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05-02-18 Board Packet
1 OTAY WATER DISTRICT BOARD OF DIRECTORS MEETING DISTRICT BOARDROOM 2554 SWEETWATER SPRINGS BOULEVARD SPRING VALLEY, CALIFORNIA WEDNESDAY May 2, 2018 3:30 P.M. AGENDA 1. ROLL CALL 2. PLEDGE OF ALLEGIANCE 3. APPROVAL OF AGENDA 4. LEGISLATIVE UPDATE (ROSANNA CARVACHO OF BROWNSTEIN, HYATT, FARBER AND SCHRECK) 5. APPROVE THE MINUTES OF THE REGULAR BOARD MEETING OF FEBRUARY 7, 2018 AND SPECIAL BOARD MEETINGS OF FEBRUARY 7, 2018 AND APRIL 11, 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 FIRST AMENDMENT TO THE 2001 AGREEMENT FOR THE OPERATION AND MAINTENANCE OF THE PUMP STATION WITH THE LAKE- VIEW 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 IN- FOSEND TO PROVIDE BILL PRINT AND ELECTRONIC BILL PRESENTMENT SERVICES IN AN AMOUNT NOT-TO-EXCEED $1,310,000 ($262,000 ANNU- ALLY, INCLUDING PASS-THROUGH POSTAGE COSTS OF $170,000), AND ONE WITH ELECTRONIC PAYMENT EXCHANGE TO PROVIDE ONLINE PAY-MENT TRANSACTION PROCESSING SERVICES IN AN AMOUNT NOT-TO-EX- CEED $1,500,000 ($250,000 ANNUALLY) 2 c) RECEIVE THE DISTRICT’S INVESTMENT POLICY, BOARD OF DIRECTORS POLICY NO. 27, FOR REVIEW AND RE-DELEGATE AUTHORITY FOR ALL IN-VESTMENT 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 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 8. 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 (COBURN-BOYD) 9. BOARD a) DISCUSS THE 2018 BOARD MEETING CALENDAR INFORMATIONAL ITEM 10. 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 (KOEPPEN) b) RECEIVE INFORMATION REGARDING A LOWER COST STRATEGY FOR FUNDING CALPERS (KOEPPEN) 3 REPORTS 11. GENERAL MANAGER’S REPORT 12. SAN DIEGO COUNTY WATER AUTHORITY UPDATE 13. DIRECTORS' REPORTS/REQUESTS 14. PRESIDENT’S REPORT/REQUESTS RECESS TO CLOSED SESSION 15. CLOSED SESSION a) CONFERENCE WITH LABOR NEGOTIATORS [GOVERNMENT CODE §54957.6] AGENCY DESIGNATED REPRESENTATIVES: MARK ROBAK AND TIM SMITH EMPLOYEE ORGANIZATION: OTAY WATER DISTRICT EMPLOYEES’ ASSOCI- ATION AND ALL REPRESENTED AND UNREPRESENTED PERSONNEL INCLUDING MAN- AGEMENT AND CONFIDENTIAL EMPLOYEES RETURN TO OPEN SESSION 16. REPORT ON ANY ACTIONS TAKEN IN CLOSED SESSION. THE BOARD MAY ALSO TAKE ACTION ON ANY ITEMS POSTED IN CLOSED SESSION 17. ADJOURNMENT 4 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 April 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 April 27, 2018. /s/ Susan Cruz, District Secretary STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: May 2, 2018 SUBMITTED BY: Tenille M. Otero, Communications Officer PROJECT: Various DIV. NO. ALL APPROVED BY: Mark Watton, General Manager SUBJECT: Presentation: Legislative Update GENERAL MANAGER’S RECOMMENDATION: No recommendation. This is an informational item only. COMMITTEE ACTION: N/A. PURPOSE: To provide the Board with a legislative update on 2017-2018 legislative session. ANALYSIS: Otay Water District maintains a set of legislative policy guidelines to direct staff and legislative advocates on issues important to the District. The legislative guidelines are updated annually and presented to the District’s Board of Directors for review, comment, and adoption. In addition, staff annually presents the District’s legislative priorities on issues affecting the District. The District’s legislative consulting firm, Brownstein Hyatt Farber and Schreck (BHFS), monitors significant bills that could have potential impact on the District and/or its ratepayers. Rosanna Caravacho from BHFS will present a legislative update on the 2017- 2018 legislative session. Please see Attachment A for a legislative synopsis of the legislative session and Attachment B for a list of legislative bills that BHFS is tracking for the District. FISCAL IMPACT: Joe Beachem, Chief Financial Officer None. LEGAL IMPACT: None Attachments: Attachment A – 2017-Legislative Session Update Attachment B – List of Otay Water District Bills monitored by BHFS Memorandum DATE: April 26, 2018 TO: Board of Directors and General Manager, Mark Watton Otay Water District FROM: Rosanna Carvacho RE: 2017-18 Legislative Session Update Prior to the Legislature adjourning last year, SB 623 (Monning) was introduced, which would establish California’s first ever tax on drinking water. Although the bill stalled in 2017, it has become the main point of reference in the Governor’s 2018-19 proposed water budget and the cornerstone for the Safe and Affordable Drinking Water budget trailer bill. This proposal seeks to create a new special fund, the “Safe and Affordable Drinking Water Fund,” for the State Water Resources Control Board to assist communities in paying for short-term and long-term costs of obtaining access to safe and affordable drinking water, through a tax on water users, dairies and agriculture. Both the Assembly and Senate Budget Subcommittees have taken up the Safe and Affordable Drinking Water item for discussion but have not yet taken action. The budget subcommittees will wait to act on this item until after the Governor releases his “May Revision” to the budget next month. As you may recall, in April 2017 the Administration published a final framework for implementing Executive Order B-37-16, which urged the continuance of state water conservation efforts and establishment of long-term water conservation measures. During the 2017 legislative session, multiple bills were introduced and amended in an effort to codify these recommendations. At the beginning of April, two of the water conservation bills from 2017 – AB 1668 (Friedman) and SB 606 (Skinner) related to water management planning – were amended. These bills were a critical part of the water conservation bill package we saw last year, as they focus on the adoption of long-term standards for the efficient use of water, require guidance related to drought and water shortage contingency plans and require the update of water management plans to consider drought preparedness – among other things. The amendments appear to address various technical concerns raised by stakeholders at the end of last year but both bills will likely be amended again in the coming months. We will continue to monitor the status of all of the water conservation bills before the Legislature adjourns the 2017-18 Legislative Session on August 31st. In addition to water conservation, the funding of water projects, including drought and flood protection measures, continues to be a hot topic. SB 5 (de León) of 2017, the California Drought, Water, Parks, Climate, Coastal Protection, and Outdoor Access For All Act, is set for the June 5, 2018 ballot – now known as Proposition 68. If approved by voters, Proposition 68 will authorize a $4 billion general obligation bond for the creation and rehabilitation of state and local parks, natural resources protection projects, climate adaptation projects, water quality and supply projects, and flood protection projects. Attachment A 2 As was expected, there will be a subsequent water bond on the November 2018 ballot – the Water Supply and Water Quality Bond Act of 2018. This bond is proposed by Dr. Jerry Meral, former Deputy Secretary of Natural Resources under Governor Brown, and would authorize a $8.88 billion general obligation bond for safe drinking water, water recycling, water conservation, flood improvements and more. On April 25th the Secretary of State announced that this initiative had qualified for the November ballot. A third proposed water bond initiative would have authorized a $7.9 billion general obligation bond to be placed before the voters, however, the proponents failed to gather the required number of signatures needed to qualify for the November ballot. Provided the voters pass Proposition 68 in June, the Governor’s proposed 2018-19 budget includes funding for the restoration of the Salton Sea, providing $30 million from SB 5 (de León), for the Natural Resources Agency to construct water management infrastructure and habitat conservation and dust mitigation projects and $170 million for the implementation of the Salton Sea Management Program 10- year plan. Although the Salton Sea remains a topic of discussion in the water community, we have yet to see substantive legislation in 2018 on this matter. However, a bill introduced in February, SB 1277 (Hueso), states the intent of the Legislature to enact legislation related to the governance and administrative structure for the implementation of the Salton Sea Management Program, mentioned above. Unfortunately, this bill has not moved forward yet because it is only an intent bill but we will continue to watch it. Keeping on the trend with California’s focus on water sustainability and reliability, the Department of Water Resources released the Preliminary Draft of Water Plan Update 2018 in September 2017 and is currently in the process of finalizing the document. The plan outlines California’s commitment to a sustainable future and describes how the state can support and empower local and regional entities to bring their visions of sustainable water resources management to life. Building upon Update 2013, this update is the twelfth in a series of California Water Plans since 1957.The 2018 Update is currently expected to be released in May of 2018 but the release date has already been pushed back numerous times this year. The California WaterFix also remains a priority of the Administration and continues to be a topic of discussion throughout the state. Since our last update the Metropolitan Water District (MWD) of Southern California’s Board of Directors voted to approve funding for nearly 2/3 of the cost of two tunnels. This is an abrupt change for MWD whose general manager had, about a week earlier, announced plans to abandon the two-tunnel approach in favor of a staged approach in which a single, larger tunnel would be constructed with the option of adding a second tunnel in the future. Governor Brown issued the following statement after the MWD Board vote “This is a historic decision that is good for California – our people, our farms and our natural environment.” Prior to the vote, the Governor sent a letter to the MWD Board urging them to support the project, in full. Otay Water District took several positions on bills in the 2017-18 legislative session, which we continue to monitor and provide updates to your staff as they move through the Legislature. Below is a list of those bills and their current status. • AB 869 (Rubio) – This measure, as amended, would require the State Water Resources Control Board (SWRCB), in consultation with the Department of Water Resources (DWR), to adopt long-term standards for urban water conservation and water use, and would require DWR to conduct studies and investigations, and recommend standards for indoor residential use and outdoor irrigation use, to the SWRCB for adoption. Otay Water District took a support position on an earlier version of this bill that would have excluded recycled water from future water use reduction calculations. The measure was held in the Senate and is currently a 2-year bill. 3 • AB 1000 (Friedman) – This measure, strongly opposed by the water community, sought to create a new certification process for water conveyance in California. Specifically, the measure would have imposed a duplicative environmental review of the Cadiz Valley Water Conservation, Recovery and Storage Project. The proposed creation of a new regulatory layer to block the Cadiz Project would have set a dangerous precedent, putting future water conveyance projects at risk of similar regulatory abuse. Otay Water District took an oppose position on the measure. The measure was held in the Senate and is currently a 2-year bill. • AB 1323 (Weber) – This measure would require DWR to convene a stakeholder group involving a wide variety of stakeholder interests and would require the stakeholder workgroup to develop, evaluate, and recommend proposals for establishing new water use targets for urban water suppliers and to report to the Governor and Legislature. Otay Water District took a support position on the measure. The measure was held in the Senate and is currently a 2-year bill. • AB 1654 (Rubio) – The current version of this measure states that it is the intent of the Legislature to enact legislation necessary to help make water conservation a California way of life. Otay Water District took a support position on a previous version of the measure that would have placed numerous requirements on urban retail water suppliers. The measure was held in the Senate and is currently a 2-year bill. • AB 1667 (Friedman) – This measure would require the SWRCB, in consultation with DWR, to adopt long-term standards for urban water conservation and water use and require the SWRCB, in consultation with DWR, to adopt performance measures for commercial, industrial, and institutional water use. Otay Water District took an oppose position on the measure. The measure was held in the Senate and is currently a 2-year bill. • AB 1668 (Friedman)/SB 606 (Skinner/Hertzberg) – In July, both of these bills were stripped down to intent language regarding making conservation a California way of life. The bills were subsequently gutted and amended to relate to urban water plans and water efficiency standards. Otay Water District took an oppose unless amended position on the bills. AB 1668 was held in the Senate and SB 606 was held in the Assembly. However, as outlined above, the bills were amended again in early April. AB 1668 is now back in Senate Rules and SB 606 is now on the Assembly Floor. • AB 2065 (Ting) – This measure seeks to expand the definition of “local agency” to include sewer, water, utility, and local and regional park districts, joint powers authorities, successor agencies to former redevelopment agencies, housing authorities, and other political subdivisions of this state thereby requiring these entities to comply with existing and expanded requirements for the disposal of surplus land. The goal of this bill, according to the author’s office, is to guarantee affordable housing developers get first priority to purchase surplus land from local governments and agencies. Otay Water District does not currently have a position on this bill, but it is our understanding that this bill is of importance to the District. The bill passed the Assembly Local Government Committee on April 11, 2018 with technical amendments. The bill is now in the Assembly Appropriations Committee awaiting a hearing. • SB 623 (Monning) – On August 21, the measure was gutted and amended to establish a public goods charge on water to create an ongoing funding stream for safe and affordable drinking water – the first ever tax on drinking water in California. Otay Water District took an oppose position on the measure. The measure was held in the Assembly and is now a 2-year bill. As mentioned above, the proposed Safe and Affordable Drinking Water budget trailer bill is the more viable avenue for this proposal, but both SB 623 and the budget trailer bill remain potential vehicles. 4 • SB 831 (Wieckowski) – As amended on April 9, 2018, this bill proposes to undo the carefully negotiated statutory language from 2016 on the issue of whether a water system should be allowed to charge a connection fee or capacity charge upon a new accessory dwelling unit. SB 831 eliminates the connection fee and capacity charge authority altogether, and inserts an affirmative prohibition against any kind of connection fee or capacity charge. Otay Water District took an oppose unless amended position on this measure. This bill was heard and passed the Senate Governance and Finance Committee on April 25, 2018. • SB 998 (Dodd) – This bill, as amended on April 23, 2018, prohibits an urban and community water system from discontinuing residential service for nonpayment until a payment by a customer has been delinquent for at least 60 days. The bill would also require a water system to contact the customer no less than 7 business days before discontinuation of residential service and specifies what must be included in the notice. Additionally, SB 998 restricts a water system from shutting off the water to a delinquent customer with a documented, life-threatening medical condition provided that the customer agrees to pay off the outstanding balance over time. This bill was heard and passed the Senate Judiciary Committee on April 24, 2018. 1 Otay Water District Bills Thursday, April 26, 2018 AB 554 (Cunningham R) Desalination: statewide goal. Current Text: Amended: 3/27/2017 html pdf Last Amend: 3/27/2017 Status: 2/1/2018-Failed Deadline pursuant to Rule 61(b)(3). (Last location was APPR. on 5/26/2017) Location: 2/1/2018-A. DEAD Summary: The Cobey-Porter Saline Water Conversion Law provides that is it the intention of the Legislature that the Department of Water Resources undertake to find economic and efficient methods of desalting saline water so that desalted water may be made available to help meet the growing water requirements of the state. This bill would establish a goal to desalinate 300,000 acre-feet of drinking water per year by the year 2025 and 500,000 acre-feet of drinking water per year by the year 2030. Position Watch AB 560 (Salas D) Safe Drinking Water State Revolving Fund: project financing: severely disadvantaged communities. Current Text: Chaptered: 10/7/2017 html pdf Last Amend: 7/12/2017 Status: 10/7/2017-Approved by the Governor. Chaptered by Secretary of State - Chapter 552, Statutes of 2017. Location: 10/7/2017-A. CHAPTERED Summary: Would, to the extent permitted by federal law, authorize the State Water Resources Control Board to provide grant funding, and principal forgiveness and 0% financing on loans, from the Safe Drinking Water State Revolving Fund to a project for a water system with a service area that qualifies as a severely disadvantaged community if the water system demonstrates that repaying a Safe Drinking Water State Revolving Fund loan with interest would result in unaffordable water rates, as defined. Position Watch AB 574 (Quirk D) Potable reuse. Current Text: Chaptered: 10/6/2017 html pdf Last Amend: 9/1/2017 Status: 10/6/2017-Approved by the Governor. Chaptered by Secretary of State - Chapter 528, Statutes of 2017. Location: 10/6/2017-A. CHAPTERED Summary: Current law required the State Department of Public Health to, on or before December 31, 2013, adopt uniform water recycling criteria for indirect potable reuse for groundwater recharge. Current law also required the department to develop and adopt uniform water recycling criteria for surface water augmentation, as defined, by December 31, 2016, if a specified expert panel found that the criteria would adequately protect public health, and required the department to investigate the feasibility of developing uniform water recycling criteria for direct potable reuse and to provide a final report on that investigation to the Legislature by December 31, 2016. Current law defined the terms “direct potable reuse” and “surface water augmentation” for these Attachment B 2 purposes. This bill would specify that “direct potable reuse” includes “raw water augmentation” and “treated drinking water augmentation.” Position Watch AB 642 (Harper R) Desalinated water. Current Text: Introduced: 2/14/2017 html pdf Status: 1/20/2018-Failed Deadline pursuant to Rule 61(b)(2). (Last location was PRINT on 2/14/2017) Location: 1/20/2018-A. DEAD Summary: The Cobey-Porter Saline Water Conversion Law declares that the growing water needs of the state require the development of cost-effective and efficient water supply technologies and that desalination technology is now feasible to help provide significant new water supplies from seawater, brackish water, and reclaimed water.This bill would declare the intent of the Legislature to enact subsequent legislation relating to desalination. Position Watch AB 746 (Gonzalez Fletcher D) Public health: potable water systems: lead testing: schoolsites. Current Text: Chaptered: 10/13/2017 html pdf Last Amend: 9/8/2017 Status: 10/13/2017-Approved by the Governor. Chaptered by Secretary of State - Chapter 746, Statutes of 2017. Location: 10/13/2017-A. CHAPTERED Summary: Would require a community water system that serves a schoolsite of a local educational agency with a building constructed before January 1, 2010, to test for lead in the potable water system of the schoolsite before January 1, 2019. The bill would require the community water system to report its findings to the schoolsite, as specified, and, if the schoolsite’s lead level exceeds a certain level, to test a water sample from the point in which the schoolsite connects to the community water system’s supply network. The bill would require the local educational agency, if the lead level exceeds the specified level at a schoolsite, to notify the parents and guardians of the pupils who attend the schoolsite or preschool. Position Watch AB 851 (Caballero D) Local agency contracts. Current Text: Chaptered: 10/16/2017 html pdf Last Amend: 9/7/2017 Status: 10/15/2017-Approved by the Governor. Chaptered by Secretary of State - Chapter 821, Statutes of 2017. Location: 10/16/2017-A. CHAPTERED Summary: Current law authorizes a county, until January 1, 2018, with approval of the board of supervisors, to utilize construction manager at-risk construction contracts for the erection, construction, alteration, repair, or improvement of any building owned or leased by the county, subject to certain requirements, including that the method may only be used for projects that are in excess of $1,000,000. This bill would extend that authorization described above until January 1, 2023. This bill contains other related provisions and other current laws. Position Watch AB 869 (Rubio D) Sustainable water use and demand reduction: recycled water. Current Text: Amended: 8/24/2017 html pdf Last Amend: 8/24/2017 Status: 9/1/2017-Failed Deadline pursuant to Rule 61(a)(12). (Last location was N.R. & W. on 8/24/2017)(May be acted upon Jan 2018) Location: 9/1/2017-S. 2 YEAR 3 Summary: Current law imposes various water use reduction requirements that apply to urban retail water suppliers, including a requirement that the state achieve a 20% reduction in urban per capita water use by December 31, 2020. This bill would require long-term standards for urban water conservation and water use to include a credit for recycled water, as specified. Position Support AB 885 (Rubio D) Pupil health: drinking water: lead. Current Text: Amended: 4/27/2017 html pdf Last Amend: 4/27/2017 Status: 1/20/2018-Failed Deadline pursuant to Rule 61(b)(2). (Last location was APPR. SUSPENSE FILE on 5/17/2017) Location: 1/20/2018-A. DEAD Summary: Would require a community water system, as defined, to test, on or before July 1, 2019, and every year thereafter, for the presence of lead at a sample of water outlets used for drinking or cooking at each school, defined to include a public elementary school, a public secondary school, a public preschool located on public school property, and a public day care facility located on public school property, constructed before January 1, 1993, within the boundaries of the community water system. Position Watch AB 968 (Rubio D) Urban water use: water efficiency. Current Text: Amended: 4/17/2017 html pdf Last Amend: 4/17/2017 Status: 1/20/2018-Failed Deadline pursuant to Rule 61(b)(2). (Last location was APPR. SUSPENSE FILE on 5/10/2017) Location: 1/20/2018-A. DEAD Summary: Would require each urban retail water supplier to develop a water efficiency target, as defined, for 2025 in its 2020 urban water management plan required to be submitted by July 1, 2021, and to achieve that target. The bill would authorize an urban retail water supplier to adjust and update the water efficiency target, as appropriate, when the supplier reports its compliance in achieving the water efficiency targets and its implementation of the identified performance measures in its 2025 urban water management plan required to be submitted by July 1, 2026. The bill would require each urban retail water supplier to meet its adjusted 2025 water efficiency target by December 31, 2025, unless the supplier makes a certain report to the department. Position Support AB 1000 (Friedman D) Water conveyance: use of facility with unused capacity. Current Text: Amended: 7/3/2017 html pdf Last Amend: 7/3/2017 Status: 9/1/2017-Failed Deadline pursuant to Rule 61(a)(12). (Last location was APPR. SUSPENSE FILE on 8/28/2017)(May be acted upon Jan 2018) Location: 9/1/2017-S. 2 YEAR Summary: Current law prohibits the state or a regional or local public agency from denying a bona fide transferor of water from using a water conveyance facility that has unused capacity for the period of time for which that capacity is available, if fair compensation is paid for that use and other requirements are met. This bill would, notwithstanding that provision, prohibit a transferor of water from using a water conveyance facility that has unused capacity to transfer water from a groundwater basin underlying desert lands, as defined, that is in the vicinity of specified federal lands or state lands to outside of the groundwater basin unless the State Lands Commission, in consultation with the Department of Fish and Wildlife, finds that the transfer of the water will not adversely affect the natural or cultural resources of those federal and state lands. Position Oppose 4 AB 1270 (Gallagher R) Dams and reservoirs: inspections and reporting. Current Text: Chaptered: 2/26/2018 html pdf Last Amend: 1/22/2018 Status: 2/26/2018-Approved by the Governor. Chaptered by Secretary of State - Chapter 3, Statutes of 2018. Location: 2/26/2018-A. CHAPTERED Summary: Current law requires the Department of Water Resources, from time to time, to make inspections of dams and reservoirs at state expense for the purpose of determining their safety. This bill would repeal those provisions and instead would require the department to inspect dams, reservoirs, and appurtenant structures once per fiscal year with the exception of low hazard potential dams which the bill would require to receive inspections at least every 2 fiscal years, as specified. The bill would require the owner of a dam to operate critical outlet and spillway control features on an annual basis and to demonstrate their full operability in the presence of the department every 3 years or as directed by the department. Position Watch AB 1271 (Gallagher R) Dams and reservoirs. Current Text: Amended: 3/21/2017 html pdf Last Amend: 3/21/2017 Status: 2/1/2018-From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. Location: 1/31/2018-A. DEAD Summary: Current law requires the Department of Water Resources, in determining whether or not a dam or reservoir or proposed dam or reservoir constitutes or would constitute a danger to life or property, to take into consideration the possibility that the dam or reservoir might be endangered by conditions that exist or that might occur in any area in the vicinity of the dam or reservoir. Under existing law, whenever the department deems that a condition endangers a dam or reservoir, the department is required to order the owner to take action as the department determines to be necessary to remove the resultant danger to life and property. This bill would require the department, as soon as possible, to order the owner to take action. Position Watch AB 1323 (Weber D) Sustainable water use and demand reduction: stakeholder workgroup. Current Text: Amended: 5/30/2017 html pdf Last Amend: 5/30/2017 Status: 9/1/2017-Failed Deadline pursuant to Rule 61(a)(12). (Last location was APPR. SUSPENSE FILE on 8/21/2017)(May be acted upon Jan 2018) Location: 9/1/2017-S. 2 YEAR Summary: Would, with a specified exception, require the Department of Water Resources to convene a stakeholder workgroup with prescribed representatives invited to participate, including, among others, representatives of the department and the State Water Resources Control Board, no later than February 1, 2019. The bill would require the stakeholder workgroup to develop, evaluate, and recommend proposals for establishing new