occurrence with a self-insurance retention program for public liability claims. The policy or policies shall name the Participating Agencies as additional insureds with evidence of same Added based on suggested addition by El Cajon. Comment from Coronado: Should the insurance coverages be reviewed and updated? -29- 60409.00001\30914102.330914102.8 supplied to each. Insurance premiums, claims payments and claims administration costs shall be included in the computation of the SSC. B. Substantially Equivalent Coverage.10.2 In the event of a transfer of the Metro System to a nonpublic entity pursuant to SectionArticle II, coverage substantially equivalent to all the above provisions shall be maintained by any successor in interest. INTERRUPTION OF SERVICEXI. Should the Metro System services to the Participating Agencies be interrupted as a result of a major disaster, by operation of federal or state law, or other causes beyond the City’s control, the Participating Agencies shall continue all payments required under this Agreement during the period of the interruption. NOTICES REQUIRED UNDER AGREEMENTXII. The City and each Participating Agency shall give notice when required by this Agreement. All notices must be in writing and either served personally, or mailed by certified mail. The notices shall be sent to the officer listed for each party, at the address listed for each party in Exhibit D in accordance with this SectionArticle. If a party wishes to change the officer and/or address to which notices are given, the party shall notify all other parties in accordance with this SectionArticle. Upon such notice, as a ministerial matter, the City shall amend Exhibit D to reflect the changes. The amendment shall be made within thirty (30) days after the change occurs. The City shall keep an updated version of Exhibit D on file with the City ClerkPublic Utilities Department. The City shall provide a copy of the amended Exhibit D to all parties. EFFECTIVE DATE AND TERMINATIONEXPIRATIONXIII. A. Effective Date.13.1 This Agreement shall be effective thirty (30) days after execution by the City and all of the Participating Agencies, and shall be dated as of the signature date of the last executing party. Upon the effective date of this Agreement, the 1998 Agreement shall be of no further force and effect Expiration.13.2 B. Preferences. In the event one or more agencies which are subject to Wastewater Agreements with the City before the effective date of this Agreement do not execute this Agreement, the City agrees not to enter into any new agreements with said agency or agencies without first offering the Participating Agencies agreements under substantially the same terms and conditions for any proposed agreement covering the same subject matter and issues. County comment: Why should PAs be liable for charges when no services are being provided? Previous section below (Preferences) removed as no longer necessary because there are no PAs that have separate agreements with the City relating to the Metro System. -30- 60409.00001\30914102.330914102.8 C. Termination. Subject to the rights and obligations set forth in Section XIII.C. below13.4, this Agreement shall terminateexpire on December 31, 2065. This Agreement is subject to extension by agreement of the parties. The parties shall commence discussions on an agreement to provide wastewater treatment services beyond the year 2065 on or before December 31, 2055. D. Contract Capacity Rights Survive TerminationExpiration.13.3 The Participating Agencies’ right to obtain wastewater treatment services from the facilities referred to in, or constructed pursuant to this Agreement shall survive the terminationexpiration of the Agreement. Provided however, upon expiration of this Agreement, the Participating Agencies shall be required to pay their proportional share based on Flow and Strength of all Metro System Costs (Capital Improvement Costs and Operation and Maintenance) to maintain their right to such treatment services. Provided further, that in the event that the Participating Agencies exercise their rights to treatment upon expiration of this Agreement, the City shall have the absolute right, without consultation, to manage, operate and expand the Metro System in its discretion. E. Abandonment.13.4 After December 31, 2065, the City may abandon the Metro System upon delivery of notice to the Participating Agencies ten (10) years in advance of said abandonment. Upon notice by the City to abandon the Metro System, the parties shall meet and confer over the nature and conditions of such abandonment. In the event the parties cannot reach agreement, the matter shall be submitted to arbitrationmediation under the provisions of SectionArticle IX. In the event of abandonment, the City shall retain ownership of all Metro System assets free of any claim of the Participating Agencies. GENERALXIV. A. Exhibits.14.1 This Agreement references Exhibits A through G. Each exhibit is1. attached to this Agreement, and is incorporated herein by reference. The exhibits are as follows: Exhibit A Metro Facilities; Exhibit B Contract Capacities; Exhibit C Allocation of Operating Reserves and Debt Service Coverage to Participating Agencies; Exhibit D Notice Listing; Comment from Nick Norvell (Metro JPA): The term of the Agreement would be extended 15 years to allow for cost recovery by wastewater if the wastewater costs of the Pure Water Program exceed the costs of converting the Point Loma WTP to full secondary at 165 MGD capacity. Comment from Otay: Not provided. Need exhibit to follow the agreement. All Exhibits will be included with this version of the Agreement. Comment from Otay: Not provided. Need exhibit to follow the agreement. Values for the County need to be totals to be consistent with Section III. Payment and Monitoring Provisions, Subsection D.3.b and c. Comment from Otay: Not provided. Need exhibit to follow the agreement. Comment from Otay: Not provided. Need exhibit to follow the agreement. -31- 60409.00001\30914102.330914102.8 Exhibit E Map of Reclaimed Water Projects; Exhibit F Pure Water Cost Allocation and Commodity RateRevenues; and Exhibit G Metro System Capacity Pool Allocation2050 Flow Projections B. Amendment of Agreement.14.2 Except as provided in this Agreement, and recognizing that certain amendments are ministerial and preapproved, this Agreement may be amended or supplemented only by a written agreement between the City and the Participating Agencies stating the parties’ intent to amend or supplement the Agreement. C. Construction of Agreement.14.3 1. Drafting of Agreement14.3.1 It is acknowledged that the City and the Participating Agencies, with the assistance of competent counsel, have participated in the drafting of this Agreement and that any ambiguity should not be construed for or against the City or any Participating Agency on account of such drafting. 2. Entire Agreement14.3.2 The City and each Participating Agency represent, warrant and agree that no promise or agreement not expressed herein has been made to them, that this Agreement contains the entire agreement between the parties, that this Agreement supersedes any and all prior agreements or understandings between the parties unless otherwise provided herein, and that the terms of this Agreement are contractual and not a mere recital; that in executing this Agreement, no party is relying on any statement or representation made by the other party, or the other party’s representatives concerning the subject matter, basis or effect of this Agreement other than as set forth herein; and that each party is relying solely on its own judgement and knowledge. 3. Agreement Binding on All14.3.3 This Agreement shall be binding upon and shall inure to the benefit of each of the parties, and each of their respective successors, assigns, trustees or receivers. All the covenants contained in this Agreement are for the express benefit of each and all such parties. This Agreement is not intended to benefit any third parties, and any such third party beneficiaries are expressly disclaimed. Comment from Otay: Not provided. Need exhibit to follow the agreement. Comment from Otay: This Exhibit is described as ”Stipulated Final Order for Injunctive Relief” in Section I.S. and as “Map of Reclaimed Water Projects” in Section XIV.A.1. Comment from Otay: This Exhibit is described as ”Stipulated Final Order for Injunctive Relief” in Section I.S. and as “Map of Reclaimed Water Projects” in Section XIV.A.1. Comment from Otay: Otay WD submitted a response to Metro TAC that has been added to a revised agreement that changes the way Otay WD will be billed. Otay WD reserves the right to modify these values, without penalty. This section penalizes an agency that doesn’t have any land use authority for any projects within its District and has already made a significant investment in non-potable reuse. -32- 60409.00001\30914102.330914102.8 4. Severability14.3.4 14.3.4.1 Should any provision of this Agreement be held invalid or illegal, such invalidity or illegality shall not invalidate the whole of this Agreement, but, rather, the Agreement shall be construed as if it did not contain the invalid or illegal part, and the rights and obligations of the parties shall be construed and enforced accordingly. except to the extent that enforcement of this Agreement without the invalidated provision would materially and adversely frustrate either the City’s or a Participating Agency’s essential objectives set forth in this Agreement. 14.3.4.2 Should a court determine that one or more components of the allocation of costs set forth in this Agreement places the City or a Participating Agency in violation of Article XIII, Section 6 of the California Constitution with respect to their ratepayers, such components shall no longer be of force or effect. In such an event, the City and the Participating Agencies shall promptly meet to renegotiate the violative component of the cost allocation to comply with Article XIII, Section 6 of the California Constitution, and use the dispute resolution process in Article IX of this Agreement if an agreement cannot be reached through direct negotiation. 5. Choice of Law14.3.5 This Agreement shall be construed and enforced pursuant to the laws of the State of California. 6. Recognition of San Diego Sanitation District as Successor to Certain14.3.6 Parties. The parties hereby acknowledge and agree that the San Diego County Sanitation District is a Participating Agency under this Agreement as the successor in interest to the Alpine Sanitation District, East Otay Mesa Sewer Maintenance District, Lakeside Sanitation District, Spring Valley Sanitation District, and Winter Gardens Sewer Maintenance District. D. Declarations Re: Agreement.14.4 1. Understanding of Intent and Effect of Agreement14.4.1 The parties expressly declare and represent that they have read the Agreement and that they have consulted with their respective counsel regarding the meaning of the terms and conditions contained herein. The parties further expressly declare and represent that they fully understand the content and effect of this Agreement and they approve and accept Comment from Nick Norvell (Metro JPA): What would happen if this were the case? New language suggested by City of SD. Comment from Tom Zeleny (City of SD): We may all need this, they way Prop 218 keeps getting stricter. -33- 60409.00001\30914102.330914102.8 the terms and conditions contained herein, and that this Agreement is executed freely and voluntarily. 2. Warranty Regarding Obligation and Authority to Enter Into This14.4.2 Agreement Each party represents and warrants that its respective obligations herein are legal and binding obligations of such party, that each party is fully authorized to enter into this Agreement, and that the person signing this Agreement hereinafter for each party has been duly authorized to sign this Agreement on behalf of said party. 3. Restrictions on Veto of Transfers and Acquisitions of Capacity14.5 Each party understands and agrees that this Agreement governs its respective rights and responsibilities with respect to the subject matter hereto and specifically recognizes that with respect to the transfer and acquisition of Contract Capacity (Section IV.B4.2) or the creation of New Contract Capacity for any Participating Agency (SectionArticle VII), no Participating Agency has a right to veto or prevent the transfer of capacity by and among other Participating Agencies or with the City, or to veto or prevent the creation or acquisition capacity for another Participating Agency or Agencies, recognizing that by signing this Agreement each Participating Agency has expressly preapproved such actions. The sole right of a Participating Agency to object to any of the foregoing shall be through expression of its opinion to the Metro Commission and, where applicable, through exercise of its rights under the dispute resolution provisions of this Agreement. 4. Right to Make Other Agreements14.6 Nothing in this Agreement limits or restricts the right of the City or the Participating Agencies to make separate agreements among themselves without the need to amend this Agreement, provided that such agreements are consistent with this Agreement. Nothing in this Agreement or Exhibit F limits or restricts the right of the City or the Participating Agencies to enter into separate agreements for the purchase or sale of Repurified Water produced by the Water Repurification System or sharing in City Water Utility PW Costs. Such agreements shall not affect the cost allocation and Metro System revenues delineated in Exhibit F. Limitation of Claims14.7 Notwithstanding any longer statute of limitations in State law, for purposes of any claims asserted by the City or a Participating Agency for refunds of overpayments or collection of undercharges arising under this Agreement, the parties agree that such refunds or collections shall not accrue for more than four years prior to the date that notice of such claim is received by the City or a Participating Agency. This also applies to any related adjustments to each Participating Agency’s share of net Metro System costs or revenues resulting from the resolution of such claims. The City and the Participating Agencies hereby waive any applicable statute of limitations available under State law that exceed four Placeholder comment in case commodity rate is replaced with other type of revenue. -34- 60409.00001\30914102.330914102.8 years. In no case shall the limitations period stated in this section begin to accrue until the date that the annual audit and year-end adjustment from which the claim arises are complete. 5. Counterparts14.8 This Agreement may be executed in counterparts. This Agreement shall become operative as soon as one counterpart hereof has been executed by each party. The counterparts so executed shall constitute one Agreement notwithstanding that the signatures of all parties do not appear on the same page. No Third Party Beneficiaries14.9 This Agreement is intended to benefit only the parties hereto and no other person or entity has or shall acquire any rights hereunder. This Agreement does not create any third party beneficiary rights. SIGNATURES ON FOLLOWING PAGES Suggested addition by City of SD. Comment from Tom Zeleny (City of SD): This is something we promised to do as a result of the Padre Dam claim. IN WITNESS WHEREOF, the Parties have executed this Amendment and Restated Regional Wastewater Disposal Agreement as of the date first set forth above. CITY OF CHULA VISTA Approved as to Form: Name:Name: Title:Title: CITY OF CORONADO Approved as to Form: Name:Name: Title:Title: CITY OF DEL MAR Approved as to Form: Name:Name: Title:Title: CITY OF EL CAJON Approved as to Form: Name:Name: Title:Title: CITY OF IMPERIAL BEACH Approved as to Form: Name:Name: Title:Title: CITY OF LA MESA Approved as to Form: Name:Name: Title:Title: LEMON GROVE SANITATION DISTRICT Approved as to Form: Name:Name: Title:Title: CITY OF NATIONAL CITY Approved as to Form: Name:Name: Title:Title: -35- 60409.00001\30914102.330914102.8 OTAY WATER DISTRICT Approved as to Form: Name:Name: Title:Title: PADRE DAM MUNICIPAL WATER DISTRICT Approved as to Form: Name:Name: Title:Title: CITY OF POWAY Approved as to Form: Name:Name: Title:Title: CITY OF SAN DIEGO Approved as to Form: Name:Name: Title:Title: SAN DIEGO COUNTY SANITATION DISTRICT Approved as to Form: Name:Name: Title:Title: -36- 60409.00001\30914102.330914102.8 -37- 60409.00001\30914102.330914102.8 EXHIBIT A 60409.00001\30914102.330914102.8 EXHIBIT A METRO FACILITIES AS OF 6/27/18 Existing Facilities Pt. Loma Wastewater Treatment Plant Pt. Loma Ocean Outfall Pump Station #1 Pump Station #2 South Metro Interceptor North Metro Interceptor Metro Force Mains 1 & 2 Digested Sludge Pipeline North City Water Reclamation Plant Metro Biosolids Center (NCWR Plant Related Facilities) North City Tunnel Connector North City Raw Sludge Pipeline Centrate Pipeline Rose Canyon Parallel Trunk Sewer Second Rose Canyon Trunk Sewer East Mission Bay Trunk Sewer Morena Blvd. Interceptor South Bay Water Reclamation-Plant Dairy Mart Road & Bridge Rehab Grove Avenue Pump Station Grove Avenue Pump Station Sewer Pipeline South Bay Raw Sludge Pipeline South Bay Land/Ocean Outfall1 Environmental Monitoring & Technical Services Laboratory Centrate Treatment Facility at Metropolitan Biosolids Center Metro Operations Center (Iv10C) Complex (based on annual facilities allocation) Additional Metro Facilities [INSERT CURRENT VERSION OF EXHIBIT A ON FILE WITH CITY CLERK]Note: The below listed facilities could be required as part of the Metro System for hydraulic capacity, good engineering practices and/or compliance with applicable law, rules or regulations, including OPRA, and the continuation of the City's waiver of 1 The South Bay Land/Ocean Outfall is jointly owned by the International Boundary and Water Commission, U.S. Section (60.06%) and the City of San Diego (39.94%). The capacity of the City’s portion of the outfall as of the date of this Agreement is 74 MDG average dry weather flow, of which the Metro System has a capacity right to 69.2 MGD and the City as an exclusive right to 4.8 MGD. applicable treatment standards at the Point Loma Wastewater Treatment Plant ("Waiver"). South Bay Sludge Processing Facility South Bay Secondary Treatment Plant, Phase I (21 MGD) South Bay Secondary Sewers, Phase I Note: These facilities could be required as part of the Metro System for hydraulic capacity, good engineering practices, compliance with OPRA, and to maintain the City's Waiver. In the event that hydraulic capacity demands, or the obligations of OPRA (or its successor) or the terms of the City's Waiver change, these facilities may not be required or may be modified or supplemented, as appropriate, pursuant to the terms of this Agreement. South Bay Secondary Treatment Plant, Phase II (28 MGD) South Bay Secondary Sewers, Phase II Note: These facilities could be added to the Metro System as part of Phase I of the Pure Water Program. Expansion of North City Water Reclamation Plant Morena Pump Station EXHIBIT A-2 60409.00001\30914102.330914102.8 EXHIBIT B CONTRACT CAPACITIES EXHIBIT B 60409.00001\30914102.330914102.8 [INSERT CURRENT VERSION OF EXHIBIT B ON FILE WITH CITY CLERK, IF DIFFERENT FROM 1998 VERSION] Additional Contract Capacity is capacity allocated pursuant to Section 4.3.1 of the Agreement.1. New Contract Capacity is capacity obtained pursuant to Section 6 of the Agreement.2. Transferred Contract Capacity is capacity obtained pursuant to Section 4.2 of the Agreement.3. EXHIBIT C 60409.00001\30914102.330914102.8 EXHIBIT C ADMINISTRATIVE PROTOCOL ON ALLOCATION OF OPERATING RESERVES AND DEBT SERVICE COVERAGE TO PARTICIPATING AGENCIES EXHIBIT C 60409.00001\30914102.330914102.8 EXHIBIT D 60409.00001\30914102.330914102.8 EXHIBIT D NOTICE LISTING City Manager City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91919 Phone: 691-5031 Fax: 585-5612 City Manager City of La Mesa 8130 Allison Avenue La Mesa, CA 91942 Phone: 667-1101 Fax: 462-7528 City Manager City of San Diego 202 “C” Street San Diego, CA 92101 Phone: 236-5949 Fax: 236-6067 City Manager City of Coronado 1825 Strand Way Coronado, CA 92113 Phone: 522-7335 Fax: 522-7846 City Manager City of Lemon Grove 3232 Main Street Lemon Grove, CA 91945 Phone: 464-6934 Fax: 460-3716 Chief Administrative Officer County of San Diego 1600 Pacific Highway, Rm. 209 San Diego, CA 92101 Phone: 531-5250 Fax: 557-4060 City Manager City of Del Mar 1050 Camino Del Mar Del Mar, CA 92014 Phone: 755-9313 ext. 25 Fax: 755-2794 City Manager City of National City 1243 National City Blvd. National City, CA 91950 Phone: 336-4240 Fax: 336-4327 General Manager Otay Water District 2554 Sweetwater Springs Blvd. Spring Valley, CA 91977 Phone: 670-2210 Fax: 670-2258 City Manager City of El Cajon 200 E. Main StreetCivic Center Way El Cajon, CA 92020 Phone: 441-1716 Fax: 441-1770 City Manager City of Poway 13325 Civic Center Drive Poway, CA 92064 Phone: 679-4200 Fax: 679-4226 General Manager Padre Dam Municipal Water District 10887 Woodside Avenue9300 Fanita Pkwy Santee, CA 92071 Phone: 258-4610 Fax: 258-4794 City Manager City of Imperial Beach 825 Imperial Beach Blvd. Imperial Beach, CA 91932 Phone: 423-8300 ext. 7 Fax: 429-9770 Each agency: Please review and update contact information as appropriate. EXHIBIT E MAP OF RECLAIMED WATER PROJECTS EXHIBIT E 60409.00001\30914102.330914102.8 EXHIBIT F PURE WATER COST ALLOCATION AND COMMODITY RATEREVENUES EXHIBIT F 60409.00001\30914102.330914102.8 EXHIBIT G METRO SYSTEM CAPACITY POOL ALLOCATION 2050 FLOW PROJECTIONS EXHIBIT G 60409.00001\30914102.330914102.8 EXHIBIT H 60409.00001\30914102.330914102.8 Summary report: Litéra® Change-Pro 7.5.0.135 Document comparison done on 7/16/2018 4:00:59 PM Style name: Default Style Intelligent Table Comparison: Active Original DMS:iw://iManage/iManage/30914102/3 Modified DMS: iw://iManage/iManage/30914102/8 Changes: Add 600 Delete 365 Move From 16 Move To 16 Table Insert 15 Table Delete 2 Table moves to 0 Table moves from 0 Embedded Graphics (Visio, ChemDraw, Images etc.)4 Embedded Excel 0 Format changes 0 Total Changes:1018 DRAFT – 5/14/187/16/18 Version 1 EXHIBIT F PURE WATER PROGRAM COST ALLOCATION AND COMMODITY RATEREVENUES The City intends to implement the phased, multi-year Pure Water Program to produce up to 83 mgd of safe, reliable potable water for the City using new or modified facilities. As part of the Pure Water Program, the City intends to modify the North City Water Reclamation Plant (a Metro System facility) and expand its capacity to 52 mgd. In addition, the City intends to construct the North City Advanced Water Purification Facility on a nearby site to produce Repurified Water. In the future, the Parties anticipate that the City may construct, modify, or expand other Metro System facilities in connection with the production of Repurified Water and the Pure Water Program. This Exhibit F sets forth the costs and revenues associated with the Pure Water Program which are, or are not, attributable to the Metro System. A.Costs Excluded from Metro System CostsI. All of the following Pure Water Program costs, including Capital Improvement Costs, Operation and Maintenance Costs, and other related costs (including administration, insurance, claims, and overhead) are excluded as Metro System Costs for purposes of calculating the annual Sewer System Charge, and shall be the responsibility of City’s water utility (“City Water Utility PW Costs”), unless otherwise expressly agreed to pursuant to an amendment to this Exhibit F: 1. General Exclusions.1.1 a. Costs of the Water Repurification System and any Metro System1.1.1 facilities to the extent constructed, modified, expanded, or used for the purpose of treating water beyond secondary treatment (ocean discharge standard under current law). This shall include costs for preliminary treatment, primary treatment, and secondary treatment to the extent such costs are higher than they would otherwise be due to the production of Repurified Water. b. Costs for fail-safe disposal, if necessary, for design capacity for1.1.2 Repurified Water, including, but not limited to, any costs associated with the reservation of capacity at the Point Loma Wastewater Treatment Plant. c. Costs for preliminary treatment, primary treatment, and secondary treatment to the extent such costs are higher than they would otherwise be due to the production of Repurified Water. d. Costs for the demolition or replacement of existing Metro System1.1.3 facilities with similar facilities for the purpose of making space available for Water DRAFT – 5/14/187/16/18 Version 2 Repurification System facilities. Such costs may take into account the current asset value or market value of the existing Metro System facility. 2. Cost Exclusions Specific to North City Water Reclamation Plant1.2 Improvements. a. 1.2.1 Costs for increased aeration tank volume to the extent the new volume exceeds the amount necessary to provide 52 mgd capacity. Determination of sizing to provide 52 mgd capacity shall be based on the current tank volume necessary to provide 30 mgd capacity. b. 1.2.2 Costs for the methanol feed system. c. 1.2.3 Costs for brine disposal, including, but not limited to, pump stations, pipelines, retreatment, ocean outfall, and monitoring. d. 1.2.4 Costs for the use of existing of tertiary water filters for Repurified Water purposes, which may take into account depreciated value of such filters. (Such costs shall be reimbursed or credited by City’s water utility to the Metro System). B.North City Water Reclamation Plant Improvement Costs Included asII. Metro System Costs Notwithstanding the above exclusions, the City and the Participating Agencies have specifically agreed that the following Capital Improvement Costs and Operation and Maintenance Costs related to North City Water Reclamation Plant improvements shall be included as Metro System Costs for purposes of calculating the annual Sewer System Charge (and therefore not qualify as City Water Utility PW Costs): 1. Costs for chemically enhanced primary treatment for up to 52 mgd capacity.2.1 2. Costs for primary effluent equalization for up to 52 mgd capacity.2.2 3. Costs for increased volume of aeration tanks that will provide up to, but not2.3 exceeding, 52 mgd capacity. Determination of sizing to provide 52 mgd capacity shall be based on the current tank volume necessary to provide 30 mgd capacity. 4. Costs to add secondary clarifier tanks sufficient for up to 52 mgd capacity.2.4 5. Costs for wastewater conveyance facilities to provide wastewater for2.5 replacement of centrate flows that cannot be treated at the North City Water Reclamation Plant due to the production of Repurified Water. 6. Costs for treatment and conveyance of all return flows (micro-filtration and2.6 tertiary backwash) based on Flow, COD, and SS. C.Cost Allocation ExampleIII. Provisions subject to further discussions between City and Metro JPA. Provision subject to further discussions between City and Metro JPA. Comment from Otay: Brine needs to be defined. This will avoid an Response to Comment regarding Brine: A definition has been added to Provision subject to further discussions between City and Metro JPAComment Typo removed. Comment from Otay: Why are the participating agencies paying for conveyance facilities necessitated by Pure Water? The member agencies should not be responsible for picking up the tab due to a water limitation. Perhaps this could be addressed with the provisions above dealing with O&M. If so, there should be a caveat added such as, “to the degree the costs do not exceed the limit established in Section xx” – see OWD’s comments above Comment from Metro TAC Ad Hoc Committee re: conveyance facilities are considered Metro System costs under the existing agreement. Comment from Metro TAC Ad Hoc Committee re: cost cap: This cost would be included in calculating the Contingent Rate component of the commodity rate. Accordingly, if the costs to the Metro System, including costs for these conveyance facilities, exceed the estimated cost to upgrade PLWTP to full secondary, and such upgrading is required in the future, City’s water utility would repay the cost difference through the Contingent Rate. ... ... ... ... ... ... DRAFT – 5/14/187/16/18 Version 3 Attachment 1 is an example of costs relating to the City’s budget for ________Pure Water Phase I Cost Estimate (based on 60% design), and indicates which costs are City Water Utility PW Costs and which costs are attributable to the Metro System. The Parties agree that Attachment 1 is an illustrative document to assist the Parties in the future and is not a comprehensive list of all such costs. If there is any conflict between this Exhibit F and Attachment 1, or if a specific cost is not addressed in Attachment 1, this Exhibit F shall control. Revenue Sharing for Repurified WaterIV. 4.1 Background. Initially, the parties anticipate that the cost per acre foot associated with the production of Repurified Water will be more expensive than the cost per acre foot of untreated imported water. However, it is anticipated that Repurified Water produced under the Pure Water Program will be less expensive than untreated imported water sometime in the future. Once Repurified Water produced under the Pure Water Program becomes less expensive than the cost of untreated imported water, the parties agree that there will be revenue from the Pure Water Program. 4.2 Calculation. Revenue sharing shall occur in each fiscal year during which the annual cost per acre foot associated with the production of Repurified Water is less than the cost of untreated water per acre foot from the San Diego County Water Authority (“CWA”). The annual cost difference shall be known as “Repurified Water Revenue.” Repurified Water Revenue shall be determined as follows: Attachment 2 is an example of a bill from CWA showing which fixed and variable costs for untreated water will be used for determining Repurified Water Revenue and the amount of water delivered in a billing period. The Parties agree that Attachment 2 shall be referred to by the Parties in the future in determining how costs for water delivered at Miramar Reservoir are Annual cost per acre foot of CWA untreated water purchased by the City for delivery at Miramar Reservoir (which shall be determined based on the total of certain fixed and variable costs for water actually billed to the City by CWA for water delivered at Miramar Reservoir in a fiscal year, divided by the number of acre-feet of CWA water delivered at Miramar Reservoir that year) less Annual cost per acre foot of City Water Utility PW Costs (which shall be determined based on the total annual City Water Utility PW Costs, as defined above in Section A, divided by the number of acre-feet of Repurified Water actually produced in that year) multiplied by The number of acre feet of Repurified Water produced by Pure Water Program facilities during the applicable fiscal year. DRAFT – 5/14/187/16/18 Version 4 calculated. If no untreated water is delivered at Miramar Reservoir in a given year, then the closest point of delivery of untreated water to the City shall be used. Attachment 3 is a sample calculation of Repurified Water Revenue. The City shall estimate whether there will be Repurified Water Revenue in the upcoming fiscal year prior to January 15 of each year, and the estimated amount of Repurified Water Revenue shall be effective on July 1 of the upcoming fiscal year. 4.3 Revenue Sharing. Repurified Water Revenue shall initially be shared based on the relative actual Capital Improvement Costs for the Pure Water Program contributed by City’s Water Utility and the Metro System. Such Capital Improvement Cost contributions are currently estimated as (61% City Water Utility and 39% Metro System) until the debt attributable to the Metro System is fully paid. Following full payment of debt attributable to the Metro System, Repurified Water Revenue shall be shared based on the relative actual Operation and Maintenance Costs for Pure Water Program facilities contributed by City’s Water Utility and the Metro System, calculated annually. Such Operation and Maintenance Costs are currently estimated as (76% City Water Utility and 24% Metro System) on an annual basis. 4.4 Year-End Adjustment. At the end of each fiscal year during which there is Repurified Water Revenue, the City shall determine the actual cost per acre foot of CWA untreated water purchased by the City, the actual cost per acre foot of City water Utility PW costs, and the actual amount of Repurified Water produced at Pure Water Program facilities. Based on the actual cost and production information, the City will recalculate the Repurified Water Revenue for the prior fiscal year. The City will credit any future charges or bill for any additional amounts due the quarter after the prior year costs have been audited. 4.5 Change in Potable Reuse Method. The parties acknowledge that the Pure Water Program will initially use the surface water augmentation method of potable reuse. The use of CWA untreated water costs in calculating Repurified Water Revenue is intended to provide an appropriate point of comparison to costs for producing Repurified Water that will be introduced into surface water. The parties agree that if the City implements direct potable reuse (in which Repurified Water is introduced directly into a water supply pipeline or facility), the parties shall meet and negotiate in good faith regarding an amendment to this Exhibit F to appropriately update the formula for Repurified Water Revenue. D.Metro System Revenue – Secondary Effluent Commodity RateV. City’s Water Utility shall pay a commodity rate (“Secondary Effluent Commodity Rate”) for each acre-foot of secondary treated effluent produced by Metro System facilities for the production of Repurified Water. a. Basic Rate The Secondary Effluent Commodity Rate shall equal $178.80 per acre foot of The Metro TAC Ad Hoc Committee is proposing that this basic commodity rate apply beginning the first year in which the City uses secondary treated effluent produced by Metro System facilities. The rate would continue each year the City uses such secondary treated effluent to produce Repurified Water. Comment from Otay: Metro System Revenue – Secondary Effluent Commodity Rate. Secondary effluent commodity rate for each AF should be equivalent to the wholesale rate the City charges today for recycled water to agencies that use the effluent to offload Point Loma. The cost of tertiary water charged to Otay WD from the SBWRP is $756 per AF. Why should the commodity rate be any different if the net result is lowering flow to Point Loma? DRAFT – 5/14/187/16/18 Version 5 secondary effluent, which amount shall be adjusted annually starting on July 1, 2018 to equal twenty percent (20%) of the San Diego County Water Authority’s melded untreated M&I supply rate (the “Basic Rate”). The Basic Rate shall begin in the fiscal year in which Pure Water Program costs are first allocated to the Metro System, and shall continue until termination of the Agreement. b. Contingent Rate In addition to the Basic Rate, City’s Water Utility shall pay also pay an additional amount (the “Contingent Rate”) if: (a)the5.1 Background. The Point Loma Wastewater Treatment Plant is fully or partially upgraded to secondary treatment due to (i) the failure to receive anoperates under a National Pollutant Discharge Elimination System (“NPDES”) permit modified under section 301(h) & (j)(5) of the Clean Water Act for. If such modified permit were ever revoked or not renewed, the parties agree that, under current law, the City would have an obligation to upgrade the Point Loma WTP, or (ii) a discretionary decision of the City (except to the extent such to secondary treatment upgrade is part of the Pure Water program); and. The parties further agree that $1.8 billion is a fair and comprehensive estimation of the costs that could be incurred by the Metro System to meet the legal requirements related to the Metro System under current law. Therefore, the parties agree that $1.8 billion represents the maximum amount of Capital Improvement Costs that the Metro System should be obligated to contribute to the Pure Water Program, the purpose of which is not solely the disposal of wastewater, but also the production of Repurified Water. The parties agree that this $1.8 billion maximum contribution should apply whether or not the Point Loma WTP is actually upgraded to secondary treatment to meet legal requirements in the future because, as of the date of the Agreement, the parties have the option of upgrading the Point Loma WTP to full secondary treatment for the cost of approximately $1.8 billion. In light of the above, the parties have agreed that if Metro System costs related to the Pure Water Program exceed the $1.8 billion, City’s Water Utility will pay a charge for each acre foot of secondary treated effluent produced by Metro System facilities and used for the production of Repurified Water. (ba) the sum of all Capital Improvement Costs and associated debt attributable to (i) the Metro System components of the Pure Water Program under this Exhibit F; and/or (iib) the sum of all Capital Improvement Costs and associated debt for the full or partial upgrading of the Point Loma WTPWastewater Treatment Plant to secondary treatment exceeds $_____ (which amount shall be adjusted for inflation). Notwithstanding, the ContingentCapital Expense Rate shall not apply if the upgrading The basis for setting the rate is subject to further discussion among the PAs and with the City of San Diego. The Metro TAC Ad Hoc Committee is in discussions with the City of San Diego about a Commodity Rate that would begin as soon as Pure Water costs are incurred by wastewater. Details about the Basic Rate are the subject of further discussion among the PAs and with the City. DRAFT – 5/14/187/16/18 Version 6 of the Point Loma WTP is actually upgraded to secondary treatment (or beyond) is caused bydue to: (a) a change in federal or state statutory law making it necessary to upgrade the Point Loma WTP to comply with such new discharge standard; or (b) a final decision by a state or federal court or a federal administrative agency of competent jurisdiction that an NPDES permit modified under section 301(h) & (j)(5) of the Clean Water Act is thereby revoked or denied renewal due to a finding that the discharge from the Point Loma WTP violates 40 C.F.R. 131.12, State Water Resources Control Board Resolution 68-16, and State Water Resources Control Board Administrative Procedures Update No. 90-004.[. c. Calculation of Contingent Rate At the end of each fiscal year during the term of the Agreement, there shall be a reasonable determination by the City, in consultation with the Participating Agencies, of whether or not the Contingent Rate shall be added to the Basic Rate as described above. In calculating the sum of all Capital Improvement Costs and associated debt attributable to the Metro System components of the Pure Water Program under this Exhibit F and the upgrading of the Point Loma WTP to secondary treatment, the City shall take into account all costs incurred to date, including any debt issued for such costs. 5.3 Calculation of Capital Expense Rate . The amount per acre-foot of the ContingentCapital Expense Rate shall be determined as follows: These are the federal and state regulations that implement the anti- degradation policies of the Clean Water Act. 5.2Capital Expense Rate. Under the circumstances described below, City’s Water Utility shall pay a charge (“Capital Expense Rate”) for each acre-foot of secondary treated effluent produced by Metro System facilities and used for the production of Repurified Water. City’s Water Utility shall pay the Capital Expense Rate if the following costs alone, or in combination, exceedComment from Metro TAC Ad Hoc: The first item (subsection (a)) would apply if the permit/waiver was not renewed for any reason other than a finding of actual environmental degradation. The second item would only apply if a court or federal agency concluded that the Point Loma WTP actually caused environmental degradation, and based on that finding the permit was revoked or not renewed. ... ... ... ... DRAFT – 5/14/187/16/18 Version 7 The City shall estimate whether there the Capital Expense Rate shall apply to the upcoming fiscal year (and its amount) prior to January 15 of each year, and the estimated amount of the Capital Expense Rate shall be effective on July 1 of the upcoming fiscal year. For purposes of this Article V of Exhibit F, Capital Improvement Costs and associated debt shall include such costs incurred by the Metro System prior to the effective date of the Agreement. d. 5.4 Year-End Adjustment At the end of each fiscal year during which the City’s Water Utility pays the ContingentCapital Expense Rate applies, the City shall determine the actual Capital Improvement Costs and associated debt attributable to the Metro System components of the Pure Water Program under this Exhibit F and any upgrading of the Point Loma WTP to secondary treatment if different from the amounts determined in the first year the Contingent Rate went into effect. In addition, the City shall determine the , the then-applicable interest amount for outstanding loans for the Metro System components of the Pure Water Program and Point Loma WTP upgrades, and will update the interest multiplier accordingly for that fiscal yearthe actual amount of Repurified Water produced at Pure Water Program facilities. Based on the above, the Contingent Rate will then be recalculated for secondary The sum of all Capital Improvement Costs and associated debt attributable to (i) the Metro System components of the Pure Water Program under this Exhibit F and (ii) any upgrading of the Point Loma WTP to secondary treatment (if any) less $_____, [the estimated cost to upgrade the Point Loma Wastewater Treatment Plant to full secondary at 165 mgd which will be identified by the City’s consultant]1.8 billion, as adjusted for inflation each July 1 (starting on July 1, 2019) to reflect the annual percentage change in the Engineering News Record – Los Angeles construction cost index multiplied by 1.42 (which estimates the total interest on a 30-year State Revolving Fund loan with an interest rate of 2.5%) and divided by The total number of acre feet per year of secondary treated effluent that is expected to be produced by Metro System facilities for the production of Repurified Water over a period of thirty (30) years, or the number of years remaining in the term of the Agreement, whichever is shorter. The Metro TAC Ad Hoc Committee is proposing that this basic commodity rate apply beginning the first year in which the City uses secondary treated effluent produced by Metro System facilities. The rate would continue each year the City uses such secondary treated effluent to produce Repurified Water. Comment from Otay: Metro System Revenue – Secondary Effluent Commodity Rate. Secondary effluent commodity rate for each AF should be equivalent to the wholesale rate the City charges today for recycled water to agencies that use the effluent to offload Point Loma. The cost of tertiary water charged to Otay WD from the SBWRP is $756 per AF. Why should the commodity rate be any different if the net result is lowering flow to Point Loma? DRAFT – 5/14/187/16/18 Version 8 effluent purchased duringactual cost, interest, and production information, the City will recalculate the Capital Expense Rate for the prior fiscal year and allocated in the proportions set forth in Exhibit G. The City will credit any future charges or bill for any additional amounts due the quarter after the prior year costs have been audited. e. 5.5 Duration; Expiration The ContingentCapital Expense Rate shall continue until the cost difference between (a) the actual sum of the Capital Improvement Costs and associated debt attributable to the Metro System under this Exhibit F and the costs to upgrade the Point Loma WTP and (b) $_____ (which amount shall be1.8 billion (as adjusted for inflation) has been fully repaid. D.Audit Procedures For the clarity of the Parties, and without limiting the generality of the City’s obligations under the Agreement, the City agrees as follows: 1. The City shall, keep appropriate records and accounts of all costs, expenses, and revenues relating to conveyance, treatment, disposal, and reuse of wastewater, and production of Repurified Water; the acquisition, planning, design, construction, administration, monitoring, operation and maintenance of the Metro System and Water Repurification System; and any grants, loans, or other revenue received therefor. The City shall keep such records and accounts for at least four (4) years, or for any longer period required by law or outside funding sources. 2. Said accounts and records shall be subject to reasonable inspection by any authorized representative of any Participating Agency at its expense and shall be audited annually by an independent certified public accounting firm appointed by the City pursuant to generally accepted accounting principles, and a copy of said report shall be available to any Participating Agency. 3. As part of said audit, the actual amount of City Water Utility’s PW Costs, Pure Water Program costs attributable to the Metro System, and Secondary Effluent Commodity Rate shall be determined and audited by the City’s external auditors and Participating Agency representatives, and a summary of such amounts shall be included as a footnote or attachment to the audit of the Metro System. Note: The previous version of Exhibit F included a section titled “Audit Procedures.” Much of the language in that section was duplicative of what is in Section 2.5 of the Agreement. Accordingly, the “Audit Procedures” section has been deleted here from Exhibit F. Audit-related language specific to the Pure Water program has been moved into Section 2.5 of the Agreement. DRAFT – 5/14/187/16/18 Version 9 4. ATTACHMENT 1 – EXAMPLE OF PURE WATER BUDGET Note: The above estimates are based on 60% design of Phase I of the Pure Water Program. DRAFT – 5/14/187/16/18 Version 10 ATTACHMENT 2 – SAMPLE CWA BILL DRAFT – 5/14/187/16/18 Version 11 ATTACHMENT 23 – EXAMPLESAMPLE CALCULATION OF CWA BILLREPURIFIED WATER REVENUE 60409.00001\30398144.730398144.11 Summary report: Litéra® Change-Pro 7.5.0.135 Document comparison done on 7/16/2018 4:03:38 PM Style name: Default Style Intelligent Table Comparison: Active Original DMS:iw://iManage/iManage/30398144/7 Modified DMS: iw://iManage/iManage/30398144/11 Changes: Add 108 Delete 92 Move From 13 Move To 13 Table Insert 0 Table Delete 0 Table moves to 0 Table moves from 0 Embedded Graphics (Visio, ChemDraw, Images etc.)1 Embedded Excel 0 Format changes 0 Total Changes:227 7/16/18 Version 1 EXHIBIT F PURE WATER PROGRAM COST ALLOCATION AND REVENUES As part of the Pure Water Program, the City intends to modify the North City Water Reclamation Plant (a Metro System facility) and expand its capacity to 52 mgd. In addition, the City intends to construct the North City Advanced Water Purification Facility on a nearby site to produce Repurified Water. This Exhibit F sets forth the costs and revenues associated with the Pure Water Program which are, or are not, attributable to the Metro System. I. Costs Excluded from Metro System Costs All of the following Pure Water Program costs, including Capital Improvement Costs, Operation and Maintenance Costs, and other related costs (including administration, insurance, claims, and overhead) are excluded as Metro System Costs for purposes of calculating the annual Sewer System Charge, and shall be the responsibility of City’s water utility (“City Water Utility PW Costs”), unless otherwise expressly agreed to pursuant to an amendment to this Exhibit F: 1.1 General Exclusions. 1.1.1 Costs of the Water Repurification System and any Metro System facilities to the extent constructed, modified, expanded, or used for the purpose of treating water beyond secondary treatment (ocean discharge standard under current law). This shall include costs for preliminary treatment, primary treatment, and secondary treatment to the extent such costs are higher than they would otherwise be due to the production of Repurified Water. 1.1.2 Costs for fail-safe disposal, if necessary, for design capacity for Repurified Water, including, but not limited to, any costs associated with the reservation of capacity at the Point Loma Wastewater Treatment Plant. 1.1.3 Costs for the demolition or replacement of existing Metro System facilities with similar facilities for the purpose of making space available for Water Repurification System facilities. Such costs may take into account the current asset value or market value of the existing Metro System facility. 1.2 Cost Exclusions Specific to North City Water Reclamation Plant Improvements. 1.2.1 Costs for increased aeration tank volume to the extent the new volume exceeds the amount necessary to provide 52 mgd capacity. Determination of sizing to provide 52 mgd capacity shall be based on the current tank volume necessary to provide 30 mgd capacity. 1.2.2 Costs for the methanol feed system. 1.2.3 Costs for brine disposal, including, but not limited to, pump stations, pipelines, retreatment, ocean outfall, and monitoring. Attachment A-6 7/16/18 Version 2 1.2.4 Costs for the use of existing tertiary water filters for Repurified Water purposes, which may take into account depreciated value of such filters. (Such costs shall be reimbursed or credited by City’s water utility to the Metro System). II. North City Water Reclamation Plant Improvement Costs Included as Metro System Costs Notwithstanding the above exclusions, the City and the Participating Agencies have specifically agreed that the following Capital Improvement Costs and Operation and Maintenance Costs related to North City Water Reclamation Plant improvements shall be included as Metro System Costs for purposes of calculating the annual Sewer System Charge (and therefore not qualify as City Water Utility PW Costs): 2.1 Costs for chemically enhanced primary treatment for up to 52 mgd capacity. 2.2 Costs for primary effluent equalization for up to 52 mgd capacity. 2.3 Costs for increased volume of aeration tanks that will provide up to, but not exceeding, 52 mgd capacity. Determination of sizing to provide 52 mgd capacity shall be based on the current tank volume necessary to provide 30 mgd capacity. 2.4 Costs to add secondary clarifier tanks sufficient for up to 52 mgd capacity. 2.5 Costs for wastewater conveyance facilities to provide wastewater for replacement of centrate flows that cannot be treated at the North City Water Reclamation Plant due to the production of Repurified Water. 2.6 Costs for treatment and conveyance of all return flows (micro-filtration and tertiary backwash) based on Flow, COD, and SS. III. Cost Allocation Example Attachment 1 is an example of the City’s Pure Water Phase I Cost Estimate (based on 60% design), and indicates which costs are City Water Utility PW Costs and which costs are attributable to the Metro System. The Parties agree that Attachment 1 is an illustrative document to assist the Parties in the future and is not a comprehensive list of all such costs. If there is any conflict between this Exhibit F and Attachment 1, or if a specific cost is not addressed in Attachment 1, this Exhibit F shall control. IV. Revenue Sharing for Repurified Water 4.1 Background. Initially, the parties anticipate that the cost per acre foot associated with the production of Repurified Water will be more expensive than the cost per acre foot of untreated imported water. However, it is anticipated that Repurified Water produced under the Pure Water Program will be less expensive than untreated imported water sometime in the future. Once Repurified Water produced under the Pure Water Program becomes less expensive than the cost of untreated imported water, the parties agree that there will be revenue from the Pure Water Program. 7/16/18 Version 3 4.2 Calculation. Revenue sharing shall occur in each fiscal year during which the annual cost per acre foot associated with the production of Repurified Water is less than the cost of untreated water per acre foot from the San Diego County Water Authority (“CWA”). The annual cost difference shall be known as “Repurified Water Revenue.” Repurified Water Revenue shall be determined as follows: Attachment 2 is an example of a bill from CWA showing which fixed and variable costs for untreated water will be used for determining Repurified Water Revenue and the amount of water delivered in a billing period. The Parties agree that Attachment 2 shall be referred to by the Parties in the future in determining how costs for water delivered at Miramar Reservoir are calculated. If no untreated water is delivered at Miramar Reservoir in a given year, then the closest point of delivery of untreated water to the City shall be used. Attachment 3 is a sample calculation of Repurified Water Revenue. The City shall estimate whether there will be Repurified Water Revenue in the upcoming fiscal year prior to January 15 of each year, and the estimated amount of Repurified Water Revenue shall be effective on July 1 of the upcoming fiscal year. 4.3 Revenue Sharing. Repurified Water Revenue shall initially be shared based on the relative actual Capital Improvement Costs for the Pure Water Program contributed by City’s Water Utility and the Metro System. Such Capital Improvement Cost contributions are currently estimated as (61% City Water Utility and 39% Metro System) until the debt attributable to the Metro System is fully paid. Following full payment of debt attributable to the Metro System, Repurified Water Revenue shall be shared based on the relative actual Operation and Maintenance Costs for Pure Annual cost per acre foot of CWA untreated water purchased by the City for delivery at Miramar Reservoir (which shall be determined based on the total of certain fixed and variable costs for water actually billed to the City by CWA for water delivered at Miramar Reservoir in a fiscal year, divided by the number of acre-feet of CWA water delivered at Miramar Reservoir that year) less Annual cost per acre foot of City Water Utility PW Costs (which shall be determined based on the total annual City Water Utility PW Costs, as defined above in Section A, divided by the number of acre-feet of Repurified Water actually produced in that year) multiplied by The number of acre feet of Repurified Water produced by Pure Water Program facilities during the applicable fiscal year. 7/16/18 Version 4 Water Program facilities contributed by City’s Water Utility and the Metro System, calculated annually. Such Operation and Maintenance Costs are currently estimated as (76% City Water Utility and 24% Metro System) on an annual basis. 4.4 Year-End Adjustment. At the end of each fiscal year during which there is Repurified Water Revenue, the City shall determine the actual cost per acre foot of CWA untreated water purchased by the City, the actual cost per acre foot of City water Utility PW costs, and the actual amount of Repurified Water produced at Pure Water Program facilities. Based on the actual cost and production information, the City will recalculate the Repurified Water Revenue for the prior fiscal year. The City will credit any future charges or bill for any additional amounts due the quarter after the prior year costs have been audited. 4.5 Change in Potable Reuse Method. The parties acknowledge that the Pure Water Program will initially use the surface water augmentation method of potable reuse. The use of CWA untreated water costs in calculating Repurified Water Revenue is intended to provide an appropriate point of comparison to costs for producing Repurified Water that will be introduced into surface water. The parties agree that if the City implements direct potable reuse (in which Repurified Water is introduced directly into a water supply pipeline or facility), the parties shall meet and negotiate in good faith regarding an amendment to this Exhibit F to appropriately update the formula for Repurified Water Revenue. V. Secondary Effluent Commodity Rate 5.1 Background. The Point Loma Wastewater Treatment Plant operates under a National Pollutant Discharge Elimination System (“NPDES”) permit modified under section 301(h) & (j)(5) of the Clean Water Act. If such modified permit were ever revoked or not renewed, the parties agree that, under current law, the City would have an obligation to upgrade the Point Loma WTP to secondary treatment. The parties further agree that $1.8 billion is a fair and comprehensive estimation of the costs that could be incurred by the Metro System to meet the legal requirements related to the Metro System under current law. Therefore, the parties agree that $1.8 billion represents the maximum amount of Capital Improvement Costs that the Metro System should be obligated to contribute to the Pure Water Program, the purpose of which is not solely the disposal of wastewater, but also the production of Repurified Water. The parties agree that this $1.8 billion maximum contribution should apply whether or not the Point Loma WTP is actually upgraded to secondary treatment to meet legal requirements in the future because, as of the date of the Agreement, the parties have the option of upgrading the Point Loma WTP to full secondary treatment for the cost of approximately $1.8 billion. In light of the above, the parties have agreed that if Metro System costs related to the Pure Water Program exceed the $1.8 billion, City’s Water Utility will pay a charge for each acre foot of secondary treated effluent produced by Metro System facilities and used for the production of Repurified Water. 5.2 Capital Expense Rate. Under the circumstances described below, City’s Water Utility shall pay a charge (“Capital Expense Rate”) for each acre-foot of secondary treated 7/16/18 Version 5 effluent produced by Metro System facilities and used for the production of Repurified Water. City’s Water Utility shall pay the Capital Expense Rate if the following costs alone, or in combination, exceed $1.8 billion (which amount shall be adjusted for inflation): (a) the sum of all Capital Improvement Costs and associated debt attributable to the Metro System components of the Pure Water Program under this Exhibit F; and/or (b) the sum of all Capital Improvement Costs and associated debt for the full or partial upgrading of the Point Loma Wastewater Treatment Plant to secondary treatment. Notwithstanding, the Capital Expense Rate shall not apply if the Point Loma WTP is actually upgraded to secondary treatment (or beyond) due to: (a) a change in federal or state statutory law making it necessary to upgrade the Point Loma WTP to comply with such new discharge standard; or (b) a final decision by a state or federal court or a federal administrative agency of competent jurisdiction that an NPDES permit modified under section 301(h) & (j)(5) of the Clean Water Act is thereby revoked or denied renewal due to a finding that the discharge from the Point Loma WTP violates 40 C.F.R. 131.12, State Water Resources Control Board Resolution 68-16, and State Water Resources Control Board Administrative Procedures Update No. 90-004. 5.3 Calculation of Capital Expense Rate . The amount per acre-foot of the Capital Expense Rate shall be determined as follows: The City shall estimate whether there the Capital Expense Rate shall apply to the upcoming fiscal year (and its amount) prior to January 15 of each year, and the estimated amount of the Capital Expense Rate shall be effective on July 1 of the upcoming fiscal year. The sum of all Capital Improvement Costs and associated debt attributable to (i) the Metro System components of the Pure Water Program under this Exhibit F and (ii) upgrading of the Point Loma WTP to secondary treatment (if any) less $1.8 billion, as adjusted for inflation each July 1 (starting on July 1, 2019) to reflect the annual percentage change in the Engineering News Record – Los Angeles construction cost index multiplied by 1.42 (which estimates the total interest on a 30-year State Revolving Fund loan with an interest rate of 2.5%) and divided by The total number of acre feet per year of secondary treated effluent that is expected to be produced by Metro System facilities for the production of Repurified Water over a period of thirty (30) years, or the number of years remaining in the term of the Agreement, whichever is shorter. 7/16/18 Version 6 For purposes of this Article V of Exhibit F, Capital Improvement Costs and associated debt shall include such costs incurred by the Metro System prior to the effective date of the Agreement. 5.4 Year-End Adjustment At the end of each fiscal year during which the Capital Expense Rate applies, the City shall determine the actual Capital Improvement Costs and associated debt attributable to the Metro System components of the Pure Water Program under this Exhibit F and any upgrading of the Point Loma WTP to secondary treatment, the then-applicable interest amount for outstanding loans for the Metro System components of the Pure Water Program and Point Loma WTP upgrades, and the actual amount of Repurified Water produced at Pure Water Program facilities. Based on the actual cost, interest, and production information, the City will recalculate the Capital Expense Rate for the prior fiscal year. The City will credit any future charges or bill for any additional amounts due the quarter after the prior year costs have been audited. 5.5 Duration; Expiration The Capital Expense Rate shall continue until the cost difference between (a) the actual sum of the Capital Improvement Costs and associated debt attributable to the Metro System under this Exhibit F and the costs to upgrade the Point Loma WTP and (b) $1.8 billion (as adjusted for inflation) has been fully repaid. 7/16/18 Version 7 ATTACHMENT 1 Note: The above estimates are based on 60% design of Phase I of the Pure Water Program. 7/16/18 Version 8 ATTACHMENT 2 – SAMPLE CWA BILL 7/16/18 Version 9 ATTACHMENT 3 – SAMPLE CALCULATION OF REPURIFIED WATER REVENUE 60409.00001\30398144.12 Attachment B Pure Water Phase I Cost Estimate March 2018 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 Total Percent Wastewater: Morena PS & WW Force Main and Brine Conveyance 154,897$ 1,647,288$ 3,280,849$ 12,724,831$ 28,566,500$ 143,849,533$ 131,358,206$ 3,130,181$ 324,712,285$ North City Renewable Energy 49,669$ 644,998$ 692,614$ 701,367$ 1,295,182$ 6,174,097$ 20,680,418$ 3,556,439$ 33,794,784$ North City MBC Improvements 2,673$ 54,797$ 753,144$ 1,289,608$ 3,466,999$ 1,545,572$ 198,042$ 7,310,835$ North City WRP Expansion and PWF Influent Conveyance 268,778$ 2,349,630$ 3,482,119$ 9,960,999$ 29,070,517$ 76,220,181$ 45,525,116$ 10,005,502$ 176,882,842$ SDG&E 1,062,998$ 1,095,970$ 1,129,964$ 3,288,932$ Total Wastewater 473,344$ 4,644,589$ 7,510,379$ 24,140,341$ 61,284,805$ 230,806,780$ 200,239,276$ 16,890,164$ 545,989,678$ 39% Water: MorenaPump Station WW Force Main and Brine Conveyance 43,689$ 463,495$ 1,018,609$ 1,488,282$ 5,103,717$ 18,668,104$ 19,171,954$ 547,108$ 46,504,958$ North City Renewable Energy 142,073$ 1,844,930$ 1,854,764$ 5,623,764$ 14,444,516$ 57,630,529$ 12,479,552$ 94,020,128$ Miramar WTP Pump and Plant Improvements 402,526$ 404,390$ 1,651,678$ 2,097,217$ 4,555,811$ North City Pure Water Facility 356,066$ 3,499,605$ 5,366,161$ 30,237,545$ 69,296,681$ 221,267,199$ 153,848,727$ 37,780,301$ 521,652,285$ North City WRP Expansion and PWF Influent Conveyance 211,700$ 2,407,733$ 412,267$ 2,002,336$ 2,691,337$ 28,016,829$ 8,140,260$ 1,354,497$ 45,236,959$ North City Pure Water Pipeline 427,642$ 701,334$ 4,962,149$ 6,632,030$ 24,796,516$ 46,386,566$ 23,768,685$ 1,737,030$ 109,411,952$ North City Pure Water Pump Station 11,984$ 371,482$ 2,290,465$ 1,142,275$ 4,270,856$ 7,989,442$ 4,093,826$ 299,179$ 20,469,509$ Total Water 1,051,081$ 7,585,722$ 15,894,581$ 43,759,758$ 112,187,261$ 338,424,334$ 268,751,198$ 54,197,667$ 841,851,602$ 61% Total Project 1,524,425$ 12,230,311$ 23,404,960$ 67,900,099$ 173,472,066$ 569,231,114$ 468,990,474$ 71,087,831$ 1,387,841,280$ Shared Projects: Morena PS & WW Force Main and Brine Conveyance Wastewater 154,897$ 1,647,288$ 3,280,849$ 12,724,831$ 28,566,500$ 143,849,533$ 131,358,206$ 3,130,181$ 324,712,285$ 87% Water 43,689$ 463,495$ 1,018,609$ 1,488,282$ 5,103,717$ 18,668,104$ 19,171,954$ 547,108$ 46,504,958$ 13% 198,586$ 2,110,783$ 4,299,458$ 14,213,113$ 33,670,217$ 162,517,637$ 150,530,160$ 3,677,289$ 371,217,243$ North City Renewable Energy Wastewater 49,669$ 644,998$ 692,614$ 701,367$ 1,295,182$ 6,174,097$ 20,680,418$ 3,556,439$ 33,794,784$ 26% Water -$ 142,073$ 1,844,930$ 1,854,764$ 5,623,764$ 14,444,516$ 57,630,529$ 12,479,552$ 94,020,128$ 74% 49,669$ 787,071$ 2,537,544$ 2,556,131$ 6,918,946$ 20,618,613$ 78,310,947$ 16,035,991$ 127,814,912$ North City WRP Expansion and PWF Influent Conveyance Wastewater 268,778$ 2,349,630$ 3,482,119$ 9,960,999$ 29,070,517$ 76,220,181$ 45,525,116$ 10,005,502$ 176,882,842$ 80% Water 211,700$ 2,407,733$ 412,267$ 2,002,336$ 2,691,337$ 28,016,829$ 8,140,260$ 1,354,497$ 45,236,959$ 20% 480,478$ 4,757,363$ 3,894,386$ 11,963,335$ 31,761,854$ 104,237,010$ 53,665,376$ 11,359,999$ 222,119,801$ Exhibit A DRAFT – City of SD Comments 6/6/18 60409.00001\30914102.3 60409.00001\30914102.4 AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT BETWEEN THE CITY OF SAN DIEGO AND THE PARTICIPATING AGENCIES IN THE METROPOLITAN SEWERAGE SYSTEM 60409.00001\30914102.3 60409.00001\30914102.4 -i- AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT TABLE OF CONTENTS Page I. DEFINITIONS ................................................................................................................... 2 II. OWNERSHIP AND OPERATION OF THE METRO SYSTEM .................................... 4 III. PAYMENT AND MONITORING PROVISIONS ........................................................... 