water use targets for urban water suppliers and to examine and report to the Governor and the Legislature by December 31, 2019, as specified. Position Support AB 1548 (Fong R) Occupational safety and health: penalties. Current Text: Introduced: 2/17/2017 html pdf Status: 1/13/2018-Failed Deadline pursuant to Rule 61(b)(1). (Last location was L. & E. on 3/16/2017) Location: 1/13/2018-A. DEAD Summary: Current law requires any civil or administrative penalty assessed pursuant to the California Occupational Safety and Health Act of 1973 against a school district, county board of education, county superintendent of schools, charter school, community college district, California State University, University of California, or joint powers 5 agency performing education functions to be deposited with the Workplace Health and Safety Revolving Fund. Current law authorizes these entities to apply for a refund of the civil penalties assessed against them if specified conditions are met. This bill would expand the application of this section to public entities, defined as a city, county, city and county, district, public authority, public agency, and any other political subdivision. Position Watch AB 1603 (Ridley-Thomas D) Meyers-Milias-Brown Act: local public agencies. Current Text: Amended: 8/24/2017 html pdf Last Amend: 8/24/2017 Status: 9/16/2017-Ordered to inactive file at the request of Senator McGuire. Location: 9/16/2017-S. INACTIVE FILE Summary: Under the Meyers-Milias-Brown Act (MMBA), employees of local public agencies have the right to form, join, and participate in the activities of employee organizations of their own choosing for the purpose of representation on all matters of employer-employee relations. The MMBA authorizes a local public agency to adopt reasonable rules and regulations after consultation in good faith with representatives of a recognized employee organization or organizations for the administration of employer-employee relations under the act. This bill would revise the definition of “public employee” for the purpose of the Meyers-Milias-Brown Act to also include persons jointly employed by a public agency and any other employer at specified clinics and hospitals. Position Watch AB 1654 (Rubio D) Water conservation. Current Text: Amended: 7/12/2017 html pdf Last Amend: 7/12/2017 Status: 7/17/2017-Withdrawn from committee. Re-referred to Com. on RLS. (Set for hearing ) (1/23/2018 - Immune to Deadlines according to JR61(f). Deadlines do not apply to bills in a Rules committee.) Location: 7/17/2017-S. RLS. Summary: Would state the intent of the Legislature to enact legislation necessary to help make water conservation a California way of life. Position Support AB 1667 (Friedman D) Water management planning. Current Text: Amended: 7/3/2017 html pdf Last Amend: 7/3/2017 Status: 7/14/2017-Failed Deadline pursuant to Rule 61(a)(10). (Last location was N.R. & W. on 7/11/2017)(May be acted upon Jan 2018) Location: 7/14/2017-S. 2 YEAR Summary: Would require the State Water Resources Control Board, in consultation with the Department of Water Resources, to adopt long-term standards for urban water conservation and water use on or before May 20, 2021. The bill would also require the board, in consultation with the department, to adopt performance measures for commercial, industrial, and institutional water use on or before that date. Position Oppose AB 1668 (Friedman D) Water management planning. Current Text: Amended: 4/4/2018 html pdf Last Amend: 4/4/2018 Status: 4/4/2018-From committee chair, with author's amendments: Amend, and re- refer to committee. Read second time, amended, and re-referred to Com. on RLS. Location: 9/15/2017-S. RLS. Summary: Current law requires the state to achieve a 20% reduction in urban per capita water use in California by December 31, 2020. Current law requires each urban retail water supplier to develop urban water use targets and an interim urban water use 6 target, as specified. This bill would require the State Water Resources Control Board, in coordination with the Department of Water Resources, to adopt long-term standards for the efficient use of water, as provided, and performance measures for commercial, industrial, and institutional water use on or before June 30, 2022. Position Watch AB 1669 (Friedman D) Urban water conservation standards and use reporting. Current Text: Amended: 4/18/2017 html pdf Last Amend: 4/18/2017 Status: 1/20/2018-Failed Deadline pursuant to Rule 61(b)(2). (Last location was APPR. SUSPENSE FILE on 5/10/2017) Location: 1/20/2018-A. DEAD Summary: Would require the State Water Resources Control Board, in consultation with the Department of Water Resources, to adopt long-term standards for urban water conservation and water use by May 20, 2021. The bill would authorize the board, in consultation with the department, to adopt interim standards for urban water conservation and water use by emergency regulation. The bill would require the board, before adopting an emergency regulation, to provide at least 60 days for the public to review and comment on the proposed regulation and would require the board to hold a public hearing. Position Watch AB 1870 (Reyes D) Employment discrimination: unlawful employment practices. Current Text: Introduced: 1/12/2018 html pdf Status: 4/19/2018-Coauthors revised. From committee: Do pass and re-refer to Com. on APPR. (Ayes 6. Noes 0.) (April 18). Re-referred to Com. on APPR. Location: 4/18/2018-A. APPR. Summary: Current law, the California Fair Employment and Housing Act, makes specified employment and housing practices unlawful, including discrimination against or harassment of employees and tenants, among others. Current law authorizes a person claiming to be aggrieved by an alleged unlawful practice to file a complaint with the Department of Fair Employment and Housing within one year from the date upon which the unlawful practice occurred, unless otherwise specified. This bill would extend the period to 3 years for which complaints alleging unlawful employment or housing practices may be filed with the department, as specified. Position Watch AB 2038 (Gallagher R) Countywide drought and water shortage contingency plans. Current Text: Introduced: 2/6/2018 html pdf Status: 2/16/2018-Referred to Com. on W.,P., & W. Location: 2/16/2018-A. W.,P. & W. Summary: Would require the Department of Water Resources, no later than January 1, 2020, in consultation with the State Water Resources Control Board and other relevant state and local agencies and stakeholders, to use available data to identify small water suppliers and rural communities that may be at risk of drought and water shortage vulnerability and would require the department to notify counties and groundwater sustainability agencies of those suppliers or communities. Position Watch AB 2050 (Caballero D) Small System Water Authority Act of 2018. Current Text: Amended: 4/17/2018 html pdf Last Amend: 4/17/2018 Status: 4/18/2018-Re-referred to Com. on L. GOV. Location: 4/11/2018-A. L. GOV. Summary: Would create the Small System Water Authority Act of 2018 and state legislative findings and declarations relating to authorizing the creation of small system water authorities that will have powers to absorb, improve, and competently operate 7 noncompliant public water systems. The bill, no later than March 1, 2019, would require the state board to provide written notice to cure to all public agencies, private water companies, or mutual water companies that operate a public water system that has either less than 3,000 service connections or that serves less than 10,000 people, and are not in compliance with one or more state or federal primary drinking water standard maximum contaminant levels as of December 31, 2018, and for 4 consecutive quarters, as specified. Position Watch AB 2060 (Garcia, Eduardo D) Water: grants: advanced payments. Current Text: Amended: 4/12/2018 html pdf Last Amend: 4/12/2018 Status: 4/25/2018-In committee: Hearing postponed by committee. Location: 4/12/2018-A. APPR. Summary: Current law requires a regional water management group, within 90 days of notice that a grant has been awarded, to provide the Department of Water Resources with a list of projects to be funded by the grant funds where the project proponent is a nonprofit organization or a disadvantaged community, or the project benefits a disadvantaged community. Current law requires the department, within 60 days of receiving the project information, to provide advanced payment of 50% of the grant award for those projects that satisfy specified criteria, including that the grant award for the project is less than $1,000,000, and requires the advanced funds to be handled as prescribed. This bill would require the department to providea project proponent that requests and demonstrates a need for advanced payment with advanced payment for those projects of $500,000 or 50% of the grant award, whichever is less. Position Watch AB 2064 (Gloria D) Integrated regional water management plans: grants: advanced payment. Current Text: Amended: 4/2/2018 html pdf Last Amend: 4/2/2018 Status: 4/11/2018-In committee: Set, first hearing. Referred to APPR. suspense file. Location: 4/11/2018-A. APPR. SUSPENSE FILE Summary: Current law, until January 1, 2025, requires a regional water management group, within 90 days of notice that a grant has been awarded, to provide the Department of Water Resources with a list of projects to be funded by the grant funds if the project proponent is a nonprofit organization or a disadvantaged community or the project benefits a disadvantaged community. Current law requires the department, within 60 days of receiving this project information, to provide advanced payment of 50% of the grant award for those projects that satisfy specified criteria and require the advanced funds to be handled, including that the funds are required to be spent within 6 months of the date of receipt unless the department waives this requirement. The bill, until January 1, 2025, would require a project proponent, upon completion of the first one-half of a project receiving an above-described grant award, to provide a first one- half project accountability report to the department that reports the completion of objectives for the first one-half of the project and documents the expenditure and use of advanced grant funds. Position Watch AB 2065 (Ting D) Local agencies: surplus land. Current Text: Amended: 4/16/2018 html pdf Last Amend: 4/16/2018 Status: 4/17/2018-Re-referred to Com. on APPR. Location: 4/16/2018-A. APPR. Summary: Current law prescribes requirements for the disposal of surplus land by a local agency. Current law defines “local agency” for these purposes as every city, county, city and county, and district, including school districts of any kind or class, empowered to acquire and hold real property. This bill would expand the definition of “local agency” to include sewer, water, utility, and local and regional park districts, joint 8 powers authorities, successor agencies to former redevelopment agencies, housing authorities, and other political subdivisions of this state and any instrumentality thereof that is empowered to acquire and hold real property, thereby requiring these entities to comply with these requirements for the disposal of surplus land. Position Watch AB 2242 (Rubio D) Urban water management planning. Current Text: Amended: 3/15/2018 html pdf Last Amend: 3/15/2018 Status: 4/25/2018-Read second time. Ordered to third reading. Location: 4/25/2018-A. THIRD READING Summary: Would require an urban water supplier to include in its urban water management plan an assessment of the reliability of its water service, as specified, to its customers during normal, dry, and multiple dry years, including a repeat of the 5 consecutive historic driest years the urban water supplier has experienced. Position Watch AB 2249 (Cooley D) Public contracts: local agencies: alternative procedure. Current Text: Introduced: 2/13/2018 html pdf Status: 4/19/2018-Read third time. Passed. Ordered to the Senate. (Ayes 71. Noes 0.) In Senate. Read first time. To Com. on RLS. for assignment. Location: 4/19/2018-S. DESK Summary: Would authorize public projects of $60,000 or less to be performed by the employees of a public agency, authorize public projects of $200,000 or less to be let to contract by informal procedures, and require public projects of more than $200,000 to be let to contract by formal bidding procedures. Position Watch AB 2283 (Holden D) Income taxes: exclusion: turf removal water conservation program. Current Text: Introduced: 2/13/2018 html pdf Status: 4/4/2018-In committee: Set, first hearing. Referred to APPR. suspense file. Location: 4/4/2018-A. APPR. SUSPENSE FILE Summary: The Personal Income Tax Law and the Corporation Tax Law, for taxable years beginning on or after January 1, 2014, and before January 1, 2019, provide an exclusion from gross income for any amount received as a rebate, voucher, or other financial incentive issued by a local water agency or supplier for participation in a turf removal water conservation program.This bill would extend the operation of those provisions to January 1, 2024. Position Watch AB 2339 (Gipson D) Water utility service: sale of water utility property by a city. Current Text: Amended: 4/3/2018 html pdf Last Amend: 4/3/2018 Status: 4/25/2018-In committee: Set, first hearing. Referred to APPR. suspense file. Location: 4/25/2018-A. APPR. SUSPENSE FILE Summary: Would permit a city that owns and operates a public utility for furnishing water service to sell the public utility for the purpose of consolidating its public water system with another public water system pursuant to the specified procedures, only if the potentially subsumed water system is wholly within the boundaries of the city, if the city determines that it is uneconomical and not in the public interest to own and operate the public utility, and if certain requirements are met. The bill would prohibit the city from selling the public utility for one year if 50% of interested persons, as defined, protest the sale. Position Watch 9 AB 2501 (Chu D) Drinking water: consolidation and extension of service. Current Text: Amended: 4/17/2018 html pdf Last Amend: 4/17/2018 Status: 4/25/2018-From committee: Do pass and re-refer to Com. on APPR. (Ayes 7. Noes 0.) (April 24). Re-referred to Com. on APPR. Location: 4/25/2018-A. APPR. Summary: The California Safe Drinking Water Act authorizes the State Water Resources Control Board to order extension of service to an area within a disadvantaged community that does not have access to an adequate supply of safe drinking water so long as the extension of service is an interim extension of service in preparation of consolidation. The act defines “disadvantaged community” for these purposes to mean a disadvantaged community that is in an unincorporated area, is in a mobilehome park, or is served by a mutual water company or small public water system. This bill would redefine “disadvantaged community” for these purposes to also include a disadvantaged community that is served by a state small water system or domestic well. Position Watch AB 2541 (Salas D) Safe Drinking Water State Revolving Fund: project financing: severely disadvantaged communities. Current Text: Amended: 3/15/2018 html pdf Last Amend: 3/15/2018 Status: 4/25/2018-From committee: Do pass. To Consent Calendar. (Ayes 17. Noes 0.) (April 25). Location: 4/25/2018-A. CONSENT CALENDAR Summary: Current law authorizes the State Water Resources Control Board, to the extent permitted by federal law, to provide grant funding, and principal forgiveness and 0% financing on loans, from the Safe Drinking Water State Revolving Fund to a project for a water system with a service area that qualifies as a severely disadvantaged community if the water system demonstrates that repaying a Safe Drinking Water State Revolving Fund loan with interest would result in unaffordable water rates, as defined. This bill would instead authorize the board, to the extent permitted by federal law, to provide up to 100% grant funding, and principal forgiveness and 0% financing on loans, from the Safe Drinking Water State Revolving Fund to a project for a water system that serves a severely disadvantaged community. Position Watch AB 2648 (Friedman D) Civil actions: limitations: real property. Current Text: Amended: 4/12/2018 html pdf Last Amend: 4/12/2018 Status: 4/16/2018-Re-referred to Com. on JUD. In committee: Set, first hearing. Hearing canceled at the request of author. Location: 4/12/2018-A. JUD. Summary: Current law prohibits an action from being brought to recover damages from any person, or the person’s surety, who develops real property or performs or furnishes the design, specifications, surveying, planning, supervision, testing, or observation of construction or construction of an improvement to real property more than 10 years after the substantial completion of the development or improvement, as specified. Current law provides that the 10-year statute of limitation does not apply to actions based on willful misconduct or fraudulent concealment. This bill would similarly provide that an action for personal injury resulting from water contamination must be commenced no later than 10 years after the plaintiff discovered the injury, and would make technical, nonsubstantive changes to the provisions. Position Watch AB 2692 (Arambula D) Drinking water: infrastructure funding. Current Text: Amended: 3/19/2018 html pdf Last Amend: 3/19/2018 10 Status: 4/24/2018-In committee: Set, first hearing. Hearing canceled at the request of author. Location: 3/19/2018-A. E.S. & T.M. Summary: Would require the Treasurer to establish the California Safe Drinking Water Revolving Loan Program to provide loans to public water systems to address critical water infrastructure needs of those systems. The bill would establish the California Safe Drinking Water Revolving Loan Fund in the State Treasury and would require the Treasurer, upon appropriation by the Legislature, to expend moneys in the fund for the above purpose. Position Watch AB 2728 (Chen R) Replacement of corroded or lead-containing plumbing or service lines: loans. Current Text: Introduced: 2/15/2018 html pdf Status: 4/11/2018-From committee: Do pass and re-refer to Com. on APPR. (Ayes 7. Noes 0.) (April 10). Re-referred to Com. on APPR. Location: 4/10/2018-A. APPR. Summary: Would, to the extent funding is made available, authorize the State Water Resources Control Board to establish a grant program to provide funding to a county or qualified nonprofit organization, as specified, to provide low-interest loans to defined property owners for the replacement of corroded or lead-containing plumbing and service lines that adversely impact drinking water standards or for the installation of a point-of-use or point-of-entry water treatment system, as specified. Position Watch AB 2815 (Gray D) Water rights: appropriations of water. Current Text: Introduced: 2/16/2018 html pdf Status: 2/17/2018-From printer. May be heard in committee March 19. Location: 2/16/2018-A. PRINT Summary: Under current law, the State Water Resources Control Board administers a water rights program pursuant to which the state board grants permits and licenses to appropriate water. Current law requires the board to consider and act upon all applications for permits to appropriate water. Existing law provides that in relation to applications, permits, or licenses to appropriate water, the terms stream, lake or other body of water, or water refers only to surface water and to subterranean streams flowing through known and definite channels. This bill would make nonsubstantive changes in the latter provision. Position Watch AB 2822 (Obernolte R) California State Auditor: high-risk local government agency audit program. Current Text: Amended: 4/4/2018 html pdf Last Amend: 4/4/2018 Status: 4/19/2018-Read second time. Ordered to Consent Calendar. Location: 4/19/2018-A. CONSENT CALENDAR Summary: Current law authorizes the state auditor to establish a high-risk local government agency audit program for the purpose of identifying, auditing, and issuing reports on any local government agency that he or she identifies as at high risk for fraud or waste, among other things. Current law authorizes the auditor to consult with the Controller, Attorney General, and other state agencies that have oversight responsibilities over any local government agency to identify local governments that are at high risk. This bill would additionally authorize the California State Auditor to review publicly available information to identify local governments that are at high risk. Position Watch AB 3056 (Harper R) Desalinated water. Current Text: Introduced: 2/16/2018 html pdf 11 Status: 2/17/2018-From printer. May be heard in committee March 19. Location: 2/16/2018-A. PRINT Summary: The Cobey-Porter Saline Water Conversion Law declares that the growing water needs of the state require the development of cost-effective and efficient water supply technologies and that desalination technology is now feasible to help provide significant new water supplies from seawater, brackish water, and reclaimed water.This bill would declare the intent of the Legislature to enact subsequent legislation relating to desalination. Position Watch AB 3206 (Friedman D) Water conservation: water meters: accuracy and performance standards. Current Text: Amended: 4/3/2018 html pdf Last Amend: 4/3/2018 Status: 4/10/2018-From committee: Do pass and re-refer to Com. on APPR. (Ayes 9. Noes 3.) (April 10). Re-referred to Com. on APPR. Location: 4/10/2018-A. APPR. Summary: Would require the State Energy Resources Conservation and Development Commission, on or before January 1, 2020, to adopt regulations setting standards for the accuracy of water meters purchased on and after the effective date of those regulations, including water meters installed pursuant to the Water Measurement Law, as specified. The bill would allow a water purveyor to install a water meter possessed by that water purveyor before the effective date of the regulations for a time period deemed appropriate by the commission. Position Watch ACA 28 (Mathis R) Water: projects: funding. Current Text: Introduced: 2/26/2018 html pdf Status: 2/27/2018-From printer. May be heard in committee March 29. Location: 2/26/2018-A. PRINT Summary: Would provide that, in addition, from specified state revenues, there shall be set apart, in unspecified percentages, moneys to be applied by the state for the payment of principal and interest on bonds authorized pursuant to the Water Quality, Supply, and Infrastructure Improvement Act of 2014 and, of the amount remaining, for specified water projects of the Department of Water Resources and the State Water Resources Control Board, as provided. Position Watch SB 427 (Leyva D) Public water systems: community water systems: lead user service lines. Current Text: Chaptered: 9/12/2017 html pdf Last Amend: 5/15/2017 Status: 9/11/2017-Approved by the Governor. Chaptered by Secretary of State. Chapter 238, Statutes of 2017. Location: 9/11/2017-S. CHAPTERED Summary: Current law requires, by July 1, 2018, a public water system to compile an inventory of known lead user service lines in use in its distribution system and identify areas that may have lead user service lines in use in its distribution system. This bill would apply the above-described provisions relating to lead user service lines to a community water system, instead of a public water system, and would require, by July 1, 2020, the community water system to provide a timeline for replacement of known lead user service lines in use in its distribution system to the State Water Resources Control Board. Position Watch SB 496 (Cannella R) Indemnity: design professionals. Current Text: Chaptered: 4/30/2017 html pdf 12 Last Amend: 4/5/2017 Status: 4/28/2017-Approved by the Governor. Chaptered by Secretary of State. Chapter 8, Statutes of 2017. Location: 4/28/2017-S. CHAPTERED Summary: Current law provides, with respect to contracts and amendments to contracts entered into on or after January 1, 2011, with a public agency, as defined, for design professional services, that all provisions, clauses, covenants, and agreements contained in, collateral to, or affecting these contracts or amendments to contracts that purport to require the design professional to defend the public agency under an indemnity agreement, including the duty and the cost to defend, are unenforceable, except for claims that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the design professional. This bill would instead make these provisions applicable to all contracts for design professional services entered into on or after January 1, 2018. Position Oppose SB 507 (Hueso D) Tijuana River Valley. Current Text: Chaptered: 10/6/2017 html pdf Last Amend: 8/22/2017 Status: 10/6/2017-Approved by the Governor. Chaptered by Secretary of State. Chapter 542, Statutes of 2017. Location: 10/6/2017-S. CHAPTERED Summary: The California Wildlife, Coastal, and Park Land Conservation Act establishes the California Wildlife, Coastal, and Park Land Conservation Fund of 1988 and requires money in the fund to be available for specified purposes, including for a grant to the County of San Diego to acquire natural lands in the Tijuana River Valley. The act may be amended by a 2/3 vote of the Legislature if the amendment is consistent with the purposes of the act. This bill would authorize the money granted to the County of San Diego to be available for the development, improvement, rehabilitation, protection, and restoration of natural and park lands in the Tijuana River Valley, for specified studies of the land, as provided, and for the development of a campground, as provided. Position Watch SB 564 (McGuire D) Joint powers authorities: Water Bill Savings Act. Current Text: Chaptered: 10/2/2017 html pdf Last Amend: 8/31/2017 Status: 10/2/2017-Approved by the Governor. Chaptered by Secretary of State. Chapter 430, Statutes of 2017. Location: 10/2/2017-S. CHAPTERED Summary: Would enact the Water Bill Savings Act, which would authorize a joint powers authority to provide funding for a customer of a local agency in the Counties of Alameda, Contra Costa, Los Angeles, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma or its publicly owned utility to acquire, install, or repair a water efficiency improvement on the customer’s property served by the local agency or its publicly owned utility. The bill would require the customer to repay the authority through an efficiency charge on the customer’s water bill to be established and collected by the local agency or its publicly owned utility on behalf of the authority pursuant to a servicing agreement. Position Watch SB 589 (Hernandez D) Municipal separate storm sewer systems: financial capability analysis: pilot project. Current Text: Amended: 4/26/2017 html pdf Last Amend: 4/26/2017 Status: 1/20/2018-Failed Deadline pursuant to Rule 61(b)(2). (Last location was APPR. SUSPENSE FILE on 5/25/2017) Location: 1/20/2018-S. DEAD 13 Summary: Current law requires the State Water Resources Control Board or the regional boards to issue waste discharge requirements that apply and ensure compliance with the federal Clean Water Act and any more stringent effluent standards or limitations necessary to implement water quality control plans, or for the protection of beneficial uses, or to prevent nuisance. This bill would require the state board, in conjunction with an educational institution, to establish financial capability assessment guidelines for municipal separate storm sewer system permittees by an unspecified date. Position Watch SB 606 (Skinner D) Water management planning. Current Text: Amended: 4/5/2018 html pdf Last Amend: 4/5/2018 Status: 4/5/2018-Read third time and amended. Ordered to third reading. Location: 4/5/2018-A. THIRD READING Summary: Would require an urban retail Water supplier to calculate an urban water use objective no later than November 1, 2023, and by November 1 every year thereafter, and its actual urban water use by those same dates. The bill would require an urban retail water supplier to submit a report to the department for these purposes by those dates. The bill would authorize the board to issue information orders, written notices, and conservation orders to an urban retail water supplier that does not meet its urban water use objective, as specified. The bill would authorize the board to waive these requirements for a period of up to 5 years, as specified. Position Watch SB 615 (Hueso D) Salton Sea restoration. Current Text: Chaptered: 10/15/2017 html pdf Last Amend: 9/8/2017 Status: 10/15/2017-Approved by the Governor. Chaptered by Secretary of State. Chapter 859, Statutes of 2017. Location: 10/15/2017-S. CHAPTERED Summary: Would specify that any barrier in the Salton Sea within or below a certain elevation would not be considered a dam and would provide that the construction of facilities to separate fresh water from highly saline water for the purposes of implementing restoration activities pursuant to the act shall not be subject to review, approval, inspection, or fees associated with certain laws relating to dams and reservoirs. The bill would state various legislative findings and declarations relating to the Salton Sea, would name the state’s comprehensive management plan for the Salton Sea the “John J. Benoit Salton Sea Restoration Plan." Position Watch SB 623 (Monning D) Water quality: Safe and Affordable Drinking Water Fund. Current Text: Amended: 8/21/2017 html pdf Last Amend: 8/21/2017 Status: 9/1/2017-From committee: Without recommendation. (Ayes 11. Noes 0.) (September 1) Re-referred to Com. on RLS. Location: 9/1/2017-A. RLS. Summary: Would establish the Safe and Affordable Drinking Water Fund in the State Treasury and would provide that moneys in the fund are continuously appropriated to the State Water Resources Control Board. The bill would require the board to administer the fund to secure access to safe drinking water for all Californians, while also ensuring the long-term sustainability of drinking water service and infrastructure. The bill would authorize the state board to provide for the deposit into the fund of federal contributions, voluntary contributions, gifts, grants, bequests, and settlements from parties responsible for contamination of drinking water supplies. Position Oppose 14 SB 649 (Hueso D) Wireless telecommunications facilities. Current Text: Vetoed: 10/15/2017 html pdf Last Amend: 9/6/2017 Status: 3/3/2018-Last day to consider Governor’s veto pursuant to Joint Rule 58.5. Location: 10/15/2017-S. VETOED Summary: Current federal law recognizes the authority of a state or local government to manage public rights-of-way or to require fair and reasonable compensation from telecommunications providers, on a competitively neutral and nondiscriminatory basis, for the use of public rights-of-way on a nondiscriminatory basis, if the compensation required is publicly disclosed by that government. Current federal law provides that no state or local government has the authority to regulate the entry of, or the rates charged by, a commercial mobile service, but permits a state to regulate the other terms and conditions of commercial mobile services. This bill would provide that a small cell, as defined, is a permitted use, subject only to a specified permitting process adopted by a city or county, if the small cell meets specified requirements. Position Watch SB 701 (Hueso D) Salton Sea Obligations Act of 2018. Current Text: Amended: 7/3/2017 html pdf Last Amend: 7/3/2017 Status: 9/1/2017-September 1 hearing: Held in committee and under submission. Location: 8/23/2017-A. APPR. Summary: Would enact the Salton Sea Obligations Act of 2018, which, if approved by the voters, would authorize the issuance of bonds in the amount of $500,000,000 pursuant to the State General Obligation Bond Law to finance a program to comply with specified state obligations relating to the Salton Sea. This bill would provide for the submission of these provisions to the voters at the November 6, 2018, statewide general election. Position Watch SB 831 (Wieckowski D) Land use: accessory dwelling units. Current Text: Amended: 4/9/2018 html pdf Last Amend: 4/9/2018 Status: 4/25/2018-VOTE: Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] Location: 4/25/2018-S. APPR. Summary: Would instead authorize a local agency to provide by ordinance for the creation of accessory dwelling units in areas where a single-family or multifamily dwelling is authorized, and would require the ordinance to designate areas where accessory dwelling units may be excluded for fire and life safety purposes, as specified. The bill would revise the standards for the local ordinance to, among other things, include a prohibition on considering the square footage of a proposed accessory dwelling unit when calculating an allowable floor-to-area ratio for the lot. Position Oppose Unless Ameded SB 929 (McGuire D) Special districts: Internet Web sites. Current Text: Amended: 3/6/2018 html pdf Last Amend: 3/6/2018 Status: 4/23/2018-Read third time. Passed. (Ayes 38. Noes 0.) Ordered to the Assembly. In Assembly. Read first time. Held at Desk. Location: 4/23/2018-A. DESK Summary: The California Public Records Act requires a local agency to make public records available for inspection and allows a local agency to comply by posting the record on its Internet Web site and directing a member of the public to the Web site, as specified. This bill would, beginning on January 1, 2020, require every independent special district to maintain an Internet Web site that clearly lists contact information for 15 the special district, except as provided. Because this bill would require local agencies to provide a new service, the bill would impose a state-mandated local program. Position Watch SB 952 (Anderson R) Water conservation: local water supplies. Current Text: Introduced: 1/30/2018 html pdf Status: 2/8/2018-Referred to Com. on RLS. Location: 1/30/2018-S. RLS. Summary: Would state the intent of the Legislature to enact legislation that would require the State Water Resources Control Board to recognize local water agency investment in water supply and will ensure that local agencies receive sufficient credit for these investments in meeting any water conservation or efficiency mandates. Position Watch SB 998 (Dodd D) Discontinuation of residential water service: urban and community water systems. Current Text: Amended: 4/23/2018 html pdf Last Amend: 4/23/2018 Status: 4/24/2018-VOTE: Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] Location: 4/24/2018-S. APPR. Summary: This bill would require an urban and community water system, defined as a public water system that supplies water to more than 200 service connections, to have a written policy on discontinuation of water service to certain types of residences for nonpayment available in English, Spanish, or any other language spoken by at least 10% of the people residing in its service area. The bill would require the policy to include certain components, be available on the system’s Internet Web site, and be provided to customers in writing, upon request. Position Watch SB 1215 (Hertzberg D) Provision of sewer service: disadvantaged communities. Current Text: Amended: 4/12/2018 html pdf Last Amend: 4/12/2018 Status: 4/25/2018-VOTE: Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] Location: 4/25/2018-S. APPR. Summary: Would authorize the State Water Resources Control Board to order the provision of sewer service by a special district, city, or county to a disadvantaged community, as defined, under specified circumstances. By authorizing the state board to require a special district, city, or county to provide sewer service, this bill would impose a state-mandated local program. Position Watch SB 1277 (Hueso D) Salton Sea: governance. Current Text: Introduced: 2/16/2018 html pdf Status: 3/1/2018-Referred to Com. on RLS. Location: 2/16/2018-S. RLS. Summary: Would state the intent of the Legislature to enact legislation that would create a governance and administrative structure to manage the day-to-day implementation of the Salton Sea Management Program. Position Watch SB 1367 (Atkins D) San Diego River Conservancy: San Diego Rivers Watershed Consortium Program. Current Text: Amended: 4/17/2018 html pdf Last Amend: 4/17/2018 16 Status: 4/24/2018-VOTE: Do pass, but first be re-referred to the Committee on [Appropriations] Location: 4/24/2018-S. APPR. Summary: Would require the San Diego River Conservancy to establish the San Diego Rivers Watershed Consortium Program to create advisory panels to work cooperatively with local public agencies and other entities to identify potential project funding, including grant funding, to be used to restore the watersheds of Otay River, the Sweetwater River, and the Tijuana River, and to improve access to public lands. The bill would require the conservancy, in administering the program, to create 3 advisory panels representing watersheds within the area, comprised of specified members, to offer advice, expertise, support, and service to the conservancy in those respective watershed areas. Position Watch SB 1422 (Portantino D) California Safe Drinking Water Act: microplastics. Current Text: Amended: 4/2/2018 html pdf Last Amend: 4/2/2018 Status: 4/25/2018-From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 5. Noes 0.) (April 18). Location: 4/18/2018-S. APPR. Summary: Would require the State Water Resources Control Board to adopt regulations requiring annual testing for, and reporting of, the amount of microplastics in drinking water, including public disclosure of those results. Position Watch SB 1489 (Stern D) California Drought, Water, Parks, Climate, Coastal Protection, and Outdoor Access For All Act of 2018: water recycling. Current Text: Amended: 4/3/2018 html pdf Last Amend: 4/3/2018 Status: 4/19/2018-April 24 hearing postponed by committee. Location: 4/12/2018-S. N.R. & W. Summary: If approved by the voters at the June 5, 2018, statewide primary election as Proposition 68, the California Drought, Water, Parks, Climate, Coastal Protection, and Outdoor Access for All Act of 2018 would authorize the issuance of bonds in the amount of $4,100,000,000 for the purpose of financing a drought, water, parks, climate, coastal protection, and outdoor access program.This bill, operative only if Proposition 68 is approved by the voters at the June 5, 2018, statewide primary election, would add language to the provisions enacted by the proposition to eliminate this prohibition on using this $100,000,000 in bond funds for the purpose of water recycling for projects that augment surface water reservoirs that supply water directly to treatment facilities that serve domestic uses. Position Watch 1 MINUTES OF THE BOARD OF DIRECTORS MEETING OF THE OTAY WATER DISTRICT February 7, 2018 1. The meeting was called to order by President Smith at 3:33 p.m. 2. ROLL CALL Directors Present: Croucher, Gastelum, Robak, 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 Operations Jose Martinez, Assistant Chief of Finance Kevin Koeppen, 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 Robak and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve the agenda. 5. APPROVE THE MINUTES OF THE REGULAR BOARD MEETING ON NOVEMBER 1, 2017 A motion was made by Director Thompson, and seconded by Director Gastelum and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve the minutes of the regular board meetings of November 1, 2017. 2 6. 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 No one wished to be heard. 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 PARTICULAR ITEM: A motion was made by Director Robak, seconded by Director Thompson and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve the following consent calendar items: a) APPROVE AN AGREEMENT BETWEEN THE SAN DIEGO COUNTY WATER AUTHORITY AND OTAY WATER DISTRICT REGARDING COMPLETION OF THE EAST COUNTY REGIONAL TREATED WATER IMPROVEMENT PROGRAM b) APPROVE THE TERMINATION OF A CONSTRUCTION AGREEMENT TO ORTIZ CORPORATION FOR THE FUERTE DRIVE SEWER RELOCATION PROJECT (CIP S2045) THAT WAS AWARDED AT THE SEPTEMBER 6, 2017, BOARD MEETING IN AN AMOUNT NOT-TO-EXCEED $147,650.00 c) ADOPT RESOLUTION NO. 4342 DESIGNATING DISTRICT STAFF WITH THE AUTHORITY TO ORDER THE DEPOSIT OR WITHDRAWAL OF FUNDS WITH THE LOCAL AGENCY INVESTMENT FUND d) APPROVE THE DECLARATION OF 2.539 ACRES OF REAL ESTATE PROPERTY LOCATED ALONG THE FUTURE ALIGNMENT OF ALTA ROAD ON OTAY MESA AS SURPLUS; AND ACCEPT AN OFFER FROM KEARNY PCCP OTAY 311, LLC, A DELAWARE LIMITED LIABILITY COMPANY TO PURCHASE 2.539 ACRES OF THE LAND FOR $691,475.00 AND ACCEPT A GRANT OF EASEMENT THAT SECURES THE OTAY WATER DISTRICT’S PRIOR PROPERTY RIGHTS e) APPROVE A FOURTH AMENDMENT TO EXTEND THE SVPR COMMUNICATIONS’ CONTRACT FOR AN ADDITIONAL TWENTY- FOUR (24) MONTHS THROUGH JANUARY 31, 2020; AND INCREASE 3 THE CONTRACT AMOUNT BY $60,000, WITH AN AMOUNT NOT-TO-EXCEED $135,000 ACTION ITEMS 8. FINANCE AND ADMINISTRATION a) APPROVE AN ENGAGEMENT LETTER WITH THE AUDITING FIRM OF TEAMAN, RAMIREZ AND SMITH, INC., TO PROVIDE AUDIT SERVICES TO THE DISTRICT FOR THE FISCAL YEAR ENDING JUNE 30, 2018 Accounting Manager Rita Bell indicated that staff is requesting that the board approve an engagement letter with the auditing firm of Teaman, Ramirez and Smith, Inc. to provide audit services to the District for the fiscal year ending June 30, 2018. Please reference the Committee Action notes (Attachment A) attached to the staff report for the details of Ms. Bell’s report. Director Thompson noted that the increase of $850 for the proposed fifth year of their contract is for additional services required related to GASB 75. Thus, the firm is not really receiving a raise. A motion was made by Director Robak, seconded by Director Gastelum and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve staff’s recommendation. 9. PUBLIC RELATIONS, LEGAL AND LEGISLATIVE a) ADOPT THE 2018 OTAY WATER DISTRICT LEGISLATIVE PROGRAM GUIDELINES AND PRIORITIES (OTERO) Communications Officer Tenille Otero indicated that she is requesting that the board adopt the 2018 Otay WD Legislative Program Guidelines and Priorities. She reviewed the anticipated “top ten” (10) legislative issues to be monitored in 2018. Please reference the Committee Action notes (Attachment A) attached to the staff report for the details of Ms. Otero’s report. Ms. Otero indicated that additionally she wished to note that SB 998 (Dodd), introduced yesterday, will be added to the District’s “top 10” legislative issues to be monitored in 2018. The bill would require urban and community water systems to have a written policy on residential water service shutoffs due to nonpayment. The bill indicates for delinquent residential water accounts, that the water purveyor shall not discontinue residential service for nonpayment until the 4 customer’s payment has been delinquent for at least 60 days. A specific notice must be provided to the delinquent customer prior to shutting off their service. The bill also requires a local health department assessment of any grave danger a water shutoff poses to a household and would prohibit a shutoff under specified conditions. There was discussion regarding legislation concerning Making Water Conservation a California Way of Life and the feedback provided through CWA; Water Storage; SB 998; and SB 623. Director Thompson requested a quarterly report on the top legislation (top 10 to 12) being followed by the District. He asked that it include what the District should do (if anything) and what is anticipated for the next quarter. This would provide some guidance to the board. He also inquired if the Rosarito Desalination and the City of San Diego’s Pure Water projects should be added to the top 10 list. It was indicated that the guidelines do include the City’s Pure Water Project. It is the board’s discretion to add or remove items on the list and staff would be happy to make any changes that the board decides. President Smith suggested that staff also include CWA’s “top 10” with the District’s “top 10” list so all are together along with CWA’s report which indicates the strategy for each item on the list and an update on what occurred over the last quarter. Director Croucher suggested that Otay WD take a more active role and participate in meetings with the legislators and attend legislative events. A motion was made by Director Robak, seconded by Director Gastelum and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to adopt the 2018 Otay WD Legislative Program Guidelines and Priorities. 10. BOARD a) DISCUSSION OF 2018 BOARD MEETING CALENDAR There were no changes to the board meeting calendar. REPORTS 11. GENERAL MANAGER’S REPORT 5 General Manager Watton indicated that the District has hired a new Finance Manager. Chief Financial Officer Beachem introduced Mr. Eid Fakhouri who will be taking Finance Manager Rita Bell’s position when she retires in June 2018. The board welcomed Mr. Fakhouri. General Manager Watton presented information from his report which included an update on the sewer overflow simulation model, the award from the Municipal Information Systems Association of California, enrollment in SDG&E’s EcoChoice program, the Master Meter issue, the 870-2 pump station replacement project, potable and recycled water purchases. The board had comments and questions concerning a few items in the General Manager’s report and staff responded to the questions and comments. 12. CWA REPORT Director Croucher reported that Minutes 323 was signed by the United States and Mexico to extend Minute 319, Extension of Cooperative Measures and Adoption of a Binational Water Scarcity Contingency Plan in the Colorado River Basin. The treaty is extended to 2026. He indicated that outreach to MWD is moving forward. Two groups have been put together with the intent of avoiding further costly litigation. One group will discuss ground rules when meeting and the other will discuss how the two organizations can work together toward common ground for litigation resolution. He also shared that Mr. Brian Brady of Fallbrook Public Utility District is retiring and has stepped down from CWA’s board. He has been replaced by the District’s acting General Manager Jack Bebee. City of San Diego representative Yen Tu and city of Del Mar representative Ken Olson are also stepping down from CWA’s board. The City will be appointing Councilmember Chris Cate. Director Croucher indicated that he is scheduling a meeting with Councilmember Cate to start a working on a relationship/rapport with him. He lastly shared that CWA was working on scheduling another trip to Sacramento to meet with the legislators. President Smith indicated that CWA presented their work plans from each of the divisions; finance, water planning, legislation, etc. The legislation group reported that newly introduced AB 573 requires the State to come up with direct potable reuse regulations by the year 2023. Another group reported that CWA signed a 1.6 megawatt, 50 year term agreement to acquire power through Boulder Canyon which will help CWA level its power costs. The finance group reported that water sales are currently 7% below CWA’s estimate. General Manager Maureen Stapleton explained that there are periods when member agencies are buying more water and times when they are buying less water, but overall over the fiscal year CWA is meeting its revenue requirements. He lastly shared that the Engineering group indicated that the San Vicente energy storage analysis has been completed and CWA approved getting the California ISO portion implemented. 6 13. DIRECTORS' REPORTS/REQUESTS Director Thompson reported that the Water Conservation Garden JPA has elected a new board Chair, Betty Evans from Vallecitos WD. He also indicated that he had volunteered to review the JPA agreement to assure that they are following the bylaws. He also noted that the board adopted the new Water Conservation Garden operating agreement. Director Gastelum reported that he attended a tour of the Colorado River Aqueduct and Hoover Dam. He indicated that the tours were very educational and worthwhile. Director Robak reported that the State Department of Water Resources was dismissed this past month and Karla Nemeth was named the new director of the agency. He stated that he will be attending the Bay Delta tour next month and shared that he attended Cuyamaca College’s Ribbon-Cutting Celebration for their Field Operations Skills Yard at their new Center for Water Studies. 14. PRESIDENT’S REPORT President Smith indicated that he would like to suggest that directors include in their directors reports meetings that they have attended in the past month and what they are planning on attending so they may coordinate on event and conference attendance. He shared that he will be attending the WateReuse Annual Conference next month. He also reported on the meetings he attended during the month of January 2018 (his report is attached). He indicated that there has been discussion on the possibility of streaming the District’s board meeting online. Staff has been researching the cost to stream meetings and finds that it can be done at a small expense. He stated that he felt it was a good idea in terms of transparency with the public and would allow those who cannot make the District’s meetings at 3:30 p.m. in the afternoon to be able to listen to the meetings online. Implementation of the online streaming may be implemented in March 2018. Director Robak added to his report that he will be attending the Association of California Water Agencies Annual Washington DC Conference at the end of February. 15. CLOSED SESSION The board recessed to closed session at 5:20 p.m. to discuss the following matters: a) CONFERENCE WITH LABOR NEGOTIATORS [GOVERNMENT CODE §54957.6] 7 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 b) CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION [GOVERNMENT CODE §54956.9] OTAY WATER DISTRICT v. CITY OF SAN DIEGO; CASE NO. 37-2017- 00019348-CU-WM-CTL The board reconvened from closed session at 6:59 p.m. Attorney Jeanne Blumenfeld indicated that the board met in closed session and took no reportable actions. 16. ADJOURNMENT With no further business to come before the Board, President Smith adjourned the meeting at 6:59 p.m. ___________________________________ President ATTEST: District Secretary 8 President’s Report Tim Smith February 7, 2018 Board Meeting # Date Meeting Purpose 1 3-Jan OWD Regular Board Meeting Monthly board meeting 2 9-Jan Met with Director Croucher Discussed Otay and CWA key issues 3 18-Jan Cuyamaca College Ribbon- Cutting Celebration for their Field Operations Skills Yard at their Center for Water Studies Represented the Otay WD at the Ribbon- Cutting Ceremony 4 19-Jan Committee Agenda Briefing with General Manager Watton Met with General Manager Watton to review items that will be presented at the January committee meetings. 5 22-Jan Engineering Operations and Water Resources Committee Meeting Reviewed items that will be presented at the February board meeting. 6 23-Jan Public Relations, Legal and Legislative Committee Reviewed items that will be presented at the February board meeting. 7 23-Jan East County Caucus Discuss Otay's key issues with East County water agencies and CWA 1 MINUTES OF THE SPECIAL MEETING OF THE BOARD OF DIRECTORS OTAY WATER DISTRICT February 7, 2018 1. The meeting was called to order by President Smith at 7:00 p.m. 2. ROLL CALL Directors Present: Croucher, Gastelum, Robak, Smith and Thompson Directors Absent: None Staff Present: General Manager Mark Watton, Attorney Jeanne Blumenfeld, District Secretary Susan Cruz and others per attached list. 3. PLEDGE OF ALLEGIANCE 4. APPROVAL OF AGENDA A motion was made by Director Croucher, seconded by Director Thompson and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve the agenda. 5. 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 No one wished to be heard. RECESS TO CLOSED SESSION 6. CLOSED SESSION The board convened into closed session at 7:01 p.m. to discuss the following item: a) CONFERENCE WITH REAL PROPERTY NEGOTIATORS [GOVERNMENT CODE §54956.8] 2 PROPERTY: SALT CREEK GOLF COURSE 525 HUNTE PARKWAY CHULA VISTA, CA 91914 AGENCY NEGOTIATOR: MARK WATTON, GENERAL MANAGER NEGOTIATING PARTIES: BILL McWETHY, PACIFIC HOSPITALITY GROUP UNDER NEGOTIATIONS: INSTRUCT NEGOTIATOR CONCERNING PRICE, TERMS OF PAYMENT, OR BOTH, FOR THE PURCHASE, SALE AND/OR LEASE OF THE PROPERTY. RETURN TO OPEN SESSION 7. REPORT ON ANY ACTIONS TAKEN IN CLOSED SESSION. THE BOARD MAY ALSO TAKE ACTION ON ANY ITEMS POSTED IN CLOSED SESSION The board reconvened from closed session at 7:28 p.m. and Attorney Jeanne Blumenfeld indicated that the board met in closed session and took no reportable actions. 8. ADJOURNMENT With no further business to come before the Board, President Smith adjourned the meeting at 7:28 p.m. ___________________________________ President ATTEST: District Secretary 1 MINUTES OF THE SPECIAL MEETING OF THE BOARD OF DIRECTORS OTAY WATER DISTRICT April 11, 2018 1. The meeting was called to order by President Smith at 3:32 p.m. 2. ROLL CALL Directors Present: Croucher, Gastelum, Robak, Smith and Thompson Directors Absent: None Staff Present: General Manager Mark Watton, General Counsel Dan Shinoff, Chief Financial Officer Joe Beachem, Chief of Engineering Rod Posada, Chief of Operations Pedro Porras, Chief of Administration and Information Technology Adolfo Segura, Senior Confidential Executive Secretary Tita Ramos- Krogman and others per attached list. 3. PLEDGE OF ALLEGIANCE 4. APPROVAL OF AGENDA A motion was made by Director Thompson, seconded by Director Gastelum and carried with the following vote: Ayes: Directors Croucher, GasteIum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve the agenda. 5. 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 No one wished to be heard. 