8 IV. CAPACITY RIGHTS ........................................................................................................ 9 V. SYSTEM OF CHARGES ................................................................................................ 10 VI. PLANNING ..................................................................................................................... 14 VII. FACILITIES SOLELY FOR NEW CONTRACT CAPACITY ..................................... 14 VIII. THE METRO COMMISSION ........................................................................................ 16 IX. DISPUTE RESOLUTION ............................................................................................... 17 X. INSURANCE AND INDEMNITY ................................................................................. 18 XI. INTERRUPTION OF SERVICE ..................................................................................... 19 XII. NOTICES REQUIRED UNDER AGREEMENT ........................................................... 19 XIII. EFFECTIVE DATE AND TERMINATION .................................................................. 19 XIV. GENERAL ....................................................................................................................... 20 Exhibits A. Metro Facilities B. Contract Capacities C. Allocation of Operating Reserves and Debt Service Coverage to Participating Agencies D. Notice Listing E. Reclaimed Water Distribution System F. Pure Water Cost Allocation and Commodity Rate G. Metro System Capacity Pool Allocation 60409.00001\30914102.3 -1- 60409.00001\30914102.4 AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT THIS AMENDED AND RESTATED REGIONAL WASTEWATER DISPOSAL AGREEMENT is made and entered into this _____ day of _________________, 2018, by and between the CITY OF SAN DIEGO, a municipal corporation (“the City”); and the CITY OF CHULA VISTA, a municipal corporation; the CITY OF CORONADO, a municipal corporation; the CITY OF DEL MAR, a municipal corporation; the CITY OF EL CAJON, a municipal corporation; the CITY OF IMPERIAL BEACH, a municipal corporation; the CITY OF LA MESA, a municipal corporation; the LEMON GROVE SANITATION DISTRICT, a political subdivision of the State of California; the CITY OF NATIONAL CITY, a municipal corporation; the CITY OF POWAY, a municipal corporation; the OTAY WATER DISTRICT, a political subdivision of the State of California; the PADRE DAM MUNICIPAL WATER DISTRICT, a political subdivision of the State of California; and the SAN DIEGO COUNTY SANITATION DISTRICT, a political subdivision of the State of California (the “Participating Agencies”). RECITALS WHEREAS, the City and the Participating Agencies are autonomous entities each having the authority to provide and to contract for the conveyance, treatment and disposal of wastewater; and WHEREAS, the City and the Participating Agencies (or their predecessors in interest) entered into that certain Regional Wastewater Disposal Agreement dated May 18, 1998 (the “1998 Agreement”), which provided, among other things, for certain contract rights to capacity in the Metropolitan Sewerage System, a system of wastewater conveyance, treatment, and disposal facilities (“Metro System”) and the establishment of a mechanism to fund the planning, design, construction, operation, and maintenance of the Metro System by the City and the Participating Agencies; and WHEREAS, the purposes of the 1998 Agreement were: (1) to replace the prior-existing sewage disposal agreements between the City and the Participating Agencies; (2) to provide certain contract rights to capacity in the Metro System to the Participating Agencies; (3) to establish a mechanism to fund the planning, design, construction, operation and maintenance of the Metro System by the City and the Participating Agencies as necessary to provide hydraulic capacity, and to comply with applicable law and with generally accepted engineering practices; and (4) to establish a system of charges which allocates the costs of the planning, design and construction of such new wastewater conveyance, treatment and disposal facilities as are necessary solely to provide for new capacity on a fair and equitable basis; and WHEREAS, on April 29, 2014 the San Diego City Council gave its approval and support for the Pure Water San Diego program by adoption of Resolution No. R-308906. The Resolution approved and supported the City’s efforts to develop an implementation strategy to accomplish secondary equivalency atoffload wastewater flow from the Point Loma Wastewater Treatment Plant through implementation of potable reuse, resulting in effluent discharged to the Pacific Ocean being equivalent to what would be achieved by upgrading the Point Loma Wastewater Treatment Plant to a secondary treatment plant (secondary equivalency); and -2- 60409.00001\30914102.3 60409.00001\30914102.4 WHEREAS, the City intends tois implementing a phased, multi-year program to produce up toat least 83 million gallons per day of safe, reliable potable water for the City using the new, expanded, or modified facilities, some of which will include Metro System facilities, in order to achieve secondary equivalency under the Clean Water Act at the Point Loma Wastewater Treatment Plant by offloading wastewater from the Point Loma plant; and WHEREAS, if secondary equivalency is recognized through federal legislation amending the Clean Water Act, the Pure Water Program will not only benefit the City by producing repurified water, but also the Participating Agencies and their wastewater customers, especially if secondary equivalency is recognized through federal legislation amending the Clean Water Act. Specifically, implementation of the Pure Water Program will reduce wastewater discharges to the Point Loma Wastewater Treatment Plant, part of the Metro System where a large portion of the Participating Agencies’ wastewater is currently treated and disposed by discharging it into the Pacific Ocean. By diverting wastewater from the Point Loma Wastewater Treatment Plant and reducing the effluent discharged into the Pacific Ocean, the City and the Participating Agencies will potentially avoid billions of dollars in unnecessary capital, financing, energy, and operating costs to upgrade the Point Loma plant to secondary treatment at full capacity. Avoiding such costs would result in significant savings for regional wastewater customers; and WHEREAS, Section XIV, subsection B, of the 1998 Agreement provided that the Parties may amend the Agreement by a written agreement between the City and all Participating Agencies stating the parties’ intent to amend the Agreement; and WHEREAS, in order to comprehensively and equitably address the costs and revenues associated with the Pure Water Program and the related construction, expansion, and/or modification of Metro System facilities, the City and Participating Agencies wish to amend and restate the Regional Wastewater Disposal Agreement as provided herein. THEREFORE, in consideration of the mutual promises set forth herein, the City and the Participating Agencies agree as follows: I. DEFINITIONS A. Annual Average Daily Flow is the number, in millions of gallons of wastewater per day (“MGD”), calculated by dividing total Flow on a fiscal year basis by 365 days. B. Capital Improvement Costs are costs associated with the planning, design, financing, construction, or reconstruction of facilities. C. Chemical Oxygen Demand or “COD” means the measure of the chemically decomposable material in wastewater, as determined by the procedures specified in the most current edition of “Standard Methods for the Examination for Water and Wastewater,” or any successor publication which establishes the industry standard. D. City Water Utility PW Costs are those Pure Water Program costs allocated to the City’s water utility and therefore which are excluded as Metro System costs -3- 60409.00001\30914102.3 60409.00001\30914102.4 under Exhibit F and are the responsibility of City’s water utility. E. Contract Capacity is the contractual right possessed by each Participating Agency to discharge wastewater into the Metro System pursuant to this Agreement up to the limit set forth in Exhibit B attached hereto. Contract Capacity is stated in terms of Annual Average Daily Flow. F. Flow is the amount of wastewater discharged by the City and each Participating Agency. G. Functional-Design Methodology shall mean the process of allocating Operation and Maintenance Costs and Capital Improvement Costs to Flow and Strength parameters recognizing the benefits of both the design criteria and the primary function of a unit process. H. Metro System Costs are those costs set forth in Section V.B.1. I. Metro System Revenues are those revenues set forth in Section V.B.2. I.J. Metro Wastewater JPA or Metro JPA shall mean the Joint Powers Authority created by agreement [on file, registered with State?] J.K. Metropolitan Sewerage System or Metro System shall mean and consist of those facilities and contract rights to facilities which are shown and/or described in Exhibit A attached hereto and incorporated by this reference, including any amendments thereto authorized by this Agreement. K.L. Municipal System shall mean the City’s wastewater collection system, which consists of pipelines and pump stations, that collects wastewater within the City of San Diego and conveys it to the Metropolitan Sewerage System for treatment and disposal. L.M. New Capacity is the capacity to discharge wastewater outside the Metro System, above the Contract Capacity set forth in Exhibit B attached hereto. M.N. New Contract Capacity is the capacity to discharge wastewater into the Metro System, above the Contract Capacity set forth in Exhibit B attached hereto. N.O. North City Water Reclamation Plant is the 30 million gallons per day (as of the date of this Agreement) wastewater treatment facility which includes four major processes: primary treatment, secondary treatment, tertiary treatment, and disinfection. O.P. Operation and Maintenance Costs are the costs of those items and activities required by sound engineering and management practices to keep the conveyance, disposal, treatment, and reuse facilities functioning in accordance with all applicable laws, rules, and regulations. -4- 60409.00001\30914102.3 60409.00001\30914102.4 P.Q. Point Loma Wastewater Treatment Plant or Point Loma WTP is the 240 million gallons per day (as of the date of this Agreement) advanced primary treatment plant which includes four major processes: screening, grit removal, sedimentation, and digestion. Q.R. Pure Water Program is the City’s phased, multi-year program to produce up toat least 83 million gallons per day of Repurified Water using new, expanded, or modified facilities, some of which will include Metro System facilities. R.S. Reclaimed Water (or Recycled Water) shall have the definition set forth in Title 22, Division 4 of the California Code of Regulations and shall mean water which, as a result of treatment of wastewater, is suitable for a direct beneficial use or a controlled use that otherwise could not occur. S.T. Reclaimed Water (or Recycled Water) Distribution System shall mean and consist of those eight (8) reclaimed water projects listed in Attachment B of the Stipulated Final Order for Injunctive Relief approved by the U.S. District Court on June 6, 1997 in U.S.A. v. City of San Diego, Case No. 88-1101-B, and attached hereto as Exhibit E. T.U. Repurified Water shall mean water which, as a result of advanced treatment of Rreclaimed wWater, is suitable for use as a source of domestic (or potable) water supply. U.V. Return Flow shall mean the effluent created by the dewatering of digested biosolids, which includes centrate. V.W. Reuse shall mean to use again, such as water which has been reclaimed or repurified, or sludge that has been converted to biosolids for beneficial use. W.X. South Bay Land/Ocean Outfall is the facility that is jointly owned by the International Boundary & Water Commission (U.S. Section IBWC) and the City of San Diego. The Outfall is planned to convey and discharge treated effluent from the IBWC’s International Wastewater Treatment Plant and treated effluent from the City’s South Bay Water Reclamation Plant and the South Bay Secondary Treatment Plant. As of the date of this Agreement, the Outfall has a current Average Daily Flow Capacity of 174 million gallons per day. As of the date of this Agreement, the City owns 39.94% of the capacity of the Outfall and the balance of the capacity is owned by the IBWC. X.Y. Strength means the measurement of Suspended Solids (SS) and Chemical Oxygen Demand (COD) within the wastewater Flow and any other measurement required by law after the date of this Agreement. Y.Z. “Suspended Solids” or “SS” means the insoluble solid matter in wastewater that is separable by laboratory filtration, as determined by the procedures specified in the most current edition of “Standard Methods for the Examination of Water and Wastewater,” or any successor publication which establishes the industry -5- 60409.00001\30914102.3 60409.00001\30914102.4 standard. Z.AA. Tertiary Component is that portion of the wastewater treatment process that currently filters the secondary treated wastewater effluent through fine sand and/or anthracite coal to remove fine Suspended Solids and disinfects it to meet the requirements of the California Administrative Code, Title 22, or its successor for filtered and disinfected wastewater. AA.BB. Water Repurification System shall mean any facilities, including treatment and conveyance facilities, the purpose of which is the production or conveyance of Repurified Water. Water Repurification System includes, but is not limited to: the Tertiary Component of the North City Water Reclamation Plant[1] to the extent being used to produce Repurified Water, the North City Advanced Water Purification Facility to be located across the street from the North City Water Reclamation Plant (“North City AWP Facility”); the Repurified Water conveyance system, which will transport Repurified Water from the North City AWP Facility and/or other facilities to the Miramar Reservoir or other alternative location(s) as determined by the City; and any other Repurified Water treatment or conveyance facilities which are part of the City’s 83 million gallons per day Pure Water Program. II. OWNERSHIP AND OPERATION OF THE METRO SYSTEM A.2.1 Rights of the Parties. The City is the owner of the Metro System, and of any additions to the Metro System or other facilities constructed pursuant to this Agreement. All decisions with respect to the planning, design, construction, operation and maintenance of the Metro System shall rest with the City, in consultation with the Metro Commission. The Participating Agencies shall have a contractual right to use the Metro System and to participate in its operation as set forth in this Agreement. Subject to the terms of this Agreement, and in conformance with all applicable laws, the City may transfer ownership of all or part of the Metro System at any time. In the event of a transfer, the City’s successor shall be bound by the terms of this Agreement. Subject to the terms of this Agreement, any Participating Agency may transfer or assign its rights and obligations under this Agreement. Any transfer shall first be approved by the City. No transfer may occur if the City determines, after consultation with the Participating Agencies involved, that the proposed transfer will imbalance, or will otherwise adversely impact the City’s ability to operate the Metro System. B.2.2 Metro System Services. 1.2.2.1 The City shall provide wastewater conveyance, treatment and disposal services to the Participating Agencies through the Metro System, under the terms set forth in this Agreement. 2.2.2.2 The City shall operate the Metro System in an efficient and economical manner, maintaining it in good repair and working order, all in accordance with recognized sound engineering and management practices. -6- 60409.00001\30914102.3 60409.00001\30914102.4 3.2.2.3 The City shall convey, treat, and dispose of or reuse all wastewater received under this Agreement in such a manner as to comply with all applicable laws, rules and regulations. C.2.3 Flow Commitment. 1.2.3.1 Absent agreement of the parties, all Flow from the Participating Agencies and the City, up to the capacity limits set forth in Exhibit B or any amendments thereto, shall remain in the Metro System. 2.2.3.2 This Agreement shall not preclude any Participating Agency from diverting Flow from the Metro System as a result of the construction of reclamation facilities or New Capacity outside of the Metro System. 3.2.3.3 Any Participating Agency may negotiate an agreement with the City to withdraw all Flow from the Metro System, which at a minimum requires the Agency to pay its proportionate share of Capital Improvement Costs. D.2.4 Funding Obligations. Nothing in this Section or in this Agreement shall obligate the City to make any payment for the acquisition, construction, maintenance or operation of the Metro System from moneys derived from taxes or from any income and revenue of the City other than moneys in or sewer revenues which go into the Sewer Revenue Fund for the Metro System and from construction funds derived from the sale of such sewer revenue bonds for the Metro System as are duly authorized. Nothing in this contract shall be construed to obligate the City to pay from its annual income and revenues any sum which would create an indebtedness, obligation or liability within the meaning of the provisions of Section 18 of Article XVI of the Constitution of the State of California. Nothing in this Section, however, or in this Agreement shall prevent the City, in its discretion, from using tax revenues or any other available revenues or funds of the City for any purpose for which the City is empowered to expend moneys under this Agreement. Nothing herein shall relieve the City from its obligations to fund and carry out this Agreement. Nothing in this Section or in this Agreement shall obligate any Participating Agency to make any payment which would create an indebtedness, obligation or liability within the meaning of the provisions of Section 18 of Article XVI of the Constitution of the State of California, or which is not authorized by law. E.2.5 Financial Statements. 1.2.5.1 The City shall keep appropriate records and accounts of all costs and expenses relating to conveyance, treatment, disposal, and reuse of wastewater, and the acquisition, planning, design, construction, administration, monitoring, operation and maintenance of the Metro System. 2.2.5.2 Said records and accounts shall be subject to reasonable inspection by any authorized representative of any Participating Agency at its expense. Further, said accounts and records shall be audited annually by an -7- 60409.00001\30914102.3 60409.00001\30914102.4 independent certified public accounting firm appointed by the City pursuant to generally accepted accounting principles. A copy of said report shall be available to any Participating Agency. F.2.6 Limitations on Types and Condition of Wastewater. 1.2.6.1 Each Participating Agency will comply with all applicable laws, rules and regulations including its regulatory obligations associated with the discharge of wastewater into its respective system and from such system into the Metro System. 2.2.6.2 Each Participating Agency will minimize to the maximum extent practicable, the infiltration and inflow of surface, ground or stormwaters into its respective wastewater systems. 3.2.6.3 Each Participating Agency will insure that all industrial users of its wastewater system are regulated by an effective industrial pretreatment program that conforms to all to all applicable laws, rules and regulations and that is acceptable to the City. Provided, however, that the City shall not require the Participating Agencies to take any actions beyond that which is required under applicable laws, rules and regulations that can be taken but are not being taken by the City. 4.2.6.4 The City and the Participating Agencies agree that nothing in this Agreement, including the termination of the existing sewage disposal agreements, shall affect the validity of the Interjurisdictional Pretreatment Agreements, or the separate transportation agreements that are currently in effect between or among the City and the Participating Agencies. 5.2.6.5 Each Participating Agency will not discharge a substantial amount of sewage originating outside its respective boundaries into the Metro System without the approval of the City. 6.2.6.6 Each Participating Agency shall be responsible for the violation of any applicable laws, rules or regulations associated with its respective discharge of wastewater into the Metro System. 7.2.6.7 In the event a regulatory agency imposes any penalty or takes other enforcement action relating to the conveyance, treatment, disposal or reuse of wastewater in or from the Metro System, the City shall determine whether the City or a Participating Agency or Agencies caused or contributed to such penalty or enforcement actions. The City shall allocate the penalty or other relief, including the costs of defense, to the party or parties responsible. Each responsible party, whether a Participating Agency or the City, shall be obligated to pay its share of such penalty or other relief, and any costs of defense. In the event that the City cannot make such an allocation, the cost of such penalty or other relief -8- 60409.00001\30914102.3 60409.00001\30914102.4 shall be shared by the Participating Agencies and the City proportionately based on Flow and Strength. G.2.7 Right of First Refusal. 1.2.7.1 The City shall not sell or agree to sell the Metro System without first offering it to the Participating Agencies. For the purposes of this section, “Participating Agencies” shall mean a Participating Agency, a group of Participating Agencies, or a third party representing one or more Participating Agencies. The term “sell” shall include any transfer or conveyance of the Metro System or of any individual treatment or reclamation facility or outfall within the Metro System. 2.2.7.2 The City and the Participating Agencies recognize that transfer of ownership of the Metro System is currently restricted by Sections 6.04 and 6.20 of the Installment Purchase Agreement between the City and the Public Facilities Financing Authority of the City, which inter alia restricts the transfer of ownership to the Metropolitan Wastewater Sewage District or other governmental agency whose primary purpose is to provide wastewater treatment. The City shall not seek to impose on bond holders a waiver of Section 6.04 or 6.20. Absent such a restriction, before the City sells or agrees to sell the Metro System, or any portion of it, the City shall offer to sell the Metro System to the Participating Agencies (“the Offer”) on the terms and at a price equal to that proposed for the sale of the Metro System to a third party. The Participating Agencies shall have thirty days from receipt of the Offer (“the Intent to Respond Period”) in which to notify the City of their intent to respond to the Offer. The Participating Agencies shall have five months from the expiration of the Intent to Respond Period in which to accept or reject the Offer. The Offer shall contain the name of the proposed purchaser, the proposed sale price, the terms of payment, the required deposit, the time and place for the close of escrow, and any other material terms and conditions on which the sale is to be consummated. 3.2.7.3 If the Participating Agencies give timely notice of their intent to respond and timely notice of their acceptance of the Offer, then the City shall be obligated to sell and the Participating Agencies shall be obligated to purchase the Metro System or any individual treatment or reclamation facility or outfall within the Metro System, as applicable, at the price and on the terms and conditions of the Offer. If the Participating Agencies do not give timely notice of their intent to respond or their acceptance of the Offer, or do not submit an offer on the same terms and conditions as the Offer, the City may, following the end of the Offer period, sell the Metro System, or any portion of it, at a price and on terms and conditions no less favorable to the City than those in the Offer. The City shall not sell the Metro System to any third party on terms or at a price less favorable to the -9- 60409.00001\30914102.3 60409.00001\30914102.4 City from the terms and price contained in the Offer absent compliance with the terms of this Section. 4.2.7.4 Nothing herein shall prevent the City from entering into a financing agreement which may impose limits on the City’s power to sell the Metro System to the Participating Agencies pursuant to Section H.2.7.1. if the City believes that such a financing agreement is in the City’s best interest. Neither the entry into such a financing agreement by the City nor the performance thereof by the City shall constitute a breach or default by the City hereunder. H.2.8 Pure Water San Diego Program. 1. Each new, expanded, or modified Metro System facility which is used in relation to the production of Repurified Water (in addition to the modification and expansion of the North City Water Reclamation Facility) shall be governed by this Agreement and Exhibit F, attached hereto and incorporated herein. The parties acknowledge and agree that additional amendments to Exhibit F will be necessary based on the actual Repurified Water processes selected and the nature of specific facilities. Therefore, notwithstanding Section XIV, subsection B14.2 (Amendment of Agreement), the City’s Mayor and the chief executive officer of eachCity and the Metro JPA, by a majority vote of the Participating Agenciesits member agencies[2], shall have the authority to execute ministerial amendments to Sections A.2 and B of Exhibit F which identify improvements to specific facilities or portions thereof as being Metro System Costs or City Water Utility PW Costs. For purposes of this provisionsection, a “ministerial amendment” is a written amendment that: (1) allocates costs related to new, expanded, or modified Metro System facilities in connection with the production of Repurified Water, and (2) is generally consistent with the cost allocation principles set forth in the originalin Section A.1 of Exhibit F, which is attached to this Agreement. 2. Nothing in this Agreement or Exhibit F limits or restricts the right of the City or the Participating Agencies to enter into separate agreements the purchase or sale of Repurified Water produced by the Water Repurification System or sharing in City Water Utility’s associated capital, debt, operation, and maintenance costs. Under such circumstances, the cost allocation and commodity rate delineated in Exhibit F will remain unchanged.[3] III. III PAYMENT AND MONITORING PROVISIONS A.3.1 Payment for Metro System Facilities. Through the system of charges set forth in Section Article V of this Agreement, each Participating Agency shall pay its share of the costs of planning, design and construction of all of the Metro System facilities which are identified in Exhibit A hereto, which is incorporated herein by reference. B.3.2 Payment for Additional Metro System Facilities. Through the system of charges set forth in Section Article V of this Agreement, each Participating Agency shall pay its share of the costs of acquisition, or planning, design and -10- 60409.00001\30914102.3 60409.00001\30914102.4 construction of such facilities in addition to those set forth on Exhibit A as are necessary for the Metro System to maintain compliance with applicable laws, rules and regulations, including the Ocean Pollution Reduction Act of 1994 and its successor(s), present and future waivers of applicable treatment standards at any Metro System treatment facility, and all facilities as are necessary to convey, treat, dispose, and reuse wastewater in the Metro System to provide the Contract Capacity set forth in Exhibit B, to maintain hydraulic capacity and as otherwise required by sound engineering principles. As a ministerial matter, the City shall amend Exhibit A from time to time to reflect such additional facilities and shall give notice of any amendments to the Participating Agencies. The City shall keep an updated version of Exhibit A on file with the City ClerkMetro JPA. Exhibit A may be amended to reflect other changes to the Metro System only as expressly provided in this Agreement. C.3.3 Payment for Operation and Maintenance. Through the system of charges set forth in Section Article V of this Agreement, each Participating Agency shall pay its share of the Operation and Maintenance Costs of all Metro System facilities. The Participating Agencies shall not pay for the Operation and Maintenance Costs of Water Repurification System, which are City Water Utility PW Costs. D.3.4 Charges Based on Flow and Strength; Exception.[4] 1.3.4.1 Except as otherwise described in this subsection D3.4, a Participating Agency’s share of the charges in this Section Article III shall be assessed pursuant to Section Article V of this Agreement based on its proportionate Flow in the Metro System and the Strength of its wastewater. 2.3.4.2 Notwithstanding the abovesection 3.4.1, or any other provision of this Agreement, a Participating Agency’s share of Pure Water Program Capital Improvement Costs and Pure Water Program revenues[5] attributable to the Metro System under Exhibit F shall be assessed or credited based on the parties’ “Metro Capacity Rights[6].,” which are based on projections of each party’s 2050 Flow. Metro Capacity Rights are based on projections of each party’s 2050 Flow as set forth in Exhibit G[7], which is attached hereto and incorporated herein. The City shall annually determine allocate the estimated and actual costs and revenues which are attributable to the Metro System under Exhibit F and take into account the above assessment methodusing Metro Capacity Rights when estimating quarterly payments and conducting year-end adjustments under Section Article V. 3.3.4.3 Each party recognizes that operation within respective Metro Capacity Rights is essential to the accurate allocation of costs and revenues under the Pure Water Program. In recognition of same, the parties agree as follows: a.3.4.3.1 If any party’s Flow exceeds the sum of its Metro Capacity Rights and its portion of the Reserve Capacity Pool (as shown in Exhibit G) for any continuous consecutive three (3) month period, -11- 60409.00001\30914102.3 60409.00001\30914102.4 such party shall pay for the use of such capacity from the Reserve Capacity Pool. Payment for such use of the Reserve Capacity Pool shall be made as part of the yearly billing adjustments under Section V.B5.2.4 and shall be credited to offset the other parties’ Pure Water Program Capital Improvement Costs. Such payments shall be based on the following amounts, which shall be annually adjusted each July 1 (starting on July 1, 2018) to reflect the annual percentage change in the Engineering News Record – Los Angeles construction cost index[8]: (1)3.4.3.1.1 $_____ per MGD (for use of any portion of the Reserve Capacity Pool up to four (4) times such party’s share of the Reserve Capacity Pool) (2)3.4.3.1.2 $_____ per MGD (for use of any portion of the Reserve Capacity Pool over four (4) times such party’s share of the Reserve Capacity Pool) b.3.4.3.2 Notwithstanding the amounts set forth in Exhibit G, the following parties will have the following Metro Capacity Rights until July 1, 2023: (1)3.4.3.2.1 Padre Dam: 2.48 MGD (2)3.4.3.2.2 San Diego County Sanitation District: 10.959 MGD (3)3.4.3.2.3 El Cajon: 7.8 MGD c.3.4.3.3 Notwithstanding the amounts set forth in Exhibit G, the following parties will have the following Metro Capacity Rights until July 1, 2028[9]: (1)3.4.3.3.1 San Diego County Sanitation District: 5.739 MGD (2)3.4.3.3.2 El Cajon: 7.8 MGD d.3.4.3.4 If any party’s Flow exceeds the sum of its Metro Capacity Rights and its portion of the Reserve Capacity Pool (as shown in Exhibit G) for any continuous consecutive six (6) month period, the City shall contract with an independent consultant (who shall be approved by a majority of the Metro Commission) to prepare an amendment to Exhibit G that accurately reflectsadjusts projections of 2050 Flow based on the amount of Flow that exceeds the party’s Metro Capacity Rights. The revised Exhibit G prepared by the consultantUpon approval by the Metro JPA, the City shall, as a ministerial matter, be adopted by the City within 180 days of such exceedanceamend Exhibit G to reflect the new projects of 2015 Flow. The City shall give notice of the amendment of Exhibit G to -12- 60409.00001\30914102.3 60409.00001\30914102.4 each Participating Agency, and shall provide copies of the amendment with the notice. The City shall keep an updated version of Exhibit G on file with the City ClerkMetro JPA. If the City and the Metro JPA cannot agree on an amendment to Exhibit G, the matter shall be submitted to dispute resolution pursuant to Article IX. e.3.4.3.5 If Exhibit G is amended to update one or more parties’ Metro Capacity Rights, the change in Metro Capacity Rights shall be retroactive in effect[10], and the City shall use the updated amounts in estimating quarterly payments and conducting year-end adjustments for Pure Water Program costs and revenues. Therefore, any party that underpaid based on previous Metro Capacity Rights (which were based on prior projections of 2050 Flow) shall pay the difference in its quarterly payments the following fiscal year; any party that overpaid based on previous Metro Capacity Rights shall receive a credit in its quarterly payments the following fiscal year. E.3.5 Monitoring Flow and Strength. 