6. DISCUSSION DISPOSITION OF SALT CREEK GOLF COURSE President Smith indicated that a special board meeting was being held to provide information of the Salt Creek Golf Course property’s irrigation status. He noted that 2 it was Highland Links Golf Group, LLC’s sole decision to close the Salt Creek Golf Course and that their lease agreement was terminated on March 31, 2018. President Smith highlighted that it is the Otay Water District’s responsibility to utilize the property to the highest and best use. He stated that the District represents the ratepayers who trust that the District will provide the best services at the lowest cost. He shared that staff worked weekends and long hours to draft a study that included cost estimates to maintain the golf course. President Smith introduced Mr. Joe Beachem, Chief Financial Officer, to provide a staff report that included a recommendation to expend no funds to maintain the Salt Creek Golf Course. Mr. Joe Beachem, Chief Financial Officer, stated that the District has verified with Executive Vice President Jeffrey Woolson of CBRE that a leasehold interest in a golf course property has little or no value (See Attachment A). Mr. Beachem also discussed the credentials of Mr. Nicholas R. Spardy from Harrell’s Growing a Better World and indicated that Mr. Spardy provided a cost estimate to restore the golf course (See Attachment B). As stated in Mr. Beachem’s staff report, “Without the viability of a lease, and without the need to hold this land, the District should be using a time frame of a minimum of many months up to a year or more to determine the future use of this property.” He shared Mr. Spardy’s cost estimate, which indicated that it would cost approximately $38,725 to restore the greens on the property, and $5,333 every month to maintain it. Mr. Beachem also shared cost estimates to maintain fairways. He noted that the current cost estimates are only estimates to restore the greens and fairways to a decent condition. Also noted was the impact to the District’s Habitat Management Area (HMA) that is adjacent to the golf course; impacts such as unmanaged growth of invasive species that would thrive with watering the property. General Manager Mark Watton stated that additional information of the Salt Creek Golf Course will be provided at the May 2, 2018, Regular Board meeting, which may include information about leasing the property. He said that the main focus for the District in the next three months is the disposition of the golf course. He stated that if the board chooses not to irrigate the golf course at this time, they could change their decision after receiving additional information of the golf course. In response to a question from Director Croucher, General Manager Mark Watton clarified that the District only leased the land where the Salt Creek Golf Course was located and has never sold or leased golf courses. Over the years, the Lessees were the responsible parties who dealt with the sale of the golf course through bankruptcy court. President Tim Smith opened the discussion item to the public. Mr. Bob Barrett, representative for Sweetwater High School District golf teams, stated his support to have the Salt Creek Golf Course remain open. He stated that he coaches several high school golf teams who practice and have golf tournaments at the Salt Creek Golf Course. He indicated that several golf courses have closed 3 in the South Bay area making it difficult to find a place for local schools to practice. Mr. Barrett suggested that the District collaborate with the City of Chula Vista or local high schools to help keep the Salt Creek Golf Course open. Ms. Samantha Tricky, an aide to Chula Vista Councilmember John McCann, spoke on behalf of Councilmember McCann. She shared that Councilmember McCann met with the residents surrounding the Salt Creek Golf Course who voiced their concerns about over development, traffic congestion, missing recreational activities, and the loss of event facilities. Councilmember McCann encouraged the District board members to maintain the property in good condition during the transition and keep the property’s primary use as recreational. Ms. Tricky stated that Councilmember McCann and the City Manager of Chula Vista stand ready to be collaborative partners in finding a positive solution for the Salt Creek Golf Course property; a solution for both the Otay Water District ratepayers and the community surrounding the property. Mr. Ed Fletcher, representing Salt Creek Mens Club, voiced his opinion and concerns regarding the Salt Creek Golf Course. He is in support of having the golf course remain open. President Tim Smith indicated that at the May 2, 2018, Regular Board meeting, the board members will continue to discuss the disposition of the land; which may include the alternative to lease it. He acknowledged public members’ comments regarding the acceptance of proposals from companies who would like to take over the golf course. It was noted that the District has not yet received any proposals. President Smith explained that the District has a legal process that includes the advertisement of leasing or selling the property; this legal process will be discussed at the May 2, 2018, board meeting. He opened the discussion item to the board members. Director Mitch Thompson clarified that the agenda item is focused on the irrigation status of the Salt Creek Golf Course. He stated that the staff report is pretty clear that the District has to do what is financially sound for its customers/ratepayers. Director Thompson commented on the short notice of the Special Meeting, stating that the Special Meeting was in response to several comments that were made from public speakers at the April 4 Regular Board meeting; comments regarding the financial consequences of not watering the golf course. Director Gary Croucher commented that the District’s core is its water, rates, quality and reliability. He is encouraged that District staff plans to meet with the City of Chula Vista to discuss alternatives for the golf course, such as the possibility of the City providing irrigation services to the golf course. He discussed other variables that the District should consider, such as the cost for on-site security, impacts of dumping if the property becomes vacant, and partnerships with high schools/City of Chula Vista High School District to help support management and maintenance. 4 Director Hector Gastelum inquired if the Salt Creek Golf Course could become a fire hazard if it is not maintained. Director Gary Croucher stated that there is always that possibility. However, the area is monitored on a regular basis by the District’s consultant and the US Fish and Wildlife Department since it is surrounded by the District’s Habitat Management Area. In addition, the District can coordinate with the City of Chula Vista’s Fire Department and the California Department of Forestry to monitor the property for fire hazards. Director Hector Gastelum encouraged public members to continue to support and save the Salt Creek Golf Course. In addition, he commended staff for providing a detailed staff report on such a short notice. He noted that the staff report provides transparency to the public members. Director Mark Robak commended staff for providing a staff report on such short notice to respond to public members’ questions and concerns from the April 4, 2018, Regular Board meeting. President Tim Smith inquired if the purpose of the agenda item was to focus on immediate watering of the golf course and to prevent the greens from dying. Chief Financial Officer Joe Beachem stated, “Yes.” President Smith discussed the pros and cons of watering the greens and acknowledged comments made by board members. He stated that the District will look into collaborating with the City of Chula Vista and local high schools to help maintain the golf course, which would help the District financially and also minimize costs to its ratepayers. Director Gary Croucher suggested that the District also collaborate with local community colleges, such as Southwestern College and also Cuyamaca Community College. A motion was made by Director Robak, seconded by Director Thompson and carried with the following vote: Ayes: Directors Croucher, Gastelum, Robak, Smith and Thompson Noes: None Abstain: None Absent: None to approve staffs’ recommendation that the District expends no funds to maintain the Salt Creek Golf course. General Manager Mark Watton indicated that the agenda and board packet for the May 2, 2018, Regular Board meeting would be available for review on the District’s website on April 27, 2018. 5 7. CLOSED SESSION The board waived the closed session. 8. ADJOURNMENT With no further business to come before the Board, President Smith adjourned the meeting at 4:15 p.m. ___________________________________ President ATTEST: District Secretary STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: May 2, 2018 SUBMITTED BY: Rita Walmer Finance Manager PROJECT: DIV. NO. All APPROVED BY: Joseph R. Beachem, Chief Financial Officer Mark Watton, General Manager SUBJECT: Authorize the First Amendment to the 2001 Agreement for the Operation and Maintenance of the Pump Station with the Lakeview at Highlands Ranch Homeowners Association GENERAL MANAGER’S RECOMMENDATION: That the Board authorize the General Manager to execute the First Amendment to the 2001 agreement for the operation and maintenance of the pump station with the Lakeview at Highlands Ranch Homeowners Association. COMMITTEE ACTION: See Attachment A. PURPOSE: That the Board authorize the General Manager to amend the agreement with the Lakeview at Highlands Ranch Homeowners Association (HOA). The purpose of the amendment is to extend the time period for the funding of the replacement reserve and allow for a gradual increase of the funding until the reserve reaches the agreed upon target. ANALYSIS: The District entered into the agreement with the HOA in 2001. The agreement calls for the HOA to pay the District for the maintenance and operation of the pump station. The pump station was needed to service the homes at the higher elevations because the developer did not build a reservoir to serve these homes. Additionally, the agreement calls for the HOA to fund a replacement reserve to be used for the eventual replacement of this facility. The agreement assumed the facility would be replaced in 20 years and so the collection period was set for 20 years with the assumptions that the interest earned on the reserve would be at 5% and the ENR index (inflation per year) would be 2%. However, the reserve will not be on target because the interest earnings on the reserve averaged 1.75%, far less than anticipated, and the ENR index during this period was 2.6%, which was higher than anticipated. To collect the necessary amount in the reserve by year 2023, the monthly amount collected would have to increase from $1,620.93 to $3,525.82, a 117% increase. The District also considered extending the collection period by an additional 5 or 10 years. The HOA agreed to extend the collection period by 10 years. This would allow the increase in monthly payments from $1,620.93 to $1,746.00, a 7.7% increase beginning on June 1, 2018. Then beginning July 1, 2019, an annual increase of 10% will take effect until the reserve is fully funded. The HOA stated that they would ratify the amendment to the contract at their board meeting scheduled for May 17, 2018. FISCAL IMPACT: Joseph Beachem, Chief Financial Officer This is a cost neutral contract amendment. It allows the HOA to fund the replacement reserve over 10 additional years. STRATEGIC GOAL: To manage the financial issues that are critical to the District to maintain financial strength. LEGAL IMPACT: None. Attachments: A) Committee Action B) First Amendment to the Agreement ATTACHMENT A SUBJECT/PROJECT: Authorize the First Amendment to the 2001 Agreement for the Operation and Maintenance of the Pump Station with the Lakeview at Highlands Ranch Homeowners Association COMMITTEE ACTION: The Finance and Administration Committee (Committee) reviewed this item at a meeting held on April 17, 2018 and the following comments were made: Staff is requesting that the Board approve the First Amendment to the 2001 agreement for the operation and maintenance of the pump station with Lakeview at Highlands Ranch Homeowners Association (HOA). Staff reviewed information in the staff report. In response to an inquiry from the Committee, it was indicated that the agreement likely came about as an accommodation to the developer. This agreement is not something the District would sign today. It was indicated that staff has been working with the HOA on an amendment to their agreement to determine how they will fund the replacement reserve for the pump station serving their development as it is currently underfunded due to lower than anticipated interest earnings. Staff stated that once the reserve has been funded, they would have completed their obligation and the pump station will be integrated into the District’s system. Staff stated that if there was a problem with the pump station today, the repair costs would come out of the Homeowners Association’s replacement reserve. The HOA has been cooperative and will be presenting the proposed amendment to their HOA Board on May 17, 2018. Upon completion of the discussion, the committee supported staffs’ recommendation and presentation to the full board on the consent calendar. FIRST AMENDMENT TO THE AGREEMENT FOR THE OPERATION AND MAINTENANCE OF PUMP STATION BETWEEN THE OTAY WATER DISTRICT AND THE LAKEVIEW AT HIGHLANDS RANCH HOMEOWNERS ASSOCIATION This First Amendment (“Amendment”) to the original Agreement for the Operation and Maintenance of Pump Station dated May 2, 2001, is made and entered into on __________, 2018, by and between the OTAY WATER DISTRICT, a Municipal Water District formed under the Municipal Water Act of 1911 ("District"), and the LAKEVIEW AT HIGHLANDS RANCH HOMEOWNERS ASSOCIATION, a California nonprofit mutual benefit corporation (“Association”), with reference to the following facts which are acknowledged by each party as true and correct. District and Association are collectively referred to as the “Parties”. RECITALS 1. On May 2, 2001 the District and Association entered into that certain “Otay Water District Agreement for the Operation and Maintenance of a Pump Station” (“Agreement”), under which the Association agreed, among other things, to assume the responsibilities relating to the maintenance and replacement of the Pump Station, a hydro-pneumatic facility that is needed to supply water to specific lots within Lakeview at Highlands Ranch. 2. Pursuant to Section 7 and 8 of the Agreement (Maintenance of Pump Station and Replacement of Pump Station respectively), the District was required to create separate reserve funds for the operation and ultimate replacement of the Pump Station. The Association was required to collect funds from owners within the Association and pay said funds on the first day of each month to the District’s Maintenance Reserve Fund and Replacement Reserve Fund, for the operation and ultimately the replacement of the Pump Station. 3. Pursuant to Section 7 of the Agreement (Maintenance of Pump Station), the Association is required to make payments to the District for the maintenance of the Pump Station in perpetuity. 4. Section 8 of the Agreement (Replacement of Pump Station) estimates that the useful life of the Pump Station is 20 years; thus, the Association anticipates making payments to the District’s Replacement Reserve Fund for a period of 20 years, ending in 2022. 5. The Association currently pays the sum of $1,620.93 each month to the District’s Replacement Reserve Fund. 6. The Parties’ original assumption for collecting the Replacement Reserve Fund was that the Reserve Fund would earn interest at the rate of 5% per year, and that ENR (inflation per year) would be 2% per year. 7. The Replacement Reserve Fund is not on target to be fully funded at the end of the 20 years. Attachment B 8. The District and the Association desire to amend the terms and provisions of the Agreement to extend the date for Association’s contribution to the Replacement Reserve Fund, as set forth below. AMENDMENT NOW THEREFORE, in consideration of the above Recitals and of the promises and agreements contained herein, and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, District and Association do hereby promise and agree as follows: 1. The Association shall continue to collect funds from owners within the Association and pay said funds on the first day of each month to the District for deposit in the Replacement Reserve Fund for an additional eleven (11) years, until the year 2033, and subject to the same terms as set forth in Section 8 of the Agreement. 2. The Association will pay to the District’s Replacement Reserve Fund the sum of $1,746.00 on the first day of each month commencing June 1, 2018. 3. The Association’s monthly payments to the District’s Replacement Reserve Fund will increase at the rate of 10% per year commencing July 1, 2019, until the year 2033 or until the Replacement Reserve Fund is fully funded, whichever occurs first. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 4. All other terms and conditions of the Agreement, which are not modified or amended by this Amendment, are and shall remain in full force and effect. IN WITNESS WHEREOF, the Parties have caused this Amendment to the Agreement to be executed as of the day and year first above written. OTAY WATER DISTRICT By: _____________________________ Date: _______________ Mark Watton General Manager Approved as to form: By: _____________________________ Date: _______________ General Counsel LAKEVIEW AT HIGHLANDS RANCH HOMEOWNERS ASSOCIATION By: ______________________________ Name: ____________________________ Title: _____________________________ Date: __________________________ STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: May 2, 2018 SUBMITTED BY: Andrea Carey Customer Service Manager PROJECT: DIV. NO. All APPROVED BY: Joseph R. Beachem, Chief Financial Officer Mark Watton, General Manager SUBJECT: Authorize the General Manager to Amend Agreements with InfoSend and Electronic Payment Exchange for Billing and Online Payment Services GENERAL MANAGER’S RECOMMENDATION: That the Board authorize the General Manager to amend agreements to extend the terms for two-years, plus three one-year extension options with: 1) InfoSend to provide bill print and electronic bill presentment services in an amount not to exceed $1,310,000 ($262,000 annually, includes pass-through postage costs of $170,000); and with 2) Electronic Payment Exchange (EPX) to provide online payment transaction processing services in an amount not to exceed $1,500,000 ($250,000 annually). COMMITTEE ACTION: See Attachment A. PURPOSE: Authorize the General Manager to amend agreements with InfoSend for bill print and electronic bill presentment services, and with Electronic Payment Exchange for payment transaction processing services. ANALYSIS: The District bills approximately 52,000 customers each month (624,000 billings annually) for water and sewer services. Of these bills, approximately 36,500 are mailed to customers every month, while the remaining 15,500 bills are delivered electronically (e-bill). The District receives over 22,000 payments monthly via the website. InfoSend has been the District’s bill print provider since 2008 and its online payment provider since 2010. In 2013, the District entered into a five-year agreement with InfoSend to provide bill print, mailing services, online bill presentment, and web payment services to the District. Over the past six months, staff has researched bill print and online payment service providers. Utilizing the piggyback option in the District’s Purchasing Policy, staff evaluated various other agencies request for proposals for similar services. Staff found the City of Morgan Hill’s recently completed formal RFP to mirror the District’s requirements. Morgan Hill received nine responses and narrowed the final evaluation down to two vendors: InfoSend and Dataprose. The evaluation team ultimately chose InfoSend as they offered a more complete service package at a lower overall cost. Morgan Hill also selected to use EPX for payment processing. Based on the City of Morgan Hill’s RFP and contract plus weighing in the cost, complexity, and risk of changing bill print and online payment processing services, staff recommends remaining with InfoSend and extending the current contract for another five-year term. Although the prior contract allowed for modest price increases, InfoSend did not increase pricing throughout the initial five-year term. For the upcoming five-year term, InfoSend has increased bill print service fees by .0006 cents and envelope costs by .003 cents, with all other fees related to printing and electronic bill and payment services remaining the same. In order to ensure our pricing with InfoSend is competitive in current market conditions, staff compared Otay’s pricing with other similarly sized agencies who recently entered into contracts with InfoSend such as Helix, Irvine Ranch, Cucamonga Valley and the City of Modesto and found Otay’s pricing was the lowest. It should also be noted that 17 of the 24 San Diego County Water Authority member agencies use InfoSend for bill print services. On the online payment side, InfoSend partners with payment processors EPX and Vantiv to verify and transmit customer payments. These payment processors verify the credit card and banking information for each transaction and then wire funds daily to Otay’s account with Union Bank. Staff analyzed the fees charged by both EPX and Vantiv and found EPX to be lower. The cost of services are as follows: Payment Services Vendor Annual Price (Estimate) EPX $250,000 Vantiv $260,000 Staff is currently using EPX and is satisfied with their online portal and level of customer service. The District has more than 22,000 customers paying in excess of $3.5 million monthly through InfoSend’s online site, which includes more than 13,000 who have selected automatic pay. A transition from InfoSend would result in these customers having to re-enroll in electronic services. The staff time and inconvenience to the customer would be great and most likely result in a drop-off in the number of electronic payments and those customers receiving an electronic bill. By continuing the relationship with InfoSend and EPX, the District’s customers will not be subject to a change in their online accounts or bill print delivery. Given the complexity and sensitive nature of these services, it is recommended that the General Manager amend the agreements with InfoSend and EPX to extend the term for two-years, plus three one- year extension options. After the initial two-year period, the District will have the option not to renew should opportunities, circumstances or business practices change. The agreements will run concurrently and expire at the same time. Both companies allow the District to terminate for cause at any time. FISCAL IMPACT: Joseph Beachem, Chief Financial Officer The increase in bill print processing costs for InfoSend translates to a 1% increase or approximately $3,000 more a year. The annual cost for InfoSend services will be approximately $262,000 (includes pass- through postage costs of $170,000) and for EPX services it will be approximately $250,000. The proposed FY 2019 budget is sufficient to cover these costs. STRATEGIC GOAL: Evaluate the most cost effective and efficient processes and tools to communicate service related issues to customers. LEGAL IMPACT: None. Attachments: A) Committee Action ATTACHMENT A SUBJECT/PROJECT: Authorize the General Manager to Amend Agreements with InfoSend and Electronic Payment Exchange for Billing and Online Payment Services COMMITTEE ACTION: The Finance and Administration Committee (Committee) reviewed this item at a meeting held on April 17, 2018 and the following comments were made: Staff is requesting that the board authorize amendments to two (2) agreements extending the terms for two-years, plus three one-year extension options with: 1) InfoSend to provide bill print and electronic bill presentment services in an amount not-to-exceed $1,310,000 ($262,000 annually, includes pass-through postage costs of $170,000); and 2) Electronic Payment Exchange (EPX) to provide online payment transaction processing services in an amount not-to- exceed $1,500,000 ($250,000 annually). Staff reviewed information in the staff report. It was indicated in response to an inquiry from the Committee, that the City of Morgan Hill is located in northern California. Staff explained that when the Purchasing Policy was last amended, it added the “piggyback” option which allows the District to reference the RFP results of another agency that provides the same service. Upon completion of the discussion, the committee supported staffs’ recommendation and presentation to the full board on the consent calendar. STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: May 2, 2018 SUBMITTED BY: Eid Fakhouri, Finance Manager PROJECT: DIV. NO. All APPROVED BY: Joseph R. Beachem, Chief Financial Officer Mark Watton, General Manager SUBJECT: Annual Review of the Investment Policy (Policy No. 27) of the District’s Code of Ordinances and the Re-delegation of Authority for All Investment Related Activities to the Chief Financial Officer GENERAL MANAGER’S RECOMMENDATION: That the Board receives the District’s Investment Policy (Policy No. 27) of the District’s Code of Ordinances for review and re-delegate authority for all investment related activities to the Chief Financial Officer, in accordance with Government Code Section 53607. COMMITTEE ACTION: See Attachment A. PURPOSE: Government Code Section 53646 recommends that the District’s Investment Policy be tendered to the Board on an annual basis for review. In addition, Government Code Section 53607 requires that for the Chief Financial Officer’s delegation of authority to remain effective, the governing board must re-delegate authority over investment activities on an annual basis. ANALYSIS: The primary goals of the Investment Policy are to assure compliance with the California Government Code, Sections 53600 et seq. The primary objectives, in priority order, of investment activities are: 1. Protect the principal of the funds. 2. Remain sufficiently liquid to enable the District to meet all operating requirements which might be reasonably anticipated. 3. The District’s return is a market rate of return that is commensurate with the conservative investments approach to meet the first two objectives of safety and liquidity. The code provides a broad range of investment options for local agencies, including Federal Treasuries, Federal Agencies, Callable Federal Agencies, the State Pool, the County Pool, high-grade corporate debt, and others. Over recent years, the size of the District’s portfolio has declined from $110 million in 2010 to $87 million as of February 28, 2018. The reduction is primarily due to planned outlays for construction projects. Because of the District’s adherence to a conservative range of authorized investments, we have been able to maintain a healthy and diversified portfolio with no investment losses despite an extended period of turmoil and instability in the national financial markets. The policy is consistent with the current law and the overall objectives of the policy are being met. FISCAL IMPACT: Joseph R. Beachem, Chief Financial Officer None. STRATEGIC GOAL: Demonstrate financial health through formalized policies, prudent investing, and efficient operations. LEGAL IMPACT: None. Attachments: A) Committee Action B) Investment Policy No. 27 ATTACHMENT A SUBJECT/PROJECT: Annual Review of the Investment Policy (Policy No. 27) of the District’s Code of Ordinances and the Re-Delegation of Authority for All Investment Related Activities to the Chief Financial Officer COMMITTEE ACTION: The Finance and Administration Committee (Committee) reviewed this item at a meeting held on April 17, 2018 and the following comments were made: Staff is requesting that the Board receive the District’s Investment Policy (Policy No. 27) of the District’s Code of Ordinances for review and re-delegate authority for all investment related activities to the Chief Financial Officer in accordance with Government Code Sections 53607. Staff reviewed information in the staff report. Staff indicated that each year they evaluate and adapt the District’s policy with any legislative changes that impact local agencies investment codes or other updates. As there were no approved changes to local agencies investment codes during the 2017 California legislative session, staff is proposing no changes to the District’s Investment Policy. It was indicated that the Investment Policy provides guidance for making prudent investment decisions and assures ratepayers that the District’s funds are invested safely, liquid to meet demands and obligations, and are earning a reasonable market rate of return. Upon completion of the discussion, the committee supported staffs’ recommendation and presentation to the full board on the consent calendar. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 1 of 17 1.0: POLICY It is the policy of the Otay Water District to invest public funds in a manner which will provide maximum security with the best interest return, while meeting the daily cash flow demands of the entity and conforming to all state statues governing the investment of public funds. 2.0: SCOPE This investment policy applies to all financial assets of the Otay Water District. The District pools all cash for investment purposes. These funds are accounted for in the District’s audited Comprehensive Annual Financial Report (CAFR) and include: 2.1) General Fund 2.2) Capital Project Funds 2.2.1) Designated Expansion Fund 2.2.2) Restricted Expansion Fund 2.2.3) Designated Betterment Fund 2.2.4) Restricted Betterment Fund 2.2.5) Designated Replacement Fund 2.2.6) Restricted New Water Supply Fund 2.3) Other Post Employment Fund (OPEB) 2.4) Debt Reserve Fund Exceptions to the pooling of funds do exist for tax-exempt debt proceeds, debt reserves and deferred compensation funds. Funds received from the sale of general obligation bonds, certificates of participation or other tax-exempt financing vehicles are segregated from pooled investments and the investment of such funds are guided by the legal documents that govern the terms of such debt issuances. 