1.3.5.1 The City shall monitor wastewater that is discharged into the Metro System for Flow and Strength. The City shall own and operate as part of the Metro System monitoring devices which will measure the amount of daily wastewater discharged into the Metro System. These devices shall be installed at locations appropriate to accurately monitor Flow and Strength. The City may also monitor wastewater Flow and Strength at other locations as it deems appropriate. 2.3.5.2 In measuring Strength, the frequency and nature of the monitoring shall not be more stringent for the Participating Agencies than it is for the City. 3.3.5.3 The City shall provide its plans for the monitoring system and for the procedures it will use to determine Strength to the Participating Agencies for review and comment prior to implementation. 4.3.5.4 The City shall report Flow and Strength data to the Participating Agencies at least quarterly. IV.III. CAPACITY RIGHTS A.4.1 Contract Capacity. In consideration of the obligations in this Agreement, each Participating Agency shall have a contractual right to discharge wastewater to the Metro System up to the Contract Capacity set forth in Exhibit B. B.4.2 Transfers of Contract Capacity. -13- 60409.00001\30914102.3 60409.00001\30914102.4 The Participating Agencies and the City may buy, sell or exchange all or part of their Contract Capacity among themselves on such terms as they may agree upon. The City shall be notified prior to any transfer. Any transfer shall be first approved by the City. No Contract Capacity may be transferred if the City determines, after consultation with the Participating Agencies involved in the transaction, that said transfer will unbalance, or will otherwise adversely impact the City’s ability to operate the Metro System. Provided, however, that the Participating Agency seeking the transfer may offer to cure such imbalance at its own expense. Following the City’s consent, as a ministerial matter, the Contract Capacity set forth in Exhibit B shall be adjusted to reflect the approved transfer. C.4.3 Allocation of Additional Capacity. The parties recognize that the City’s applicable permits for the Metro System may be modified to create capacity in the Metro System beyond that set forth in Exhibit B as a result of the construction of additional facilities or as a result of regulatory action. This additional capacity shall be allocated as follows: 1.4.3.1 Except as provided in subsection section 4.3.2 below, in the event that the Metro System is rerated so that additional permitted capacity is created, said capacity shall be allocated proportionately based upon the Metro System charges that have been paid since July 1, 1995 to the date of rerating. 2.4.3.2 In the event that the additional permitted capacity is created as the result of the construction of non-Metro System facilities, or as the result of the construction of facilities pursuant to Section Article VII, such additional capacity shall be allocated proportionately based on the payments made to plan, design and construct such facilities. D.4.4 Deductions in Contract Capacity. The parties further recognize that the Contract Capacity in Exhibit B may be modified to comply with, or in response to, applicable permit conditions, or related regulatory action, or sound engineering principles. In the event that the capacity of the Metro System is rerated to a level below the total capacity set forth in Exhibit B, the Contract Capacity in Exhibit B shall be reallocated proportionately pending the acquisition or construction of new facilities. The City shall acquire or construct such facilities as necessary to provide the Contract Capacity rights set forth in Exhibit B, as planning and capacity needs require. The costs of such facilities shall be assessed pursuant to Section III.B. above3.2. E.4.5 Amendments to Exhibits B and C. As a ministerial matter, the City shall prepare amendments to Exhibits B and C to reflect any adjustment in Contract Capacity pursuant to this Section within ninety (90) days after the adjustment is made. The City shall give notice of the amendments to each Participating Agency, and shall provide copies of the amendments with the notice. The City shall keep an updated version of Exhibits B and C on file with the City ClerkMetro JPA. -14- 60409.00001\30914102.3 60409.00001\30914102.4 F.4.6 The South Bay Land/Ocean Outfall. Nothing in this Section shall limit the City’s right to transfer capacity service rights in that portion of the South Bay Land/Ocean Outfall which is not part of the Metro System. V. V. SYSTEM OF CHARGES A.5.1 Charges Authorized. The City agrees to implement and the Participating Agencies agree to abide by a new system of charges. This new system allows the City to equitably recover from all Participating Agencies their proportional share of the net Metro System Costs through the imposition of the following charges: 1.5.1.1 SSC (Sewer System Charge);[11] 2.5.1.2 NCCC (New Contract Capacity Charge). B.5.2 SSC (Sewer System Charge). The City shall determine the SSC based on the projected Metro System Costs (as defined below) for the forthcoming fiscal year, less all Metro System Revenues (as defined below). 1.5.2.1 Metro System Costs a.5.2.1.1 The following shall at a minimum be considered Metro System Costs for purposes of calculating the annual SSC: (1)5.2.1.1.1 Except as provided in Excluded Costs, subsection b.section 5.2.1.2 below(Excluded Costs), the annual costs associated with administration, operation, maintenance, replacement, annual debt service costs and other periodic financing costs and charges, capital improvement, insurance premiums, claims payments and claims administration costs of the Metro System, including projected overhead. Overhead shall be calculated using accepted accounting practices to reflect the overhead costs of the Metro System. (2)5.2.1.1.2 Fines or penalties imposed on the City as a result of the operation of the Metro System, unless the fine/penalty is allocated to the City or a Participating Agency as provided in Section II.F2.6.7. -15- 60409.00001\30914102.3 60409.00001\30914102.4 (3)5.2.1.1.3 Costs incurred by the City, including attorneys’ fees, that are [12]necessary to implement the terms of this Agreement. b.5.2.1.2 Excluded Costs. The following items shall not be considered Metro System Costs for purposes of calculating the annual SSC: (1)5.2.1.2.1 Costs related to the City of San Diego’s Municipal System as determined by reasonable calculations; (2)5.2.1.2.2 Costs related to the treatment of sewage from any agency which is not a party to this Agreement; (3)5.2.1.2.3 Costs related to the inspection and monitoring program for the industrial dischargers located in San Diego, including associated administrative and laboratory services; (4)5.2.1.2.4 Right-of-way charges for the use of public streets of the City or any Participating Agency. The City and the Participating Agencies agree not to impose a right-of- way charge for the use of its public rights-of-way for Metro System purposes. (5)5.2.1.2.5 Capital Improvement Costs of any non-Metro System facility. (6)5.2.1.2.6 Capital Improvement Costs for which an NCCC is paid. (7)5.2.1.2.7 City Water Utility PW Costs as defined in Exhibit F.[13] 2.5.2.2 Metro System Revenues. a.5.2.2.1 The following revenues shall be at a minimum considered Metro System Revenues for purposes of determining the annual SSC: (1)5.2.2.1.1 Any grant or loan receipts or any other receipts that are attributable to the Metro System, including, but not limited to, all compensation or receipts from the sale, lease, or other conveyance or transfer of any asset of the Metro System, and any grant, loan, or other receipts attributable to the Metro System components of the Pure Water Program[14]. -16- 60409.00001\30914102.3 60409.00001\30914102.4 (2)5.2.2.1.2 All compensation or receipts from the sale or other conveyance or transfer of any Metro System by- products, including, but not limited to gas, electrical energy, sludge products, and Reclaimed Water (excepting therefrom any receipts allocated pursuant to subsection 2.a.(3) belowsection 5.2.2.1.3); provided however, that this shall not include the Secondary Effluent Commodity Rate[15], which is specifically addressed in subsection 2.a.(6) below5.2.2.1.6. (3)5.2.2.1.3 The distribution of revenue from the sale of Reclaimed Water from the North City Water Reclamation Plant, including incentives for the sale of Reclaimed Water, shall first be used to pay for the cost of the Reclaimed Water Distribution System, then the cost of the Operation and Maintenance of the Tertiary Component of the North City Water Reclamation Plant that can be allocated to the production of Reclaimed Water, and then to the Metro System. (4)5.2.2.1.4 Any portion of an NCCC that constitutes reimbursement of costs pursuant to Section VII.A7.1.4. (5)5.2.2.1.5 Any penalties paid under Section VII.C7.3. (6)5.2.2.1.6 Proceeds from the Secondary Effluent Commodity Rate, as calculated under Exhibit F and allocated among the Participating Agencies in the proportions set forth in Exhibit G[16]. b.5.2.2.2 Excluded Revenue (1)5.2.2.2.1 Capital Improvement Costs for which an NCCC is paid; (2)5.2.2.2.2 Proceeds from the issuance of debt for Metro Ssystem projects. (3)5.2.2.2.3 Proceeds from the sale of Reclaimed Water used to pay for the Reclaimed Water Distribution System pursuant to subsection 2.a.(3)5.2.2.1.3 above. 3.5.2.3 Calculation of SSC Rates. a.5.2.3.1 Prior to the initial implementation of the new system of charges, the City shall prepare a sample fiscal year estimate setting forth the methodology and sampling data used as a base for Strength based billing (SBB) which includes Flow and Strength -17- 60409.00001\30914102.3 60409.00001\30914102.4 (Chemical Oxygen Demand (COD) and Suspended Solids (SS)). The analysis shall be submitted to each Participating Agency. b.5.2.3.2 The City shall determine the unit SSC rates by allocating net costs (Metro System Costs less Metro System Revenues) between parameters of Flow, COD and SS. This allocation is based on the approved Functional-Design Methodology analyses for individual Capital Improvement Projects (CIPs) and estimated Operation and Maintenance (O&M) Costs allocated to the three parameters. The City may revise the calculations to include any other measurement required by law after the effective date of this Agreement. c.5.2.3.3 The net cost allocated to each of the three parameters (Flow, COD and SS) shall be divided by the total Metro System quantity for that parameter to determine the unit rates for Flow, COD and SS. These unit rates shall apply uniformly to all Participating Agencies. 4.5.2.4 Estimate and Billing Schedule and Year End Adjustment a.5.2.4.1 Estimate - The City shall estimate the SSC rates on an annual basis prior to January 15. The City shall quantify the SSC rates by estimating the quantity of Flow, COD and SS for each party, based on that party’s actual flow and the cumulative data of sampling for COD and SS over the preceding years. If cumulative data is no longer indicative of discharge from a Participating Agency due to the implementation of methods to reduce Strength, previous higher readings may be eliminated. b.5.2.4.2 Costs of treating Return Flow for solids handling will be allocated to the Participating Agencies in proportion to their Flow and Strength. Return Flow will not be counted against the Participating Agencies’ Contract Capacity as shown in Exhibit B. c.5.2.4.3 SSC Billing Schedule - The City shall bill the Participating Agencies quarterly, invoicing on August 1 , November 1, February 1 and May 1. Each bill shall be paid within thirty (30) days of mailing. Quarterly payments will consist of the total estimated cost for each Participating Agency, based on their estimated Flow, COD and SS, divided by four. d.5.2.4.4 Year-End Adjustments - At the end of each fiscal year, the City shall determine the actual Metro System. Costs and the actual Flow as well as the cumulative Strength data for the City and each of the Participating Agencies. The City shall make any necessary adjustments to the unit rates for Flow, COD and SS based on -18- 60409.00001\30914102.3 60409.00001\30914102.4 actual costs for the year. The City shall then recalculate the SSC for the year using actual costs for the year, actual Flow, and cumulative Strength factors (COD, SS and Return Flow) for the City and for each Participating Agency. The City shall credit any future charges or bill for any additional amounts due, the quarter after the prior year costs have been audited. C.5.3 NCCC (New Contract Capacity Charge). If New Contract Capacity is required or requested by a Participating Agency, pursuant to Section Article VII, the Metro System shall provide the needed or requested capacity, provided that the Participating Agency agrees to pay an NCCC in the amount required to provide the New Contract Capacity. New Contract Capacity shall be provided pursuant to Section Article VII. D.5.4 Debt Financing. The City retains the sole right to determine the timing and amount of debt financing required to provide Metro System Facilities. E.5.5 Allocation of Operating Reserves and Debt Service Coverage.[17] The parties shall continue to comply with the 2010 Administrative Protocol on Allocation of Operating Reserves and Debt Service Coverage to Participating Agencies, attached hereto and incorporated herein as Exhibit C. VI. PLANNING A.6.1 Projected Flow and Capacity Report. Commencing on July 1, 1999, each Participating Agency shall provide the City and the Metro Commission with a ten-year projection of its Flow and capacity requirements from the Metro System. The Agencies shall disclose any plans to acquire New Capacity outside the Metro System. This “Projected Flow and Capacity Report” shall be updated annually. B.6.2 Other Planning Information. Each Participating Agency shall provide the City with such additional information as requested by the City as necessary for Metro System planning purposes. C.6.3 Ten-Year Capital Improvement Plan. The City shall prepare a Ten-Year Capital Improvement Plan for the Metro System that describes the facilities necessary to convey, treat, and dispose of, or reuse all Flow in the Metro System in compliance with all applicable rules, laws and regulations. The plan shall be updated annually. D.6.4 Notice to Metro Commission. -19- 60409.00001\30914102.3 60409.00001\30914102.4 In the event that the City is not able to include a facility in the Ten-Year Capital Improvement Plan, the City shall notify the Metro Commission as soon as possible before the detailed design or construction of such facility provided that the facility will significantly impact the Metro System. VII. FACILITIES SOLELY FOR NEW CONTRACT CAPACITY The Participating Agencies and City are obligated to pay for the acquisition or planning, design, and construction of new facilities in the Metro System that are needed solely to provide New Contract Capacity only under the terms provided below. A.7.1 Determination of Need for New Contract Capacity. 1.7.1.1 As part of its planning efforts, and considering the planning information provided to the City by the Participating Agencies, the City shall determine when additional facilities beyond those acquired or constructed pursuant to Section Article III above will be necessary solely to accommodate a need for New Contract Capacity in the Metro System, whether by the City or by the Participating Agencies. The City shall determine: (1) the amount of New Contract Capacity needed; (2) the Participating Agency or Agencies, or the City, as the case may be, in need of the New Contract Capacity; (3) the type and location of any capital improvements necessary to provide the New Contract Capacity; (4) the projected costs of any necessary capital improvements; and, (5) the allocation of the cost of any such facilities to the Participating Agency and/or the City for which any New Contract Capacity is being developed. The City shall notify the Participating Agencies of its determination within sixty days of making such determination. 2.7.1.2 The City or Participating Agency or Agencies in need of New Contract Capacity as determined by the City pursuant to Paragraph 1section 7.1.1 above, may choose, in their sole discretion, to obtain New Capacity outside of. the Metro System in lieu of New Contract Capacity. Under such circumstances, the Participating Agency or Agencies shall commit to the City in writing their intent to obtain such New Capacity. Upon such commitment, the City shall not be required to provide New Contract Capacity to such Agency or Agencies as otherwise required under this Agreement. 3.7.1.3 The Participating Agencies shall have six months from the date of notice of the determination within which to comment on or challenge all or part of the City’s determination regarding New Contract Capacity, or to agree thereto or to commit, in writing, to obtain New Capacity outside of the Metro System. Any Participating Agency objecting to the City’s determination shall have the burden to commence and diligently pursue the formal dispute resolution procedures of this Agreement within said six month period. The City’s determination shall become final at the close of -20- 60409.00001\30914102.3 60409.00001\30914102.4 the six month comment and objection period. The City’s determination shall remain valid notwithstanding commencement of dispute resolution unless and until set aside by a final, binding, determination of an arbitratorotherwise agreed pursuant to the dispute resolution process set forth in this Agreementin Article IX. 4.7.1.4 The City and the Participating Agency or Agencies which need New Contract Capacity shall thereafter enter into an agreement specifying the terms and conditions pursuant to which the New Contract Capacity will be provided, including the amount of capacity and the New Contract Capacity. Each party obtaining New Contract Capacity shall reimburse the Metro System for the costs of acquisition, planning, design, and construction of facilities necessary to provide the New Contract Capacity that have been paid by other parties under Section VII.B7.2.3. 5.7.1.5 The parties recognize that the City may acquire and plan, design and construct facilities that are authorized pursuant to both Section Article III and Section Article VII of this Agreement. Under such circumstances, the City shall allocate the costs and capacity of such facilities pursuant to SectionArticle III and Section VII.A7.1.1 as applicable. B.7.2 Charges for Facilities Providing New Contract Capacity 1.7.2.1 The expense of acquisition, planning, design, and construction of New Contract Capacity shall be borne by the City or the Participating Agency or Agencies in need of such New Contract Capacity. 2.7.2.2 Notwithstanding any provision in this Agreement, the City and the Participating Agencies shall pay for the Operation and Maintenance Costs of all facilities pursuant to the payment provisions of Section Article III, including those facilities acquired and constructed to provide New Contract Capacity in the Metro System. 3.7.2.3 Charges for the acquisition, planning, design and construction of facilities solely to provide New Contract Capacity shall be paid for by the Participating Agencies and the City pursuant to the payment provisions in Section Article III of this Agreement until an agreement is reached under Section VII.A7.1.4. or pending the resolution of any dispute relating to the City’s determination with respect to New Contract Capacity. 4.7.2.4 As a ministerial matter, the City shall prepare amendments to Exhibits A and B to reflect the acquisition or construction of facilities to provide New Contract Capacity pursuant to this SectionArticle. The City shall give notice of the Amendments to the Participating Agencies, and shall provide copies of the Amendments with the notice. C.7.3 Penalty for Failure to Pay. -21- 60409.00001\30914102.3 60409.00001\30914102.4 1.7.3.1 The parties recognize that appropriate capacity and long term planning for same are essential to the proper provision of sewerage service. In recognition of same, the parties agree that discharge beyond Contract Capacity should be penalized. Therefore, in the event that a Participating Agency exceeds its Contract Capacity after the City has given notice that New Capacity is required, said Participating Agency shall be assessed and pay a quarterly penalty until such time as the Participating Agency obtains the required New Capacity. The penalty shall be fifteen percent (15%) of the quarterly charges authorized pursuant to this Agreement times the amount of Flow which exceeds the Participating Agency’s Contract Capacity for the first quarter, twenty-five percent (25%) of such amount for the second quarter, thirty percent (30%) of such amount for the third quarter, and thirty-five percent (35%) of such amount for every quarter thereafter. 2.7.3.2 In the event that a Participating Agency fails to pay the charges imposed under this Article after the City has given notice that payment is required, said Participating Agency shall be assessed and shall pay a penalty of fifteen percent (15%) of the total outstanding charges each quarter until said charges are paid in full.[18] VIII. THE METRO COMMISSION A.8.1 Membership. The Metro Commission shall consist of one representative from each Participating Agency. Each Participating Agency shall have the right to appoint a representative of its choice to the Metro Commission. If a Participating Agency is a dependent district whose governing body is that of another independent public agency that Participating Agency shall be represented on the Metro Commission by a representative appointed by the governing body which shall have no more than one representative no matter how many Participating Agencies it governs. Each member has one vote in any matter considered by the Metro Commission. The Metro Commission shall establish its own meeting schedule and rules of conduct. Metro Commission meetings may be consolidated with meetings of the Metro JPA. The City may participate in the Metro Commission on an ex officio, non-voting, basis. -22- 60409.00001\30914102.3 60409.00001\30914102.4 B.8.2 Advisory Responsibilities of Metro Commission. 1.8.2.1 The Metro Commission shall act as an advisory body, advising the City on matters affecting the Metro System. The City shall present the position of the majority of the Metro Commission to the City’s governing body in written staff reports. The Metro Commission may prepare and submit materials in advance and may appear at any hearings on Metro System matters and present its majority position to the governing body of the City. 2.8.2.2 The Metro Commission may advise the City of its position on any issue relevant to the Metro System. IX. DISPUTE RESOLUTION This Section governs all disputes arising out of this Agreement. A.9.1 Voluntary Mandatory Non-Binding Mediation. If a dispute arises between the City and any Participating Agency relating to or arising from a party’s obligations under this Agreement that cannot be resolved through informal discussions and meetings, the City and the Participating Agency shall first endeavor to settle the dispute in an amicable manner, using mandatory non-binding mediation under the rules of JAMS, AAA, or any other neutral organization agreed upon by the parties before having recourse in a court of law.Upon notice to all of the parties involved, any dispute may be submitted to a mutually-acceptable mediator, including a consultant specializing in the subject matter of the dispute, for determination of the issue(s) raised. Unless the parties involved agree in writing otherwise, the decision of the mediator or consultant shall not be final and binding. In the event that there is no agreement to mediate the dispute, any party may proceed directly to Arbitration. B.9.2 ArbitrationSelection of Mediator. A single mediator that is acceptable to the City and the Participating Agency shall be used to mediate the dispute. The mediator will be knowledgeable in the subject matter of this Agreement, if possible, and chosen from lists furnished by JAMS, AAA, or any other agreed upon mediator. 9.3 Mediation Expenses. The expenses of witnesses for either side shall be paid by the party producing such witnesses. All mediation costs, including required traveling and other expenses of the mediator, and the cost of any proofs or expert advice produced at the direct request of the mediator, shall be Metro System Costs. 9.4 Conduct of Mediation. Mediation hearings will be conducted in an informal manner. Discovery shall not be allowed. The discussions, statements, writings and admissions will be confidential to the -23- 60409.00001\30914102.3 60409.00001\30914102.4 proceedings (pursuant to California Evidence Code Sections 1115 - 1128) and will not be used for any other purpose unless otherwise agreed by the parties in writing. The parties may agree to exchange any information they deem necessary. The City and the Participating Agency shall have representatives attend the mediation who are authorized to settle the dispute, though a recommendation of settlement may be subject to the approval of each agency’s boards or legislative bodies. Either party may have attorneys, witnesses or experts present. 9.5 Mediation Results. Any resultant agreements from mediation shall be documented in writing. The results of the mediation shall not be final or binding unless otherwise agreed to in writing by the parties. Mediators shall not be subject to any subpoena or liability and their actions shall not be subject to discovery.Arbitration shall be commenced by sending a Notice of Demand for Arbitration to the other party or parties to the dispute. A copy of the notice shall be sent to the City, all other Participating Agencies, and the Metro Commission. Notice shall be given in accordance with Section XII. After such notice, any party that fails to timely participate by giving notice within forty-five (45) days thereafter, shall be barred from the noticed action. The scope of the arbitrator’s jurisdiction shall not include the authority to amend the terms of this Agreement. 1. The arbitration shall be conducted by a mutually-acceptable dispute resolution entity which utilizes retired judges as arbitrators or arbitrators agreed to by the parties. If the parties cannot agree on such an entity, then the American Arbitration Association shall be used. 2. All arbitrations shall be conducted in accordance within California Code of Civil Procedure Sections 1282 et seq., provided, however, that in the event of a conflict between the Code of Civil Procedure arbitration provisions and the provisions of this Agreement, the provisions of this Agreement control. 3. Discovery regarding the subject matter of the arbitration shall be allowed as provided in Code of Civil Procedure Section 1283.05 (or its successors), except that depositions may be taken without first obtaining permission from the arbitrator. The arbitrator’s fee shall be paid in equal shares by the parties who participate in the arbitration. The arbitrator may award costs to the prevailing party, except, however, all costs incurred by the City for arbitration arising under Section VII shall be a Metro System cost and charged accordingly. The decision of the arbitrator shall be final and binding. C.9.6 Performance Required During Dispute. Nothing in this Section Article shall relieve the City and the Participating Agencies from performing their obligations under this Agreement. The City and the Participating Agencies shall be required to comply with this Agreement, including the performance of all -24- 60409.00001\30914102.3 60409.00001\30914102.4 disputed activity and disputed payments, pending the resolution of any dispute under this Agreement. X. INSURANCE AND INDEMNITY A.10.1 City Shall Maintain All Required Insurance. 1.10.1.1 The City shall maintain all insurance required by law, including workers’ compensation insurance, associated with the operation of the Metro System. 2.10.1.2 Throughout the term of this Agreement the City shall procure and maintain in effect liability insurance covering, to the extent reasonably available, any and all liability of the City, the Metro System and the Participating Agencies, including their respective officers, directors, agents, and employees, if any, with respect to or arising out of the ownership, maintenance, operation, use and/or occupancy of the Metro System and all operations incidental thereto, including but not limited to structural alterations, new construction and demolition, including coverage for those hazards generally known in the insurance industry as exploding, collapse and underground property damage. 3.10.1.3 Said insurance shall name the City, and its respective officers, employees, and agents, and shall have a limit of not less than $24,000,000 combined single limit per occurrence for bodily injury, personal injury and property damage suffered by any person. Said insurance may provide for a deduction from coverage, which deductible shall not be more than $1,000,000. Said limits and/or deductible may be adjusted from time to time. Said insurance may be evidenced by a policy or policies covering only the Metro System or by endorsement to bring the same within a blanket policy or policies held by the City covering other properties in which the City has an interest provided the policy or policies have a location aggregate provision. The City may satisfy the first $1,000,000 per occurrence with a self-insurance retention program for public liability claims. The policy or policies shall name the Participating Agencies as additional insureds with evidence of same supplied to each. Insurance premiums, claims payments and claims administration costs shall be included in the computation of the SSC. B.10.2 Substantially Equivalent Coverage. In the event of a transfer of the Metro System to a nonpublic entity pursuant to Section Article II, coverage substantially equivalent to all the above provisions shall be maintained by any successor in interest. XI. INTERRUPTION OF SERVICE -25- 60409.00001\30914102.3 60409.00001\30914102.4 Should the Metro System services to the Participating Agencies be interrupted as a result of a major disaster, by operation of federal or state law, or other causes beyond the City’s control, the Participating Agencies shall continue all payments required under this Agreement during the period of the interruption. XII. NOTICES REQUIRED UNDER AGREEMENT The City and each Participating Agency shall give notice when required by this Agreement. All notices must be in writing and either served personally, or mailed by certified mail. The notices shall be sent to the officer listed for each party, at the address listed for each party in Exhibit D in accordance with this SectionArticle. If a party wishes to change the officer and/or address to which notices are given, the party shall notify all other parties in accordance with this SectionArticle. Upon such notice, as a ministerial matter, the City shall amend Exhibit D to reflect the changes. The amendment shall be made within thirty (30) days after the change occurs. The City shall keep an updated version of Exhibit D on file with the City ClerkMetro JPA. The City shall provide a copy of the amended Exhibit D to all parties. XIII. EFFECTIVE DATE AND TERMINATIONEXPIRATION A.13.1 Effective Date. This Agreement shall be effective thirty (30) days after execution by the City and all of the Participating Agencies, and shall be dated as of the signature date of the last executing party. Upon the effective date of this Agreement, the 1998 Agreement shall be of no further force and effect.[19] B.13.2 Preferences. In the event one or more agencies which are subject to Wastewater Agreementsparties to the 1998 Agreement with the City before the effective date of this Agreement do not execute this Amended and Restated Agreement, the City agrees not to enter into any new agreements with said agency or agencies without first offering the Participating Agencies agreements under substantially the same terms and conditions for any proposed agreement covering the same subject matter and issues. C.13.3 TerminationExpiration. Subject to the rights and obligations set forth in Section XIII.C13.4. below, this Agreement shall terminate expire on December 31, 2065[20]. This Agreement is subject to extension by agreement of the parties. The parties shall commence discussions on an agreement to provide wastewater treatment services beyond the year 2065 on or before December 31, 2055. D.13.4 Contract Capacity Rights Survive TerminationExpiration. The Participating Agencies’ right to obtain wastewater treatment services from the facilities referred to in, or constructed pursuant to this Agreement shall survive the termination expiration of the Agreement. Provided however, upon expiration of this Agreement, the Participating Agencies shall be required to pay their proportional share based on Flow and -26- 60409.00001\30914102.3 60409.00001\30914102.4 Strength of all Metro System Costs (Capital Improvement Costs and Operation and Maintenance) to maintain their right to such treatment services. Provided further, that in the event that the Participating Agencies exercise their rights to treatment upon expiration of this Agreement, the City shall have the absolute right, without consultation, to manage, operate and expand the Metro System in its discretion. E.13.5 Abandonment. After December 31, 2065, the City may abandon the Metro System upon delivery of notice to the Participating Agencies ten (10) years in advance of said abandonment. Upon notice by the City to abandon the Metro System, the parties shall meet and confer over the nature and conditions of such abandonment. In the event the parties cannot reach agreement, the matter shall be submitted to arbitration mediation under the provisions of SectionArticle IX. In the event of abandonment, the City shall retain ownership of all Metro System assets free of any claim of the Participating Agencies. XIV. GENERAL A.14.1 Exhibits. 1. This Agreement references Exhibits A through G. Each exhibit is attached to this Agreement, and is incorporated herein by reference. The exhibits are as follows: Exhibit A Metro Facilities; Exhibit B Contract Capacities; Exhibit C Allocation of Operating Reserves and Debt Service Coverage to Participating Agencies; Exhibit D Notice Listing; Exhibit E Map of Reclaimed Water Projects; Exhibit F Pure Water Cost Allocation and Commodity Rate; and Exhibit G Metro System Capacity Pool Allocation B.14.2 Amendment of Agreement. Except as provided in this Agreement, and recognizing that certain amendments are ministerial and preapproved, this Agreement may be amended or supplemented only by a written agreement between the City and the Participating Agencies stating the parties’ intent to amend or supplement the Agreement. C.14.3 Construction of Agreement. 1.14.3.1 Drafting of Agreement -27- 60409.00001\30914102.3 60409.00001\30914102.4 It is acknowledged that the City and the Participating Agencies, with the assistance of competent counsel, have participated in the drafting of this Agreement and that any ambiguity should not be construed for or against the City or any Participating Agency on account of such drafting. 2.14.3.2 Entire Agreement The City and each Participating Agency represent, warrant and agree that no promise or agreement not expressed herein has been made to them, that this Agreement contains the entire agreement between the parties, that this Agreement supersedes any and all prior agreements or understandings between the parties unless otherwise provided herein, and that the terms of this Agreement are contractual and not a mere recital; that in executing this Agreement, no party is relying on any statement or representation made by the other party, or the other party’s representatives concerning the subject matter, basis or effect of this Agreement other than as set forth herein; and that each party is relying solely on its own judgement and knowledge. 3.14.3.3 Agreement Binding on All This Agreement shall be binding upon and shall inure to the benefit of each of the parties, and each of their respective successors, assigns, trustees or receivers. All the covenants contained in this Agreement are for the express benefit of each and all such parties. This Agreement is not intended to benefit any third parties, and any such third party beneficiaries are expressly disclaimed. 4.14.3.4 Severability 14.3.4.1 Should any provision of this Agreement be held invalid or illegal, such invalidity or illegality shall not invalidate the whole of this Agreement, but, rather, the Agreement shall be construed as if it did not contain the invalid or illegal part, and the rights and obligations of the parties shall be construed and enforced accordingly except to the extent that enforcement of this Agreement without the invalidated provision would materially and adversely frustrate either the City’s or a Participating Agency’s essential objectives set forth in this Agreement. 14.3.4.2 Should a court determine that one or more components of the allocation of costs set forth in this Agreement places the City or a Participating Agency in violation of Proposition 218 with respect to their ratepayers, such components shall no longer be of force or effect. In such an event, the City and the Participating Agencies shall promptly meet to renegotiate the violative component of the cost allocation to comply with Proposition 218, and use the dispute resolution process in Article IX if an agreement cannot be reached through direct negotiation.[21] -28- 60409.00001\30914102.3 60409.00001\30914102.4 5.14.3.5 Choice of Law This Agreement shall be construed and enforced pursuant to the laws of the State of California. 6.14.3.6 Recognition of San Diego Sanitation District as Successor to Certain Parties. The parties hereby acknowledge and agree that the San Diego County Sanitation District is a Participating Agency under this Agreement as the successor in interest to the Alpine Sanitation District, East Otay Mesa Sewer Maintenance District, Lakeside Sanitation District, Spring Valley Sanitation District, and Winter Gardens Sewer Maintenance District. D.14.4 Declarations Re: Agreement. 1.14.4.1 Understanding of Intent and Effect of Agreement The parties expressly declare and represent that they have read the Agreement and that they have consulted with their respective counsel regarding the meaning of the terms and conditions contained herein. The parties further expressly declare and represent that they fully understand the content and effect of this Agreement and they approve and accept the terms and conditions contained herein, and that this Agreement is executed freely and voluntarily. 2.14.4.2 Warranty Regarding Obligation and Authority to Enter Into This Agreement Each party represents and warrants that its respective obligations herein are legal and binding obligations of such party, that each party is fully authorized to enter into this Agreement, and that the person signing this Agreement hereinafter for each party has been duly authorized to sign this Agreement on behalf of said party. 3.14.5 Restrictions on Veto of Transfers and Acquisitions of Capacity Each party understands and agrees that this Agreement governs its respective rights and responsibilities with respect to the subject matter hereto and specifically recognizes that with respect to the transfer and acquisition of Contract Capacity (Section IV.B4.2) or the creation of New Contract Capacity for any Participating Agency (Section Article VII), no Participating Agency has a right to veto or prevent the transfer of capacity by and among other Participating Agencies or with the City, or to veto or prevent the creation or acquisition capacity for another Participating Agency or Agencies, recognizing that by signing this Agreement each Participating Agency has expressly preapproved such actions. The sole right of a Participating Agency to object to any of the foregoing shall be through expression of its opinion to the Metro Commission and, where applicable, through exercise of its rights under the dispute resolution provisions of this Agreement. -29- 60409.00001\30914102.3 60409.00001\30914102.4 4.14.6 Right to Make Other Agreements Nothing in this Agreement limits or restricts the right of the City or the Participating Agencies to make separate agreements among themselves without the need to amend this Agreement, provided that such agreements are consistent with this Agreement. Nothing in this Agreement or Exhibit F limits or restricts the right of the City or the Participating Agencies to enter into separate agreements for the purchase or sale of Repurified Water produced by the Water Repurification System or sharing in City Water Utility PW Costs. Such agreements shall not affect the cost allocation and commodity rate delineated in Exhibit F. 14.7 Limitation of Claims[22] Notwithstanding any longer statute of limitations in State law, for purposes of any claims asserted by the City or a Participating Agency for refunds of overpayments or collection of undercharges arising under this Agreement, the parties agree that such refunds or collections shall not accrue for more than four years prior to notice of such claim is received by the City or a Participating Agency. This also applies to any related adjustments to each Participating Agency’s share of net Metro System Costs resulting from the resolution of such claims. The City and the Participating Agencies hereby waive any applicable statute of limitations available under State law that exceed four years. 5.14.8 Counterparts This Agreement may be executed in counterparts. This Agreement shall become operative as soon as one counterpart hereof has been executed by each party. The counterparts so executed shall constitute one Agreement notwithstanding that the signatures of all parties do not appear on the same page. EXHIBIT A 60409.00001\30914102.3 60409.00001\30914102.4 EXHIBIT A METRO FACILITIES [INSERT CURRENT VERSION OF EXHIBIT A ON FILE WITH CITY CLERK] EXHIBIT B 60409.00001\30914102.3 60409.00001\30914102.4 EXHIBIT B CONTRACT CAPACITIES [INSERT CURRENT VERSION OF EXHIBIT B ON FILE WITH CITY CLERK, IF DIFFERENT FROM 1998 VERSION] EXHIBIT C 60409.00001\30914102.3 60409.00001\30914102.4 EXHIBIT C ADMINISTRATIVE PROTOCOL ON ALLOCATION OF OPERATING RESERVES AND DEBT SERVICE COVERAGE TO PARTICIPATING AGENCIES EXHIBIT D 60409.00001\30914102.3 60409.00001\30914102.4 EXHIBIT D NOTICE LISTING[23] City Manager City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91919 Phone: 691-5031 Fax: 585-5612 City Manager City of La Mesa 8130 Allison Avenue La Mesa, CA 91942 Phone: 667-1101 Fax: 462-7528 City Manager City of San Diego 202 “C” Street San Diego, CA 92101 Phone: 236-5949 Fax: 236-6067 City Manager City of Coronado 1825 Strand Way Coronado, CA 92113 Phone: 522-7335 Fax: 522-7846 City Manager City of Lemon Grove 3232 Main Street Lemon Grove, CA 91945 Phone: 464-6934 Fax: 460-3716 Chief Administrative Officer County of San Diego 1600 Pacific Highway, Rm. 209 San Diego, CA 92101 Phone: 531-5250 Fax: 557-4060 City Manager City of Del Mar 1050 Camino Del Mar Del Mar, CA 92014 Phone: 755-9313 ext. 25 Fax: 755-2794 City Manager City of National City 1243 National City Blvd. National City, CA 91950 Phone: 336-4240 Fax: 336-4327 General Manager Otay Water District 2554 Sweetwater Springs Blvd. Spring Valley, CA 91977 Phone: 670-2210 Fax: 670-2258 City Manager City of El Cajon 200 E. Main Street El Cajon, CA 92020 Phone: 441-1716 Fax: 441-1770 City Manager City of Poway 13325 Civic Center Drive Poway, CA 92064 Phone: 679-4200 Fax: 679-4226 General Manager Padre Dam Municipal Water District 10887 Woodside Avenue Santee, CA 92071 Phone: 258-4610 Fax: 258-4794 City Manager City of Imperial Beach 825 Imperial Beach Blvd. Imperial Beach, CA 91932 Phone: 423-8300 ext. 7 Fax: 429-9770 EXHIBIT E 60409.00001\30914102.3 60409.00001\30914102.4 EXHIBIT E MAP OF RECLAIMED WATER PROJECTS EXHIBIT F 60409.00001\30914102.3 60409.00001\30914102.4 EXHIBIT F PURE WATER COST ALLOCATION AND COMMODITY RATE EXHIBIT G 60409.00001\30914102.3 60409.00001\30914102.4 EXHIBIT G METRO SYSTEM CAPACITY POOL ALLOCATION EXHIBIT B Pure Water Program Water/Wastewater Cost and Revenue Allocation Agreement Basic Principles 1. Water shall pay for all improvements after secondary treatment (ocean discharge standard). 2. Water shall pay for all costs for fail-safe disposal to include any cost associated with reservation of capacity at the PLWTP. 3. Water shall pay for portions of the preliminary treatment, primary treatment and secondary treatment process that have added costs to deal with increased treatment needed to accommodate Pure Water. a) NCWRP Preliminary and Primary Treatment - Wastewater shall pay for chemically enhanced primary treatment. b) NCWRP Primary Effluent Equalization - All wastewater cost. c) NCWRP Aeration - Water shall pay all capital costs for increased volume of aeration tanks for Pure Water. Wastewater shall pay for the aeration tank volume required for 52 MGD of capacity based on sizing criteria for the existing 30 MGD. Water shall also pay for a methanol feed system. d) NCWRP Secondary Clarifiers - Water shall pay for any demolition and replacement of existing tanks. Wastewater shall pay the cost to expand from 30 MGD to 52 MGD. 4. Water shall pay any costs for the demolishing and replacement with similar facilities of North City facilities needed to make space available. 5. Wastewater shall pay capital, debt, operations and maintenance costs for wastewater conveyance facilities to provide wastewater for replacement of centrate flows that cannot be treated at the North City Water Reclamation Plant (NCWRP) due to Pure Water needs. 6. Water shall pay all costs for brine disposal including pump stations, pipelines, retreatment, ocean outfall and monitoring. 7. Wastewater shall pay all treatment and conveyance costs for all return flows (Micro Filtration and tertiary backwash) based on flow, COD and SS. 8. Commodity Charge a) Water will pay a commodity charge for secondary treated wastewater that is used for potable reuse. b) If the total expenses for the wastewater potion of the Pure Water program to produce 83 MGD of potable reuse exceed the cost to upgrade 180 MDG of treatment to the secondary level at the Point Loma Wastewater Treatment Plant, then the commodity charge will be modified as necessary to mitigate costs above this level to the wastewater customer. Note: 1. These principles are based on the assumption that secondary equivalency is approved through Federal Legislation 2. Each new wastewater facility after NCWRP may require additional negotiation based on the actual process selected. Metro Wastewater JPA ^&K§=2*22fl 276 FourmAvenue Chulavista'CA91950 619-176-2557 www.melroipa.org Jerry Jones,Chair November 21,2017 VIA I .S.and Electronic Mail DSDEAS @ sandiego.gov Mr.Mark Brunette Senior Environmental Planner City of San Diego Department Services Center 1222 First Avenue,MS 501 San Diego,CA 92101 Re:Comments on Draft EIR/EIS for the Pure Water San Diego Program,North City Project—Project No.499621 /SCH No.2106081016 Dear Mr.Brunette: Metro JPA appreciates the opportunity to comment on the North City Project Draft EIR/EIS.Metro JPA is a joint powers authority organized pursuant to the California Joint Exercise of Powers Act,Government Code section 6500 et seq.for the purpose of representing its member agencies'interests in the operation and management of the San Diego regional sewer system.Metro JPA's member agencies are the cities of Chula Vista,Coronado, Del Mar,El Cajon,Imperial Beach,La Mesa,National City,and Poway;the Lemon Grove Sanitation District;the Padre Dam Municipal Water District and Otay Water District;and the County of San Diego Sanitation District (collectively,"Member Agencies"). Metro JPA has identified several aspects of the Draft EIR/EIS for the North City Water Reclamation Plant Project ("DEER")that the City of San Diego ("City")that Metro JPA requests the City reconsider and/or clarify to provide a complete analysis of the Project's impacts.Metro JPA's intent in providing these comments is to assist the City with development of a sound environmental analysis of the proposed project,and ensure that the project is constructed in a manner that makes the best use of the project's role in the metro system. The Joint Powers Authority Proactively Addressing Regional Wastewater Issues Chula Vista •Coronado ■Del Mar • El Cajon •Imperial Beach >La Mesa •Lemon Grove Sanitation District National City •Otay Water District •Poway •Padre Dam Municipal Water DistrictCountyofSanDiego,representing East Otay,Lakeside/A]pine,Spring Valley &Winter Gardens Sanitation Districts -1- COMMENTS The DEIR needs to assess the impact the North City Water Reclamation Plant Project will have on offloading of the E.W.Blom Point Loma Wastewater Treatment Plant The E.W.Blom Point Loma Wastewater Treatment Plant ("Point Loma Plant")operates pursuant to a modified National Pollution Discharge Elimination System ("NPDES")permit, which allows the Plant to discharge wastewater treated only to advanced primary standards into the ocean.The City operates the Point Loma Plant under a waiver from the United States Environmental Protection Agency ("EPA")issued pursuant to Clean Water Act section 301(h) and 40 CFR 125,Subpart G. The DEIR should consider the impacts that offloading the Point Loma Plant will have on the operation of the Plant and on the sufficiency of the conveyance system leading to the Plant. In particular,the City should consider whether fail-safe infrastructure at the North City Plant is adequate to ensure that the Point Loma Plant is permanently offloaded rather than serving as a back-up. Metro JPA and its Member Agencies are concerned that the North City Project will be constructed in a manner that continues to rely on the Point Loma Plant,and that in turn,brings into question the basis for the Point Loma Plant's Clean Water Act Waiver.Additionally,on page 2-20,the DEIR states that there is uncertainty whether EPA will continue to grant the Point Loma Plant Waiver.There is no basis for this statement,especially if the City constructs the North City Project as agreed.Metro JPA requests that the statement be removed from the DEIR. The Project should include appropriate failsafe mechanisms to protect the Point Loma Plant and the Environment As noted above,Metro JPA is concerned that the project as described in the DEIR does not adequately protect the Point Loma Plant to ensure that it is permanently offloaded.For example: •Section 3.5.2 Page 3-29 of the DEIR states:"In the event the NCPWF is shut down for any purpose,the Morena Pump Station will also be shut down and go into a by-pass mode directing flows to the Point Loma WWTP." •Page 3-32 of the DEIR states:"Power for the Morena Pump Station and MTBS would be supplied by SDG&E.Backup generators are not anticipated to be required." •Page 3-40 of the DEIR states:"The NCPWF is not an essential facility.In the rare event of simultaneous failure of the power generation facility at NCWRP and utility power,the majority of NCPWF will be shut down and flow to NCWRP will be reduced to meet Title 22 flows.Remaining raw sewage will be diverted to the Point Loma WWTP." The Joint Powers Authority Proactively Addressing Regional Wastewater Issues Chula Vista •Coronado •Del Mar • El Cajon •Imperial Beach •La Mesa •Lemon Grove Sanitation District National City •Otay Water District •Poway •Padre Dam Municipal Water District County of San Diego,representing East Otay,Lakeside/Alpine,Spring Valley &Winter Gardens Sanitation Districts -2- We request that the City define what shutdown of the North City Plant means.We would prefer to keep the facility running and find another place to use or dispose of the effluent instead of sending it to Point Loma.Further,we believe that emergency generators should be supplied at the Morena Pump Station to prevent spills,or unnecessary diversions.Lastly,we believe the NCPWF is an essential facility and should have emergency power generation.These protections should be included in the final North City Project and described in the final EIR. Location ofdischarge of non-spec water Pages 3-42 through 3-43 of the DEIR describe three options for managing flows in the event that the North City Plant produced non-spec water.Options A and B would send emergency flows into the North City Pipeline.Option C would allow flows to be discharged to local stormdrains and/or Carrol Canyon.Metro JPA requests that the City pursue Option C for management of these flows.Because the North City Plant is producing potable water,it is possible that the City could obtain cover under "General Waste Discharge Requirements for Discharges from Drinking Water Systems to Surface Waters (SWRCB Order No.2014-0194- DWQ,NPDES No.CAG140001)for these discharges. Option C would not require the flow to be retreated at Point Loma.This would save operation costs and reduce redundant treatment needs.Expanding the use of Option C for the entire flow to the AWPF would be the best option to reduce future costs.Since the water would be near distilled water quality and this discharge would happen very rarely the impacts would be minimal.If the volume of discharge was an issue multiple discharge points could be considered. The DEIR should clarify the volume of water that the North City Plant will add to the region's water supplyportfolio,and the corresponding demand Pages 3-45 and 5.17-2 of the DEIR describe the overall contribution the North City Project will have on the region's water supply portfolio between 2016 and 2035.We request that the City clarify in the DEIR that the 93,000 acre-feet per year that will be created by the Pure Water Project (including the North City Project)represents 20%of the current water use in the San Diego County Water Authority. The DEIR should discuss the original 15 MGD project and consider the IS MGD project as an Alternative As part of the waiver renewal process,the City entered into an agreement with certain non-governmental environmental organizations that requires the City to build a 15 MGD recycled water project by December 31,2023.In exchange,the environmental organizations agreed not to challenge the EPA waiver renewal for the Point Loma Plant.The City subsequently elected to incorporate a 30 MGD reuse project,with an accelerated compliance plan,in place of the 15 MGD recycled water project. The Joint Powers Authority Proactively Addressing Regional Wastewater Issues Chula Vista •Coronado ■Del Mar ■ El Cajon •Imperial Beach •La Mesa •Lemon Grove Sanitation District National City •Otay Water District •Poway •Padre Dam Municipal Water District County of San Diego,representing East Otay,Lakeside/Alpine.Spring Valley &Winter Gardens Sanitation Districts The DEIR does not include a discussion of the original 15 MGD water project in its history of project changes or as a project alternative.The 15 MGD project analysis is relevant to an adequate assessment of the scale of impacts the North City Project because the expansion has implications for flow volumes in the remainder of the system.The larger 30 MGD project could therefore have an impact on the operational and regulatory obligations which the Plant must meet. The DEIR does not adequately assess the relationship between the modified permit for the Point Loma Wastewater Treatment Plant and the Proposed Project The DEIR does not adequately assess the relationship between the modified NPDES permit for the Plant and the projected impact of the North City Project on the Plant's ability to meet applicable modified permit conditions.Specifically,the DEIR should address the Plant's ability to achieve Secondary Equivalency at the Point Loma Plant and the impact the North City Project might have on that ability. On May 15,2014,the City adopted Resolution 308906,"A Resolution of the Council of the City of San Diego Supporting the 'Pure Water San Diego Program"1.The Resolution memorialized the City's commitment to potable reuse via the Pure Water Program and to obtaining Secondary Equivalency at the Point Loma Plant. The Resolution memorializes the City Council's direction that the Pure Water Program be implemented in a manner that "secures long-term compliance with discharge standards at the Point Loma Wastewater Treatment Plant through potable reuse and secondary equivalency."The Resolution directs City staff to develop a legislative strategy to authorize secondary equivalency under the Clean Water Act,and importantly for Metro JPA and its member agencies,establish a financing plan and cost-sharing principles with other public agencies that use the City's wastewater system. The DEIR currently lacks a sufficient assessment of applicable regulatory requirements which are related to the Point Loma Plant or are implicated by,or dependent on,the Pure Water Program and North City Project.Without a full and detailed analysis of the Plant's NPDES permit and relationship to the North City Project (including Project Alternatives),the DEIR creates the appearance that the expanded,30 MGD project is necessary for the Point Loma Plant to meet the modified permit terms.The Metro JPA member agencies are concerned about this aspect of the DEIR because they have not yet agreed to help fund the larger project. Accordingly,the DEIR must provide a detailed and accurate relationship between the modified permit under which the Plant operates and the North City Project. Lastly,the DEIR should include a discussion of the City's plan to obtain a permanent waiver for Point Loma based on the Secondary Equivalency concept and completion of the North City Project.The only reason wastewater ratepayers can be required to help fund the North City project,and the Pure Water Project in general is if there is a nexus between the project and The Joint Powers Authority Proactively Addressing Regional Wastewater Issues Criula Vista •Coronado •Del Mar • El Cajon •Imperial Baach •La Mesa •Lemon Grove Sanitation District National City •Otay Water District •Poway •Padre Dam Municipal Water District County of San Diego,representing East Otay,Lakeside/Alpine,Spring Valley &Winter Gardens Sanitation Districts compliance at the Point Loma Plant.Metro JPA will not help fund a water supply project if there is still a risk that they may have to upgrade the Point Loma Plant in the future. The DEIR should provide a detailed discussion of the dilution impacts and ratios affecting Miramar and San Vicente Reservoirs The dilution effects of purified water releases under the DEIR's reservoir operating scenarios are inadequate for Metro JPA and its Member Agencies to fully understand and assess the impacts of the North City Project.For instance,the DEIR fails to provide detailed information with respect to the Miramar and San Vicente Reservoirs,including the manner in which reservoir size and volume will impact dilution of constituents in the recycled water to be stored there or the existing imported water already stored in the reservoir. Dilution factors used to assess the impacts of purified water introduced into the reservoirs may change over time.This dynamic does not appear to be considered at all.The EIR references a model produced to consider these issues,but the model is not included as an appendix,and the discussion of its findings is extremely limited.Without this information it is not possible for Metro JPA or its Member Agencies to fully understand the impact of the North City Project.To provide a complete analysis of the North City Project and its potential impacts, the DEIR must include a more detailed discussion of purified water impacts on dilution within the reservoirs. The DEIR does not address relevant legislation that could have a significant impact on wastewaterproduction and use The DEIR does not consider recently enacted green building requirements for the conversion of multifamily buildings by 2019,as well as all residential units when sold.This legislation could have a significant impact on the production and use of wastewater.Substantial declines in wastewater production and use call into question the viability of the North City Project at its current scale.Accordingly,it is difficult to properly consider the impact the Project will have without any information about relevant regulatory changes that will directly affect the production and use of wastewater. The DEIR does not assess the effects of seasonal flows to the North City Plant and corresponding demandfor recycled water The DEIR does not adequately account for seasonal flow variations of non-potable recycled water in any detail.Page 6.17-2 mentions a seasonal strategy in passing but the overall project should be analyzed in terms of seasonal need and demand.Without this information, Metro JPA and its Member Agencies cannot adequately assess how well North City Project will offload the Point Loma Plant or whether the North City Plant will over-produce recycled water. The DEIR should supply information related to the effect of seasonal flows as well as any anticipated swings this strategy is likely to create with regard to seasonal flows that may impact North City Project facility operations. The Joint Powers Authority Proactively Addressing Regional Wastewater Issues Ctiula Vista •Coronado •Del Mar • El Cajon •Imperial Reach •La Mesa •Lemon Grove Sanitation District National City •Otay Water District •Poway •Padre Dam Municipal Water District County of San Oiego,representing East Otay,Lakeside/Alpine,Spring Valley &Winter Gardens Sanitation Districts The DEIR should specify the roles and charges ofresearchers staffed at the anticipated Operating &Maintenance Facility The North City Project would require 60 new fulltime employees to operate the project, including 15 new fulltime employees at the North City Water Reclamation Plant ("NCWRF') and 45 at the NCPWF.Of those 45 employees at the NCPWF,the DEIR indicates that 12 would be "researchers."However,the DEIR provides no definition of researchers or indicates what roles and responsibilities such employees will have,other than that they are generally required for operation of the NCPWF. Without further detail,it is impossible for Metro JPA and its Member Agencies to adequately understand how the North City Project facilities will operate,and thus cannot sufficiently assess whether costs associated with these positions are appropriately attributed to water or wastewater operations.Metro JPA requests that the City clarify the roles of all employees working on the completed North City Project and whether their roles are related to wastewater treatment or water supply. Project Size Description In various places,the DEIR describes the North City Project as 34 MGD,42.5 MGD,and 90 MGD.The DEIR is not consistent and needs improved explanation of the project size.The DEIR needs to explain the project size and why that size is necessary to achieve the 34 MGD goal of the project. Non-Spec Water Corrective Action Report On page 2-18 Part 1 of the DEIR cites applicable California regulations that impose requirements on recycled water projects.In particular,22 CCR Division 4,Chapter 3,Articles 5.1 and 5.2,require the water agency (or agencies)proposing a recycled water project to submit a joint plan to the SWRCB and RWQCB outlining corrective actions to be taken in the event that a delivery of recycled wastewater to an augmented reservoir fails to meet required water quality criteria.Metro JPA requests a copy of this report if it has been completed. Other clerical and technical errors The DEIR must be revised to accurately identify critical data points required to assess the impacts of the Project.Without such accurate information,any impact determination is rendered speculative.For instance,discrepancies in data figures appear to exist in the following places: •AADF into Pump Station 2 is 180 MGD (Page 2-9),while AAFD to the Plant is 141 MGD (Page 2-7); •On Page 3-8,the DEIR indicates that the maximum production of the North City Plant will be 34 MGD,while elsewhere the DEIR indicates the figure is 30 MGD; The Joint Powers Authority Proactively Addressing Regional Wastewater Issues Chula Vista •Coronado •Del Mar • El Cajon •Imperial Beach •La Mesa •Lemon Grove Sanitation District National City •Otay Water District ■Poway •Padre Dam Municipal Water District County of San Diego,representing East Otay,Lakeside/Alpine,Spring Valley &Winter Gardens Sanitation Districts •For the pipeline to Miramar,the DEIR indicates daily flow will be between 23 MGD and 33MGD(i.e.not 34 MGD); •Annual flow rates on Page 5.11-24 do not appear to match current flows at the Plant, particularly when 30 MGD are moving away from the Plant;the figures should therefore reflect flows which will likely result if the Project is not completed;and • Projected project increases in potable water demand of 3 MGD on Page 3-49 are substantially lower that projected demand of 4.8 MGD inferred from the figures on Page 5.17-5 (i.e.8,195 AFY to 13,650 AFY by 2020.) CONCLUSION As noted above,Metro JPA intends these comments to