3.0: PRUDENCE Investments should be made with judgment and care, under current prevailing circumstances, which persons of prudence, discretion and intelligence, exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. Attachment B OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 2 of 17 The standard of prudence to be used by investment officials shall be the “Prudent Person” and/or "Prudent Investor" standard (California Government Code 53600.3) and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments. 4.0: OBJECTIVE As specified in the California Government Code 53600.5, when investing, reinvesting, purchasing, acquiring, exchanging, selling and managing public funds, the primary objectives, in priority order, of the investment activities shall be: 4.1) Safety: Safety of principal is the foremost objective of the investment program. Investments of the Otay Water District shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. To attain this objective, the District will diversify its investments by investing funds among a variety of securities offering independent returns and financial institutions. 4.2) Liquidity: The Otay Water District’s investment portfolio will remain sufficiently liquid to enable the District to meet all operating requirements which might be reasonably anticipated. 4.3) Return on Investment: The Otay Water District’s investment portfolio shall be designed with the objective of attaining a benchmark rate of return throughout budgetary and economic cycles, commensurate with the District’s investment risk constraints and the cash flow characteristics of the portfolio. 5.0 DELEGATION OF AUTHORITY Authority to manage the Otay Water District’s investment program is derived from the California Government Code, Sections 53600 through 53692. Management responsibility for the investment program is hereby OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 3 of 17 delegated to the Chief Financial Officer (CFO), who shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials and their procedures in the absence of the CFO. The CFO shall establish written investment policy procedures for the operation of the investment program consistent with this policy. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the CFO. 6.0: ETHICS AND CONFLICTS OF INTEREST Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution and management of the investment program, or that could impair their ability to make impartial investment decisions. Employees and investment officials shall disclose to the General Manager any material financial interests in financial institutions with which they conduct business. They shall further disclose any personal financial/investment positions that could be related to the performance of the investment portfolio. Employees and officers shall refrain from undertaking personal investment transactions with the same individual with whom business is conducted on behalf of the District. 7.0: AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS The Chief Financial Officer shall maintain a list of District selected financial institutions and security broker/dealers authorized and approved to provide investment services in the State of California. Investment services include the buying or selling of permissible investments such as treasuries, government agencies, etc. for delivery to the custodian bank. These may include “primary” dealers or regional dealers that qualify under Securities & Exchange Commission Rule 15C3- 1 (Uniform Net Capital Rule). No public deposit shall be made except in a qualified public depository as established by state laws. All financial institutions and broker/dealers who desire to become qualified bidders for investment transactions must supply the District with the following, as appropriate: OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 4 of 17 Audited Financial Statements. Proof of Financial Industry Regulatory Authority (FINRA) certification. Proof of state registration. Completed broker/dealer questionnaire. Certification of having read the District’s Investment Policy. Evidence of adequate insurance coverage. An annual review of the financial condition and registrations of qualified bidders will be conducted by the CFO. A current audited financial statement is required to be on file for each financial institution and broker/dealer through which the District invests. 8.0: AUTHORIZED AND SUITABLE INVESTMENTS From the governing body perspective, special care must be taken to ensure that the list of instruments includes only those allowed by law and those that local investment managers are trained and competent to handle. The District is governed by the California Government Code, Sections 53600 through 53692, to invest in the following types of securities, as further limited herein: 8.01) United States Treasury Bills, Bonds, Notes or those instruments for which the full faith and credit of the United States are pledged for payment of principal and interest. There is no percentage limitation of the portfolio which can be invested in this category, although a five-year maturity limitation is applicable. 8.02) Local Agency Investment Fund (LAIF), which is a State of California managed investment pool, may be used up to the maximum permitted by State Law (currently $65 million). The District may also invest bond proceeds in LAIF with the same but independent maximum limitation. 8.03) Bonds, debentures, notes and other evidence of indebtedness issued by any of the following government agency issuers: Federal Home Loan Bank (FHLB) OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 5 of 17 Federal Home Loan Mortgage Corporation (FHLMC or "Freddie Mac") Federal National Mortgage Association (FNMA or "Fannie Mae") Government National Mortgage Association (GNMA or “Ginnie Mae”) Federal Farm Credit Bank (FFCB) Federal Agricultural Mortgage Corporation ( FAMCA or “Farmer Mac”) There is no percentage limitation of the portfolio which can be invested in this category, although a five-year maturity from the settlement date limitation is applicable. Government agencies whose implied guarantee has been reduced or eliminated shall require an “A” rating or higher by a nationally recognized statistical rating organization. 8.04) Interest-bearing demand deposit accounts and Certificates of Deposit (CD) will be made only in Federal Deposit Insurance Corporation (FDIC) insured accounts. For deposits in excess of the insured maximum of $250,000, approved collateral shall be required in accordance with California Government Code, Section 53652. Investments in CD’s are limited to 15 percent of the District’s portfolio. 8.05) Commercial paper, which is short-term, unsecured promissory notes of corporate and public entities. Purchases of eligible commercial paper may not exceed 10 percent of the outstanding paper of an issuing corporation, and maximum investment maturity will be restricted to 270 days. Investment is further limited as described in California Government Code, Section 53601(h). Purchases of commercial paper may not exceed 10 percent of the District’s portfolio and no more than 10 percent of the outstanding commercial paper of any single issuer. 8.06) Medium-term notes defined as all corporate debt securities with a maximum remaining maturity of five years from the settlement date or less, and that meet the further requirements of California Government Code, Section 53601(k). Investments in medium-term notes are limited to 10 percent of the District’s portfolio. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 6 of 17 8.07) Money market mutual funds that invest only in Treasury securities and repurchase agreements collateralized with Treasury securities, and that meet the further requirements of California Government Code, Section 53601(l). Investments in money market mutual funds are limited to 10 percent of the District's portfolio. 8.08) The San Diego County Treasurer’s Pooled Money Fund, which is a County managed investment pool, may be used by the Otay Water District to invest excess funds. There is no percentage limitation of the portfolio which can be invested in this category. 8.09) Under the provisions of California Government Code 53601.6, the Otay Water District shall not invest any funds covered by this Investment Policy in inverse floaters, range notes, interest-only strips derived from mortgage pools, or any investment that may result in a zero interest accrual if held to maturity. Also, the borrowing of funds for investment purposes, known as leveraging, is prohibited. 9.0: INVESTMENT POOLS/MUTUAL FUNDS A thorough investigation of the pool/fund is required prior to investing, and on a continual basis. There shall be a questionnaire developed which will answer the following general questions: A description of eligible investment securities, and a written statement of investment policy and objectives. A description of interest calculations and how it is distributed, and how gains and losses are treated. A description of how the securities are safeguarded (including the settlement processes), and how often the securities are priced and the program audited. A description of who may invest in the program, how often, and what size deposits and withdrawals are allowed. A schedule for receiving statements and portfolio listings. Are reserves, retained earnings, etc., utilized by the pool/fund? A fee schedule, and when and how is it assessed. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 7 of 17 Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds? 10.0 COLLATERALIZATION Collateralization will be required on certificates of deposit exceeding the $250,000 FDIC insured maximum. In order to anticipate market changes and provide a level of security for all funds, the collateralization level will be 102% of market value of principal and accrued interest. Collateral will always be held by an independent third party with whom the entity has a current custodial agreement. A clearly marked evidence of ownership (safekeeping receipt) must be supplied to the entity and retained. The right of collateral substitution is granted. 11.0: SAFEKEEPING AND CUSTODY All security transactions entered into by the Otay Water District shall be conducted on a delivery-versus-payment (DVP) basis. Securities will be held by a third party custodian designated by the District and evidenced by safekeeping receipts. 12.0: DIVERSIFICATION The Otay Water District will diversify its investments by security type and institution, with limitations on the total amounts invested in each security type as detailed in Paragraph 8.0, above, so as to reduce overall portfolio risks while attaining benchmark average rate of return. With the exception of U.S. Treasury securities, government agencies, and authorized pools, no more than 50% of the District’s total investment portfolio will be invested with a single financial institution. 13.0: MAXIMUM MATURITIES To the extent possible, the Otay Water District will attempt to match its investments with anticipated cash flow requirements. Unless matched to a specific cash flow, the District will not directly invest in securities maturing more than five years from the settlement date of the purchase. However, for time deposits with banks or savings and loan associations, investment maturities will not exceed two years. Investments in commercial paper will be restricted to 270 days. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 8 of 17 14.0: INTERNAL CONTROL The Chief Financial Officer shall establish an annual process of independent review by an external auditor. This review will provide internal control by assuring compliance with policies and procedures. 15.0: PERFORMANCE STANDARDS The investment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and the cash flow needs. The Otay Water District’s investment strategy is passive. Given this strategy, the basis used by the CFO to determine whether market yields are being achieved shall be the State of California Local Agency Investment Fund (LAIF) as a comparable benchmark. 16.0: REPORTING The Chief Financial Officer shall provide the Board of Directors monthly investment reports which provide a clear picture of the status of the current investment portfolio. The management report should include comments on the fixed income markets and economic conditions, discussions regarding restrictions on percentage of investment by categories, possible changes in the portfolio structure going forward and thoughts on investment strategies. Schedules in the quarterly report should include the following: A listing of individual securities held at the end of the reporting period by authorized investment category. Average life and final maturity of all investments listed. Coupon, discount or earnings rate. Par value, amortized book value, and market value. Percentage of the portfolio represented by each investment category. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 9 of 17 17.0: INVESTMENT POLICY ADOPTION The Otay Water District’s investment policy shall be adopted by resolution of the District’s Board of Directors. The policy shall be reviewed annually by the Board and any modifications made thereto must be approved by the Board. 18.0: GLOSSARY See Appendix A. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 10 of 17 APPENDIX A: GLOSSARY ACTIVE INVESTING: Active investors will purchase investments and continuously monitor their activity, often looking at the price movements of their stocks many times a day, in order to exploit profitable conditions. Typically, active investors are seeking short term profits. AGENCIES: Federal agency securities and/or Government-sponsored enterprises. BANKERS’ ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer. BENCHMARK: A comparative base for measuring the performance or risk tolerance of the investment portfolio. A benchmark should represent a close correlation to the level of risk and the average duration of the portfolio’s investments. BROKER/DEALER: Any individual or firm in the business of buying and selling securities for itself and others. Broker/dealers must register with the SEC. When acting as a broker, a broker/dealer executes orders on behalf of his/her client. When acting as a dealer, a broker/dealer executes trades for his/her firm's own account. Securities bought for the firm's own account may be sold to clients or other firms, or become a part of the firm's holdings. CERTIFICATE OF DEPOSIT (CD): A short or medium term, interest bearing, FDIC insured debt instrument offered by banks and savings and loans. Money removed before maturity is subject to a penalty. CDs are a low risk, low return investment, and are also known as “time deposits”, because the account holder has agreed to keep the money in the account for a specified amount of time, anywhere from a few months to several years. COLLATERAL: Securities, evidence of deposit or other property, which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies. COMMERCIAL PAPER: An unsecured short-term promissory note, issued by corporations, with maturities ranging from 2 to 270 days. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 11 of 17 COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR): The official annual report for the Otay Water District. It includes detailed financial information prepared in conformity with generally accepted accounting principles (GAAP). It also includes supporting schedules necessary to demonstrate compliance with finance-related legal and contractual provisions, extensive introductory material, and a detailed statistical section. COUPON: (a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on the bond’s face value. (b) A certificate attached to a bond evidencing interest due on a set date. DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account. DEBENTURE: A bond secured only by the general credit of the issuer. DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities. DERIVATIVES: (1) Financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying index or security, and may include a leveraging factor, or (2) financial contracts based upon notional amounts whose value is derived from an underlying index or security (interest rates, foreign exchange rates, equities or commodities). DISCOUNT: The difference between the cost price of a security and its maturity when quoted at lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount. DISCOUNT SECURITIES: Non-interest bearing money market instruments that are issued at a discount and redeemed at maturity for full face value, e.g., U.S. Treasury Bills. DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 12 of 17 FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals, e.g., S&L’s, small business firms, students, farmers, farm cooperatives, and exporters. FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A federal agency that insures deposits in member banks and thrifts, currently up to $100,000 per deposit. FEDERAL FARM CREDIT BANK (FFCB): The Federal Farm Credit Bank system supports agricultural loans and issues securities and bonds in financial markets backed by these loans. It has consolidated the financing programs of several related farm credit agencies and corporations. FEDERAL FUNDS RATE: The rate of interest at which Fed funds are traded. This rate is currently pegged by the Federal Reserve through open-market operations. FEDERAL AGRICULTURAL MORTGAGE CORPORATION (FAMC or Farmer Mac): A stockholder owned, publicly-traded corporation that was established under the Agricultural Credit Act of 1987, which added a new Title VIII to the Farm Credit Act of 1971. Farmer Mac is a government sponsored enterprise, whose mission is to provide a secondary market for agricultural real estate mortgage loans, rural housing mortgage loans, and rural utility cooperative loans. The corporation is authorized to purchase and guarantee securities. Farmer Mac guarantees that all security holders will receive timely payments of principal and interest. FEDERAL HOME LOAN BANK (FHLB): Government sponsored wholesale banks (currently 12 regional banks), which lend funds and provide correspondent banking services to member commercial banks, thrift institutions, credit unions and insurance companies. FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC or Freddie Mac): A stockholder owned, publicly traded company chartered by the United States federal government in 1970 to purchase mortgages and related securities, and then issue securities and bonds in financial markets backed by those mortgages in secondary markets. Freddie Mac, like its competitor Fannie Mae, is regulated by the United States Department of Housing and Urban Development (HUD). OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 13 of 17 FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA or Fannie Mae): FNMA, like GNMA was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the auspices of the Department of Housing and Urban Development (HUD). It is the largest single provider of residential mortgage funds in the United States. Fannie Mae is a private stockholder-owned corporation. The corporation’s purchases include a variety of adjustable mortgages and second loans, in addition to fixed-rate mortgages. FNMA’s securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest. FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven member Board of Governors in Washington, D.C., 12 regional banks and about 5,700 commercial banks that are members of the system. FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. (FINRA): An independent, not-for-profit organization authorized by Congress to protect America’s investors by making sure the securities industry operates fairly and honestly. It is dedicated to investor protection and market integrity through effective and efficient regulation of the securities industry. FINRA is the successor to the National Association of Securities Dealers, Inc. (NASD). GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae): A government owned agency which buys mortgages from lending institutions, securitizes them, and then sells them to investors. Because the payments to investors are guaranteed by the full faith and credit of the U.S. Government, they return slightly less interest than other mortgage-backed securities. INTEREST-ONLY STRIPS: A mortgage backed instrument where the investor receives only the interest, no principal, from a pool of mortgages. Issues are highly interest rate sensitive, and cash flows vary between interest periods. Also, the maturity date may occur earlier than that stated if all loans within the pool are pre-paid. High prepayments on underlying mortgages can return less to the holder than the dollar amount invested. INVERSE FLOATER: A bond or note that does not earn a fixed rate of interest. Rather, the interest rate is tied to a specific interest OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 14 of 17 rate index identified in the bond/note structure. The interest rate earned by the bond/note will move in the opposite direction of the index. An inverse floater increases the market rate risk and modified duration of the investment. LEVERAGE: Investing with borrowed money with the expectation that the interest earned on the investment will exceed the interest paid on the borrowed money. LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes. LOCAL AGENCY INVESTMENT FUND (LAIF): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold. MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase/reverse repurchase agreements that establish each party’s rights in the transactions. A master agreement will often specify, among other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller borrower. MATURITY: The date upon which the principal or stated value of an investment becomes due and payable. MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, bankers’ acceptances, etc.) are issued and traded. MUTUAL FUNDS: An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. Mutual funds raise money by selling shares of the fund to the public. Mutual funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 15 of 17 various investment vehicles, such as stocks, bonds, and money market instruments. MONEY MARKET MUTUAL FUNDS: An open-end mutual fund which invests only in money markets. These funds invest in short term (one day to one year) debt obligations such as Treasury bills, certificates of deposit, and commercial paper. PASSIVE INVESTING: An investment strategy involving limited ongoing buying and selling actions. Passive investors will purchase investments with the intention of long term appreciation and limited maintenance, and typically don’t actively attempt to profit from short term price fluctuations. Also known as a buy-and-hold strategy. PRIMARY DEALER: A designation given by the Federal Reserve System to commercial banks or broker/dealers who meet specific criteria, including capital requirements and participation in Treasury auctions. These dealers submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission registered securities broker/dealers, banks, and a few unregulated firms. PRUDENT PERSON RULE: An investment standard. In some states the law requires that a fiduciary, such as a trustee, may invest money only in a list of securities selected by the custody state—the so-called legal list. In other states the trustee may invest in a security if it is one which would be bought by a prudent person of discretion and intelligence who is seeking a reasonable income and preservation of capital. PUBLIC SECURITIES ASSOCIATION (PSA): A trade organization of dealers, brokers, and bankers who underwrite and trade securities offerings. QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 16 of 17 RANGE NOTE: An investment whose coupon payment varies and is dependent on whether the current benchmark falls within a pre-determined range. RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond the current income return. REGIONAL DEALER: A securities broker/dealer, registered with the Securities & Exchange Commission (SEC), who meets all of the licensing requirements for buying and selling securities. REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security “buyer” in effect lends the “seller” money for the period of the agreement, and the terms of the agreement are structured to compensate him for this. Dealers use RP extensively to finance their positions. Exception: When the Fed is said to be doing RP, it is lending money that is increasing bank reserves. SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank’s vaults for protection. SECONDARY MARKET: A market made for the purchase and sale of outstanding securities issues following their initial distribution. SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors in securities transactions by administering securities legislation. SEC RULE 15C3-1: See Uniform Net Capital Rule. STRUCTURED NOTES: Notes issued by Government Sponsored Enterprises (FHLB, FNMA, FAMCA, etc.), and Corporations, which have imbedded options (e.g., call features, step-up coupons, floating rate coupons, derivative-based returns) into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the yield curve. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Number Date Adopted Date Revised INVESTMENT POLICY 27 9/15/93 5/2/17 Page 17 of 17 TREASURY BILLS: A non-interest bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months, or one year. TREASURY BONDS: Long-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities of more than 10 years. TREASURY NOTES: Medium-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities from two to 10 years. UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms as well as nonmember broker-dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash. YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond. STAFF REPORT TYPE MEETING: Regular Meeting MEETING DATE: May 2, 2018 SUBMITTED BY: Mark Watton General Manager PROJECT: DIV. NO. All APPROVED BY: Joseph R. Beachem, Chief Financial Officer Mark Watton, General Manager SUBJECT: Informational Item regarding the transfer of the San Miguel Fire training site to the County of San Diego for use by the County Fire Authority GENERAL MANAGER’S RECOMMENDATION: That the District terminate its lease with the San Miguel Consolidated Fire Protection District, enter into a new lease with the County of San Diego, and transfer ownership of the improvements on the leased property to the County of San Diego, and further that the Board authorize the General Manager to enter into the following agreements to effectuate this transfer: The Lease Cancellation and Termination Agreement between the Otay Water District and San Miguel Consolidated Fire Protection District, and thereafter the Lease Agreement between Otay Water District and the County of San Diego. COMMITTEE ACTION: Please see Attachment A. PURPOSE: To obtain Board authorization to terminate the District’s lease with the San Miguel Consolidated Fire Protection District(“San Miguel”), enter into a new lease with the County of San Diego (“County Lease”) on the same terms as the lease with San Miguel, and transfer ownership of the improvements on the leased property to the County of San Diego (“County”). ANALYSIS: Otay Water District is the owner in fee simple of real property located at 11880 Campo Road, within the County of San Diego, California. In or about 2007, San Miguel desired to lease approximately 2.73 acres of this property to construct and operate a regional training center which included a number of improvements to the land. On or about December 21, 2007, the District entered into a Ground Lease and Joint Use Agreement with San Miguel, under which the District leased the real property to construct a regional training center and conduct training programs. All costs associated with the construction of the improvements and their subsequent maintenance and operation were borne by San Miguel, including taxes. Pursuant to the Lease, San Miguel owned all the improvements, which it constructed. The initial term of the Lease was thirty (30) years, with an optional term of twenty (20) years. The rent for the initial term was $10 per year. The rent for the entire initial term ($300) was paid in full at the commencement of the Lease. The Lease was amended in or about May 2011, to provide for the Regional Training Center to comply with the County of San Diego’s storm water requirements. The Lease was amended again in June 21, 2012. San Miguel and the District now desire to terminate the Lease pursuant to its terms and conditions. The primary purpose of this termination is to facilitate the transfer of the lease of the property, including all improvements, and facilities constructed thereon, to the County under terms substantially similar to the terms of the former San Miguel lease. On March 15, 2018, San Miguel provided General Manager Watton with a letter confirming that all the improvements shall remain on the property including approximately 60,000 square feet of concrete, six fire hydrants, a 2' trench drain, 3' wide drainage ditch, retaining walls, 3' concrete ribbon gutter, concrete swale, 10,000 gallon commercial draughting pit, battery sand-oil interceptor, confined space prop, depressed prop for live fire, highway overpass prop, electrical service and back flow, plus all fixtures permanently attached to the Premises. San Miguel has agreed to execute a Lease Cancellation and Termination Agreement with the District; but, to date, it has not been executed. As with the prior lease, the County is solely responsible for the operations and maintenance of the facilities and improvements. At the commencement of the County Lease, the District will convey ownership of the improvements described above to the County. The District does not bear the financial risk associated with any operating costs or capital expenditures. Either party may cancel the lease upon written notice, pursuant to the timelines contained in the agreement. The County intends to use the leased premises for fire and emergency services training programs and services for the County Fire Authority. The initial term of the County Lease is three hundred and sixty (360) months, and the County has the option to extend the term for an additional two hundred forty (240) month period upon three hundred sixty five (365) days' prior written notice to the District. The rent for the term of the County Lease is one Dollar ($1.00). District Options and Legal Obligations The District has the option of not leasing the land to the County, however, this lease is in the best interests of the District, and there is no reason to deny the County the ability to maintain, operate, and improve this existing facility. There are no additional legal obligations created by transferring this Lease from San Miguel to the County. The District remains responsible for the existing access road from Highway 94 to the site; however, pursuant to the Lease, the District and the County are each responsible for 50% of any and all future maintenance and/or repair for this access road during the lease; this effectively reduces the District’s obligation. The County is responsible for all utilities associated with the Lease. The District is responsible for its own, and its agents (contractors, licenses, etc.) acts, omissions, or negligence which occur on the subject premises. Operating Arrangement Facility Lease This lease, like the former lease with San Miguel, is a facility lease, where the land is leased to the County who provides site maintenance, site operations, and overall facilities management services. The purpose of this lease is not financial gain. The rent is $1.00 for the term of the agreement. This is substantially similar to the terms of the former San Miguel lease. The County is obligated to fund required capital improvements, operating expense, and reserve for any ongoing capital improvements. As such, the financial risk is borne by the lessee. FISCAL IMPACT: As a result of the termination of the San Miguel lease and the creation of the new lease with the County there is no expectation of any significant fiscal change impacting the District. The sole financial obligation of the District relating to this lease concerns the existing access road from Highway 94. The District and the County are each responsible for 50% of any and all future maintenance and/or repair for this access road during the lease. STRATEGIC GOAL: None. LEGAL IMPACT: There is no particular legal impact warranting special attention. The primary purpose of this lease is to transfer the operation and responsibility for the fire training facilities previously built and operated by San Miguel, to the County for use by the County Fire Authority, with little to no substantive change in the rights or obligations of the District. The lease is fairly standard, assigning indemnification, liability, and related obligations in a standard and unobjectionable fashion. Attachments: A) Committee Action B) San Miguel Fire Lease Agreement, dated December 21, 2007 C) First Amendment to San Miguel Fire Lease Agreement, dated May 2011 D) Second Amendment to San Miguel Fire Lease Agreement, dated June 21, 2012 E) Lease Cancellation and Termination Agreement between the District and San Miguel F) Letter from Fire Chief Brainard to General Manager Watton dated March 15, 2018 G) Lease Agreement between Otay Water District and the County of San Diego ATTACHMENT A SUBJECT/PROJECT: Informational Item regarding the transfer of the San Miguel Fire training site to the County of San Diego for use by the County Fire Authority COMMITTEE ACTION: The Finance and Administration Committee (Committee) reviewed this item at a meeting held on April 17, 2018 and the following comments were made: Staff is requesting that the Board terminate its lease with the San Miguel Consolidated Fire Protection District (SMCFPD), enter into a new lease with the County of San Diego (County), and transfer ownership of the improvements on the leased property to the County, and further that the Board authorize an agreements to effectuate this transfer: The Lease Cancellation and Termination Agreement between the Otay Water District and San Miguel Consolidated Fire Protection District, and thereafter the Lease Agreement between Otay water District and the County of San Diego. Staff reviewed information in the staff report. It was noted that SMCFPD had some financial issues which has precluded them from completing the training facility and the facility has been sitting dormant for a number of years. The County and Cal Fire have an interest in leasing the training facility and the District has been working with the County on a new lease. The County is ready to sign the proposed lease agreement, but before they can sign, SMCFPD must accept/acknowledge the termination of their lease agreement with the District. The District has a letter transferring ownership of the facilities and is currently waiting on the letter from SMCFPD terminating their lease agreement. The District expects to receive the letter and is requesting that the Board authorize the execution of the new lease agreement with the County once the letter is received from SMCFPD acknowledging termination of their lease agreement with the District. It was noted that the County will complete the remaining planned facilities at the training site. Upon completion of the discussion, the committee supported staffs’ recommendation and presentation to the full board on the consent calendar. 1 AMENDMENT TO AGREEMENT BETWEEN THE OTAY WATER DISTRICT AND THE SAN MIGUEL FIRE PROTECTION DISTRICT FOR A REGIONAL TRAINING CENTER This Amendment to the Agreement (“Amendment”), made this __ day of [month], 2011, by and between the OTAY WATER DISTRICT, a municipal water district, formed and existing pursuant to California Municipal Water District Act of 1911, as amended (“DISTRICT”), and the SAN MIGUEL FIRE PROTECTION DISTRICT, a consolidated fire protection district established pursuant to Section 13812 of the Health and Safety Code and the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, commencing with Section 56000 of Title 5 of the Government Code (“SAN MIGUEL”), with reference to the following facts which are acknowledged by each party as true and correct: RECITALS A. DISTRICT is a municipal water district, formed and existing pursuant to the California Municipal Water District Act of 1911, as amended. B. SAN MIGUEL is a consolidated fire protection district established pursuant to Section 13812 of the Health and Safety Code and the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, commencing with Section 56000 of Title 5 of the Government Code C. On December 21, 2007, DISTRICT and SAN MIGUEL entered into a ground lease and joint use agreement (“Agreement”), whereby SAN MIGUEL leased certain real property from the DISTRICT pursuant to the terms and conditions of the Agreement (“Leased Property”), including agreeing to undertake certain duties and obligations relating to the Leased Property. D. Subsequent to entering into the Agreement, on or about October 22, 2010, the County of San Diego (“County”) approved Major Use Permit P 09-007 (“MUP”) for SAN MIGUEL in connection with SAN MIGUEL’s use of and construction on the Leased Property. E. The MUP requires the establishment of a maintenance agreement and, accordingly, the County has requested that the DISTRICT, as the owner of the Leased Property, enter into Storm Water Facilities Maintenance Agreement, with Easement and Covenants (L-15514/MUP P09-007) (“Stormwater Agreement”) with the County. F. The Stormwater Agreement imposes additional obligations on the Leased Property related to SAN MIGUEL’s use of and construction on the Leased Property, including, but not limited to, providing the County with a Letter of Credit in the amount of $11,075. G. The Agreement provides for a “Completion Date,” as that date is defined in subsection 3.3 of section 3 of the Agreement, in 2009, which date has passed without the completion of the specified improvements. H. DISTRICT and SAN MIGUEL now desire to amend the Agreement for SAN MIGUEL to assume any and all duties and obligations under the MUP and Stormwater Agreement and to extend the Completion Date of the Agreement, and SAN MIGUEL is willing to amend the Agreement pursuant to the terms and conditions of this Amendment. AMENDMENT 2 NOW, THEREFORE, it is agreed by and between the parties as follows: 1. DISTRICT and SAN MIGUEL agree to amend the Agreement by incorporating by reference County of San Diego Major Use Permit P 09-007 (“MUP”) and Storm Water Facilities Maintenance Agreement, with Easement and Covenants (L-15514/MUP P09-007) (“Stormwater Agreement”), attached hereto as Exhibits “A” and “B” to this Amendment, respectively. SAN MIGUEL expressly assumes any and all obligations and duties of the DISTRICT as set forth in the MUP and Stormwater Agreement and agrees to fully comply with the same. SAN MIGUEL will perform all obligations which otherwise would have been performed by the DISTRICT as required in the MUP and Stormwater Agreement. SAN MIGUEL further agrees to defend, indemnify, and hold harmless the DISTRICT from any and all claims arising from the MUP or Stormwater Agreement, in addition to and as part of SAN MIGUEL’s indemnification obligations under subsection 13.1 of section 13 of the Agreement. 2. DISTRICT and SAN MIGUEL agree to amend the Agreement to extend the “Completion Date,” as set forth in subsection 3.3 of section 3 of the Agreement, to ______, 20__. 3. All other terms of the Agreement remain unchanged. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed the day and year first above written. SAN MIGUEL FIRE PROTECTION DISTRICT By: ____________________________ August F. Ghio, Fire Chief ATTEST: ____________________________ District Recording Secretary APPROVED AS TO FORM: _______________________________ General Counsel OTAY WATER DISTRICT By: ___________________________ Mark Watton, General Manager ATTEST: _______________________________ Susan Cruz, District Secretary APPROVED AS TO FORM: _______________________________ General Counsel SECOND AMENDMENT TO GROUND LEASE AND JOINT USE AGREEMENT BETWEEN OTAY WATER DISTRICT AND SAN MIGUEL CONSOLIDATED FIRE PROTECTION DISTRICT FOR REGIONAL TRAINING CENTER This Second Amendment ("Amendment") to the original Ground Lease and Joint Use Agreement is made and entered into as of the 21 §!-day of Ut.«'' V' , 2012 and is effective as of April4, 2012, by and between OTAY WATER DISTRICT ("Otay"), and SAN MIGUEL CONSOLIDATED FIRE PROTECTION DISTRICT ("San Miguel"). A. District and San Miguel entered into that certain Ground Lease and Joint Use Agreement dated December 21 , 2007 (the "Lease"), under which Otay leased certain real property to San Miguel for the construction and operation of a regional training center (the "Training Center''). B. In May 2011 , Otay and San Miguel amended the Lease with regard to County of San Diego stormwater requirements. C. Otay desires to construct and/or install facilities at the Training Center and to properly address such improvements and future improvements in the Lease. D. Otay and San Miguel desire to enter into this Amendment to amend certain specific terms and conditions of the Lease as indicated below. E. All terms in this Amendment shall have the same meaning as provided in the Lease unless otherwise noted . NOW, THEREFORE, in consideration of the foregoing and the mutual promises and covenants hereinafter contained , the parties agree as follows : 1. Section 3. 7 is hereby added to the Lease as follows: 3.7 Construction of OWD Improvements. Throughout the term of this Lease, OWD may construct and/or install certain improvements on the Premises (the "OWD 1 Improvements"), provided the OWD Improvements do not interfere with the Improvements or San Miguel's use of the Premises. The OWD Improvements shall become a part of and subject to the terms of this Lease upon written notice to and acknowledgment by San Miguel. If construction and/or installation of OWD Improvements coincides with any construction by San Miguel, San Miguel agrees to include the OWD Improvements in its construction contracts upon request by OWD and in compliance with California public contracting laws. OWD agrees to provide sufficient funding to San Miguel to cover the cost of such OWD Improvements. 2. Section 4.5 is hereby added to the Lease as follows: 4.5 Use of OWD Improvements. OWD and San Miguel agree that San Miguel shall be allowed to make use of the OWD Improvements in the following manner: a. Reserved Use. San Miguel staff, volunteers, employees, agents or invitees may reserve the use of any OWD Improvements during hours of non-operation by OWD, at no charge, upon the conditions agreed upon by San Miguel and OWD. b. Shared Use. San Miguel staff, volunteers, employees, agents or invitees shall have access to and be able to use the OWD Improvements at any time upon reasonable notice of not less than 24 hours to OWD provided said use does not conflict with planned use by OWD. c. Indemnification for San Miguel Use. San Miguel shall, to the fullest extent permitted by law, hold harmless, protect, defend (with attorneys approved by OWD) and indemnify OWD, its Board of Directors, and each member thereof, its officers, agents, employees, representatives, and their successors and assigns, from and against any and all losses, liabilities, claims, suit damage, expenses and costs including reasonable attorney's fees and costs, and expert costs and investigation expenses ("Claims"), which arise out of or are in any way connected to San Miguel's use of the OWD Improvements under this Lease or any negligent or wrongful act or omission by San Miguel, its officers, employees, representatives, subcontractors, or agents regardless of whether or not such claim, loss or liability is caused in 2 part by a party indemnified hereunder. San Miguel shall have no obligation, however, to defend or indemnify OWD if it is determined by a court of competent jurisdiction that such Claim was caused by the sole negligence or willful misconduct of OWD. 3. Section 7.3 is hereby added to the Lease as follows: 7.3 Ownership of OWD Improvements. All OWD Improvements constructed or installed on the Premises by OWD shall be and remain the property of OWD. San Miguel shall have no right to waste the OWD Improvements, or to destroy, demolish or remove any OWD Improvements except as approved by OWD pursuant to a written amendment to this Lease. San Miguel agrees and acknowledges that it shall have no right, title, or claim in the OWD Improvements and that it shall not allow any liens, encumbrances, or claims other than those expressly allowed by OWD. 4. Section 9.1 of the Lease shall be amended and replaced with the following: 9.1 Maintenance and Repair. OWD places prime importance on quality maintenance to ensure the safety and well being of its staff, visitors and volunteers and any other person using the Improvements or OWD Improvements and/or participating in any Training Programs. Except as otherwise provided in this Lease, San Miguel assumes full responsibility for the construction, operation and maintenance of the Improvements, and maintenance of the OWD Improvements, without any expense to OWD, and agrees to perform all repairs and replacements necessary to maintain and preserve the Improvements, the OWD Improvements and the premises in a clean and safe condition reasonably satisfactory to OWD and in compliance with all applicable laws. Normal wear and tear of the Improvements and the OWD Improvements will be acceptable to OWD assuming San Miguel regularly constructs and performs all necessary repairs to maintain the Improvements and OWD Improvements in first- class condition, similar to their condition on the date the Improvements and OWD Improvements are accepted from the contractor. In addition, San Miguel shall keep the 3 premises and the Improvements and OWD Improvements free from all graffiti and any accumulation of debris or waste material. 5. The parties agree that all terms and cond itions of the Lease not modified or amended by this Amendment, including without limitation all indemnity and insurance requirements, are and shall remain in full force and effect. 6. This Amendment is subject to the venue, choice of law and interpretation provisions of the Lease. IN WITNESS WHEREOF, the parties have caused this Amendment to the Lease to be executed as of the day and year first above written. OTAY WATER DISTRICT By: lid tdtiJV /Mafi<Watton Its: Gen,ral Jv1anager Date: &!]A /Z!?..'k I I Appr:?!orm: By: -~~----------------General Counsel 4 SAN MIGUEL CONSOLIDATED FIRE PROTECTION DISTRICT By A~ Its: Fire Chief Date: Page 1 of 5 LEASE CANCELLATION AND TERMINATION AGREEMENT This Lease Cancellation and Termination Agreement (“Agreement”) is entered into as of ____________________ (“Effective Date”), by and between Otay Water District, a municipal water district, as landlord (“District”), and San Miguel Consolidated Fire Protection District, a consolidated fire district, as tenant (“San Miguel”). District and San Miguel are collectively referred to herein as the "Parties." RECITALS A. On or about December 21, 2007, the District entered into a Ground Lease and Joint Use Agreement with San Miguel (“Lease”), under which the District leased certain real property (“Property”) to San Miguel for the purpose of constructing, developing and operating thereon a state-of-the-art regional training center that included certain Improvements, and to offer certain Training Programs and services as described in the original Lease and exhibits thereto, and any subsequent Amendments. B. In or about May 2011, the District and San Miguel entered into an Amendment to Agreement between the Otay Water District and the San Miguel Fire Protection District for a Regional Training Center to comply with the County of San Diego’s storm water requirements. C. On or about June 21, 2012, the Parties entered into a Second Amendment to Ground Lease and Joint Use Agreement, which amended portions of the Lease. D. Any reference to the Lease within this Agreement incorporates any Amendments relating thereto. E. San Miguel desires to terminate the Lease and the District desires to cancel the Lease pursuant to the terms and conditions specified in this Agreement. E. This Agreement is entered into pursuant to Water Code sections 35405 and 35406 because the conveyance is in the public interest and the cancellation and termination of the Lease will enable The District to recover possession and access of the Property and Improvements and make constructive use of the Property. AGREEMENT NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the District and San Miguel agree as follows: 1. Lease Modification. The term of the Lease shall expire and shall be deemed terminated and cancelled effective on [insert date], 2018 (“Expiration Date”). Except as modified herein, the Lease is unmodified and remains in full force and effect. 2. Lease Termination and Termination Payment. Notwithstanding the foregoing, if, on or before the Expiration Date, San Miguel vacates the Property and leaves such Property and Improvements in reasonably good condition and repair and otherwise in such condition as is required under Paragraph 4 below, and under the Lease with respect to the surrender of the Page 2 of 5 Property and Improvements following a termination of the Lease then, as of the date that San Miguel so vacates the Property (such date being the “Termination Date”), (i) the Lease shall be deemed terminated and cancelled with the same effect as if such date were the normal expiration date of the Lease; (ii) San Miguel shall pay or cause to be paid all rent to the District and any and all utility charges that are due on or before the Termination Date; (iii) neither party shall have any claim against the other, and each party releases the other from any and all claims, liabilities, damages, or actions of any kind whatsoever arising out of or pursuant to the Lease or San Miguel’s use or occupancy of the Property; and (iv) San Miguel shall remove all personal property from the Property not qualifying as an Improvement, as defined in the Lease or exhibits thereto. Notwithstanding any provision in the Lease or in this Agreement, if for any reason San Miguel fails to perform any obligation hereunder or under the Lease, including, but not limited to, San Miguel’s obligation to vacate the Property and to leave such Property and Improvements on or before the Expiration Date in reasonably good condition and repair and otherwise in such condition as is required under Paragraph 4 below, then San Miguel hereby agrees that the Lease remains in full force and effect and is responsible for all payments of rent as if this Agreement had not been entered into. 3. Compliance with Obligations. San Miguel shall be responsible for all its obligations under the Lease through and including the Termination Date including, but not limited to, San Miguel’s obligation to pay monthly rent, additional rent, utility charges, and all other amounts and charges owing under the Lease. 4. Condition of Property. On or before the Termination Date, San Miguel shall remove all of its personal property; repair all damage to the Property and/or the Improvements; vacate the Property and leave such Property and Improvements in reasonably good condition and repair and otherwise in such condition as is required under the Lease with respect to surrender of the Property and Improvements at the end of the term of such Lease; and deliver the keys to the Property to the District. 5. Mutual Release. By this Agreement, effective on the Termination Date and as long as neither party shall be in default under its obligations hereunder, each party hereto releases the other party hereto from all claims, demands, damages, rights, liabilities, and causes of action of any nature whatsoever, whether at law or equity, known or unknown, suspected or unsuspected, which are related or in any manner are incidental to the Lease or the Property and which first arise out of transactions and occurrences from and after the Termination Date. Each party waives and relinquishes any right or benefit which it has or may have under applicable law regarding waiver of unknown claims to the full extent that it may lawfully waive such rights and benefits. In connection with such waiver and relinquishment, each party acknowledges that it is aware that it or its attorneys, accountants, or agents may hereafter discover facts in addition to or different from those which it now knows or believes to exist with respect to the subject matter of this Agreement or the other party hereto, but that it is such party’s intention hereby to fully, finally, and forever settle and release all of the claims, disputes, and differences, known or unknown, suspected or unsuspected, which now exist or may exist hereafter between each party with regard to the Lease or the Property. This Agreement shall be and remain in effect as a full and complete release notwithstanding the discovery or existence of any such additional or different facts. Notwithstanding the foregoing to the contrary, this Mutual Release is not intended to release or offset actions by either party for claims arising as a result of (i) a breach of the Lease and occurring Page 3 of 5 on or before the Termination Date; (ii) a breach of this Agreement; or (iii) transactions or occurrences on or before the Termination Date. 6. Indemnity. To the fullest extent permitted by law, the District shall not be liable for, and San Miguel shall defend and indemnify the District and its elected officials, officers, agents, employees, and volunteers (collectively “the District Parties”), against any and all claims, deductibles, self-insured retentions, demands, liability, judgments, awards, fines, mechanics’ liens or other liens, labor disputes, losses, damages, expenses, charges or costs of any kind or character, including attorneys’ fees and court costs (collectively “Claims”), which arise out of or are in any way connected to this Agreement or the Lease, whether arising either directly or indirectly from any act, error, omission, or negligence of San Miguel or its officers, employees, agents, contractors, licensees, or servants including, without limitation, Claims caused by the sole passive negligent act or the concurrent negligent act, error or omission, whether active or passive, of the District Parties. San Miguel shall have no obligation, however, to defend or indemnify the District Parties from a Claim if it is determined by a court of competent jurisdiction that the Claim was caused by the sole active negligent act or willful misconduct of the District Parties. 7. Knowing Release. In executing this Agreement, each party hereto acknowledges that they have consulted with and received advice of counsel and that the parties have executed this Agreement after independent investigation and without fraud, duress, or undue influence. 8. Authority of San Miguel. San Miguel represents and warrants that (i) it is the owner and holder of the San Miguel interest in the Lease and that it has the power, right, and authority to execute this Agreement and to carry out the intent hereof; (ii) the execution and delivery of this Agreement shall not violate or contravene any agreement, contract, security agreement, lease, or indenture to which San Miguel is a party or by which it is bound or requires the consent of any party to any of the foregoing; and (iii) the Property, including all improvements and betterments thereto, is unencumbered, free of any security interests, liens, chattel mortgages, leases, lease purchase agreements, or any other security or financing devices and all such installations have been fully paid for. 9. Attorneys’ Fees. If any party initiates legal proceedings to enforce its rights under this Agreement, the substantially prevailing party shall be entitled to reimbursement of its reasonable attorneys’ fees, costs, expenses, and disbursements from the other party. 