be helpful in the overall evaluation of the North City Project.Metro JPA and its Member Agencies are concerned about the efficient use of resources and the value that the North City Plant brings in terms of regulatory compliance and water supply.Metro JPA believes that the project should maximize both and submits these comments in furtherance of that goal. The DEIR presents a daunting array of complex issues.Metro JPA and its Member Agencies understand that arriving at appropriate and supportable findings and conclusions is an iterative process.Metro JPA therefore appreciates the opportunity to participate in that process by proposing the above comments. IC.P.deSousa J.G.Andre Monette Best Best &Krieger LLP General Counsel,Metro Wastewater JPA 6040y.OUO0l\30262881.3 The Joint Powers Authority Proactively Addressing Regional Wastewater Issues Chula Vista ■Coronadu ■Del Mar • El Cajon ■Imperial Beach •La Mesa •Lemon Grove Sanitation District National City •Otay Water District •Poway ■Padre Dam Municipal Water DistrictCountyofSanDiego,representing East Otay,Lakeside/Alpine,Spring Vafley &Winter Gardens Sanitation Districts -7- EXHIBIT E Jerrold L Jones Chair, Metro Wastewater JPA/Commission 3232 Main Street Lemon Grove, CA 91945 May 20,2018 The Honorable Mayor Kevin Faulconer 202 C Street, 11th Floor San Diego, CA 92101 Mayor Faulconer, As financial partners of the City, Metro JPA's twelve member agencies support Pure Water and its significant environmental and sustainability benefits for the region. The 1998 Regional Wastewater Disposal Agreement between the City of San Diego and the Metro JPA members did not anticipate the complexity of the Pure Water project and must be updated prior to San Diego City Council's authorization of the $1.4B in Pure Water construction contracts. The updated/amended Disposal Agreement should define cost allocation for water and wastewater facilities prior to building these facilities. All plans and impacts moving forward must be clear to all stakeholders, including JPA wastewater ratepayers as well as San Diego's own wastewater ratepayers. Public Utilities staff and the City Attorney's Office have already been working for months with Metro JPA representatives on agreeable terms. While acceptable progress has been made, we are concerned that that a secured agreement within the City's aggressive timeline to bid construction contracts may be difficult if not impossible. JPA representatives would like to meet with you and your staff to discuss: The importance of an updated disposal agreement and mechanism's or instruments that will address securing an updated agreement while maintaining the City's Pure Water timeline. Mitigation of future costs through value engineering and planning in the event that federal legislation authorizing secondary equivalency cannot be secured. Even with secured secondary equivalency it is important to insure that we are not missing cost savings and design opportunities in Phase 1 by looking ahead to Phase 2. We are concerned that some North County agencies using the San Elijo and Encina plants are currently paying less for full secondary treatment than agencies using the advanced primary treatment of the Metro system, even before the costs of Pure Water are added. With or without secondary equivalency, JPA engineers believe that there are sound engineering options for a capacity and facility downsize of Point Loma that are more economically sound and environmentally responsible than maintaining current facility size, costs and capacity. JPA staff are currently working with City staff on a study to explore this. We believe it is vital that we share progress and our thoughts on this collaboration with you and your staff so that your input can be included early in this process. Jerry Jones Metro Wastewater JPA/Commission Chair STAFF REPORT TYPE MEETING: Regular Board Meeting MEETING DATE: August 1, 2018 SUBMITTED BY: Mark Watton, General Manager W.O./G.F. NO: DIV. NO. APPROVED BY: Susan Cruz, District Secretary Mark Watton, General Manager SUBJECT: Board of Directors 2018 Calendar of Meetings GENERAL MANAGER’S RECOMMENDATION: At the request of the Board, the attached Board of Director’s meeting calendar for 2018 is being presented for discussion. PURPOSE: This staff report is being presented to provide the Board the opportunity to review the 2018 Board of Director’s meeting calendar and amend the schedule as needed. COMMITTEE ACTION: N/A ANALYSIS: The Board requested that this item be presented at each meeting so they may have an opportunity to review the Board meeting calendar schedule and amend it as needed. STRATEGIC GOAL: N/A FISCAL IMPACT: None. LEGAL IMPACT: None. Attachment: Calendar of Meetings for 2018 G:\UserData\DistSec\WINWORD\STAFRPTS\Board Meeting Calendar 8-01-18.doc Board of Directors, Workshops and Committee Meetings 2018 Regular Board Meetings: Special Board or Committee Meetings (3rd Wednesday of Each Month or as Noted) January 3, 2018 February 7, 2018 March 7, 2018 April 4, 2018 May 2, 2018 June 6, 2018 July 11, 2018 August 1, 2018 September 5, 2018 October 3, 2018 November 7, 2018 December 5, 2018 January 17, 2018 March 21, 2018 March 21, 2018 April 18, 2018 May 23, 2018 June 20, 2018 July 18, 2018 August 15, 2018 September 19, 2018 October 17, 2018 November 21, 2018 December 19, 2018 SPECIAL BOARD MEETINGS: July 30, 2018 at 3:00 p.m.: Special Board Meeting – Tour of Layfield Group Facilities August 6, 2018 at 8:00 a.m.: Special Board Meeting – Tour of the City of San Diego’s South Bay Water Reclamation Plant and the IBWC’s Wastewater Treatment Plant BOARD WORKSHOPS: STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: August 1, 2018 SUBMITTED BY: Bob Kennedy Engineering Manager CIP./G.F. NO: P1210-010000 DIV. NO. ALL APPROVED BY: Rod Posada, Chief, Engineering Mark Watton, General Manager SUBJECT: Informational Item - Status of the District’s Efforts to Expand the Use of Recycled Water GENERAL MANAGER’S RECOMMENDATION: No recommendation. This is an informational item only. COMMITTEE ACTION: Please see Attachment A. PURPOSE: To update the Otay Water District (District) Board of Directors (Board) on the status of the District’s efforts to expand the use of recycled water. ANALYSIS: REGIONAL STUDIES FOR THE SOUTH BAY There have been many studies to look at irrigation demands and groundwater reuse in the South Bay. A summary table of some of the studies is provided below. The studies contain overlapping service areas and portions of the recycled water demands listed in one study are contained in another study. 2 Studies Estimating Reclaimed Water Demands for Irrigation and Groundwater Recharge Study Irrigation Service Area Estimated Demand (Average Annual) Chula Vista Master Plan (1990) Chula Vista Sphere of Influence Otay Mesa 16.3 MGD (18,256 AFY) Otay Water District Master Plan and Optimization Study (1995) Eastern Chula Vista Otay River Valley Otay Mesa 4.3 MGD (4,816 AFY) San Diego Reclaimed Water Market Assessment Update Dated March 1995 (see Exhibit A) Otay Mesa Otay River Valley Eastern Imperial Beach Tijuana River Valley 13.5 MGD (15,070 AFY) Spring Valley Sanitation District Water Reclamation Facility Project Feasibility Report Dated May 1997 (see Exhibit B) Spring Valley Lower Sweetwater River Otay River Valley 5.18 MGD (5,800 AFY) South Bay Reclaimed Water Business Plan Dated November 1998 (see Exhibit C) South Bay and Tijuana 5.4 MGD (6,000 AFD) SWEETWATER AUTHORITY (SWA) PROJECTS In addition to the regional studies above, the District and SWA have looked at a reservoir augmentation study for Sweetwater Reservoir entitled, “Feasibility of IPR/DPR - RWCWRF Purification Plant to Sweetwater Reservoir” (see Exhibit D). Several options were investigated with an estimated unit potable water cost range of $3,450 to $4,780 per acre-feet. Two issues that greatly impact planning level costs developed are the disposal of brine from the treatment process and assumptions on the IPR/DPR treatment process. The report also noted potential regulatory issues that still need to be resolved including 3 staffing requirements, limitations on the withdrawal of water from Sweetwater Reservoir, meeting the Basin Plan Standards and California Toxics Rule. District staff periodically receives a phone call from an irrigation well operator from the San Diego County Club, which is within SWA’s service area, asking about the availability of recycled water. They are notified where District facilities are located and asked to contact SWA. DISTRICT PROJECTS AND STUDIES The District has considered many projects to increase the use of recycled water including the following items that were presented to the Board: North District Recycled Water Regulatory Compliance System Development Project, Phase I Concept Study (see Exhibit E). On September 2, 2009, Board of Directors Policy 52 for District Administration of Recycled Water Retrofit Program was adopted. In addition to the extension of the recycled water pipeline to Southwestern College and Bonita Vista High School, staff formulated a grant program to assist users with the cost of retrofitting existing potable irrigation systems to recycled irrigation systems (see Exhibit F). An update was presented to the Board on June 5, 2013 for the Recycled Water Retrofit Program R2094 for four (4) Homeowners Associations which entered into agreements with the District for conversion projects. Based on the experience with the pilot program, the costs associated with the implementation of the retrofit program at existing multi-family developments outweighed the overall benefits for the District (see Exhibit G). Expansion of the recycled water system to Otay Mesa, which resulted with the Permanent Moratorium on the Installation of New Recycled Water Facilities on Otay Mesa (see Exhibit H). Restricted use of recycled water for the Water Supply Assessment and Verification Report for Village 14 and PA 16-19 (see Exhibit I). Restricted use of recycled water for the Water Supply Assessment and Verification Report for Otay Ranch Resort Village Project (see Exhibit J). RECYCLED WATER FIRE HYDRANT INSTALLATION The District established a project that included obtaining regulatory approval, establishing the protocol for use and the 4 site selection for a fire hydrant fill station. One station was built at the end of Hunte Parkway. Information on CIP R2122 includes: Information included in the GM report to the Board (see Exhibit K) Email from the Regional Water Quality Control Board approving the installation of the Fill Station (see Exhibit L) Email noting the City of Chula Vista’s decision not to use the fill station for storm drain cleaning, sewer cleaning, and also for street sweeping (see Exhibit M) Email from the Fire Department that they decided not to use the fill station for filling their fire tanker vehicles (see Exhibit N) Photos of the fill station (see Exhibit O) Staff continues to look for opportunities to expand the use of recycled water. FISCAL IMPACT: Joe Beachem, Chief Financial Officer No fiscal impact as this is an informational item only. STRATEGIC GOAL: This Project supports the District’s Mission statement, “To provide high value water and wastewater services to the customers of the Otay Water District in a professional, effective, and efficient manner” and the General Manager’s Vision, “A District that is at the forefront in innovations to provide water services at affordable rates, with a reputation for outstanding customer service.” LEGAL IMPACT: None. BK/RP:jf P:\Bob Kennedy\Recycled Water Alternative Uses\Staff Report\08-01-18 Staff Report Recycled Water Alternative Use Info Item-(BK).doc Attachments: Attachment A – Committee Action Exhibit A – San Diego Reclaimed Water Market Assessment Update Dated March 1995 Exhibit B – Spring Valley Sanitation District Water Reclamation Facility Project Feasibility Report Dated May 1997 Exhibit C – South Bay Reclaimed Water Business Plan 5 Exhibit D – Feasibility of IPR/DPR - RWCWRF Purification Plant to Sweetwater Reservoir Exhibit E – North District Recycled Water Regulatory Compliance System Development Project, Phase I Concept Study Exhibit F – District Administration of Recycled Water Retrofit Program Exhibit G – Update for the Recycled Water Retrofit Program Exhibit H – Permanent Moratorium on the Installation of New Recycled Water Facilities on Otay Mesa Exhibit I – Water Supply Assessment and Verification Report for Village 14 and PA 16-19 Exhibit J – Water Supply Assessment and Verification Report for Otay Ranch Resort Village Project Exhibit K – GM Reports to the Board Exhibit L – Email from the Regional Water Quality Control Board approving the installation of the Fill Station Exhibit M – Email noting a phone call with the City of Chula Vista Exhibit N – Email from the Fire Department Exhibit O – Photos of Fill Station ATTACHMENT A SUBJECT/PROJECT: P1210-000000 Informational Item - Status of the District’s Efforts to Expand the Use of Recycled Water COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) reviewed this item at a meeting held on July 16, 2018 and the following comments were made: Staff reviewed the staff report with the Committee as an informational item. There was a discussion on regional studies for the South Bay, Sweetwater Authority projects, District projects and studies, and recycled water fire hydrant. The Committee commented on reclaimed water use restrictions implemented by state legislators and local agencies. There was a discussion on how the restrictions negate staffs’ efforts to expand the use of recycled water. The Committee inquired about the San Diego Reclaimed Water Market Assessment and how many recycled water customers the City of San Diego are serving from the South Bay Water Reclamation Plant. Staff stated that the City currently has only a few recycled water irrigation customers. At one time, the International Boundary and Water Commission’s International Wastewater Treatment (IBWC) Plant was the largest user. However, IBWC in now able to produce enough recycled water internally, to backwash their filters, and today receive very little water from the City of San Diego. The Committee asked about recycled water use in the northern service area of the District, specifically about the Steel Canyon Golf Course. Staff indicated that the County had originally used potable water to irrigate the golf course, then eventually switched to local wells as an irrigation resource. The Committee asked staff to investigate the conditions imposed by the County and prepare a summary of any reports that might be available on the local groundwater basin. The Committee inquired about the status of the recycled water connection to Southwestern College. Staff stated that Southwestern College is close to completing the interior pipelines on campus before a recycled water meter can be set. The Committee commended staff for their effort to convert potable irrigation customers to recycled water with demands as low as 62 acre-feet per year. This was a pilot program for homeowner associations, which was determined by staff that this program was not cost effective for the District. In response to the Committee’s inquiry about the District’s efforts to promote the use of recycled water during calls for water restrictions or changes to recycled water policy by the regulatory agencies, staff has attached five typical letters to this committee action report: o The attached letter (Attachment A-1) dated February 12, 2015 was sent to the Regional Water Quality Control Board as a joint comment letter from the San Diego County Water Authority and the District requesting revisions to the “Landscape Irrigation with Recycled Water” section necessary to maintain existing recycled water use within the region and to offer opportunities for expanded recycle water use. o The attached letter (Attachment A-2) dated September 15, 2016 was sent to the Department of Water Resources as a joint comment letter from the San Diego County Water Authority and also signed by the District. This letter was supporting the exclusion of recycled water from an agency total water use when determining compliance with the proposed outdoor landscape water use budget being developed. o A letter dated December 19, 2016 (Attachment A-3) was sent to the State Water Resources Control Board directly from the District. This was on “Making Water Conservation a California Way of Life: Implementing Executive Order B- 37-16” that noted efficiency, by itself, will not result in a resilient water supply that can alleviate severe shortage situations. It also notes the District’s investment in water recycling that helped increase the District’s self-reliance. o A letter dated June 26, 2018 (Attachment A-4) was sent to the State Water Resources Control Board as a joint comment letter from the San Diego County Water Authority, local sister agencies, and the District. This letter supports changes to the Recycled Water Policy with the goal of increasing recycled water use in California. o On June 26, 2018, a joint comment letter (Attachment A-5) prepared by ACWA, WateReuse, CASA and CMUA was sent to the State Water Resources Control Board. They also support amendments to the Recycled Water Policy to maximize the beneficial use of recycled water in California. Following the discussion, the Committee asked staff to make a presentation of this item to the full board as an informational item. STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: August 1, 2018 SUBMITTED BY: Mark Watton General Manager W.O./G.F. NO: N/A DIV. NO. N/A APPROVED BY: Mark Watton, General Manager SUBJECT: General Manager’s Report ADMINISTRATIVE SERVICES: Human Resources: Employee Recognition Luncheon - Mark your calendars to attend the District’s annual Recognition Luncheon and BBQ scheduled for Tuesday, October 9th at 11:30 a.m. at the Operations Center. Benefits Pre-Renewal Meeting – HR staff met with Alliant, our benefits consultant, in preparation for our annual renewal and benefits open enrollment that is held in October. Labor Negotiations – Negotiations with the Otay Water District Employees’ Association began in late June, with additional meetings scheduled in late July and late August. Recruitments/New Hires/Promotions: o The Recycled Water Specialist, Customer Service Field Representative II, and one Utility Worker I began in July. o The District is recruiting for: Meter Maintenance Worker I/II and Reclamation Plant Operator II/III. o These vacancies are critical to District operations. IT Operations: Office 365 Cloud Email - Staff completed the deployment and migration of the District’s corporate email to Microsoft Office365 (O365). Within the next several weeks, staff will also deploy the latest Office productivity applications to District users. Given 2 O365 quarterly retention parameters, the District’s email retention has now changed from 100 to 120 days. Purchasing & Facilities: Salt Creek Gate Security and Access Control – A new electric gate is now operational at the entrance to the Salt Creek property. With clicker, FOB or keypad code, authorized individuals are granted access through the District’s alarm and access management software, Entré. Contactors and tenants requiring entry are given a five digit keypad code. Should the gate be forced open or held open for an extended period of time, an alarm is generated along with video which are sent to the central monitoring station and a designated Otay staff member. During an ongoing review period and with each authorized entry, an email and text is sent to designated Otay staff, which include a link to a record of the event as well as a live feed. Administration Building Rekey Project – In an effort to enhance security and place greater control over master keys, the Administration building has been rekeyed by section: General Manager’s area, Finance, Engineering, and Admin Services. Each office is individually keyed and each section has its own master key controlled by section managers and Chiefs. An Admin master key over all sections is controlled through Facilities and Senior staff. BidSync Solicitations – During this reporting period there were no solicitations active on BidSync. Safety & Security: The Southern California Water Regional Resilience (RRAP) - Staff attended the RRAP status report and workshop on information security for water utilities. The RRAP program assessment was conducted and completed by scientists from the Argonne National Laboratory, led by Dr. John R. Hummel (Otay participated), and its focus is on the impacts of extreme event on the resilience of Southern California water systems. The goal of this program is to provide stakeholders insights on how to improve the resilience and security of the water systems. The District was highlighted and commended for its security program and electronic availability of its condensed emergency response plan and the 14 probable emergency incidents and response procedures. Regulatory Training - The District’s 12 member HAZWOPER and Confined Space emergency rescue team completed advanced confined space rescue training techniques and practical hands-on exercises. These exercises are completed to assist in keeping emergency response skills keen, refresh training, and lead to a more 3 efficient and effective response when the need to respond to an emergency arises. Monthly WebEOC Exercise – Staff completed the July monthly WebEOC exercise, which consisted of: “Creating and downloading a photo log for an emergency event and share it with the Water Hub. Include “test” in the title”. The exercise was completed successfully. Safety Committee – The District’s Safety Committee held its quarterly meeting on Wednesday, July 18th. Topics discussed included: Utility Maintenance’s evaluation and testing of heat illness prevention PPE’s; current hard hats in use; respiratory protection requirements and job descriptions; “Supervisors Safety Bulletin” and “Safety Compliance Alert” publications and the opportunity to add electronically to SharePoint; and FEMA Emergency Training reminder. FINANCE: Salt Creek Exit – Staff has sent a draft release agreement to Highlands Golf and is going through steps to settle the terms of the release. Water Rate Increase Notices and Sewer 218 Notices – Both the water and sewer notices were finalized and mailed with customer bills beginning in mid-July and will be completed by mid-August. The Proposition 218 hearing for sewer customers is scheduled for October 3, 2018. Remarketing Agent – Staff has obtained three bids for remarketing agents for the 1996 COPS due to Union Bank, the current agent is exiting this business. Staff is in the process of reviewing the selection with the District’s Financial Advisor. Financial Reporting: o For the twelve months ending June 30, 2018, there are total revenues of $104,829,583 and total expenses of $101,136,518. The revenues exceeded expenses by $3,693,065. o The market value shown in the Portfolio Summary and in the Investment Portfolio Details as of June 30, 2018 total $89,140,820 with an average yield to maturity of 1.504%. The total earnings year-to-date are $1,082,120. 4 ENGINEERING AND WATER SYSTEM OPERATIONS: ENGINEERING: 870-2 Pump Station Replacement: This project consists of a new pump station to replace the existing Low Head 571-1 and High Head 870-1 Pump Stations. The project also includes the replacement of the existing liner and cover for the 571-1 Reservoir (36.7 MG). During the month of July 2018, Pacific Hydrotech completed work to place reinforcing steel, place forms and pour the concrete for the east galley wall. The contractor took delivery and began installation work for the pump station suction header and pump cans. Pavement restoration work for the access road located immediately around the 571-1 Reservoir was also completed during July 2018. Pump station specific submittals are in progress. The project is within budget and scheduled to complete in October 2019. (P2083 & P2562) SR-11 Utility Relocations: This project consists of relocating several District potable water pipelines located in Otay Mesa Road, Sanyo Avenue, Enrico Fermi Drive, Alta Road, and within District easements. The first two rounds of relocations (Caltrans Utility Agreement Numbers 33592 and 33622) were completed in FY 2016. Caltrans approved the District’s water main relocation consultant’s (NV5) drawings for the relocations in Enrico Fermi Drive and Alta Road on May 29, 2018. Caltrans has scheduled the start of construction in the fall of 2019. A Utility agreement corresponding to the final design was approved by the Board on July 11, 2018. (P2453) 978-1 & 850-2 Reservoir Interior/Exterior Coatings & Upgrades: This project consists of removing and replacing the interior and exterior coatings of the 978-1 (0.5 MG) Reservoir and the 850-2 (3.1 MG) Reservoir along with providing structural upgrades to ensure the tanks comply with both state and federal OSHA standards as well as the American Water Works Association and the County Health Department standards. The 978-1 Reservoir was placed back in service in July 2017. The 850-2 Reservoir was placed back in service on January 12, 2018. Contract acceptance and recordation of the Notice of Completion by the District was completed on May 31, 2018. Project delivery by the contractor was behind schedule due to contractor coordination. As a result, the District has assessed liquidated damages for late delivery of the project starting in September 2017 through substantial completion, which occurred when the 850-2 Reservoir was placed back in service on January 12, 2018. The contractor has sent claims correspondence to the District disputing the assessment of liquidated damages. The District’s construction manager for the project has issued the Engineer’s Entitlement Decision denying the claims. The contractor has filed 5 for mediation on the project. Mediation is scheduled for August 2018. The project is within budget. (P2534 & P2544) Campo Road Sewer Replacement: The existing sanitary sewer from Avocado Road to Singer Lane is undersized and located in environmentally sensitive areas that are difficult to access. The Campo Road Sewer Replacement project will install approximately 7,420 linear feet of new 15-inch gravity sewer pipe and includes abandonment of the existing sewer main. In July 2018, work continued at the Rancho San Diego Village shopping center. Work at the shopping center included installation of the new sewer main, which is approximately 30-feet deep. This work is occurring at night to minimize impacts to the shopping center. During July 2018, the sewer installation work progressed to the shopping center’s main entrance. This is one of four entrances to the shopping center. Staff is coordinating the work and the closure of the driveway entrance with the property management of the Rancho San Diego Village Shopping Center. The project is within budget and the overall project is scheduled for completion in May 2019. (S2024) Hillsdale Road Potable Water and Sewer Replacement: The existing water line in Hillsdale Road between Jamacha Road and Vista Grande Road has experienced several leaks and is nearing the end of its useful life. This project consists of replacing approximately 4,050 linear feet of steel water line with a 12-inch Polyvinyl Chloride (PVC) water line. The project also includes the replacement of approximately 760 linear feet of 8-inch PVC sewer within Hillsdale Road. During July, the contractor completed the trench pavement restoration work along with the pavement replacement work in the area that fronts Valhalla High School. It is anticipated that punch list work for the project will complete in early August 2018. The project is within budget. The District’s pavement repair work on Hillsdale Road is being coordinated with the County of San Diego’s Hillsdale Road asphalt pavement overlay project. The County’s project will begin once the District’s work is complete. (P2573 & S2048) Vista Vereda and Hidden Mesa Water Pipelines Replacement: The existing 1950’s steel water line along Vista Vereda between Vista Grande Road and Hidden Mesa Trail in the Hillsdale area has experienced leaks and is nearing the end of its useful life. The existing water main is located primarily within easements, many of which have had significant improvements performed over the years since the water line was constructed. Through the District’s As- Needed Engineering Design contract, a Task Order was issued on May 2, 2017 to Rick Engineering to design the project. A community meeting was held on February 10, 2018. Staff continues to discuss the project with property owners who have requested additional 6 information with a letter distributed in May 2018 updating them on the alignment changes at the 60% design. A follow up letter is currently being composed with more detailed impacts to individual properties. In March, the 60% design was reviewed and potholing of existing utilities performed to verify proposed water line alignments. The 90% design was reviewed in June and preparation of the final design is currently in progress. County permits applications were submitted in July 2018. A negative declaration for the project is scheduled to be out for public review in early August. The project is on schedule for completion of the design in July 2018 (the community outreach efforts delayed this a month from the original schedule). (P2574 & P2625) Fuerte Drive Sewer Relocation Project: The County of San Diego has designated a section of Fuerte Drive west of Calavo Drive at the intersection of Fuerte Drive and Alzeda Drive for road realignment for safety issues, prompting the relocation of approximately 255 linear feet of 8-inch sewer. During July 2018, Burtech Pipeline, Inc., the District’s construction contractor for the project, completed the sewer relocation work and punch list items associated with the work on Fuerte Drive. The project is within budget. (S2045) OWD Administration and Operations Parking Lot Improvements, Phase II – Pavement Restoration: Phase I of this project, completed in October 2017, upgraded the parking lot light fixtures in both the Administration and Operations lots. Phase II consists of repairing the asphalt concrete paving, slurry sealing, and restriping both asphalt concrete parking lots. In addition to the pavement improvements, a carport will be installed to protect the larger fleet vehicles, and gates will be installed to better secure the Operations parking lot. During July 2018, Frank and Son Paving, Inc., the District’s construction contractor for the OWD Administration & Operations Parking Lot Improvements, PH. II – Pavement Restoration project, continued working on submittals for the project including the equipment canopy for the Operations Yard. The pavement restoration work and striping will be performed during weekends to minimize disruption to customers and the District’s employees. It is anticipated that the contractor will begin the pavement seal work in early August and complete the project in September 2018. The project is within budget. (P2555) 980-2 Reservoir Interior/Exterior Coating and Upgrades: This project consists of removing and replacing the interior and exterior coatings of the 980-2 (5.0 MG) Reservoir, along with providing structural upgrades, to ensure the tank complies with both state and federal OSHA standards as well as the American Water Works Association and the County Health Department standards. During the month of July 2018, the contractor completed interior final coating 7 of the reservoir and the reservoir floor. The contractor also began the exterior coating work. It is anticipated that the exterior coating work will complete in early August 2018. The project is within the approved budget and scheduled to complete in August 2018. (P2546) Rancho San Diego Pump Station Rehabilitation: On April 30, 2014, the District and the San Diego County Sanitation District (Sanitation District) executed a reimbursement agreement for the improvements to the Rancho San Diego Pump Station. The Sanitation District awarded a construction contract to TC Construction Company, Inc. on September 14, 2016. Construction is substantially complete and in operation, the contractor completed site work and punch list items in July 2018. A meeting between the County and District operators will be held in early August 2018 at the pump station to confirm coordination between the station and RWCWRF with the new improvements. (S2027) Temporary Lower Otay Pump Station Redundancy: This project will add a second pump to the District’s existing temporary Lower Otay Pump Station (TLOPS) to provide redundancy. District staff received two (2) informal quotes to deliver a trailer mounted engine and pump. A staff report for the material procurement was presented to the Committee on July 16, 2019 and August 1, 2019 Board. The District’s as-needed hydraulic modeling consultant’s (WSC) subconsultant (Scott Foster Engineering, Inc.) completed a draft surge analysis on July 11. A task order was issued to the District’s as-needed electrical engineering design consultant (BSE Engineering, Inc.) on July 11, 2019. District staff has been progressing the civil and mechanical design in-house. A public works bid package including grading, mechanical, electrical, instrumentation & control, and installation of the trailer will be awarded in the January 2019 timeframe. District staff met with the City of San Diego to discuss possible modifications to the existing water purchase agreement on June 26, 2019. (P2619) Pipeline Cathodic Protection Replacement Program: This project includes repairs to existing cathodic protection systems such as anode replacement, cathodic test station repairs, retrofit/repair of isolation kits, and repair of existing impressed current systems and anode beds. The first phase was completed on the District’s 1980 era RWCWRF 14-inch force main in 2017. A portion of the second phase was bid and awarded with the District’s 870-2 Pump Station project. The award for the remainder of the second phase was approved at the July 11, 2018 Board meeting. (P2508) Interconnect Airvac Valve Replacement Project: This project includes the replacement of existing combination air-vac valves along existing 30-inch transmission mains between the 624-3 (aka 8 Eastlake or 30 MG) Reservoir and the Upper Reservoir with slow closing surge style combination air-vac valves to support the 870-2 Pump Station operations. The award of a construction contract to M- Rae Engineering, Inc. for this project was approved at the June 6, 2018 Board meeting. It is anticipated that work will begin in August 2018. This project is on schedule and within the approved budget. (P2623) 571-1 Reservoir Cover/Liner Replacement: The project included the replacement of the existing liner and cover for the 571-1 Reservoir (36.7 MG). Pacific Hydrotech completed the reconstruction of the earthen reservoir wall that was removed to complete the pipe installation within the 571-1 Reservoir limits. Pacific Hydrotech also completed the installation of the new reservoir liner and cover. In recognition of a successful project, Layfield USA Corporation presented the District with a photograph of the completed project. (P2562) For the month of June 2018, the District sold 84 meters (132 EDUs), generating $1,153,692 in revenue. Projection for this period was 23.6 meters (30.8 EDUs), with budgeted revenue of $270,083. Total revenue for Fiscal Year 2018 is $9,411,882 against the annual budget of $3,241,000. WATER SYSTEM OPERATIONS (reporting for June): On June 6, Water System Operations staff assisted the Inspection Section staff with a planned shutdown for a developer project in the Town Center shopping center to cut in a new connection tee for the 12-inch Town Center Drive water relocation. The shutdown did not impact any customers. On June 13, the City of San Diego Wastewater Treatment Plant notified staff of a planned shutdown for Thursday, June 21 from 3:00 AM to 3:00 PM for UV channel cleaning, inspection and upgrade. On June 21, staff responded to the Woodbridge Apartment complex at 10874 Calle Verde in La Mesa due to a pipe failure on the customer’s side during a large meter change out. Fifty units were affected from 6:00 PM to 10:00 PM and a water trailer was on site for those affected. On July 16, Cal/OSHA has offered to withdraw the citation issued to the Ralph W. Chapman Water Recycling Facility providing the District does not attempt to collect its legal fees from them. The District is in the process of obtaining settlement documents with Cal/OSHA. The settlement documents will illustrate that the 9 District was incorrectly cited during the unannounced inspection that occurred on May 25, 2017. Purchases and Change Orders: The following table summarizes purchases and Change Orders issued during the period of June 18, 2018 through July 11, 2018 that were within staff signatory authority: Date Action Amount Contractor/ Consultant Project 06/18/18 P.O. $1,050.00 Technowsion, Inc. SCADA Services 06/20/18 P.O. $2,590.00 Timmons Group, Inc. Professional Services 06/21/18 P.O. $3,794.96 DPI Direct Printing Services 06/26/18 P.O. $2,600.00 Wageworks, Inc. Flexible Spending Account 06/26/18 P.O. $401.25 A&D Fire Sprinklers, Inc. Fire Sprinkler Inspection 06/26/18 P.O. $850.00 Jenel Engineering Corp. SB989 Certification 06/26/18 P.O. $8,151.00 American Digital Cartography Software License Renewal 06/26/18 P.O. $10,500.00 Innovyze, Inc. License Renewal 06/26/18 P.O. $11,932.14 DLT Solutions, LLC Software Subscription 06/26/18 P.O. $40,000.00 IWater, Inc. Annual Site License 06/26/18 P.O. $4,887.00 SC Supply Company, LLC Safety Cones 06/27/18 P.O. $28,000.00 Environmental Systems Research Institute ESRI Enterprise Program 06/27/18 P.O. $577.20 Pacific Trans Environmental Waste Removal 06/27/18 P.O. $413,123.59 Special District Risk Management Authority 2018-19 Workers’ Compensation Program 06/28/18 P.O. $1,469.62 Lynn’s Locksmith Service Administrative Building Re-Key 06/28/18 P.O. $2,700.00 IWater, Inc. InfraMap Enhancement 06/29/18 P.O. $2,744.94 Jenal Engineering Corp. SB989 Testing 06/29/18 P.O. $5,050.00 Aztec Fence Co II, Inc. Gate Installation 10 Water Conservation and Sales: Water Conservation – June 2018 usage was 16% lower than June 2013. Since June 2017, customers have saved an average of 7% over 2013 levels. 06/29/18 P.O. $3,919.40 GHA Technologies, Inc. Veritas Essential Support 06/29/18 P.O. $3,957.15 Pacific Trans Environmental Waste Disposal 06/29/18 P.O. $5,940.00 Safety-R-Us, LLC Training 07/05/18 P.O. $9,058.27 Sympro, Inc. Software Maintenance 07/05/18 P.O. $19,280.30 Gexpro Software Maintenance 07/09/18 P.O. $141,198.27 Tyler Technologies, Inc. Software Maintenance/Support 07/09/18 P.O. $211,534.47 Software One, Inc. MS Software Maintenance 07/09/18 P.O. $60,000.00 Azteca Systems, LLC Cityworks Licenses & Support 07/11/18 P.O. $7,000.00 Nightcoders Website Professional Services 11 June potable water purchases were 2,706.1 acre-feet which is 2.2% above the budget of 2,648.4 acre-feet. The cumulative purchases through June were 29,637.9 acre-feet which is 10.8% above the cumulative budget of 26,758.6 acre-feet. The June recycled water purchases and production were 498.2 acre- feet which is 22.1% above the budget of 408.1 acre-feet. The cumulative production and purchases through June were 4,220.7 acre- feet which is 13.8% above the cumulative budget of 3,710.1 acre- feet. 12 Potable, Recycled, and Sewer (Reporting up to the month of June): Total number of potable water meters: 50,247. Total number of sewer connections: 4,722 Recycled water consumption for the month of June: o Total consumption: 411.7 acre-feet or 134,088,724 gallons. o Average daily consumption: 4,469,624 gallons per day. o Total cumulative recycled water consumption since July 1, 2017: 4,157.6 acre-feet. o Total number of recycled water meters: 729. Wastewater flows for the month of June: o Total basin flow: 1,507,400 gallons per day. This is a decrease of 6.43% from June 2017. o Spring Valley Sanitation District Flow to Metro: 500,724 gallons per day. o Total Otay flow: 1,006,533 gallons per day. o Flow Processed at the Ralph W. Chapman Water Recycling Facility: 899,833 gallons per day. o Flow to Metro from Otay Water District: 106,700 gallons per day. By the end of June there were 6,739 wastewater EDUs. $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 -$1,000,000 -YTD Actual Net Revenues -YTD Budget Net Revenues -YTD Variance in Net Revenues COMPARATIVE BUDGET SUMMARY NET REVENUES AND EXPENSES FOR THE TWELVE MONTHS ENDED JUNE 30, 2018 The year-to-date actual net revenues through June show a positive variance of $3,693,064. REVENUES: Potable Water Sales $ Recycled Water Sales Potable Energy Charges Potable System Charges Potable MWD & CW A Fixed Charges Potable Penalties Total Water Sales Sewer Charges Meter Fees Capacity Fee Revenues Non-Operating Revenues Tax Revenues Interest Total Revenues $ EXPENSES: Potable Water Purchases $ Recycled Water Purchases CWA-Infrastructure Access Charge CW A-Customer Service Charge CWA-Reliability Charge CWA-Emergency Storage Charge MWD-Capacity Res Charge MWD-Readiness to Serve Charge Subtotal Water Purchases Power Charges Payroll & Related Costs Material & Maintenance Administrative Expenses Legal Fees Expansion Reserve Betterment Reserve Replacement Reserve OPEB Trust New Supply Reserve Total Expenses $ EXCESS REVENUES(EXPENSE) $ F:/MORPT /FS20 18-0618 OT A Y WATER DISTRICT COMPARATIVE BUDGET SUMMARY FOR TWELVE MONTHS ENDED JUNE 30,2018 Annual Budget Actual Budget 49,251,200 $ 54,262,051 $ 49,251,200 9,863,100 10,463,863 9,863,100 1,925,500 2,040,410 1,925,500 12,917,600 13,078,386 12,917,600 12,030,400 11,920,268 12,030,400 911,600 830,217 911,600 86,899,400 92,595,195 86,899,400 2,869,400 2,838,212 2,869,400 103,100 283,500 103,100 1,513,200 1,612,361 1,513,200 2,164,500 2,790,579 2,164,500 4,396,100 4,500,787 4,396,100 302,500 208,948 302,500 98,248,200 $ I 04,829,583 $ 98,248,200 34,225,800 $ 37,925,100 $ 34,225,800 3,716,700 3,793,237 3,716,700 2,080,200 2,071,740 2,080,200 1,682,400 I ,670,281 1,682,400 1,908,000 1,909,909 1,908,000 4,486,800 4,510,642 4,486,800 734,400 735,501 734,400 1,344,000 1,049,092 1,344,000 50,178,300 53,665,501 50,178,300 3,023,800 3,095,272 3,023,800 21,522,100 20,946,129 21,522,100 3,645,700 3,773,863 3,645,700 5,010,700 4,819,352 5,010,700 475,000 443,800 475,000 3,274,600 3,274,600 3,274,600 111,100 Ill, 100 111,100 9,787,900 9,787,900 9,787,900 998,000 998,000 998,000 221,000 221,000 221,000 98,248,200 $ 101,136,518 $ 98,248,200 $ 3,693,065 $ Exhibit A YTD Variance Var% $ 5,010,851 10.2% 600,763 6.1% 114,910 6.0% 160,786 1.2% (110,132) (0.9%) (81 ,383) (8.9%2 5,695,795 6.6% (31,188) (1.1 %) 180,400 175.0% 99,161 6.6% 626,079 28.9% 104,687 2.4% (93,552) (30.9%) $ 6,581,383 6.7% $ (3,699,300) (10.8%) (76,537) (2.1%) 8,460 0.4% 12,119 0.7% (1 ,909) (0.1 %) (23,842) (0.5%) (1,101) (0.1 %) 294,908 21.9% {3,487,2012 {6.9%2 (71,472) (2.4%) 575,971 2.7% (128,163) (3.5%) 191,348 3.8% 31,200 6.6% 0.0% 0.0% 0.0% 0.0% 0.0% $ (2,888,318) (2.9%) $ 3,693,065 7/25/2018 3:01 PM OTAY WATER DISTRICT INVESTMENT PORTFOLIO REVIEW June 30, 2018 INVESTMENT OVERVIEW & MARKET STATUS: At the most recent Federal Reserve Board's regular scheduled meeting on June 13, 2018, the federal funds rate was increased from 1.75% to 2. 00%" in view of realized and expected labor market conditions and inflation. This is the sixth federal rate increase within the last eighteen months. The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective over the medium term. The stance of monetary policy remains accommodative, thereby supporting some further strengthening in labor market conditions and a return to 2 percent inflation. In determining the timing and size of future adjustments to the target range for the federal funds rate, they went on to say: "the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. " The District's effective rate of return for the month of June 2018 was 1.49%, which was six basis points higher than the previous month. At the same time the LAIF return on deposits has improved over the previous month, reaching an average effective yield of 1.85% for the month of June 2018. Based on our success at maintaining a competitive rate of return on our portfolio during this extended period of low interest rates, no changes in investment strategy regarding returns on investment are being considered at this time. The desired portfolio mix is important in mitigating any liquidity risk from unforeseen changes in LAIF or County Pool policy. In accordance with the District's Investment Policy, all District funds continue to be managed based on the objectives, in priority order, of safety, liquidity, and return on investment. PORTFOLIO COMPLIANCE: June 30, 2018 Investment State Limit Otay Limit Otay Actual 8.01: Treasury Securities 100% 100% 0 8.02: Local Agency Investment Fund (Operations) $65 Million $65 Million $11.23 Million 8.02: Local Agency Investment Fund (Bonds) 100% 100% 0 8.03: Federal Agency Issues 100% 100% 73.01% 8.04: Certificates of Deposit 30% 15% 0 8.05: Short-Term Commercial Notes 25% 10% 0 8.06: Medium-Term Commercial Debt 30% 10% 0 8.07: Money Market Mutual Funds 20% 10% 0 8.08: San Diego County Pool 100% 100% 13.57% 12.0: Maximum Single Financial Institution 100% 50% .93% Target: Meet or Exceed 100% of LAIF 2.00 1.50 1.00 0.50 -,__ r-r--,__ r---- 0.00 l l l []_ l l a_ l l l -0.50 July Aug Sep I st Oct Nov Dec 2nd Jan Feb Performance Measure FY-18 Return on Investment -1-- f-r--'--1-r-- l a_ l l b_ tL t:L r- r- tr Mar 3rd Apr May June 4th July Aug -r-- r-r-r-- .,_ '------ Sep I st Oct Nov Qtr Qtr Qtr Qtr Qtr FYI? FYI? FYI? FYI? FYI? FYI? FYI? FYI? FYI? FYI7 FYI? FYI? FYI? FYI? FYI? FYI? FYI8 FYI8 FYI8 FYI8 FYI8 FYI8 liLA IF 0.59 0.61 0.63 0.61 0.65 0.68 0.72 0.68 0.75 0.78 0.82 0.78 0.88 0.93 0.98 0.93 1.05 1.08 1.11 1.08 1. I 4 1.17 •otay 0.95 0.92 0.97 0.94 0.95 0.99 0.97 0.97 1.00 I .13 1.09 1.07 1.14 1.11 1.14 1.13 1.11 1.01 1.14 1.09 1.1 ~ 1.17 0 Di tl'erence 0.36 0.31 0.34 0.33 0.30 0.3 1 0.25 0.29 0.25 0.35 0.27 0.29 0.26 0.19 0.16 0.20 0.06 -0.07 0,03 0.01 -0.01 0.00 Month [ •LAIF •Otay o Difference -,..---r-::- -- ------ f-r-r-r-- -r-r-r- ::r c.-T b-r T T [f r IT Dec 2nd Jan Feb Mar 3rd Apr May June 4th Qtr Qtr Qtr FYI8 FYI8 FYI8 FYI8 FYI8 FYI8 FYI 8 FYI8 FY18 FYI8 1.24 1.18 1.35 1.41 1.52 1.43 1.66 1.76 1.85 1.76 1.16 1.15 1.22 1.36 1.28 1.29 1.40 1.43 1.49 1.44 ---0.08 -0.03 -0.13 -0.05 -0.24 -0.14 -0.26 -0.33 -0.36 -0.32 $65,624,952 73.01 Otay Water District Investment Portfolio: o6/30/20t8 Total Cash and Investments: $89,882,441 (Book Value) D Banks (Passbook/Checking/CO) • Pools (LAIF & County) $837,865 $23,419,624 26.06% D Agencies & Corporate Notes Investments Federal Agency Issues-Callable Local Agency Investment Fund (LAIF) San Diego County Pool Investments Cash Passbook/Checking (not inclyded in yield calculations) Total Cash and Investments Total Earnings Current Year Average Daily Balance Effective Rate of Return June 30 Par Value 65,625,000.00 11,225,096.37 12,194,528.19 89,044,624.56 837,864.75 89,882,489.31 Month Ending 108,442.90 88,805,077.34 1.49% OTAY Portfolio Management Portfolio Summary June 30, 2018 Market Book Value Value 64,967,884.85 65,624,952.10 11,204,070.29 11 ,225, 096.37 12,131,000.00 12,194,528.19 88,302,955.14 89,044,576.66 837,864.75 837,864.75 89,140,819.89 89,882,441.41 Fiscal Year To Date 1 ,082,119.85 85,971,862.08 1.26% %of Days to YTM YTM Portfolio Term Maturity 360 Equlv. 365 Equiv. 73.70 1,009 411 1.351 1.370 12.61 1 1 1.829 1.854 13.69 1.880 1.906 100.00% 744 303 1.484 1.504 0.331 0.336 744 303 1.484 1.504 Fiscal Year Ending 1 ,082,119.85 I hereby certify that the investments contained in this report are made in accordance with the District Investment Policy Number 27 adopted by the Board of Directors on May 2, 201 B. The market value inform ion provided bY. In ractive Data Corporation. The investmen~z;~ j';~t liquidity to meet the cash flow requirements of the District for the next six months of expenditures. Reporting period 06/01/2018-06/30/2018 Run Date: 07/20/2016. 14:54 Portfolio OT A Y AP PM (PRF_PM1) 7.3.0 Report Ver. 7.3.5 CUSIP Investment# Federal Agency Issues-Callable 3133EGJUO 3130A6KR3 3134G8XA2 3133EGBG9 3130A9C90 3135GOG64 3136G2R66 3134G9ZR1 3132XORZ6 3134G9AW7 3130A7WK7 3133EGCZ6 3133EGGS6 3134G9SL2 3133EGJR7 3136G33N3 3136G33N3 3136G33N3 3136G34U6 3133EGWF6 3130A9NJ6 3136G4DR1 3136G4DZ3 3136G4FY4 3130AABM9 3136G4JU6 3135GOS53 3136G4MA8 3134GSHT5 3130ADQH6 3134GB4S6 3134GSHS7 3130ADC26 2362 2358 2348 2354 2366 2336 2334 2360 2380 2347 2352 2357 2359 2356 2361 2364 2365 2366 2367 2369 2371 2373 2370 2372 2374 2375 2377 2379 2366 2384 2361 2385 2382 Issuer Federal Farm Credit Bank Federal Home Loan Bank Federal Home Loan Mortgage Federal Farm Credit Bank Federal Home Loan Bank Fannie Mae Fannie Mae Federal Home Loan Mortgage Federal Agricultural Mortgage Federal Home Loan Mortgage Federal Home Loan Bank Federal Farm Credit Bank Federal Farm Credit Bank Federal Home Loan Mortgage Federal Farm Credit Bank Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal Farm Credit Bank Federal Home Loan Bank Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal Home Loan Bank Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal Home Loan Mortgage Federal Home Loan Bank Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Bank Average Balance ------ Subtotal and Average 65,624,949.68 Run Date: 07/20/2018-14:54 OTAY Portfolio Management Portfolio Details -Investments June 30, 2018 Purchase Date 07/05/2016 06/23/2016 04/27/2016 05/23/2016 09/26/2016 10/30/2015 11/19/2015 06/28/2016 04/19/2017 04/26/2016 05/24/2016 06/06/2016 06/27/2016 06/28/2016 07/05/2016 08/30/2016 08/30/2016 08/30/2016 08/30/2016 10/03/2016 10/26/2016 10/27/2016 10/25/2016 11/08/2016 12/27/2016 12/30/2016 01/27/2017 02/28/2017 04/30/2018 03/22/2018 12/28/2017 04/19/2018 01/29/2018 Par Value 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 1,030,000.00 2, 705,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 1,890,000.00 2,000,000.00 65,625,000.00 Market Value 1,999,640.00 1,999,740.00 1,998,740.00 1,997,300.00 1,995,300.00 1,993,600.00 1,992,740.00 1,987,980.00 1,985,920.00 1,981,060.00 1,980,120.00 1,978,180.00 1,976,280.00 1,978,300.00 1,971 ,640.00 1,014,683.90 2,664, 776.65 1,970,260.00 1,970,260.00 1,967,500.00 1,968,720.00 1,964,560.00 1,964,380.00 1,967,660.00 1,966,620.00 1,973,620.00 1,974,040.00 1,972,940.00 1,994,560.00 1,991,080.00 1,968,800.00 1,880,304.30 1,974,180.00 64,967,884.85 Stated Book Value Rate 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 1,999,952.10 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 1,030,000.00 2, 705,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 1,890,000.00 2,000,000.00 65,624,952.10 0.820 0.820 1.000 1.000 1.050 1.100 1.150 1.000 1.433 1.150 1.250 1.300 1.200 1.300 1.020 1.125 1.125 1.125 1.125 1.170 1.200 1.100 1.200 1.250 1.450 1.580 1.700 1.700 2.500 2.500 2.000 2.600 2.200 Page 1 S&P YTM Days to Maturity 360 Maturity Date AA 0.809 0.809 AA 0.986 0.986 AA 1.036 1.085 1.134 0.986 1.416 AA 1.134 1.233 AA 1.282 AA 1.184 1.282 1.006 1.110 1.110 1.110 1.110 1.154 AA 1.183 AA 1.085 AA 1.184 1.233 AA 1.430 AA 1.558 AA 1.677 1.677 2.467 AA 2.466 AA 1.973 AA 2.565 2.170 1.351 4 07/05/2018 5 07/06/2018 26 07/27/2018 53 08/23/2018 89 09/28/2018 120 10/29/2018 141 11/19/2018 180 12/28/2018 291 04/18/2019 299 04/26/2019 327 05/24/2019 340 06/06/2019 361 06/27/2019 362 06/28/2019 369 07/05/2019 423 08/28/2019 423 08/28/2019 423 08/28/2019 423 08/28/2019 459 10/03/2019 467 10/11/2019 473 10/17/2019 481 10/25/2019 495 11/08/2019 544 12/27/2019 547 12/30/2019 575 01/27/2020 607 02/28/2020 760 07/30/2020 814 09/22/2020 820 09/28/2020 933 01/19/2021 943 01/29/2021 411 Portfolio OTAY AP PM (PRF _PM2) 7.3.0 Report Ver. 7.3.5 CUSIP Investment# Issuer Local Agency Investment Fund (LAIF) LA IF 9001 STATE OF CALIFORNIA Subtotal and Average San Diego County Pool SO COUNTY POOL 9007 San Diego County Subtotal and Average Total and Average Run Date: 07/20/2016-14:54 Average Balance 9,138,429.70 12,171 ,632.82 88,805,077.34 OTAY Portfolio Management Portfolio Details -Investments June 30, 2018 Purchase Date Par Value Market Value 11 ,225,096.37 11,204,070.29 11,225,096.37 11,204,070.29 12,194,528.19 12,131,000.00 12,194,528.19 12,131,000.00 89,044,624.56 88,302,955.14 Stated Book Value Rate 11,225,096.37 1.854 11,225,096.37 12,194,528.19 1.906 12,194,528.19 89,044,576.66 Page2 YTM Daysto Maturity S&P 360 Maturity Date 1.829 --------- 1.829 1.880 --------- 1.880 1.484 303 Portfolio OT A Y AP PM (PRF _PM2) 7.3.0 CUSIP Investment# Issuer Union Bank UNION MONEY 9002 STATE OF CALIFORNIA PETTY CASH 9003 STATE OF CALIFORNIA UNION OPERATING 9004 STATE OF CALIFORNIA PAYROLL 9005 STATE OF CALIFORNIA RESERVE-10 COPS 9010 STATE OF CALIFORNIA RESERVE-10 BABS 9011 STATE OF CALIFORNIA UBNA-FLEX ACCT 9014 STATE OF CALIFORNIA Average Balance Total Cash and Investments Run Date: 07/20/2018-14:54 Average Balance 0.00 88,805,077.34 OTAY Portfolio Management Portfolio Details -Cash June 30, 2018 Purchase Date Par Value 10,000.09 2,950.00 701,556.17 07/01/2017 28,512.29 22,023.88 58,452.64 07/01/2017 14,369.68 89,882,489.31 Market Value Book Value 10,000.09 10,000.09 2,950.00 2,950.00 701,556.17 701,556.17 28,512.29 28,512.29 22,023.88 22,023.88 58,452.64 58,452.64 14,369.66 14,369.68 89,140,819.89 89,882,441.41 Stated Rate S&P 0.010 0.400 0.010 0.010 Page3 YTM Daysto 360 Maturity 0.010 0.000 0.395 0.000 0.010 0.010 0.000 1.484 303 Portfolio OT A Y AP PM (PRF _PM2) 7.3.0 CUSIP Investment# Fund: Treasury Fund 3134GB4S8 2381 3134G9AW7 2347 3134G9ZR1 2360 3134G9SL2 2356 3134G8XA2 2348 3134GSHT5 2386 3134GSHS7 3136G4DZ3 3135GOS53 3136G33N3 3136G4FY4 3136G4MA8 3136G34U6 3136G4JU8 3136G33N3 3136G4DR1 3136G33N3 2385 2370 2377 2365 2372 2379 2367 2375 2366 2373 2364 3130AABM9 2374 3130A8KR3 2358 3130A9NJ6 2371 3130A9C90 2368 3130ADC26 2382 3130ADQH8 2384 3130A7VVK7 2352 PAYROLL 9005 UNION MONEY 9002 RESERVE-10 COPS 9010 RESERVE-10 BASS 9011 LAIF 9001 UBNA-FLEX ACCT 9014 Run Date: 07/20/2018-14:57 Fund 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 Investment Class Maturity Date Fair Value 09/28/2020 Fair Value 04/26/2019 FairValue 12/28/2018 Fair Value 06/28/2019 FairValue 07/27/2018 Fair Value 07/30/2020 Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Fair Value Amortized Amortized Amortized Amortized Fair Value Amortized 01/19/2021 10/25/2019 01/27/2020 08/28/2019 11/08/2019 02/28/2020 08/28/2019 12/30/2019 08/28/2019 10/17/2019 08/28/2019 12/27/2019 07/06/2018 10/11/2019 09/28/2018 01/29/2021 09/22/2020 05/24/2019 OTAY GASB 31 Compliance Detail Sorted by Fund -Fund June 1, 2018 -June 30, 2018 Beginning Invested Value 1,973,000.00 1,980,280.00 1,985,860.00 1,978,200.00 1,997,120.00 1,999,280.00 1,884,311.10 1,965,500.00 1,975,480.00 2,665,479.95 1,969,200.00 1,975,420.00 1,970,780.00 1,975,600.00 1,970,780.00 1,965,900.00 1,014,951.70 1,970,060.00 1,997,940.00 1,968,780.00 1,993,380.00 1,977,900.00 1,996,060.00 1,979,820.00 28,512.29 10,000.09 21,994.08 58,373.64 8,105,092.39 24,917.57 Purchase of Principal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Addition to Principal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 62,500.09 29.80 79.00 5,900,000.00 0.00 Redemption of Principal 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 62,500.09 0.00 0.00 2,800,000.00 10,547.89 Adjustment in Value Amortization Adjustment 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0,00 0.00 Change in Market Value -4,200.00 780.00 2,120.00 100.00 1,620.00 -4,720.00 -4,006.80 -1,120.00 -1,440.00 -703.30 -1,540.00 -2,480.00 -520.00 -1,980.00 -520.00 -1,340.00 -267.80 -1,240.00 1,800.00 -60.00 1,920.00 -3,720.00 -4,980.00 300.00 0.00 0.00 0.00 0.00 -1,022.10 0.00 Ending Invested Value 1,968,800.00 1,981,060.00 1,987,980.00 1,978,300.00 1,998,740.00 1,994,560.00 1,880,304.30 1,964,380.00 1,974,040.00 2,664,776.65 1,967,660.00 1,972,940.00 1,970,260.00 1,973,620.00 1,970,260.00 1,964,560.00 1,014,683.90 1,968,820.00 1,999,740.00 1,968,720.00 1,995,300.00 1,974,180.00 1,991,080.00 1,980,120.00 28,512.29 10,000.09 22,023.88 58,452.64 11,204,070.29 14,369.68 Portfolio OTAY AP GD (PRF _GD) 7.1.1 Report Ver. 7 3.5 Investment Maturity CUSIP Investment# Fund Class Date Fund: Treasury Fund PETIY CASH 9003 99 Amortized UNION OPERATING 9004 99 Amortized 3133EGBG9 2354 99 Fair Value 08/23/2018 3133EGWF8 2369 99 Fair Value 10/03/2019 3133EGCZ6 2357 99 Fair Value 06/06/2019 3133EGGS8 2359 99 Fair Value 06/27/2019 3133EGJUO 2362 99 Fair Value 07/05/2018 3133EGJR7 2361 99 Fair Value 07/05/2019 3136G2R66 2334 99 Fair Value 11/19/2018 3135GOG64 2336 99 Fair Value 10/29/2018 SD COUNTY POOL 9007 99 Fair Value 3132XORZ6 2380 99 Fair Value 04/18/2019 Subtotal Total Run Dale: 07/20/2018-14:57 OTAY GASB 31 Compliance Detail Sorted by Fund-Fund Beginning Purchase Addition Redemption Invested Value of Principal to Principal of Principal 2,950.00 0.00 0.00 0.00 1,081,132.23 0.00 679,935.94 1,059,512.00 1,995,480.00 0.00 0.00 0.00 1,966,860.00 0.00 0.00 0.00 1,977,620.00 0.00 0.00 0.00 1,976,480.00 0.00 0.00 0.00 1,997,960.00 0.00 0.00 0.00 1,971,400.00 0.00 0.00 0.00 1,991,060.00 0.00 0.00 0.00 1,991,920.00 0.00 0.00 0.00 12,109,000.00 0.00 24,530.75 0.00 1,985,720.00 0.00 0.00 0.00 86,427,555.04 0.00 6,667,075.58 3,932,559.98 86,427,555.04 0.00 6,667,075.58 3,932,559.98 Adjustment in Value Amortization Change in Adjustment Market Value 0.00 0.00 0.00 0.00 0.00 1,820.00 0.00 640.00 0.00 560.00 0.00 -200.00 0.00 1,880.00 0.00 240.00 0.00 1,680.00 0.00 1,680.00 0.00 -2,530.75 0.00 200.00 0.00 -21,250.75 0.00 -21,250.75 Page2 Ending Invested Value 2,950.00 701 ,556.17 1,997,300.00 1,967,500.00 1 ,978,180.00 1,976,280.00 1,999,840.00 1,971,640.00 1 '992, 7 40.00 1,993,600.00 12,131,000.00 1,985,920.00 89,140,819.89 89,140,819.89 Portfolio OT A Y AP GO (PRF_GD) 7.1.1 Report Ver. 7.3.5 Percent CUSIP Investment# Issuer of Portfolio Issuer: STATE OF CALIFORNIA Union Bank UNION MONEY 9002 UNION OPERATING 9004 RESERVE-10 COPS 9010 RESERVE-10 BABS 9011 UBNA-FLEX ACCT 9014 STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA STATE OF CALIFORNIA Subtotal and Balance Local Agency Investment Fund (LAIF) LAIF 9001 STATE OF CALIFORNIA Subtotal and Balance Issuer Subtotal 13.421% Issuer: Federal Agricultural Mortgage Federal Agency Issues-Callable Subtotal and Balance Issuer Subtotal 2.225% Issuer: Fannie Mae Federal Agency Issues-Callable Subtotal and Balance Issuer Subtotal 4.450% Issuer: Federal Farm Credit Bank Federal Agency Issues-Callable Subtotal and Balance Run Date: 07/20/2018-14:58 OTAY Activity Report Sorted By Issuer June 1, 2018 -June 30, 2018 Par Value Beginning Current Transaction Balance Rate Date 0.010 0.400 0.010 0.010 1,227,879.90 1.854 8,125,096.37 9,352,976.27 2,000,000.00 2,000,000.00 4,000,000.00 4,000,000.00 12,000,000.00 Purchases or Deposits 62,500.09 679,935.94 29.80 79.00 0.00 742,544.83 5,900,000.00 5,900,000.00 6,642,544.83 0.00 0.00 Par Value Redemptions or Withdrawals 62,500.09 1,059,512.00 0.00 0.00 10,547.89 1 '132,559.98 2,800,000.00 2,800,000.00 3,932,559.98 0.00 0.00 Ending Balance 837,864.75 11,225,096.37 12,062,961.12 2,000,000.00 2,000,000.00 4,000,000.00 4,000,000.00 12,000,000.00 Portfolio OT A Y AP DA (PRF _DA) 7.2 0 Report Ver. 7.3.5 Percent CUSIP Investment# Issuer of Portfolio Issuer Subtotal 13.351% Issuer: Federal Home Loan Bank Federal Agency Issues-Callable Subtotal and Balance Issuer Subtotal 15.576~. Issuer: Federal Home Loan Mortgage Federal Agency Issues-Callable Subtotal and Balance Issuer Subtotal 15.454% Issuer: Federal National Mortage Assoc Federal Agency Issues-Callable Subtotal and Balance Issuer Subtotal 21.956% Issuer: San Diego County San Diego County Pool SD COUNTY POOL 9007 San Diego County Subtotal and Balance Issuer Subtotal 13.567% Total 100.000% Run Date: 07/20/2018-14:58 OTAY Activity Report June 1, 2018-June 30, 2018 Par Value Beginning Current Transaction Balance Rate Date 12,000,000.00 14,000,000.00 14,000,000.00 13,890,000.00 13,890,000.00 19,735,000.00 19,735,000.00 1.906 12,169,997.44 12,169,997.44 87,147,973.71 Par Value Purchases or Redemptions or Deposits Withdrawals 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 24,530.75 0.00 24,530.75 0.00 24,530.75 0.00 6,667,075.58 3,932,559.98 Page 2 Ending Balance 12,000,000.00 14,000,000.00 14,000,000.00 13,890,000.00 13,890,000.00 19,735,000.00 19,735,000.00 12,194,528.19 12,194,528.19 89,882,489.31 Portfolio OT A Y AP DA (PRF _DA) 7.2.0 Report Ver. 7 .3.5 Security ID Investment# Fund 3136G2R66 2334 3135GOG64 2336 3134G9AW7 2347 3134G8XA2 2348 3130A7VVK7 2352 3133EGBG9 2354 3134G9SL2 2356 3133EGCZ6 2357 3130A8KR3 2358 3133EGGS8 2359 3134G9ZR1 2360 3133EGJR7 2361 3133EGJUO 2362 3136G33N3 2364 3136G33N3 2365 3136G33N3 2366 3136G34U6 2367 3130A9C90 2368 3133EGWF8 2369 3136G4DZ3 2370 3130A9NJ6 2371 3136G4FY4 2372 3136G4DR1 2373 3130AABM9 2374 3136G4JU8 2375 3135GOS53 2377 3136G4MA8 2379 3132XORZ6 2380 3134GB4S8 2381 Run Dale' 07/20/2018 -15'00 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 OTAY Duration Report Sorted by Investment Type -Investment Type Through 06/30/2018 Issuer Fannie Mae Fannie Mae Federal Home Loan Mortgage Federal Home Loan Mortgage Federal Home Loan Bank Federal Farm Credit Bank Federal Home Loan Mortgage Federal Farm Credit Bank Federal Home Loan Bank Federal Farm Credit Bank Federal Home Loan Mortgage Federal Farm Credit Bank Federal Farm Credit Bank Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal Home Loan Bank Federal Farm Credit Bank Federal National Mortage Assoc Federal Home Loan Bank Federal National Mortage Assoc Federal National Mortage Assoc Federal Home Loan Bank Federal National Mortage Assoc Federal National Mortage Assoc Federal National Mortage Assoc Federal Agricultural Mortgage Federal Home Loan Mortgage Investment Class Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Fair Book Value 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000,00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 1,030,000.00 2,705,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000,00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 1,999,952.10 2,000,000.00 Page 1 Par Value 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 1,030,000.00 2,705,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 Market Current Value Rate 1,992,740.00 1.150000 1,993,600.00 1.100000 1,981,060.00 1.150000 1,998,740.00 1.000000 1,980,120.00 1.250000 1,997,300.00 1.000000 1,978,300.00 1.300000 1 ,978,180.00 1.300000 1,999,740.00 .8200000 1,976,280.00 1.200000 1,987,980.00 1.000000 1,971,640.00 1.020000 1,999,840.00 .8200000 1,014,683.90 1.125000 2,664,776.65 1.125000 1,970,260.00 1.125000 1,970,260.00 1.125000 1,995,300.00 1.050000 1,967,500.00 1.170000 1,964,380.00 1.200000 1,968,720.00 1.200000 1,967,660.00 1.250000 1 ,964,560.00 1.100000 1,968,820.00 1.450000 1,973,620.00 1.580000 1,974,040.00 1.700000 1 ,972,940.00 1.700000 1 ,985,920.00 1.433065 1 ,968,800.00 2.000000 YTM Current 360 Yield 1.134 1.085 1.134 0.986 1.233 0.986 1.282 1.282 0.809 1.184 0.986 1.006 0.809 1.110 1.110 1.110 1.110 1.036 1.154 1.184 1.183 1.233 1.085 1.430 1.558 1.677 1.677 1.416 1.973 1.883 1.746 2.324 1.127 2.377 1.272 2.414 2.494 0.846 2.421 2.215 2.448 0.836 2.435 2.435 2.435 2.435 1.524 2.493 2.585 2.451 2.473 2.500 2.524 2.483 2.548 2.539 2.331 2.723 Maturity/ Modified Call Date Duration 11/19/2018 10/29/2018 04/26/2019 07/27/2018 05/24/2019 08/23/2018 06/28/2019 06/06/2019 07/06/2018 06/27/2019 12/28/2018 07/05/2019 07/05/2018 08/28/2019 08/28/2019 08/28/2019 08/28/2019 09/28/2018 10/03/2019 1012512019 10/11/2019 11/08/2019 10/17/2019 12127/2019 12/30/2019 0112712020 02/28/2020 04/18/2019 09/28/2020 0.386 0.328 0.807 0.071 0.883 0.145 0.976 0.916 0.013 0.973 0.493 0.991 0.010 1.135 1.135 1.135 1.135 0.243 1.231 1.290 1.253 1.327 1.270 1.460 1.467 1.527 1.612 0.665 2.163 Portfolio OTAY AP DU (PRF_DU)7.1.1 Report Ver. 7.3.5 OTAY Duration Report Sorted by Investment Type -Investment Type Through 06/30/2018 Investment Book Par Securi~ID Investment# Fund Issuer Class Value Value 3130AOC26 2382 99 Federal Home Loan Bank Fair 2,000,000.00 2,000,000.00 3130ADQH8 2384 99 Federal Home Loan Bank Fair 2,000,000.00 2,000,000.00 3134GSHS7 2385 99 Federal Home Loan Mortgage Fair 1,890,000.00 1,890,000.00 3134GSHT5 2386 99 Federal Home Loan Mortgage Fair 2,000,000.00 2,000,000.00 LAIF 9001 99 STATE OF CALIFORNIA Fair 11,225,096.37 11,225,096.37 SO COUNTY 9007 99 San Diego County Fair 12,194,528.19 12,194,528.19 Report Total 89,044,576.66 89,044,624.56 Run Date: 07120/2018-15:00 Page 2 Market Current YTM Value Rate 360 1,974,180.00 2.200000 2.170 1,991,080.00 2.500000 2.466 1,880,304.30 2.600000 2.565 1,994,560.00 2.500000 2.467 11,204,070.29 1.854000 1.829 12,131,000.00 1.906000 1.880 88,302,955.14 Current Yield 2.722 2.709 2.810 2.636 1.854 1.906 2.148 Maturity/ Modified Call Date Duration 01/29/2021 2.462 09/22/2020 1.351 01/19/2021 1.782 07/30/2020 1.423 0.000 0.000 0.756 Portfolio OT A Y AP DU (PRF_DU) 71.1 Report Ver. 7 3,5 CUSIP Investment# Fund: Treasury Fund 3134GB4S8 3134G9AW7 3134G9ZR1 3134G9SL2 3134G8XA2 3134GSHT5 3134GSHS7 3136G4DZ3 3135GOS53 2381 2347 2360 2356 2348 2386 2385 2370 2377 3136G33N3 2365 3136G4FY4 2372 3136G4MA8 2379 3136G34U6 2367 3136G4JU8 2375 3136G33N3 2366 3136G4DR1 2373 3136G33N3 2364 3130AABM9 2374 3130A8KR3 2358 3130A9NJ6 2371 3130A9C90 2368 3130ADC26 2382 3130ADQH8 2384 3130A7VVK7 2352 UNION MONEY 9002 RESERVE-10 COPS 9010 RESERVE-10 BASS 9011 LAIF 9001 UNION OPERATING 9004 Run Date: 07120/2018-15:01 Fund 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 99 Security Type MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 MC1 PA1 PA1 PA1 LA1 PA1 OTAY Interest Earnings Sorted by Fund -Fund June 1, 2018 -June 30, 2018 Period Yield on Beginning Book Value Ending Par Value 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 1,890,000.00 2,000,000.00 2,000,000.00 2,705,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 1,030,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 