10. Entire Agreement. This Agreement together with all exhibits attached to this Agreement and other agreements expressly referred to in this Agreement, constitutes the entire agreement between San Miguel and the District with respect to the subject matter contained in this Agreement. All prior or contemporaneous agreements, understandings, representations, warranties and statements, oral or written, are superseded. 11. Further Assurances. San Miguel and the District shall perform any further acts and execute and deliver any additional documents and instruments that may be reasonably required to carry out the provisions of this Agreement and the intentions of San Miguel and the District. 12. Governing Law. This Agreement shall be governed, interpreted, construed and enforced in accordance with the laws of the State of California. Page 4 of 5 13. Construction. The captions and section headings used in this Agreement are inserted for convenience only and are not intended to define, limit or affect the construction or interpretation of any term or provision of this Agreement. Whenever required by the context of this Agreement, the singular shall include the plural and vice versa. This Agreement shall not be construed as if it had been prepared by San Miguel or the District, but rather as if San Miguel and the District had jointly prepared this Agreement. 14. Modification, Waiver, Amendment. No modification, waiver, amendment or discharge of this Agreement shall be valid unless the modification, waiver, amendment or discharge is in writing and signed by San Miguel and the District. 15. Notices. All notices or other communications required or permitted under this Agreement shall be in writing, and shall be personally delivered by reputable overnight carrier, sent by certified mail, postage prepaid, return receipt requested, or sent by telecopy or e-mail, and shall be deemed received upon the earlier of (a) if personally delivered or delivered by overnight courier, the date of delivery to the address of the person to receive the notice, (b) if mailed, two (2) business days after the date of posting by the United States Postal Service, (c) if given by telecopy or e-mail, when sent. Any notice, request, demand, direction or other communication sent by telecopy or e-mail must be confirmed within forty-eight (48) hours by letter mailed or delivered in accordance with this section. If to San Miguel: _______________________________ ________________________________ ________________________________ _______________________ If to the District: Otay Water District 2554 Sweetwater Springs Boulevard Spring Valley, California 91978 Attention: General Manager Any notice of change of address shall be given by written notice in the manner detailed in this section. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to constitute receipt of the notice, demand, request or communication sent. 16. Severability. If any term, provision, covenant or condition of this Agreement is held to be invalid, void or otherwise unenforceable, to any extent, by any court of competent jurisdiction, the remainder of this Agreement shall not be affected, and each term, provision, covenant or condition of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 17. Successors. All terms of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by San Miguel and the District and their respective heirs, legal representatives, successors, and assigns. 18. Waiver. The waiver by one party of the performance of any term, provision, covenant or condition shall not invalidate this Agreement, nor shall it be considered as a waiver Page 5 of 5 by the party of any other term, provision, covenant or condition. Delay by any party in pursuing any remedy or in insisting upon full performance for any breach or failure of any term, provision, covenant or condition shall not prevent the party from later pursuing remedies or insisting upon full performance for the same or any similar breach or failure. SIGNATURES This Agreement shall be effective as of the date of its approval by San Miguel. SAN MIGUEL: San Miguel Consolidated Fire Protection District, a consolidated fire protection district Date: __________________ By: ______________________________ August F. Ghio, Fire Chief APPROVED AS TO FORM: _______________________________ General Counsel DISTRICT: Otay Water District, a municipal water district Date: __________________ By: _________________________________ Mark Watton, General Manager APPROVED AS TO FORM: __________________________________ General Counsel STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: May 2, 2018 SUBMITTED BY: Dan Martin Engineering Manager PROJECT: P2534-001103 P2544-001103 DIV. NO. 3 & 5 APPROVED BY: Rod Posada, Chief, Engineering Mark Watton, General Manager SUBJECT: Approve Change Order No. 4 to the Contract with Blastco, Inc. for the 978-1 & 850-2 Reservoirs Interior/Exterior Coatings & Upgrades Project GENERAL MANAGER’S RECOMMENDATION: That the Otay Water District (District) Board of Directors (Board) approve Change Order No. 4 (Exhibit C) to the existing contract with Blastco, Inc. (Blastco) in the credit amount of <$267,197.50> for the 978-1 & 850-2 Reservoirs Interior/Exterior Coatings & Upgrades Project (see Exhibit A for Project locations). COMMITTEE ACTION: Please see Attachment A. PURPOSE: To obtain Board authorization for the General Manager to execute Change Order No. 4 in the credit amount of <$267,197.50> to the construction contract with Blastco for the 978-1 & 850-2 Reservoirs Interior/Exterior Coatings & Upgrades Project. 2 ANALYSIS: At the October 5, 2016 Board Meeting, the Board awarded a construction contract in the amount of $1,106,200.00 to Blastco to replace the existing interior and exterior coating for the 978-1 and 850-2 Reservoirs. In addition to replacing the coatings of the Reservoirs, the Project includes structural upgrades to comply with the current American Water Works Association (AWWA) and the Occupational Safety and Health Administration standards for both Federal (OSHA) and State (Cal-OSHA) levels. The 978-1 Reservoir is a 0.5 million gallon (MG) steel tank originally constructed in 1959. The tank is located on Pence Drive, in unincorporated El Cajon. It is one of two (2) tanks in the 978 pressure zone. The 978-1 was last recoated in 2000 on the interior surface and 1996 on the exterior surface. The 850-2 Reservoir is a 3.1 MG steel tank originally constructed in 1973. It is one of four tanks in the 850 pressure zone. The 850-2 was last recoated on the interior and exterior surfaces in 1996. The construction contract includes Board approved allowance items, which were established to address structural deficiencies identified during construction. Since the award of the construction contract, structural repair work was identified and completed at the 978-1 and 850-2 Reservoirs under Work Orders, which were approved against the allowance items. All contract coating work has been completed and the 978-1 and 850-2 Reservoirs were approved to be placed back into service on July 27, 2017 and January 12, 2018, respectively. To date, three (3) change orders have been issued on the Project. Table 1 below provides a summary of the approved contract change orders for the Project. Each change order addresses both cost and time impacts associated with the work and serves as total compensation to the contractor. Table 1. Summary of Approved Change Orders Change Order Description Approval Date Value Time (Days) 1 No cost change order to address contract time associated with Bid Allowance work at the 978-1 Reservoir and to extend contract time due to weather impacts. 6/22/17 $0.00 12 3 2 Change order to address contract time associated with Bid Allowance work at the 850- 2 Reservoir. Change Order also partially reconciled structural bid allowance items resulting in a credit. 9/1/17 <$670.00> 61 3 Change order completed modifications to the handrail at the 850-2 Reservoir, added contract time for this work, and completed the reconciliation of the remaining structural bid allowance items. Change order credited the District for damage repairs to the 850-2 Reservoir’s RFID Card Access System due to Contractor Operations. 12/13/17 $627.63 4 Total <$42.37> 77 With the approval of the change orders summarized above, the contract completion date was revised from June 15, 2017 to September 1, 2017. Throughout the contract, Blastco has been notified that the District will be assessing liquidated damages associated with the late delivery of the Project. Section 00400 (Form A) of the contract between the District and Blastco includes provisions for liquidated damages associated with completion of the work beyond the contract time. Per the contract, liquidated damages accrue at a rate of two thousand dollars ($2,000) per calendar day until substantial completion is reached. Blastco substantially completed the contract on January 11, 2018. In accordance with the contract provisions, the District has withheld liquidated damages from progress payment requests. Change Order No. 4, which is the subject of this staff report, reconciles the final number of liquidated damages assessed and adjusts the final contract amount accordingly. Additionally, Change Order No. 4 serves as a contract closeout change order and will credit the contract for items furnished by the District to Blastco at the request of Blastco, including the following, compensation for damaged pavement at the 978-1 and 850-2 Reservoirs sites and premium time associated with specialty inspection on weekends. Change Order No. 4 will also reconcile bid 4 item No. 3.5 “1/4-inch Steel Patch Plates” as required for field conditions. In total, Change Order No. 4 is a credit to the District in the amount of <$267,197.50>. Blastco has notified the District that they disagree with the assessment of liquidated damages. The District’s Construction Manager has sent correspondence (Exhibit B) noting that Blastco has submitted two (2) claims on the Project and that the Engineer’s Entitlement Decision denying the claims has been issued. Blastco’s response is pending. A recommendation has been made to process Change Order No. 4 unilaterally to allow the Project to closeout and record project completion. The Contract includes a detailed claim resolution procedure, which remains unaffected by processing Change Order No. 4 unilaterally. FISCAL IMPACT: Joe Beachem, Chief Financial Officer The total budget for CIP P2534, as approved in the FY 2018 budget, is $650,000. Total expenditures, plus outstanding commitments and forecast, are $609,091. See Attachment B-1 for the budget detail. The total budget for CIP P2544, as approved in the FY 2018 budget, is $980,000. Total expenditures, plus outstanding commitments and forecast, are $824,480. See Attachment B-2 for the budget detail. Based on a review of the financial budget, the Project Manager anticipates that the budget 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 Replacement 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.” 5 LEGAL IMPACT: None. DM/RP:mlc P:\WORKING\CIP P2534 & P2544 - 978-1 & 850-2 Reservoir Int-Ext Coating\Staff Reports\BD 05-02-18\BD 05- 02-18, Staff Report 978-1 & 850-2 Reservoir Coating.docx Attachments: Attachment A – Committee Action Attachment B-1 – Budget Detail for P2534 (978-1 Reservoir) Attachment B-2 – Budget Detail for P2544 (850-2 Reservoir) Exhibit A – Project Location for 978-1 & 850-2 Exhibit B – Alyson Consulting Letter dated 4/9/2018 Exhibit C – Change Order No. 4 ATTACHMENT A SUBJECT/PROJECT: P2534-001103 P2544-001103 Approve Change Order No. 4 to the Contract with Blastco, Inc. for the 978-1 & 850-2 Reservoirs Interior/Exterior Coatings & Upgrades Project COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) reviewed this item at a meeting held on April 16, 2018, and the following comments were made: Staff reviewed the staff report with the Committee and recommended that the Board approve Change Order No. 4 to the existing contract with Blastco, Inc. (Blastco) in the credit amount of <$267,197.50> for the 978-1 & 850-2 Reservoirs Interior/Exterior Coatings & Upgrades Project. As stated in the staff report, with the approval of Change Orders 1 through 3, the contract completion date was revised from June 15, 2017 to September 1, 2017. The total cost changes as a result of the three change orders are a contract deduction of <$42.37>. Staff noted that throughout the contract, Blastco has been notified that the District will be assessing liquidated damages associated with the late delivery of the Project. It was also noted that Blastco notified the District that they disagree with the assessment of liquidated damages. Staff stated that the District’s Construction Manager sent Blastco a correspondence (Exhibit B) noting that the company submitted two (2) claims on the Project and that the Engineer’s Entitlement Decision denying the claims was issued. Staff noted that Blastco recently responded to the District’s correspondence, but there was no significant information provided to change staff’s decision. Staff recommended that Change Order No. 4 be processed unilaterally to allow the Project to closeout and record project completion. Staff indicated that the contract includes a detailed claim resolution procedure, which remains unaffected by processing Change Order No. 4 unilaterally. The Committee inquired if Blastco will attend the May 2, 2018, Regular Board meeting to address the claim issue. Staff stated that they will notify Blastco of the board meeting. In response to a question from the Committee, staff stated that the coating inspectors are always at the project site through the duration of coating inspection to ensure that the contractor is following mandatory procedures. The inspectors are independent of the contractor. Upon completion of the discussion, the Committee accepted staffs’ report and supported presentation to the full board as a consent item. ATTACHMENT B-1 – Budget Detail for P2534 SUBJECT/PROJECT: P2534-001103 P2544-001103 Approve Change Order No. 4 to the Contract with Blastco, Inc. for the 978-1 & 850-2 Reservoirs Interior/Exterior Coatings & Upgrades Project Date Updated: 4/09/18 Budget 650,000 Planning Standard Salaries 2,458 2,458 0 2,458 Consultant Contracts 3,800 3,800 - 3,800 HDR ENGINEERING INC Regulatory Agency Fees 25 25 - 25 PETTY CASH CUSTODIAN - - - - Total Planning 6,283 6,283 0 6,283 Design Standard Salaries 15,278 15,278 - 15,278 - - - - Total Design 15,278 15,278 - 15,278 Construction Standard Salaries 150,000 140,522 9,478 150,000 Construction Contract 369,840 319,219 50,621 369,840 BLASTCO, INC. (Paid) 19,465 - 19,465 19,465 BLASTCO, INC. (Retention) (60,000) - (60,000) (60,000) CO No. 4 Service Contracts 52 52 - 52 DAILY JOURNAL CORP Service Contracts 465 465 - 465 MAYER REPROGRAPHICS 55,957 55,957 - 55,957 CORRPRO COMPANIES INC 1,978 1,978 - 1,978 NINYO & MOORE 2,013 2,013 - 2,013 PSOMAS 30,000 24,150 5,850 30,000 ALYSON CONSULTING-CM 2,261 2,261 - 2,261 CLARKSON LAB & SUPPLY 10,500 5,642 4,858 10,500 WATCHLIGHT CORPORATION 5,000 - 5,000 5,000 Legal Total Construction 587,530 552,258 35,272 587,530 Grand Total 609,091 573,818 35,272 609,091 Vendor/Comments Otay Water District P2534-978-1 Reservoir Interior/Exterior Coating Committed Expenditures Outstanding Commitment & Projected Final Cost ATTACHMENT B-2 – Budget Detail for P2544 SUBJECT/PROJECT: P2534-001103 P2544-001103 Approve Change Order No. 4 to the Contract with Blastco, Inc. for the 978-1 & 850-2 Reservoirs Interior/Exterior Coatings & Upgrades Project Date Updated: 4/09/18 Budget 980,000 Planning Standard Salaries 2,211 2,211 - 2,211 Consultant Contracts 3,800 3,800 - 3,800 HDR ENGINEERING INC Service Contracts - - - - - - - - Regulatory Agency Fees 25 25 - 25 PETTY CASH CUSTODIAN Total Planning 6,036 6,036 - 6,036 Design Standard Salaries 13,701 13,701 - 13,701 Total Design 13,701 13,701 - 13,701 Construction Standard Salaries 150,000 136,205 13,795 150,000 Construction Contract 681,010 480,738 200,272 681,010 BLASTCO, INC. (Paid) 35,843 - 35,843 BLASTCO, INC. (Retention) (207,198) - (207,198) (207,198) CO No. 4 Service Contracts 24,431 24,431 - 24,431 CORRPRO COMPANIES INC 61,950 61,950 - 61,950 CSI SERVICES INC 1,234 1,234 - 1,234 NINYO & MOORE 5,820 5,820 - 5,820 PSOMAS 35,000 29,150 5,850 35,000 ALYSON CONSULTING-CM 688 688 - 688 CLARKSON LAB & SUPPLY 10,500 8,187 2,313 10,500 WATCHLIGHT CORPORATION 465 465 - 465 MAYER REPROGRAPHICS 5,000 - 5,000 5,000 Legal Total Construction 804,743 748,868 55,875 804,743 Grand Total 824,480 768,605 55,875 824,480 Vendor/Comments Otay Water District P2544-850-2 Reservoir Interior/Exterior Coating Committed Expenditures Outstanding Commitment & Projected Final Cost OTAY WATER DISTRICT 978-1 & 850-2 Reservoirs Interior/Exterior Coatings & UpgradesLocation Map EXHIBIT A F P:\WORKING\P2534 & P2544 978-1 & 850-2 Reservoirs Int-Ex Coating\Graphics\Exhibits-Figures\Location Map-Color.mxd §¨¦8 §¨¦8 §¨¦8 ÃÅ94 ÃÅ125 ÃÅ94 ÃÅ125 ÃÅ94 0 5,0002,500 Feet 850-2 RESERVOIR 978-1RESERVOIR CIP P2534CIP P2544 PROJECT SITE PROJECT SITE SR-94 / CAMPO RD !\ VICINITY MAP PROJECT SITENTS DIV 5 DIV 1 DIV 2 DIV 4 DIV 3 ?ò Aä%&s ?p ?Ë !\ PROJECT SITE F J A M A C H A BLVD J A M A C H A R D 9968 Hibert Street, Suite 109 – San Diego, California 92131 619-851-3331 – alysonconsulting.com April 9, 2018 Mr. Dan Martin, PE Manager, Engineering OTAY WATER DISTRICT 2554 Sweetwater Springs Blvd Spring Valley, CA 91978 Re: Recommend Unilateral Processing of Change Order No. 4 978-1 & 850-2 Reservoir Interior/Exterior Coating & Upgrades (CIP P2534/2544) Dear Mr. Martin: Change Order No. 4 was issued to Blastco on February 21, 2018 for signature (e-mail thread attached). Subsequent correspondence indicated Blastco’s legal team was reviewing the document prior to issuing a response. Via correspondence received on April 5, 2018 Blastco disagreed with the assessment of liquidated damages and expressed an unwillingness to sign the change order. The Contractor has submitted two claims on the project. The Engineer’s Entitlement Decision denying the claims has been issued and Blastco’s response is pending. The Contract includes a detailed claim resolution procedure which remains unaffected by processing Change Order No. 4 unilaterally. Given the contractor’s unwillingness to sign the change order I recommend the District process Change Order No. 4 unilaterally to allow the project to closeout and record project completion. Please do not hesitate to contact me if you have any questions or comments. Sincerely, Douglas Cook Construction Manager Print | Close Window Subject: Re: [FWD: RE: [FWD: 978 & 850 CO 04 Closeout for signature]] From: Bob Kelley <Bob.Kelley@tfwarren.com> Date: Thu, Apr 05, 2018 8:36 pm To: "dcook@alysoncorp.com" <dcook@alysoncorp.com> Doug, As previously discussed, Blastco disagrees with the assessment of liquidated damages pursuant Claims 1 and 2 and will not acknowledge the validity of your change order by signing this document. Respectfully, Bob Kelley| Operations Manager| Blastco Inc D: 5622315458 | C: 5623675089 11905 Regentview Ave | Downey, CA 90241 Sent from my iPhone On Apr 5, 2018, at 9:37 PM, "dcook@alysoncorp.com" <dcook@alysoncorp.com> wrote: Bob, I have not received a response regarding Blastco signing CO 04. Unless notified otherwise prior to close of business on Friday, April 6, 2018, the District will move forward with processing the CO unilaterally. Please do not hesitate to contact me if you have any questions or comments. Thank you, Doug Original Message Subject: RE: [FWD: 978 & 850 CO 04 Closeout for signature] From: <dcook@alysoncorp.com> Date: Fri, March 23, 2018 12:36 pm To: "Bob Kelley" <Bob.Kelley@tfwarren.com> Cc: "Dan Martin" <Dan.Martin@otaywater.gov> Bob, As we discussed yesterday this CO requires Board action and our window for placing this item on the May Board meeting agenda closes early next week. You are scheduled to complete the punchlist today and missing the May Board meeting will delay our ability to record the project as complete and therefore delay the release of remaining retention funds. Please respond and clarify if Blastco will sign the CO or if the CO needs to be processed unilaterally. Please do not hesitate to contact me if you have any questions or comments. Thank you, Doug Original Message Subject: Re: [FWD: 978 & 850 CO 04 Closeout for signature] From: Bob Kelley <Bob.Kelley@tfwarren.com> Date: Mon, March 19, 2018 8:28 pm To: "dcook@alysoncorp.com" <dcook@alysoncorp.com> Doug, As previously discussed and pursuant to our claim I do not acknowledge the validity of the liquidated damages. Therefore, I will forward the document to our legal team for review and advisement. Respectfully, Bob Kelley| Operations Manager| Blastco Inc D: 5622315458 | C: 5623675089 11905 Regentview Ave | Downey, CA 90241 On Mar 19, 2018, at 1:34 PM, "dcook@alysoncorp.com" <dcook@alysoncorp.com> wrote: Bob, I also left you a voicemail. Please let me know the status of the subject CO. Thank you, Doug Original Message Subject: 978 & 850 CO 04 Closeout for signature From: <dcook@alysoncorp.com> Date: Wed, February 21, 2018 1:41 pm To: "Bob Kelley" <bob.kelley@tfwarren.com> Bob, Per our discussion, please find the subject CO attached for signature. Please do not hesitate to contact me if you have any questions or comments. Thank you, Doug <CO 04 Closeout.pdf> Copyright © 20032018. All rights reserved. OTAY WATER DISTRICT 2554 SWEETWATER SPRINGS BLVD., SPRING VALLEY, CA. 91978, (619) 670-2222 CONTRACT/P.O. CHANGE ORDER No. 4 PROJECT/ITEM: 978-1 & 850-2 Reservoir Interior/Exterior Coating and Upgrades CONTRACTOR/VENDOR: Blastco, Inc. REF.CIP No.: P2534/P2544 APPROVED BY: Board REF. P.O. No: 719760 DATE: 2/21/18 DESCRIPTION: See attached page 2 of 2 for continuation. REASON: See attached page 2 of 2 for continuation. CHANGE P.O. TO READ: Revise Contract to deduct $267,197.50 and add 0 days time for a total Contract amount of $838,960.13 with a Contract Duration of 305 Calendar Days. ORIGINAL CONTRACT/P.O. AMOUNT: $ 1,106,200.00 ADJUSTED AMOUNT FROM PREVIOUS CHANGE: $ (42.37) TOTAL COST OF THIS CHANGE ORDER: $ (267,197.50) NEW CONTRACT/P.O. AMOUNT IS: $ 838,960.13 ORIGINAL CONTRACT COMPLETION DATE: 6/15/17 CONTRACT/P.O. TIME AFFECTED BY THIS CHANGE: No REVISED CONTRACT COMPLETION DATE: 9/1/17 IT IS UNDERSTOOD WITH THE FOLLOWING APPROVALS, THAT THE CONTRACTOR/VENDOR IS AUTHORIZED AND DIRECTED TO MAKE THE HEREIN DESCRIBED CHANGES. IT IS ALSO AGREED THAT THE TOTAL COST FOR THIS CHANGE ORDER CONSTITUTES FULL AND COMPLETE COMPENSATION FOR OBLIGATIONS REQUIRED BY THE CONTRACT/P.O. ALL OTHER PROVISIONS AND REQUIREMENTS OF THE CONTRACT/P.O. REMAIN IN FULL FORCE AND EFFECT. CONTRACTOR/VENDOR: STAFF APPROVALS: SIGNATURE: Processed Unilaterally PROJ. MGR : DATE: 4/9/18 NAME : Bob Kelly DIV. MGR : DATE: TITLE: Project Manager DATE : CHIEF: DATE: COMPANY & Blastco, Inc. ADDRESS: 11905 Regentview Avenue DISTRICT APPROVAL: Downey, CA 90241 GEN. MANAGER: DATE: COPIES: o FILE (Orig.), o CONTRACTOR/VENDOR, o CHIEF-ENGINEERING, o CHIEF-FINANCE, o ENGR. MGR. o ACCTS PAYABLE, o INSPECTION, o PROJ. MGR., o ENGR. SECRETARY, o PURCHASING, o PROJECT BINDER Contract / P.O. Change Order No. 4 page 2 of 3 Description of Work Description Increase Decrease Time Item No. 1: Reimbursement for additional inspection costs outside normal work hours per Section 00800-1.2 at the 850-2 Reservoir. $2,499.00 0 Item No. 2: Reimbursement for liquidated damages from September 1, 2017 until Substantial Completion on January 11, 2018 (132 Calendar days at $2,000/calendar day) $264,000.00 0 Item No. 3: Reimbursement for grinding removal ($1.50/SF) and replacement ($15.00/SF) of damaged asphalt concrete paving at the 850-2 Reservoir. (Credit 23 SF at $16.50/SF) $379.50 0 Item No. 4: Reimbursement for grinding removal ($1.50/SF) and replacement ($15.00/SF) of damaged asphalt concrete paving at the 978-1 Reservoir. (Credit 26 SF at $16.50/SF) $429.00 0 Item No. 5: This Change Order increases the amount allocated for Bid Item 3.5, ¼-Iinch Steel Patch Plates by $110.00 to a new authorized amount of $1,100.00. (Add 1 EA at $110/EA) $110.00 Sub Total Amount $110.00 $267,307.50 0 Total Net Change Order Amount ($267,197.50) Revisions to: BID SCHEDULE Item # Description Quantity Unit Unit Price Amount 3.5 ¼-inch Steel Patch Plates 11 EA 110 $1,210.00 Reason: Item No. 1: Contract Documents Section 00800-1.2 provides for reimbursement of additional expenses of Owner’s personnel and inspection services resulting from work outside normal working hours. The Contractor requested and was granted authorization to work overtime between November 1, 2017 and January 11, 2017 with the provision for reimbursement of additional inspection costs. The delta between overtime and regular time inspection costs is $21/hr. A total of 119 hours of overtime inspection was provided requiring premium time reimbursement. This change order is required to reimburse the District for additional costs associated with providing inspection outside normal working hours as requested by the Contractor. Item No. 2: Pursuant to contractual provisions, failure of the Contractor to complete the work within the time allowed will result in damages being sustained by the District for each calendar day the Contractor fails to substantially complete all work. The adjusted Contract complete date was September 1, 2017 and substantial completion was achieved on January 11, 2018 resulting in 132 days of liquidated damages. This change order is required to reimburse the District for costs associated with the Contractor not completing the project within the allotted time. Item No. 3: The Contractor damaged existing asphalt concrete paving at the 850-2 Reservoir. In lieu of replacing the damaged asphalt concrete paving the contractor elected to utilize the District’s FY2018 As-Needed Asphaltic Concrete Paving Services Contract pricing to reimburse the District for the associated repair cost. This change order is required to reimburse the District for costs associated with damaged asphalt concrete replacement at the 850-2 Reservoir. Contract / P.O. Change Order No. 4 page 3 of 3 Item No. 4: The Contractor damaged existing asphalt concrete paving at the 978-1 Reservoir. In lieu of replacing the damaged asphalt concrete paving the contractor elected to utilize the District’s FY2018 As-Needed Asphaltic Concrete Paving Services Contract pricing to reimburse the District for the associated repair cost. This change order is required to reimburse the District for costs associated with damaged asphalt concrete replacement at the 978-1 Reservoir. Item No. 5: The Contract Bid Item No 3.5, ¼-inch Steel Patch Plates, required a quantity adjustment resulting from field conditions. Federal ID (EIN):45-0532361 CSI Services, Inc. P.O. Box 801357 Santa Clarita, CA 91380-2316 US (877)2742422 www.csiservices.biz INVOICE BILL TO Otay Water District Attn: Accounts Payable 2554 Sweetwater Springs Blvd. Spring Valley, CA 91978-2004 INVOICE #7885 DATE 12/05/2017 DUE DATE 01/04/2018 TERMS Net 30 PO/AUTH.PROJECT NO PROJECT NAME 720092 217282 850-2 Spring Valley Tank DATE ACTIVITY ACTIVITY QTY RATE AMOUNT 10/30/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 10/31/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/01/2017 Inspector Coating Inspection Services-OT 4:00 115.75 463.00 11/01/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/02/2017 Inspector Coating Inspection Services-OT 1:00 115.75 115.75 11/02/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/03/2017 Inspector Coating Inspection Services-OT 2:00 115.75 231.50 11/03/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/04/2017 Inspector