10,000.09 22,023.88 58,452.64 11,225,096,37 701,556.17 Beginning Book Value 2,000,000.00 2,000,000,00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 1,890,000.00 2,000,000.00 2,000,000.00 2,705,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 1,030,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 2,000,000.00 10,000.09 21,994.08 58,373.64 8,125,096.37 1 ,081,132.23 Ending Maturity Current Yield This Book Value Date Rate Period 2,000,000.00 09/28/2020 2,000,000.00 04/26/2019 2,000,000.00 12/28/2018 2,000,000.00 06/28/2019 2,000,000.00 07/27/2018 2,000,000.00 07/30/2020 1,890,000.00 01/19/2021 2,000,000.00 10/25/2019 2,000,000.00 0112712020 2,705,000.00 08/28/2019 2,000,000.00 11/08/2019 2,000,000.00 02/28/2020 2,000,000.00 08/28/2019 2,000,000.00 12/30/2019 2,000,000.00 08/28/2019 2,000,000.00 10/17/2019 1,030,000.00 08/28/2019 2,000,000.00 12/27/2019 2,000,000.00 07/06/2018 2,000,000.00 10/11/2019 2,000,000.00 09/28/2018 2,000,000.00 01/29/2021 2,000,000.00 09/22/2020 2,000,000.00 05/24/2019 10,000.09 22,023.88 58,452.64 11,225,096.37 701,556.17 2.000 1.150 1.000 1.300 1.000 2.500 2.600 1.200 1.700 1.125 1.250 1.700 1.125 1.580 1.125 1.100 1.125 1.450 0.820 1.200 1.050 2.200 2.500 1.250 0.010 0.010 0.010 1.854 0.400 0.167 0.096 0.083 0.108 0.083 0.208 0.217 0.100 0.142 0.094 0.104 0.142 0.094 0.132 0.094 0.092 0.094 0,121 0.068 0.100 0.088 0.183 0.208 0.104 0.001 0.001 0.001 0.171 0.052 Adjusted Interest Earnings Interest Amortization/ Adjusted Interest Earned Accretion Earnings 3,333.33 1,916.67 1,666.67 2,166.67 1,666.67 4,166.66 4,095.00 2,000.00 2,833.33 2,535.94 2,083.34 2,833.34 1,875.00 2,633.34 1,875.00 1,833.33 965.63 2,416.66 1,366.66 2,000.00 1,750.00 3,666.67 4,166.67 2,083.33 0.11 0.18 0.49 13,925.46 567.17 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3,333.33 1,916.67 1,666.67 2,166.67 1,666.67 4,166.66 4,095.00 2,000.00 2,833.33 2,535.94 2,083.34 2,833.34 1,875,00 2,633.34 1,875.00 1,833.33 965.63 2,416.66 1,366.66 2,000.00 1,750.00 3,666.67 4,166.67 2,083.33 0.11 0.18 0.49 13,925.46 567.17 Portfolio OTAY AP tE (PRF _IE) 7.2.0 Report Ver. 7.3.5 Security Ending CUSIP Investment# Fund Type Par Value Fund: Treasury Fund 3133EGBG9 2354 99 MC1 2,000,000.00 3133EGWFB 2369 99 MC1 2,000,000.00 3133EGCZ6 2357 99 MC1 2,000,000.00 3133EGGS8 2359 99 MC1 2,000,000.00 3133EGJUO 2362 99 MC1 2,000,000.00 3133EGJR7 2361 99 MC1 2,000,000.00 3136G2R66 2334 99 MC1 2,000,000.00 3135GOG64 2336 99 MC1 2,000,000.00 SD COUNTY POOL 9007 99 LA3 12,194,528.19 3132XORZ6 2380 99 MC1 2,000,000.00 Subtotal 89,836,657.34 Total 89,836,657.34 Run Dale: 07/20/2018 ·15:01 OTAY Interest Earnings June 1, 2018-June 30, 2018 Beginning Ending Maturity Current Yield This Book Value Book Value Date Rate Period 2,000,000.00 2,000,000.00 08/23/2018 1.000 0.083 2,000,000.00 2,000,000.00 10/03/2019 1.170 0.098 2,000,000.00 2,000,000.00 06/06/2019 1.300 0.108 2,000,000.00 2,000,000.00 06/27/2019 1.200 0.100 2,000,000.00 2,000,000.00 07/05/2018 0.820 0.068 2,000,000.00 2,000,000.00 07/05/2019 1.020 0.085 2,000,000.00 2,000,000.00 11/19/2018 1.150 0.094 2,000,000.00 2,000,000.00 10/29/2018 1.100 0.092 12,169,997.44 12,194,528.19 1.906 0.157 1,999,947.09 1,999,952.10 04/18/2019 1.433 0.120 87,091 ,540.94 89,836,609.44 0.125 87,091 ,540.94 89,836,609.44 0.125 Interest Earned 1,666.67 1,950.00 2,166.67 2,000.00 1,366.67 1,700.00 1,875.00 1,833.34 19,067.78 2,388.44 108,437.89 108,437.89 Page 2 Adjusted Interest Earnings Amortization/ Accretion 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 5.01 5.01 5.01 Adjusted Interest Earnings 1,666.67 1,950.00 2,166.67 2,000.00 1,366.67 1,700.00 1,875.00 1,833.34 19,067.78 2,393.45 108,442.90 108,442.90 Portfolio OT A Y AP IE (PRF _IE) 7,2,0 Report Ver. 7.3.5 Check Total 10,796.37 10,426.59 2,488.50 12,525.96 CM201824 07/02/18 MGMT/INSP (6/1/18-6/30/18)250.00 CM201827 07/02/18 MGMT/INSP (6/1/18-6/30/18)250.00 CM201826 07/02/18 MGMT/INSP (6/1/18-6/30/18)375.00 CM201823 07/02/18 MGMT/INSP (6/1/18-6/30/18)250.00 CM201820 07/02/18 MGMT/INSP (5/1/18-6/30/18)2,560.00 CM201825 07/02/18 MGMT/INSP (6/1/18-6/30/18)437.50 CM201819 07/02/18 MGMT/INSP (5/1/18-6/30/18)5,160.00 CM201822 07/02/18 MGMT/INSP (5/4/18-6/30/18)3,941.10 MGMT/INSP (5/1/18-6/30/18)6,240.00 CM201821 07/02/18 MGMT/INSP (5/1/18-6/30/18)5,920.00 CM201815 05/20/18 MGMT/INSP (4/1/18-4/30/18)1,440.00 2050709 07/18/18 14462 ALYSON CONSULTING CM201818 07/02/18 CM201814 05/20/18 MGMT/INSP (4/1/18-4/30/18)4,200.00 CM201816 05/20/18 MGMT/INSP (4/1/18-4/30/18)2,560.00 1,000.11 2050616 07/03/18 14462 ALYSON CONSULTING CM201817 05/20/18 MGMT/INSP (4/27/18-5/3/18)4,325.96 33.05 33.05 2050555 06/27/18 18903 ALICIA A BARNETT WOD0980 06/26/18 W/O REFUNDS D0980-090289 1,000.11 AS NEEDED UTIL LOCATING (5/1/18-5/31/18)16,130.00 16,130.00 2050554 06/27/18 18896 ALEJANDRINA MAYA Ref002508354 06/25/18 UB Refund Cst #0000242940 131546127 06/06/18 AQUA AMMONIA 174.00 2050615 07/03/18 15024 AIRX UTILITY SURVEYORS INC 305312018 06/06/18 4,007.79 4,007.79 2050614 07/03/18 07732 AIRGAS SPECIALTY PRODUCTS INC 131546128 06/06/18 AQUA AMMONIA 2,314.50 DEVELOPER PLAN REVIEW (4/28/18-6/30/18)6,440.00 6,440.00 2050708 07/18/18 18681 AERZEN USA CORPORATION SEPI18000896 05/25/18 PM TERTIARY FILTER BLOWERS 1027206 06/21/18 SODIUM HYPOCHLORITE 923.95 2050707 07/18/18 11462 AEGIS ENGINEERING MGMT INC 1430 06/30/18 1027709 06/28/18 SODIUM HYPOCHLORITE 1,528.07 1027207 06/21/18 SODIUM HYPOCHLORITE 1,346.54 SODIUM HYPOCHLORITE 3,737.09 1027208 06/21/18 SODIUM HYPOCHLORITE 2,890.94 2050706 07/18/18 01910 ABCANA INDUSTRIES INC 1027710 06/28/18 1026311 06/06/18 SODIUM HYPOCHLORITE 864.40 1026317 06/07/18 SODIUM HYPOCHLORITE 768.36 1026765 06/14/18 SODIUM HYPOCHLORITE 1,248.58 1026792 06/14/18 SODIUM HYPOCHLORITE 882.65 1026766 06/14/18 SODIUM HYPOCHLORITE 2,881.34 1026318 06/07/18 SODIUM HYPOCHLORITE 1,248.58 401.25 2050613 07/03/18 01910 ABCANA INDUSTRIES INC 1026319 06/07/18 SODIUM HYPOCHLORITE 2,902.46 Amount 2050705 07/18/18 15285 A&D FIRE SPRINKLERS INC SDS28710 06/25/18 FIRE SPRINKLER INSPECTION (JUNE 2018)401.25 CHECK REGISTER Otay Water District Date Range: 6/21/2018 - 7/18/2018 Check #Date Vendor Vendor Name Invoice Inv. Date Description Page 1 of 11 Check Total Amount CHECK REGISTER Otay Water District Date Range: 6/21/2018 - 7/18/2018 Check #Date Vendor Vendor Name Invoice Inv. Date Description 25,633.60 39,003.01 17,703.15 WATER DELIVERIES (APR 2018)862.60 862.60205071607/18/18 00234 CITY TREASURER 1000226286 05/30/18 1,770.00 2050562 06/27/18 12674 CITY OF CHULA VISTA 071060PU004 06/19/18 UTILITY PERMITS (7/1/17-6/12/18)11,985.00 11,985.00 14,874.70 14,874.70 2050661 07/11/18 12674 CITY OF CHULA VISTA 071060PU004A 07/05/18 UTILITY PERMITS (6/13/18-6/30/18)1,770.00 BUS TRANSPORTATION TO GARDEN (6/27/18)367.38 367.38 2050660 07/11/18 18910 CIRCLE FOODS LLC Ref002508513 07/09/18 UB Refund Cst #0000144801 2050659 07/11/18 02026 CHULA VISTA ELEM SCHOOL DIST AR049221 06/30/18 67.30 2050658 07/11/18 17767 CHRISTOPHER QUEEN Ref002474662 01/23/17 UB Refund Cst #0000225457 32.07 32.07 39.76 39.76 2050561 06/27/18 18894 CHRISTOPHER PHAM Ref002508352 06/25/18 UB Refund Cst #0000242559 67.30 UB Refund Cst #0000022055 87.04 87.04 2050560 06/27/18 18895 CDG CHULA VISTA LLC Ref002508353 06/25/18 UB Refund Cst #0000242852 2050559 06/27/18 18873 CARLOS WAUMAN Ref002508330 06/25/18 20,427.61 2050558 06/27/18 18892 CARLEEN VELEZ Ref002508350 06/25/18 UB Refund Cst #0000241973 21.86 21.86 13,685.00 13,685.00 2050622 07/03/18 08490 CALIFORNIA BANK & TRUST 805312018 06/11/18 RET/TC CONST A#7003 (ENDING 5/31/18)20,427.61 ELECTRICAL DESIGN (9/1/17-12/31/17)3,699.76 3,699.76 2050715 07/18/18 18617 C BELOW INC 2508298 06/20/18 POTHOLING SERVICE 2050621 07/03/18 14112 BSE ENGINEERING INC 75400417 06/10/18 LEGISLATIVE ADVOCACY (THRU 6/30/18)11,873.46 725327 07/05/18 LEGISLATIVE ADVOCACY (THRU 6/30/18)5,829.69 00017301 05/17/18 RETAINAGE RELEASE 42,103.01 2050714 07/18/18 08156 BROWNSTEIN HYATT FARBER 725166 07/03/18 42,103.01 42,103.01 2050620 07/03/18 12577 BLASTCO INC 062118 CREDIT MEMO -3,100.00 W/O REFUNDS D0740-090268 854.49 854.49 2050557 06/27/18 12577 BLASTCO INC 00017301 05/17/18 RETAINAGE RELEASE 2050556 06/27/18 12684 BALDWIN & SONS LLC WOD0740A 06/26/18 3,856.13 2050713 07/18/18 14985 AZTEC FENCE CO II INC AZ1691 06/28/18 GATE INSTALLATION 5,050.00 5,050.00 43,356.35 43,356.35 2050712 07/18/18 18599 ATKINSON ANDELSON LOYA RUUD 547251 06/30/18 LEGAL/CONSULTING SERV (6/1/18-6/30/18)3,856.13 PLOTTER/PRINTER 12,745.67 12,745.67 2050619 07/03/18 17264 ARTIANO SHINOFF 300847 06/20/18 LEGAL SERVICES (THRU MAY 2018) 2050711 07/18/18 13174 ARC IMAGING RESOURCES 865524 06/28/18 916.53 2050618 07/03/18 03492 AQUA-METRIC SALES COMPANY 0069874IN 06/15/18 SENSUS METERS 38,761.19 38,761.19 2,625.00 2,625.00 2050617 07/03/18 08967 ANTHEM EAP 76786 07/01/18 EMP ASSIST PROG (JULY 2018-SEPT 2018)916.53 UB Refund Cst #0000222458 23.99 23.99 2050710 07/18/18 05843 AMERICAN ARBITRATION 0118000205332VA 06/28/18 OWD SETTLEMENT SHARE 2050657 07/11/18 18465 AMANDA STEIGER Ref002493558 11/27/17 CM201828 07/02/18 MGMT/INSP (6/1/18-6/30/18)125.00 CM201829 07/02/18 MGMT/INSP (6/1/18-6/30/18)125.00 Page 2 of 11 Check Total Amount CHECK REGISTER Otay Water District Date Range: 6/21/2018 - 7/18/2018 Check #Date Vendor Vendor Name Invoice Inv. Date Description 2,705.00 1,071.00 199.53 23.48 23.48 2050671 07/11/18 17847 ERNEALDO SALAZAR Ref002476286 03/06/17 UB Refund Cst #0000184537 199.53 UB Refund Cst #0000224550 15.21 15.21 2050670 07/11/18 17806 ERICA KIMBLE Ref002475762 02/06/17 UB Refund Cst #0000221919 2050669 07/11/18 18914 EMILIO HURTADO Ref002508517 07/09/18 158.95 2050567 06/27/18 18883 ECKHARD SASCHENBRECKER Ref002508341 06/25/18 UB Refund Cst #0000214738 147.96 147.96 10,380.00 10,380.00 2050668 07/11/18 05134 DYCHITAN, MARISSA 071018071018 07/10/18 REIMBURSEMENT OF MEMBERSHIP/DUES 158.95 UB Refund Cst #0000230700 154.34 154.34 2050721 07/18/18 05746 DOWNSTREAM SERVICES INC 102350 06/25/18 SEWER CONNECTION VERIFICATION SERVICES 2050566 06/27/18 18886 DON WALL Ref002508344 06/25/18 227.68 2050667 07/11/18 18917 DIANE RUSSELL Ref002508520 07/09/18 UB Refund Cst #0000238813 29.85 29.85 18.07 18.07 2050565 06/27/18 18879 DAVID JUDGE Ref002508336 06/25/18 UB Refund Cst #0000160311 227.68 UB Refund Cst #0000218009 93.76 93.76 2050564 06/27/18 18875 DAVID HUNT Ref002508332 06/25/18 UB Refund Cst #0000026864 2050666 07/11/18 18913 DANNY BLAKE Ref002508516 07/09/18 6,288.22 2050720 07/18/18 11797 D&H WATER SYSTEMS INC I20180576 06/06/18 W&T/DIGITAL INDICATOR 4,329.93 4,329.93 8,861.23 8,861.23 2050665 07/11/18 11797 D&H WATER SYSTEMS INC I20180594 06/13/18 W&T PARTS 6,288.22 PERMIT FEES # 05668 (JULY 2018-JULY 2019)521.00 521.00 2050719 07/18/18 17770 COX BUSINESS 670262218 06/22/18 TELECOM SVCS / METRO-E (6/24/18-7/23/18) 2050664 07/11/18 02122 COUNTY OF SAN DIEGO 056682005RI2018 05/05/18 SHUT DOWN TEST (6/14/18)918.00 2003193E602240618 07/04/18 SHUT DOWN TEST (6/14/18)153.00 2050718 07/18/18 00184 COUNTY OF SAN DIEGO 2003193E625850618 07/04/18 124.20 2050623 07/03/18 00099 COUNTY OF SAN DIEGO DPWAROTAYMWD051806/11/18 EXCAVATION PERMITS (MAY 2018)8,409.10 8,409.10 205.22 205.22 2050663 07/11/18 17705 CONTINENTAL CENTRAL CREDIT INC 050118053118 05/31/18 COLLECTION SERVICES 124.20 UB Refund Cst #0000243529 107.48 107.48 2050563 06/27/18 11696 COFFIN, SHANNON 061218-061418 06/14/18 TRAVEL EXPENSE REIMB (6/12/18-6/14/18) 98786 06/30/18 BACTERIOLOGICAL TESTING (6/14/18)103.00 2050662 07/11/18 18921 CLAYTON WHITE Ref002508524 07/09/18 96785 06/30/18 BACTERIOLOGICAL TESTING (6/14/18)159.00 96784 06/30/18 BACTERIOLOGICAL TESTING (6/30/18)103.00 96789 06/30/18 BACTERIOLOGICAL TESTING (6/25/18-6/26/18)452.00 96781 06/30/18 BACTERIOLOGICAL TESTING (6/2/18)342.00 566.00 96787 06/30/18 BACTERIOLOGICAL TESTING (6/18/18-6/19/18)490.00 96788 06/30/18 BACTERIOLOGICAL TESTING (6/19/18-6/20/18)490.00 WATER DELIVERIES (APR 2018)862.60 862.60 2050717 07/18/18 04119 CLARKSON LAB & SUPPLY INC 96782 06/30/18 BACTERIOLOGICAL TESTING (6/5/18-6/6/18) 2050716 07/18/18 00234 CITY TREASURER 1000226286 05/30/18 Page 3 of 11 Check Total Amount CHECK REGISTER Otay Water District Date Range: 6/21/2018 - 7/18/2018 Check #Date Vendor Vendor Name Invoice Inv. Date Description 489.60 6,150.75 657.36 06/29/18 BILL PROCESSING SRVCS (June 2018)11,961.03 347.15 137967 06/06/18 BILL PROCESSING SVCS (MAR 2018)310.21 2050727 07/18/18 08969 INFOSEND INC 138989 GAS DETECTION PROGRAM (JUNE 2018)704.58 704.58 2050629 07/03/18 08969 INFOSEND INC 137968 06/06/18 BILL PROCESSING SVCS (4/14/18-5/31/18) 2050726 07/18/18 17816 INDUSTRIAL SCIENTIFIC CORP 2112065 06/30/18 0130530 06/06/18 ENVIRONMENTAL (4/28/18-5/25/18)1,814.75 0130531 06/06/18 ENVIRONMENTAL (4/28/18-5/25/18)350.00 1,440.00 2050628 07/03/18 15622 ICF JONES & STOKES INC 0130710 06/11/18 ENVIRONMENTAL (4/28/18-5/25/18)3,986.00 2,360.08 2,360.08 2050627 07/03/18 13349 HUNSAKER & ASSOCIATES 2018050001 06/05/18 LAND SURVEYING (4/28/18-5/25/18)1,440.00 HYDRAULIC MODELING (5/1/18-5/31/18)7,055.00 7,055.00 2050572 06/27/18 18904 HNB MANAGEMENT INC WOD0962 06/26/18 W/O REFUNDS D0962-090256 2050626 07/03/18 18436 HAZEN AND SAWYER DPC 200940004 06/07/18 8,909.50 2050725 07/18/18 18924 HALL, BRANDEN 071118BH 07/11/18 FINGERPRINTING 20.00 20.00 43.17 43.17 2050724 07/18/18 12907 GREENRIDGE LANDSCAPE INC 17041 06/29/18 LANDSCAPING SERVICES (JUNE 2018)8,909.50 UB Refund Cst #0000232071 39.53 39.53 2050676 07/11/18 18920 GERRY MIRANDA Ref002508523 07/09/18 UB Refund Cst #0000243281 2050675 07/11/18 18096 GERARD ICART Ref002484229 06/12/17 79.28 2050571 06/27/18 18902 G STREET SENIORS CIC LP WOD0964 06/26/18 W/O REFUNDS D0964-090258 108.06 108.06 125.00 125.00 2050674 07/11/18 18907 FREEWAY AUTO WRECKING 0828070518 07/05/18 CUSTOMER REFUND 79.28 BI-WEEKLY PAYROLL DEDUCTION 125.00 125.00 2050570 06/27/18 18600 FRANCHISE TAX BOARD Ben2508385 06/28/18 BI-WEEKLY PAYROLL DEDUCTION 2050673 07/11/18 18600 FRANCHISE TAX BOARD Ben2508605 07/12/18 x1335920 06/01/18 FLEET VEHICLE WASHING 80.87 x1321830 05/18/18 FLEET VEHICLE WASHING 31.04 182.25 x1327811 05/25/18 FLEET VEHICLE WASHING 114.57 x1341791 06/08/18 FLEET VEHICLE WASHING 80.87 ONLINE DOCUMENTS (MONTHLY)99.00 99.00 2050625 07/03/18 11962 FLEETWASH INC x1317261 05/11/18 FLEET VEHICLE WASHING 2050723 07/18/18 17888 FIRST AMERICAN DATA TREE LLC 9003400618 06/30/18 3,148.46 2050722 07/18/18 03546 FERGUSON WATERWORKS # 1083 0639103 06/27/18 INVENTORY 5,304.51 5,304.51 1,425.54 1,425.54 2050624 07/03/18 03546 FERGUSON WATERWORKS # 1083 06358381 06/15/18 4" GATE VALVES 3,148.46 REIMBURSEMENT MEMBERSHIP & DUES 535.00 535.00 2050569 06/27/18 03546 FERGUSON WATERWORKS # 1083 0638310 06/21/18 INVENTORY 2050672 07/11/18 18923 FAKHOURI, EID 060618062718 06/27/18 2050568 06/27/18 18901 F STREET FAMILY CIC LP WOD0963 06/26/18 W/O REFUNDS D0963-090257 3,743.87 3,743.87 Page 4 of 11 Check Total Amount CHECK REGISTER Otay Water District Date Range: 6/21/2018 - 7/18/2018 Check #Date Vendor Vendor Name Invoice Inv. Date Description 17,548.35 850.00 83,066.89 34,064.00 782.39 782.39 CRANE INSPECTIONS (MAY 2018)575.00 575.00 2050579 06/27/18 18874 KRISTIN CONTRERAS Ref002508331 06/25/18 UB Refund Cst #0000026629 6825 06/15/18 PAVING SERVICES 16,709.00 2050578 06/27/18 12276 KONECRANES INC 152115502 06/12/18 2,924.50 2,924.50 2050634 07/03/18 05840 KIRK PAVING INC 6826 06/15/18 PAVING SERVICES 17,355.00 WATER RECLAMATION DESIGN (4/1/18-6/1/18)21,068.00 21,068.00 2050732 07/18/18 05840 KIRK PAVING INC 6835 06/28/18 PAVING SERVICES OWS007 06/28/18 CP#8, 3/4 TON REPLACEMENT TRUCK 36,954.07 2050633 07/03/18 17987 KEH & ASSOCIATES INC OWD0111702 06/12/18 14.89 2050731 07/18/18 05109 KEARNY PEARSON FORD OWS008 06/28/18 CP#7, 1 TON REPLACEMENT TRUCK 46,112.82 49.65 49.65 2050683 07/11/18 18912 KATHY BEVERLIN Ref002508515 07/09/18 UB Refund Cst #0000206379 14.89 UB Refund Cst #0000221618 36.62 36.62 2050577 06/27/18 18885 KARLA GOMEZ Ref002508343 06/25/18 UB Refund Cst #0000230575 2050576 06/27/18 18884 JUANITA RUSSELL Ref002508342 06/25/18 75.00 2050682 07/11/18 17248 JUAN TELLO Ref002460359 05/16/16 UB Refund Cst #0000187988 19.51 19.51 59.76 59.76 2050681 07/11/18 17268 JOSUE CORDERO Ref002460568 05/27/16 UB Refund Cst #0000207316 75.00 UB Refund Cst #0000241680 10.68 10.68 2050680 07/11/18 18916 JORGE SANDOVAL SALGADO Ref002508519 07/09/18 UB Refund Cst #0000229939 182066 06/19/18 SB989 CERTIFICATION 200.00 2050575 06/27/18 18891 JORGE GARCIA Ref002508349 06/25/18 2,744.94 2,744.94 2050730 07/18/18 02269 JENAL ENGINEERING CORP 182067 06/19/18 SB989 CERTIFICATION 650.00 UB Refund Cst #0000034243 209.45 209.45 2050729 07/18/18 02269 JENAL ENGINEERING CORP 182176 06/28/18 SB989 TESTING (6/7/18 & 6/19/18) 2050679 07/11/18 18909 JEFF LONEY Ref002508512 07/09/18 44.58 2050728 07/18/18 10563 JCI JONES CHEMICALS INC 760543 06/26/18 CHLORINE GAS 1,837.80 1,837.80 1,757.00 1,757.00 2050574 06/27/18 18889 JAMES BETHEA JR Ref002508347 06/25/18 UB Refund Cst #0000240665 44.58 ANNUAL SITE LICENSE (7/1/18-6/30/19)40,000.00 40,000.00 2050632 07/03/18 17106 IWG TOWERS ASSETS II LLC 450840 07/01/18 ANTENNA SUBLEASE 2050631 07/03/18 14737 IWATER INC 8116 04/01/18 32.18 2050678 07/11/18 14737 IWATER INC 8138 04/27/18 INFRAMAP ENHANCEMENT 2,700.00 2,700.00 15.06 15.06 2050573 06/27/18 18877 IVONNE FUENTES Ref002508334 06/25/18 UB Refund Cst #0000081699 32.18 LICENSE RENEWAL (7/15/18-7/14/19)10,500.00 10,500.00 2050677 07/11/18 18911 ISIDORO ESCOBEDO Ref002508514 07/09/18 UB Refund Cst #0000193856 139201 07/02/18 BILL PROCESSING SRVCS (June 2018)2,272.30 2050630 07/03/18 18678 INNOVYZE INC 180353573 03/29/18 138988 06/29/18 3,315.02BILL PROCESSING SRVCS (June 2018) Page 5 of 11 Check Total Amount CHECK REGISTER Otay Water District Date Range: 6/21/2018 - 7/18/2018 Check #Date Vendor Vendor Name Invoice Inv. Date Description 4,534.35 16,382.82 16,382.82 RET/PAC HYDRO A#7533 (ENDING 5/31/18)19,578.99 19,578.99 2050741 07/18/18 18562 PACIFIC WESTERN BANK 706302018 07/02/18 RET/PAC HYDRO A#7533 (ENDING 6/30/18) 58398 06/29/18 WASTE REMOVAL 577.20 2050640 07/03/18 18562 PACIFIC WESTERN BANK 605312018 06/06/18 1,108.53 1,108.53 2050740 07/18/18 14954 PACIFIC TRANS ENVIRONMENTAL 58397 06/29/18 WASTE DISPOSAL 3,957.15 870-2 PS REPLACEMENT (ENDING 6/30/18)311,273.52 311,273.52 2050588 06/27/18 01002 PACIFIC PIPELINE SUPPLY INC 323332 06/19/18 INVENTORY 2050739 07/18/18 06646 PACIFIC HYDROTECH CORPORATION 706302018 07/02/18 133.30 2050639 07/03/18 06646 PACIFIC HYDROTECH CORPORATION 605312018 06/06/18 870-2 PS REPLACEMENT (ENDING 5/31/18)372,000.78 372,000.78 13,132.50 13,132.50 2050587 06/27/18 12478 OSCAR BOLCH Ref002508329 06/25/18 UB Refund Cst #0000007456 133.30 GEOTECHNICAL SERVICES (4/28/18-5/25/18)900.25 900.25 2050738 07/18/18 18332 NV5 INC 93255 06/30/18 ENGINEERING DESIGN (5/1/18-6/30/18) 2050638 07/03/18 00761 NINYO & MOORE GEOTECHNICAL 218870 06/15/18 13,071.22 2050686 07/11/18 16255 NATIONWIDE RETIREMENT Ben2508595 07/12/18 BI-WEEKLY DEFERRED COMP PLAN 12,361.22 12,361.22 828.89 828.89 2050586 06/27/18 16255 NATIONWIDE RETIREMENT Ben2508375 06/28/18 BI-WEEKLY DEFERRED COMP PLAN 13,071.22 UB Refund Cst #0000214005 150.64 150.64 2050737 07/18/18 09884 NATIONAL SAFETY COMPLIANCE INC 73561 06/30/18 EMPLOYEE TESTING (JUNE 2018) 2050585 06/27/18 18881 MOLLY NOWAK Ref002508339 06/25/18 378.18 2050685 07/11/18 16613 MISSION RESOURCE CONSERVATION 390 07/03/18 WATERSMART SERVICES (6/1/18-6/30/18)32.00 32.00 750.00 750.00 2050684 07/11/18 18906 MICHAEL TABOR 3623070518 07/05/18 CUSTOMER REFUND 378.18 UB Refund Cst #0000146034 177.33 177.33 2050736 07/18/18 09581 MICHAEL R WELCH PHD PE 7149 07/02/18 ENGINEERING SERVICES (10/2017-6/29/18) 2050584 06/27/18 18878 MICHAEL GIANNONE Ref002508335 06/25/18 801.32 2050637 07/03/18 16608 MICHAEL BAKER INT'L INC 10117427 06/18/18 870-2 PS INSPECTION SERV (ENDING 6/3/18)48,115.00 48,115.00 916.18 916.18 2050735 07/18/18 01183 MCMASTER-CARR SUPPLY CO 66457467 06/26/18 FLEET SHOP PARTS 801.32 UB Refund Cst #0000199302 56.99 56.99 2050583 06/27/18 15599 MARTINEZ, JOSE 061018061418 06/14/18 LODGING EXPENSE REIMB 2050582 06/27/18 18809 MARICELA RIOS Ref002508337 06/25/18 5,411.86 2050581 06/27/18 18899 MARCO A GUTIERREZ 1949062518 06/25/18 CUSTOMER REFUND 769.40 769.40 1,363.92 1,363.92 2050636 07/03/18 10512 MAIL MANAGEMENT GROUP INC OWD10914 06/12/18 PRINTING 5,411.86 PROFESSIONAL SERVICES 6,378.50 6,378.50 2050734 07/18/18 01054 LYNN'S LOCKSMITH SERVICE I2923 06/28/18 ADMIN BUILDING REKEY 2050733 07/18/18 15597 LEONARD H VILLARREAL 071118 07/11/18 815.66 2050635 07/03/18 15597 LEONARD H VILLARREAL 062818 06/28/18 PROFESSIONAL SERVICES 5,337.50 5,337.50 2050580 06/27/18 09378 LENNAR HOMES OF CA INC WOD0926 06/26/18 W/O REFUNDS D0926-090194 815.66 Page 6 of 11 Check Total Amount CHECK REGISTER Otay Water District Date Range: 6/21/2018 - 7/18/2018 Check #Date Vendor Vendor Name Invoice Inv. Date Description 4,409.22 63,385.04 10,408.50 5,940.00 215,305.57 UTILITY EXPENSES (MONTHLY)24,004.91 24,004.91205059306/27/18 00121 SAN DIEGO GAS & ELECTRIC 061718 06/19/18 070318 07/03/18 UTILITY EXPENSES (MONTHLY)16,463.23 051618 05/16/18 UTILITY EXPENSES (MONTHLY)31.16 050218 05/02/18 UTILITY EXPENSES (MONTHLY)70,095.20 042418 04/24/18 UTILITY EXPENSES (MONTHLY)28,432.51 300.00 300.00 2050692 07/11/18 00121 SAN DIEGO GAS & ELECTRIC 070618 07/06/18 UTILITY EXPENSES (MONTHLY)100,283.47 EXPENSE REIMBURSEMENT 128.61 128.61 2050644 07/03/18 00003 SAN DIEGO COUNTY WATER AUTH 0000001685 06/11/18 WATERSMART PROGRAM 20180628183 06/28/17 SAFETY TRAINING 595.00 2050643 07/03/18 17714 SALMERON, EILEEN 050418062818 06/28/18 20180627181 06/27/18 SAFETY TRAINING 1,000.00 20180624179 06/24/17 SAFETY TRAINING 845.00 1,500.00 20180615177 06/15/18 SAFETY TRAINING 1,000.00 20180628182 06/28/18 SAFETY TRAINING 1,000.00 UB Refund Cst #0000240798 86.84 86.84 2050691 07/11/18 18033 SAFETY-R-US LLC 20180625180 06/25/18 SAFETY TRAINING CI16484 06/25/18 SPARE ROTORK ACTUATORS 177.63 2050592 06/27/18 18890 ROY DAVIS Ref002508348 06/25/18 21.84 21.84 2050745 07/18/18 02620 ROTORK CONTROLS INC CI16469 06/20/18 SPARE ROTORK ACTUATORS 10,230.87 WELDING SERVICES 500.00 500.00 2050690 07/11/18 17838 RODERICK SEWELL Ref002475950 02/21/17 UB Refund Cst #0000231490 0061671 06/19/18 CAMPO RD SUPP SVCS (4/28/18-5/25/18)8,405.70 2050642 07/03/18 00521 RICK POST WELD & WET TAPPING 11910 06/11/18 241.35 241.35 2050744 07/18/18 08972 RICK ENGINEERING COMPANY 17829D10 06/21/18 DESIGN SERVICES (3/31/18-5/25/18)54,979.34 CORROSION SERVICES (6/1/18-6/30/18)7,993.00 7,993.00 2050689 07/11/18 18915 RICHARD FIERRO Ref002508518 07/09/18 UB Refund Cst #0000226511 2050743 07/18/18 15647 RFYEAGER ENGINEERING LLC 18121 06/29/18 2,046.00 2050688 07/11/18 18908 RALSTON TEAM PROPERTIES 5310070518 07/05/18 CUSTOMER REFUND 165.04 165.04 342.20 342.20 2050687 07/11/18 18919 PRESIDIO CORNERSTONE CAMBRIA Ref002508522 07/09/18 UB Refund Cst #0000243026 2,046.00 TRAVEL EXPENSE (7/29/18-7/31/18)1,803.86 1,803.86 2050641 07/03/18 01715 PORRAS, PEDRO 072918073118A 06/25/18 TRAVEL ADVANCE (7/29/18-7/31/18) 2050591 06/27/18 01715 PORRAS, PEDRO 072918073118 06/25/18 W/O REFUNDS D0834-090238 2,571.85 WOD0834A 06/26/18 W/O REFUNDS D0834-090094 1,837.37 2050590 06/27/18 17238 PIO PICO ENERGY CENTER LLC WOD0834 06/26/18 907.67 2050742 07/18/18 15081 PINOMAKI DESIGN 5725 07/02/18 GRAPHIC DESIGN 845.00 845.00 2050589 06/27/18 00137 PETTY CASH CUSTODIAN 062518 06/25/18 PETTY CASH REIMBURSEMENT 907.67 Page 7 of 11 Check Total Amount CHECK REGISTER Otay Water District Date Range: 6/21/2018 - 7/18/2018 Check #Date Vendor Vendor Name Invoice Inv. Date Description 116,478.62 260.00 1,178,813.62 26,166.35 38,683.75 38,683.75 COMM CONSULTANT (6/1/18-6/30/18)2,500.00 2,500.00 2050755 07/18/18 00408 SWEETWATER AUTHORITY 51134011 06/20/18 OWD SHARE O&M 2050754 07/18/18 18376 SVPR COMMUNICATIONS 1220 06/30/18 452628 06/13/18 DIESEL FUEL- RED DYE 7,940.83 452389 06/06/18 DIESEL FUEL 6,483.48 9,252.21 9,252.21 2050650 07/03/18 10339 SUPREME OIL COMPANY 452388 06/06/18 UNLEADED FUEL 11,742.04 UB Refund Cst #0000203426 173.24 173.24 2050753 07/18/18 15974 SUN LIFE FINANCIAL 8166060118 06/01/18 LIFE INSURANCE AND STD/LTD 62673 05/11/18 2018-19 WORKERS' COMP PROGRAM 413,123.59 2050597 06/27/18 18880 STEVEN LOPEZ Ref002508338 06/25/18 20,783.00 2050649 07/03/18 03516 SPECIAL DISTRICT RISK 64556 05/15/18 2018-19 PROPERTY/LIABILITY PROGRAM 765,690.03 1,528.37 1,528.37 2050648 07/03/18 15176 SOUTHCOAST HEATING & AIR 1055273 06/11/18 HVAC REPLACEMENT 20,783.00 REPAIR OF FLOATING MIXERS 1,528.37 1,528.37 2050647 07/03/18 00258 SLOAN ELECTRIC COMPANY 0215291 06/08/18 REPAIR OF FLOATING MIXERS 2050752 07/18/18 00258 SLOAN ELECTRIC COMPANY 810260 06/20/18 143,507.08 2050596 06/27/18 15562 SLF IV MCMILLIN MILLENIA JV WOD0943A 06/26/18 W/O REFUNDS D0943-090326 2,913.13 2,913.13 18.60 18.60 2050751 07/18/18 18396 SIMPSON SANDBLASTING & SPECIAL 606302018 06/22/18 RES COATING & UPGRADE (ENDING 6/30/18)143,507.08 W/O REFUNDS D0132-090273 83.36 83.36 2050693 07/11/18 18457 SHEENA LAWRIE Ref002493549 11/27/17 UB Refund Cst #0000010803 2050595 06/27/18 03955 SHEA HOMES LP WOD0132A 06/26/18 14,340.00 2050594 06/27/18 18606 SHARP HEALTH CARE WOD0675 06/26/18 W/O REFUNDS D0675-090196 839.74 839.74 6,332.36 6,332.36 2050750 07/18/18 12421 SCS ENGINEERS 0327900 06/30/18 CAL-ARP PROGRAM UPDATE 14,340.00 SAFETY CONES 4,887.00 4,887.00 2050749 07/18/18 18869 SCHNEIDER ELECTRIC SYSTEMS INC 93787382 06/20/18 PRESSURE & LEVEL TRANSMITTERS 06/04/18 TUITION REIMBURSEMENT 162.00 162.00 2050646 07/03/18 18577 SC SUPPLY COMPANY LLC 29109 06/13/18 195.00 071618AS 07/16/18 IPMA MEMBERSHIP RENEWAL (7/1/18-6/30/19)65.00 2050748 07/18/18 03514 SANTOS, MARCIANO 060418MS UTILITY EXPENSES (MONTHLY)80.87 80.87 2050747 07/18/18 10578 SAN DIEGO INTERNATIONAL PUBLIC 071618HR 07/16/18 IPMA MEMBERSHIP RENEWAL (7/1/18-6/30/19) 2050746 07/18/18 00121 SAN DIEGO GAS & ELECTRIC 071018 07/10/18 062618 06/26/18 UTILITY EXPENSES (MONTHLY)10,929.34 062518 06/25/18 UTILITY EXPENSES (MONTHLY)785.66 64,538.13 062618A 06/26/18 UTILITY EXPENSES (MONTHLY)22,117.55 062718 06/27/18 UTILITY EXPENSES (MONTHLY)18,107.94 UTILITY EXPENSES (MONTHLY)24,004.91 24,004.91 2050645 07/03/18 00121 SAN DIEGO GAS & ELECTRIC 062718A 06/27/18 UTILITY EXPENSES (MONTHLY) 2050593 06/27/18 00121 SAN DIEGO GAS & ELECTRIC 061718 06/19/18 Page 8 of 11 Check Total Amount CHECK REGISTER Otay Water District Date Range: 6/21/2018 - 7/18/2018 Check #Date Vendor Vendor Name Invoice Inv. Date Description 621.83 15,949.00 75.00 75.00 UB Refund Cst #0000231972 15.32 15.32 2050605 06/27/18 18893 VANESSA FINNEY Ref002508351 06/25/18 UB Refund Cst #0000242485 SD22401 07/01/18 MGMT/INSP (6/1/18-6/30/18)2,104.00 2050604 06/27/18 18887 VANESSA DEL CARMEN RIVERA Ref002508345 06/25/18 110.00 2050760 07/18/18 08028 VALLEY CONSTRUCTION MANAGEMENT SD177613 07/01/18 MGMT/INSP (6/1/18-6/30/18)13,845.00 5,925.75 5,925.75 2050700 07/11/18 06829 US SECURITY ASSOCIATES INC 2228143 06/28/18 PATROLLING SERVICES (6/1/18-6/30/18)110.00 POSTAGE - PERMIT 700 142.01 142.01 2050603 06/27/18 18728 US PURE WATER CORP Cm1811961 04/06/18 WATER STATIONS 31353STEEC 06/21/18 PORT. TOILET RENTAL (SALES TAX/EEC)43.82 2050699 07/11/18 08402 US POSTMASTER OWD-11041P 07/11/18 1146872761 06/11/18 PORT. TOILET RENTAL (6/5/18-7/2/18)79.96 1146872757 06/11/18 PORT. TOILET RENTAL (6/5/18-7/2/18)79.96 1146872771 06/11/18 PORT. TOILET RENTAL (6/5/18-7/2/18)79.96 1146872765 06/11/18 PORT. TOILET RENTAL (6/5/18-7/2/18)79.96 98.20 1146872767 06/11/18 PORT. TOILET RENTAL (6/5/18-7/2/18)80.01 1146872776 06/11/18 PORT. TOILET RENTAL (6/5/18-7/2/18)79.96 UNDERGROUND ALERTS (MONTHLY)904.30 904.30 2050602 06/27/18 15675 UNITED SITE SERVICES INC 1146872774 06/11/18 PORT. TOILET RENTAL (6/5/18-7/2/18) 2050759 07/18/18 00427 UNDERGROUND SERVICE ALERT 620180492 07/01/18 7,562.34 2050758 07/18/18 17586 UNDERGROUND PIPELINE SOLUTIONS 00017351 06/29/17 RETAINAGE RELEASE 7,562.34 7,562.34 141,198.27 141,198.27 2050698 07/11/18 17586 UNDERGROUND PIPELINE SOLUTIONS 00017351 06/29/17 RETAINAGE RELEASE 7,562.34 UB Refund Cst #0000239718 31.39 31.39 2050697 07/11/18 03261 TYLER TECHNOLOGIES INC 045225276 06/01/18 SOFTWARE MAINT/SUPPORT (7/01/18-6/30/19) 2050601 06/27/18 18888 TYLER MANION Ref002508346 06/25/18 32.51 2050652 07/03/18 15398 TIMMONS GROUP INC 207016 06/11/18 PROFESSIONAL SERVICES (4/30/18-5/31/18)2,590.00 2,590.00 388,124.59 388,124.59 2050696 07/11/18 18918 TIM PATTEN Ref002508521 07/09/18 UB Refund Cst #0000239190 32.51 UB Refund Cst #0000243226 2,046.00 2,046.00 2050651 07/03/18 01834 TC CONSTRUCTION CO INC 805312018 06/11/18 HILLSDALE RD PROJECTS (ENDING 5/31/18) 2050600 06/27/18 18897 TC CONSTRUCTION CO Ref002508355 06/25/18 16.65 2050599 06/27/18 18898 TC CONSTRUCTION Ref002508356 06/25/18 UB Refund Cst #0000243269 2,046.00 2,046.00 440.00 440.00 2050598 06/27/18 18882 TANYA MCNEW Ref002508340 06/25/18 UB Refund Cst #0000214373 16.65 UB Refund Cst #0000232887 155.89 155.89 2050757 07/18/18 18922 TAMAYO, JUAN 062518JT 06/25/18 TUITION REIMBURSEMENT 2050695 07/11/18 17839 TALAN CLOWNEY Ref002475951 02/21/17 9,058.27 2050756 07/18/18 17704 T&T JANITORIAL INC 2018-4710 05/31/18 JANITORIAL SERVICES (5/1/18-5/31/18)4,780.00 4,780.00 2050694 07/11/18 01905 SYMPRO INC 10472 05/08/18 SOFTWARE MAINTENANCE (7/1/18-6/30/19)9,058.27 Page 9 of 11 Check Total Amount CHECK REGISTER Otay Water District Date Range: 6/21/2018 - 7/18/2018 Check #Date Vendor Vendor Name Invoice Inv. Date Description 10,081.44 61,249.19 11,412.15 9,520.00 375.001410106/05/18 BEE REMOVAL 125.00 BEE REMOVAL 125.00 14111 06/07/18 BEE REMOVAL 125.00 3246 06/30/18 HYDRAULIC MODELING (ENDING 6/30/18)650.00 2050654 07/03/18 01343 WE GOT YA PEST CONTROL INC 14102 06/05/18 5,320.00 5,320.00 2050765 07/18/18 15726 WATER SYSTEMS CONSULTING INC 3253 06/30/18 HYDRAULIC MODELING (ENDING 6/30/18)8,870.00 GARDEN FUNDING CONTRIBUTION (Q1)24,000.00 24,000.00 2050611 06/27/18 15726 WATER SYSTEMS CONSULTING INC 3195 05/31/18 HYDRAULIC MODELING (ENDING 5/31/18) 581023 06/18/18 EQUIPMENT REPLACEMENT (CP2545)373.05 2050764 07/18/18 14879 WATER CONSERVATION GARDEN 1208 06/21/18 579294 06/15/18 SECURITY ALARM MONITORING (JULY 2018)1,946.92 580522 06/05/18 SECURITY EQUIPMENT (CP2545)525.00 SECURITY EQUIPMENT (CP2545)6,189.17 581022 06/18/18 SECURITY EQUIPMENT (CP2545)2,378.01 581029 06/18/18 SECURITY EQUIP INSTALL (6/18/18-7/31/18)129.00 2050653 07/03/18 15807 WATCHLIGHT CORPORATION 581024 06/18/18 581430 06/27/18 EQUIPMENT INSTALLATION (CP2545)4,098.63 572625 04/24/18 EQUIPMENT INSTALLATION (CP2545)2,362.50 581428 06/27/18 SECURITY EQUIPMENT INSTALL (CP2545)12,069.93 581425 06/27/18 INSTALL POWER & DATA LINES (CP2545)6,405.00 SECURITY EQUIPMENT INSTALL (CP2545)21,404.01 581429 06/27/18 SECURITY EQUIPMENT INSTALL (CP2545)14,780.12 2050763 07/18/18 15807 WATCHLIGHT CORPORATION 581426 06/27/18 1,056.66 2050762 07/18/18 10340 WAGEWORKS INC INV784610 06/25/18 FLEXIBLE SPENDING ACCT (JUNE 2018)417.50 417.50 3,113.28 3,113.28 2050610 06/27/18 06154 VISTA SOUTH MELROSE LP WOD0677 06/26/18 W/O REFUNDS D0677-090172 1,056.66 UB Refund Cst #0000040892 20.12 20.12 2050609 06/27/18 18900 VILLAGE II TOWN CENTER LLC WOD0933 06/26/18 W/O REFUNDS D0933-090334 2050608 06/27/18 18876 VICTOR ISORDIA Ref002508333 06/25/18 9809507134 06/21/18 WIRELESS SERVICES (5/22/18 - 6/21/18)1,130.18 9809507135 06/21/18 WIRELESS SERVICES (5/22/18 - 6/21/18)263.87 79,391.58 2050761 07/18/18 03329 VERIZON WIRELESS 9809507131 06/21/18 WIRELESS SERVICES (5/22/18 - 6/21/18)8,687.39 929.27 929.27 2050703 07/11/18 12686 VANTAGEPOINT TRANSFER AGENTS Ben2508593 07/12/18 401A TERMINAL PAY 79,391.58 BI-WEEKLY 401A PLAN 979.27 979.27 2050702 07/11/18 06414 VANTAGEPOINT TRANSFER AGENTS Ben2508603 07/12/18 BI-WEEKLY 401A PLAN 2050607 06/27/18 06414 VANTAGEPOINT TRANSFER AGENTS Ben2508383 06/28/18 14,934.38 2050701 07/11/18 01095 VANTAGEPOINT TRANSFER AGENTS Ben2508601 07/12/18 BI-WEEKLY DEFERRED COMP PLAN 15,357.01 15,357.01 75.00 75.00 2050606 06/27/18 01095 VANTAGEPOINT TRANSFER AGENTS Ben2508381 06/28/18 BI-WEEKLY DEFERRED COMP PLAN 14,934.38 2050605 06/27/18 18893 VANESSA FINNEY Ref002508351 06/25/18 UB Refund Cst #0000242485 Page 10 of 11 Check Total Amount CHECK REGISTER Otay Water District Date Range: 6/21/2018 - 7/18/2018 Check #Date Vendor Vendor Name Invoice Inv. Date Description 250.00 449.00 449.00 Amount Pd Total:4,442,443.05 Check Grand Total:4,442,443.05 SOFTWARE ENHANCEMENTS 3,500.00 3,500.00 2050704 07/11/18 18171 YANG, YAOJU 06272018JY 07/03/18 TUITION REIMBURSEMENT 2050768 07/18/18 15973 XC2 SOFTWARE LLC 10566 06/28/18 79,116.00 2050767 07/18/18 18101 WIER CONSTRUCTION CORP 1206302018 06/30/18 SEWER REPLACEMENT (6/1/18-6/30/18)104,566.50 104,566.50 5,503.50 5,503.50 2050656 07/03/18 18101 WIER CONSTRUCTION CORP 1105312018 06/13/18 SEWER REPLACEMENT (5/1/18-5/31/18)79,116.00 RET/WEIR CONST A#2222 (5/1/18-5/31/18)4,164.00 4,164.00 2050766 07/18/18 18173 WESTERN ALLIANCE BANK 1206302018 06/30/18 RET/WEIR CONST A#2222 (6/1/18-6/30/18) 2050655 07/03/18 18173 WESTERN ALLIANCE BANK 1105312018 06/13/18 BEE REMOVAL 125.00 13496 05/30/18 BEE REMOVAL 125.00 2050612 06/27/18 01343 WE GOT YA PEST CONTROL INC 13498 05/31/18 Page 11 of 11