Coating Inspection Services-OT 8:00 94.75 758.00 11/06/2017 Inspector Coating Inspection Services-OT 2:00 115.75 231.50 11/06/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/07/2017 Inspector Coating Inspection Services-OT 2:00 115.75 231.50 11/07/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/08/2017 Inspector Coating Inspection Services-OT 2:00 115.75 231.50 11/08/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/09/2017 Inspector Coating Inspection Services-OT 2:00 115.75 231.50 11/09/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/10/2017 Inspector Coating Inspection Services-OT 1:00 115.75 115.75 11/10/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/11/2017 Inspector Coating Inspection Services-OT 8:00 94.75 758.00 11/13/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/13/2017 Inspector Coating Inspection Services-OT 2:00 115.75 231.50 11/14/2017 Inspector Coating Inspection Services-OT 2:00 115.75 231.50 11/14/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/15/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/15/2017 Inspector Coating Inspection Services-OT 2:00 115.75 231.50 11/16/2017 Inspector Coating Inspection Services-OT 2:00 115.75 231.50 Federal ID (EIN):45-0532361 DATE ACTIVITY ACTIVITY QTY RATE AMOUNT 11/16/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/17/2017 Inspector Coating Inspection Services-OT 1:00 115.75 115.75 11/17/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/18/2017 Inspector Coating Inspection Services-OT 8:00 115.75 926.00 11/20/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/21/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 11/21/2017 Inspector Coating Inspection Services-OT 2:00 115.75 231.50 11/22/2017 Inspector Coating Inspection Services 8:00 94.75 758.00 There will be a 3 percent surcharge for payments made with a credit card BALANCE DUE $19,211.25 GS¡rg¡EFtvtcEs¡ CSlServices, lnc. P.O, Box 801357 Santa Clarita, CA 91380-2316 US (877)2742422 www.csiservices.biz 0TAY_rydIR ütsTRrcTËilr.i-rvilD l0l$.tÅt'l lé Pl{ ? t2 INVOICE BILL TO Otay Water District Attn: Accounts Payable 2554 Sweeiwater Springs Blvd Spring Valley, CA 91978-2004 ,i¡r,i.i il3t¡ii INVO|CE # 7929 DATE 0110912A18 DUE DATE O2IO8I2O1B TERMS Net 30 i,/ ¡ìt¡,:':t: t ,- r ;t ; i' i:; ,.;,¡ ¡,i :, i.jÍ i'":it i;'r| 1 i '. ¡i t:l PO/AUTH 720092 DATE 11t27t2017 1112712017 1112812017 1112812017 11t29t2017 1112912017 11t30t2017 11t30t2017 12t01t2017 12t01t2017 12102t2017 1210412017 121A412017 1214512017 12tC5t2C17 12t06t2017 1210612017 1210712017 12t07t2017 12t08t2017 12t08t2017 12t0912A17 12111t2017 12t11t2017 1211212017 12t12t2017 12/13/2017 ACTIVITY lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector RATE 1 15.75 94.75 115.75 94.75 115.75 94.75 1 15.75 94.75 1 15.75 94.75 1 15.75 115.75 94.75 1 15.75 94.75 1 15.75 94.75 1 15.75 94.75 94.75 1 15.75 115.75 94.75 115.75 115.75 94.75 1 15.75 AMOUNT 231.50 758.00 23'1.50 758,00 231.50 758.00 231.50 758.00 23'1.50 758.00 926.00 231.50 758.00 231,50 758.00 231.50 758.00 231.50 758.00 758.00 23't.50 926.00 758.00 231.50 231.50 758.00 231.50 PROJECT NO 217282 ACTIVITY Coating lnspection Services-OT Coating lnspection Services Coating lnspection Services-OT Coating lnspection Services Coating lnspection Services-OT Coating lnspection Services Coating lnspection Services-OT Coating lnspection Services Coating lnspection Services-OT Coating lnspection Services Coating lnspection Services-OT Coating lnspection Services-OT Coating lnspection Services Coating lnspection Services-OT Coating lnspection Services Coating lnspection Services-OT Coating lnspection Services Coating lnspection Services-OT Coating lnspection Services Coating lnspection Services Coating lnspection Services-OT Coating lnspection Services-OT Coating lnspection Services Coating lnspection Services-OT Coating lnspection Services-OT Coating lnspection Services Coating lnspection Services-OT PROJECT NAME 850-2 Spring Valley Tank QTY 2:00 8:00 2:04 B:00 2:40 8:00 2:00 8:00 2:00 B:00 B:00 2:00 8:00 2:04 8:00 2:04 B:00 2:00 8:00 B:00 2:00 8:00 8:00 2:00 2:00 8:00 2:00 Federal lD (ElN):45-0532361 oirE 12t13t2017 1211412017 12114t2017 1211512017 12t15t2017 1211612017 12t18t2017 12t1812017 12119t2A17 1211912017 12t20t2417 1212112017 1212112017 12t22t2017 ACTIVITY lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector RATE 94.75 94.75 1 15.75 1 15.75 94.75 1 15.75 1 15.75 94.75 1 15.75 94.75 94.75 94.75 1 15.75 94.75 AMOUNT 758.00 758.00 231.50 231.50 758,00 926.00 231.50 758.00 231.50 758.00 758.00 758,00 231.50 758.00 There will be a 3 percenl surcharge for payments made with a credit card ACTIVITY Coating lnspection Services Coating lnspection Services Coating lnspection Services-OT Coating lnspection Services-OT Coating lnspection Services Coating I nspection Services-OT Coating I nspection Services-OT Coating lnspection Services Coating I nspection Services-OT Coating lnspection Services Coating lnspection Services Coating lnspection Services Coati ng I nspection Services-OT Coating lnspection Services BALANCE DUE QTY 8:00 8:00 2:00 2:0A 8:00 8:00 2:00 B:00 2:00 8:00 8:00 8:00 2:00 8:00 922,105.00 Federal lD (ElN):45-053236 1 GSI SiEFIVIGES CSlSeruices, lnc. P.O. Box 801357 Santa Clarita, CA 91380-2316 US (877)2742422 www.csiservices.biz 0TAY W&THIì ÐI$-rRlcï ?0ls ttÐ l? Âlt ls 25 INVOICE BILL TO Otay Water District Attn:Accounts Payable 2554 Sweetwater Springs Blvd. Spring Valley, CA 91978-2004 INVO|CE # 7s71 DATE 01/31/2018 DUE DATE 03/02/2018 TERMS Net30 PO/AUTH 720092 PROJECT NO 217282 ACTIVITY PROJECT NAME 850-2 Spring Valley Tank DATE 12/26/2017 12/26/2017 12/27/2017 1212712017 12/28/2017 12/28/2017 12/29t2017 0110212018 01/03/2018 0110412018 01t04/2018 01/05/2018 0110812018 01t10/2018 01 /11 /2018 0111212018 ACTIVITY lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector lnspector Coating Coating Coating Coating Coating Coating Coating Coating Coating Coating Coating Coating Coating Coating Coating Coating lnspection lnspection lnspection lnspection lnspection lnspection lnspection lnspection lnspection lnspection lnspection lnspection lnspection lnspection lnspection lnspection Services-OT Services Services-OT Services Services-OT Services Services Services Services Services-OT Services Services Services IServices Services Services RATE 1 15.75 94.75 1 15.75 94.75 115.75 94.75 94.75 94.75 94.75 1 15.75 94.75 94.75 94.75 94.75 94.75 94.75 AMOUNT 231.50 758.00 231.50 758.00 231.50 758.00 758.00 758.00 758.00 231.50 758.00 758.00 758.00 758.00 758.00 758.00 QTY 2:00 8:00 2:00 8:00 2:00 8:00 8:00 8:00 8:00 2:00 B:00 8:00 8:00 B:00 B:00 8:00 There will be a 3 percent surcharge for payments made with a credit card BALANCE DUE $10,022.00 E fnìtì'i i lii i 1 ) ti q 0 Federal lD (El N) :45-0532361 tËB t 9?'tlfJ 978-1 & 850-2 Reservoir Int/Ext Coating and Upgrades Project: P2534/P2544 Consultant/Contractor: Blastco, Inc.Subproject: 001103 APPROVED C.O.AMOUNT BY DATE DESCRIPTION TYPE C.O. 1 $0.00 Chief 6/22/2017 Contract time for weather impacts and Work Order No. 1 structural repairs at 978-1 Reservoir Contractor 2 ($670.00) Chief 9/1/2017 Contract time for Work Orders 2, 3, and 4 at the 850-2 Reservoir. Close out Bid Item 3.4. Installation of seismic support straps. Contractor 3 $627.63 Chief 12/13/2017 Handrail modifications at the 850-2 reservoir, credit for reservoir repairs to RFID Card Access system Contractor 4 ($267,197.50) Board Close Out change order to reconcile 132 days of liquidated damages for late delivery; credit for inspection outside normal working hours; credit for damaged pavement at 978-1 and 850-2 Reservoir sites; and compensation for steel patch plates. Contractor 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Total C.O.'s To Date: ($267,239.87) -24.2% Original Contract Amount:$1,106,200.00 Current Contract Amount:$838,960.13 Month Net C.O.$ Limit Authorization Absolute C.O.$ C.O. % 4/18 ($267,197.50) $2,000 Insp 0.0% $10,000 PM/Sr. Engr. 0.0% $20,000 DivM 0.0% $25,000 Chief 0.0% $75,000 GM 0.0% >$75000 Board 0.0% CHANGE ORDER LOG P:\WORKING\CIP P2534 & P2544 - 978-1 & 850-2 Reservoir Int-Ext Coating\Construction\Change Orders\P2534_P2544_COLOG_180409 1 4/9/2018 STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: May 2, 2018 SUBMITTED BY: Dan Martin Engineering Manager PROJECT: P2573-001103 S2048-001103 DIV. NO.: 5 APPROVED BY: Rod Posada, Chief, Engineering Mark Watton, General Manager SUBJECT: Approve Change Order No. 2 to the Contract with T.C. Construction Company, Inc. for the Hillsdale Road 12-Inch Waterline Replacement (CIP P2573) and Sewer Repairs (CIP S2048) Projects GENERAL MANAGER’S RECOMMENDATION: That the Otay Water District (District) Board of Directors (Board) approve Change Order No. 2 to the existing contract with T.C. Construction Company, Inc. (T.C. Construction) in the amount of $149,280.00 for the Hillsdale Road 12-Inch Waterline Replacement (CIP P2573) and Sewer Repairs (CIP S2048) Projects (see Exhibit A for Project locations). COMMITTEE ACTION: Please see Attachment A. PURPOSE: To obtain Board authorization for the General Manager to execute Change Order No. 2 in the amount of $149,280.00 to the construction contract with T.C. Construction for the Hillsdale Road 12-Inch Waterline Replacement (CIP P2573) and Sewer Repairs (CIP S2048) Projects (Project). 2 ANALYSIS: The District provides water distribution service and sanitary sewer collection service in the Jamacha drainage basin located in the northern area of the District. The existing 12-inch Cement Mortar Lined and Coated (CML&C) steel pipe that serves as the distribution main for Hillsdale Road was constructed in 1959. Staff made the determination that the pipeline has reached the end of its useful life and should be replaced. The County of San Diego has also designated Hillsdale Road for road resurfacing as soon as the District completes utility work in this area, prompting the sewer repairs to be included in the Project. Deficiencies in the existing 8-inch sewer system were observed and documented by closed-circuit television inspection and condition assessment at two (2) locations within Hillsdale Road. The Project also includes the repairs of the sewer at the two (2) locations, which are east of Jalisco Road and west of Vista Grande Road. At the September 6, 2017 Board Meeting, the Board awarded a construction contract in the amount of $2,396,060.00 to TC Construction to construct approximately 4,050 linear feet of 12-inch Polyvinyl Chloride (PVC) water line and about 760 linear feet of 8- inch PVC sewer replacement along Hillsdale Road. Shortly after issuing the construction contract’s Notice to Proceed, during the month of October 2017, the existing 12-inch CML&C steel pipe that serves as the distribution main for Hillsdale Road experienced a main break in the area that fronts Valhalla High School. The main break was not related to the construction work, which was active at the time. District Operations responded immediately to restore water service in the area and construct temporary roadway facilities to reopen Hillsdale Road. The remaining items required to complete restoration of the roadway facilities at this location, including curb, gutter, sidewalk, and asphalt pavement. The restoration work associated with the main break is being handled as an insurance claim with the Special District Risk Management Authority (SDRMA), the District’s insurance provider. In an effort to coordinate work and reduce the impacts of multiple contractors working in the area in front of Valhalla High School, the District requested a quote from TC Construction to complete the damage claim roadway facilities restoration. TC Construction’s quote was compared to a quote secured from the District’s As-Needed Paving contractor and found to be competitive. TC Construction’s quote was provided to SDRMA and SDRMA has approved the quoted amount to allow the restoration work to proceed. The SDRMA approved amount is reflected in Change Order No. 2 (Exhibit B). 3 To date, there has been one change order approved on the construction contract. Change Order No. 1, which totals $44,695.77, and was approved under the General Manager’s authority, compensated TC Construction for modifications required due to existing utilities and addressed traffic signal impacts for unmarked traffic loops at the Hillsdale Road/Chase Avenue intersection. Change Order No. 1 also added 5 days to the contract including time for weather impacts between September 2017 and March 2018. Change Order No. 2, included in this staff report, will compensate TC Construction $149,280.00 for the restoration of the asphalt pavement, curb, gutter, and sidewalk, which was damaged during the water main break. Change Order 2 will also add 55 days of contract time to the Project. This added time will allow the restoration work to occur after Valhalla High School’s graduation, which is in the month of June 2018. FISCAL IMPACT: Joe Beachem, Chief Financial Officer The total budget for CIP P2573, as approved in the FY 2018 budget, is $2,450,000. The total budget approved by SDRMA for the Hillsdale Road water main break restoration work is $149,280. The total of these two approved budgets is $2,599,280. Total expenditures, plus outstanding commitments and forecast including this contract, are $2,598,455. See Attachment B1 for budget detail. The total budget for CIP S2048, as approved in the FY 2018 budget, is $720,000. Total expenditures, plus outstanding commitments and forecast including this contract, are $693,051. See Attachment B2 for budget detail. Based on a review of the financial budgets, the Project Manager anticipates that the budgets for CIP P2573, CIP S2048, and the budget amount approved by SDRMA are sufficient to support the Project. The District has received a reimbursement payment from SDRMA in the amount of $149,280 to support the subject change order work. The Finance Department has determined that, under the current rate model, 100% of the funding for CIP P2573 and CIP 2048 is available from the Replacement 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.” 4 LEGAL IMPACT: None. DM/RP:mlc P:\WORKING\CIP P2573 12-Inch PL Replacement, 803 Zone, Hillsdale Road\Staff Reports\BD 05-02-18\BD 05- 02-18 Staff Report Approve CO 2 For The Hillsdale Road Waterline Replacement and Sewer Repair Project.Docx Attachments: Attachment A – Committee Action Attachment B1 – P2573 Budget Detail Attachment B2 - S2048 Budget Detail Exhibit A - Project Location Map Exhibit B – Change Order No. 2 ATTACHMENT A SUBJECT/PROJECT: P2573-001103 S2048-001103 Approve Change Order No. 2 to the Contract with T.C. Construction Company, Inc. for the Hillsdale Road 12-Inch Waterline Replacement (CIP P2573) and Sewer Repairs (CIP S2048) Projects COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) reviewed this item at a meeting held on April 16, 2018, and the following comments were made: Staff reviewed the staff report with the Committee and recommended that the Board approve Change Order No. 2 to the existing contract with T.C. Construction Company, Inc. (T.C. Construction) in the amount of $149,280.00 for the Hillsdale Road 12-Inch Waterline Replacement (CIP P2573) and Sewer Repairs (CIP S2048) Projects. Staff stated that on October 23, 2017, the existing 12-inch CML&C steel pipe that serves as the distribution main for Hillsdale Road experienced a main break that was not related to TC Construction’s work, which was active at the time. The restoration work associated with the main break was handled as an insurance claim with the Special District Risk Management Authority (SDRMA). In response to a question from the Committee, staff stated that the District has already received a reimbursement payment from SDRMA in the amount of $149,280 to support the subject change order work. Staff stated that Change Order No. 1, which totaled $44,695.77, included costs that were related to excavation issues. Change Order No. 1 also addressed contract time through March 2018 which included added days for weather impacts. Upon completion of the discussion, the Committee accepted staffs’ report and supported presentation to the full board as a consent item. ATTACHMENT B1 – P2573 Budget Detail SUBJECT/PROJECT: P2573-001103 S2048-001103 Approve Change Order No. 2 to the Contract with T.C. Construction Company, Inc. for the Hillsdale Road 12-Inch Waterline Replacement (CIP P2573) and Sewer Repairs (CIP S2048) Projects 4/10/2018 Budget 2,450,000.00 CIP P2573 149,280.00 SDRMA FUNDING 2,599,280.00 TOTAL Planning Regulatory Fees 50 50 - 50 Petty Cash Custodian Standard Salaries 8,660 8,660 - 8,660 Total Planning 8,710 8,710 - 8,710 Design 001102 Consultant Contracts 145,063 145,063 - 145,063 PSOMAS 2,278 2,278 - 2,278 HUNSAKER & ASSOCIATES 25,658 25,658 - 25,658 NINYO & MOORE GEOTECHNICAL AND Regulatory Agency Fees 19,895 19,895 - 19,895 COUNTY OF SAN DIEGO Service Contracts 51 51 - 51 DAILY JOURNAL CORPORATION 750 750 - 750 CHICAGO TITLE COMPANY Standard Salaries 80,683 80,683 - 80,683 Total Design 274,378 274,378 - 274,378 Construction Construction Contract 1,873,791 1,294,481 579,310 1,873,791 TC CONSTRUCTION COMPANY INC. 98,621 68,131 30,490 98,621 CALIFORNIA BANK & TRUST 149,280 - 149,280 149,280 CO NO. 2 Consultant Contracts 26,345 20,370 5,975 26,345 ALYSON CONSULTING 1,430 1,430 - 1,430 VALLEY CONSTRUCTION MANAGEMENT 1,500 263 1,237 1,500 CLARKSON LAB & SUPPLY INC. 1,400 1,400 - 1,400 PSOMAS Regulatory Fees 10,000 - 10,000 10,000 County of San Diego Permit Inspection - - - - Standard Salaries 153,000 128,100 24,900 153,000 - - - Total Construction 2,315,367 1,514,174 801,193 2,315,367 Grand Total 2,598,455 1,797,262 801,193 2,598,455 Vendor/Comments Otay Water District P2573 -PL-12" PL Repl 803Z Hillsdale Road Committed Expenditures Outstanding Commitment & Forecast Projected Final Cost (Budget detail includes approved SDRMA Funds) ATTACHMENT B2 – S2048 Budget Detail SUBJECT/PROJECT: P2573-001103 S2048-001103 Approve Change Order No. 2 to the Contract with T.C. Construction Company, Inc. for the Hillsdale Road 12-Inch Waterline Replacement (CIP P2573) and Sewer Repairs (CIP S2048) Projects Bud 4/10/2018 Budget 720,000 Planning Total Planning - - - - Design 001102 Consultant Contracts 6,415 6,415 - 6,415 NINYO & MOORE GEOTECHNICAL 36,533 36,533 - 36,533 PSOMAS - - - - Standard Salaries 21,760 21,760 - 21,760 Total Design 64,707 64,707 - 64,707 Construction Construction Contract 444,927 3,206 441,721 444,927 TC CONSTRUCTION COMPANY INC. 23,417 169 23,248 23,417 CALIFORNIA BANK & TRUST Consultant Contracts 20,000 - 20,000 20,000 ALYSON CONSULTING 10,000 350 9,650 10,000 PSOMAS Regulatory Fees 20,000 - 30,000 30,000 County of San Diego Permit Inspection - - - - Standard Salaries 100,000 2,988 97,012 100,000 Total Construction 618,344 6,713 621,631 628,344 Grand Total 683,051 71,420 621,631 693,051 Vendor/Comments Otay Water District S2048 - Hillsdale Road Sewer Repairs Committed Expenditures Outstanding Commitment & Forecast Projected Final Cost OTAY WATER DISTRICTHILLSDALE RD 12-INCH WATER PIPELINE REPLACEMENT & SEWER REPAIRSLOCATION MAPEXHIBIT A CIP P2573CIP S2048 F P:\WORKING\CIP P2573 12-Inch PL Replacement, 803 Zone, Hillsdale Road\Graphics\Exhibits-Figures\Exhibit A, Water Main and Sewer Main Replacement on Hillsdale Road, Location Map, Aug 2017.mxd JAMACHA RD C H A S E A V VISTA HILLSDALE RD D O N A H U E D R G R A N D E R D 12" Water PipelineReplacement Sewer Repair Sewer Repair JALISCO RD WIND RIVER RD VICINITY MAP PROJECT SITE NTS DIV 5 DIV 1 DIV 2 DIV 4 DIV 3 ?ò Aä%&s ?p ?Ë F 0 500250 Feet !\Legend 12-Inch Waterline Replacement Sewer Main Repairs (Two Sites) OTAY WATER DISTRICT 2554 SWEETWATER SPRINGS BLVD., SPRING VALLEY, CA. 91978, (619) 670-2222 CONTRACT/P.O. CHANGE ORDER No. 2 PROJECT/ITEM: Hillsdale Road 12-inch Waterline Replacement and Sewer Repairs CONTRACTORNENDOR: TC Construction Co. Inc. REF.CIP No.: P2573/S2048 APPROVED BY: Board REF. P.O. No: 720147 DATE: 4/6/18 DESCRIPTION: Remove 1,005 square yards of existing asphalt concrete, grade and compact existing aggregate base, install 7-inches of new asphalt concrete paving, restore traffic striping to match existing, remove and replace 45 linear feet of curb/gutter/sidewalk per county standards and RFP 001. REASON: Resulting from an existing waterline failure on Hillsdale Road a portion of existing AC paving was detrimentally affected. This change order is required to restore the affected paving and curb/gutter/sidewalk to serviceable conditions. CHANGE P.O. TO READ: Revise Contract to add $149,280.00 and add 55 days time for a total Contract amount of $2,590,035.77 with a Contract Duration of 260 Calendar Days. ORIGINAL CONTRACT/P.O. AMOUNT: ADJUSTED AMOUNT FROM PREVIOUS CHANGE: TOTAL COST OF THIS CHANGE ORDER: NEW CONTRACT/P.O. AMOUNT IS: ORIGINAL CONTRACT COMPLETION DATE: CONTRACT/P.O. TIME AFFECTED BY THIS CHANGE: REVISED CONTRACT COMPLETION DATE: $ 2,396,060.00 $ 44,695.77 $ 149,280.00 $ 2,590,035.00 4/27/18 Yes 6/26/18 IT IS UNDERSTOOD WITH THE FOLLOWING APPROVALS, THAT THE CONTRACTORNENDOR IS AUTHORIZED AND DIRECTED TO MAKE THE HEREIN DESCRIBED CHANGES. IT IS ALSO AGREED THAT THE TOTAL COST FOR THIS CHANGE ORDER CONSTITUTES FULL AND COMPLETE COMPENSATION FOR OBLIGATIONS REQUIRED BY THE CONTRACT/P.O. ALL OTHER PROVISIONS AND REQUIREMENTS OF THE CONTRACT/P.O. REMAIN IN FULL FORCE AND EFFECT. CONTRACTORNE7 c ____ STAFF APPROVALS: SIGNATURE: PROJ. MGR : _ ..... ~_-l-~ _______ DATE: 4l\O\\1b NAME : Austin Cameron DIV. MGR : DATE: ___ _ TITLE: -'-P:..::.res=id=e=nt ______ DATE: 0'l,IJo!Jcl8 CHIEF: ___________ DATE: ___ _ COMPANY & TC Construction Company. Inc. ADDRESS: ..:.,10=..::5....:..40:..;P.-,;,ro,::..:s..c;..pec=.:....;t A...;.;;v..::.,e __________ DISTRICT APPROVAL: ..=S..::;an=te=e;...,;. C=.:.,A.:....;9=2.;;.;07.-,;,1 __________ GEN. MANAGER: _________ DATE: ___ _ COPIES: 0 FILE (Orig.), 0 CONTRACTORNENDOR, 0 CHIEF-ENGINEERING, 0 CHIEF-FINANCE, 0 ENGR. MGR. o ACCTS PAYABLE, 0 INSPECTION, 0 PROJ. MGR., 0 ENGR. SECRETARY, 0 PURCHASING, 0 PROJECT BINDER Alyson Consulting 8898 Hibert Ave, Suite 109 San Diego, CA 92131 (858) 518-3072 REQUEST FOR PROPOSAL # 001 Date: February 5, 2018 Project Name: Hillsdale Road 12-inch Waterline Replacement and Sewer Repairs To: TC Construction C.I.P. No.: P2573 & S2048 10540 Prospect Ave. Santee, CA 92071 Contractor: TC Construction Co., Inc. Attn: Carlos Perea From: Douglas Cook Subject: SDRMA Paving Reference Drawings: N/A Ref. Spec. Section: N/A Referenced RFI: N/A Description: Shop drawings required X No Shop drawings required Please prepare a lump sum proposal to furnish all required labor, material, and equipment necessary to implement the following item per field and office discussions including limits defined in site walk with County representative: • Remove 1,005 square yards of existing asphalt concrete roadway, grade and re-compact existing aggregate base and install 7-inches of new asphalt concrete per County standards. • Remove and replace 45 linear feet of existing curb/gutter including 5-foot sidewalk. • Install new striping to match existing. • Required traffic control for work. • Work to take place during Valhalla High School summer recess. • Please submit a lump sum cost proposal for this adjustment to your construction contract by September 11, 2017. Your proposal should include a complete detailed breakdown of labor man-hours, materials, equipment, and all other related costs which would be basis for negotiation and agreement in an adjustment to the contract price. • Please quantify the impact, if any, the above described scope of work will have upon your project completion date, by identifying the first critical path element of your schedule which is impacted and the duration of the impact. • Other requirements to be included are: N/A By: Construction Manager’s Signature Hillsdale Road 12-Inch Waterline Replacement and Sewer Repairs Project: P2573/S2048 Consultant/Contractor: TC Construction Co. Inc. Subproject: 001103 APPROVED C.O.AMOUNT BY DATE DESCRIPTION TYPE C.O. 1 $44,695.77 GM Change order modifies water main profile due to existing utilites; addresses unmarked traffic loops at Hillsdale/Chase intersection; addition of thrust blocks at two locations; repairs unmarked water service; and addresses contract time for weather. Contractor 2 $149,280.00 Board Change order adds roadway, crub, gutter, and sidewalk repair scope to the project resulting from an existing water line failure on Hillsdale Road fronting Valhalla High School. This change order is funded by SDRMA Insurance. OWD 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Total C.O.'s To Date: $193,975.77 8.1% Original Contract Amount:$2,396,060.00 Current Contract Amount:$2,590,035.77 Month Net C.O.$ Limit Authorization Absolute C.O.$ C.O. % 4/18 $149,280.00 $2,000 Insp 0.0% $5,000 PM/Sr. Engr. 0.0% $10,000 DivM 0.0% $20,000 Chief 0.0% $75,000 GM 0.0% >$75000 Board 0.0% CHANGE ORDER LOG P:\WORKING\CIP P2573 12-Inch PL Replacement, 803 Zone, Hillsdale Road\Construction\Change Orders\180410_COLOG 1 4/10/2018 STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: May 2, 2018 SUBMITTED BY: Lisa Coburn-Boyd Environmental Compliance Specialist Bob Kennedy Engineering Manager PROJECT: P1253- 004000 DIV. NO. 5 APPROVED BY: Rod Posada, Chief, Engineering Mark Watton, General Manager SUBJECT: Award of a Professional Environmental Services Contract for the San Miguel Habitat Management Area and CIP-Associated Mitigation Projects for Three Years (June 2018–June 2021) GENERAL MANAGER’S RECOMMENDATION: That the Otay Water District (District) Board of Directors (Board) awards a Professional Environmental Services Contract to ICF Jones & Stokes, Inc. (ICF) for the maintenance and monitoring of the San Miguel Habitat Management Area and CIP-Associated Mitigation Projects for a three year period (June 2018–June 2021) and authorizes the General Manager to execute an agreement in an amount not-to-exceed $483,787.40 (see Exhibit A for location map). COMMITTEE ACTION: Please see Attachment A. PURPOSE: That the Board authorizes the General Manager to execute a Professional Environmental Services Agreement with ICF in an amount not-to-exceed $483,787.40 for the maintenance, monitoring, and reporting for the San Miguel Habitat Management Area and CIP- Associated Mitigation Projects for three years (June 2018–June 2021). 2 ANALYSIS: The District’s Habitat Management Area (HMA) is a 230-acre, designated biological reserve located within the District’s 509-acre Use Area property within the City of Chula Vista. The HMA serves as a mitigation bank with credits that can be utilized to offset habitat impacts associated with District projects and facilities. It also serves as a habitat restoration area for vegetation impacts associated with the construction of District CIP projects. The District is required to conduct biological monitoring, provide continuous maintenance, and submit annual reports to the U.S. Fish and Wildlife Service and the California Department of Fish & Wildlife for the HMA. The HMA has been in existence since 1997 and is required to be monitored and maintained in perpetuity. Individual restoration areas associated with CIP projects at the HMA generally have a three (3) to five (5) year maintenance, monitoring, and reporting period. Currently, Helix Environmental is the firm that has the contract for the HMA maintenance, monitoring, and reporting. Their contract will conclude at the end of May, 2018. In order to have a new consultant on board immediately following the end of the current contract so that maintenance services are not neglected, the District solicited Professional Environmental Consulting Services from consulting firms by placing an advertisement on the District’s website and in various other publications. Twelve (12) firms submitted a Letter of Interest and Statement of Qualifications. The Request for Proposal (RFP) was sent to all twelve firms resulting in five (5) proposals received on February 28, 2018, from the following consulting firms: ESA (San Diego, CA) Helix Environmental Planning (La Mesa, CA) ICF (San Diego, CA) Merkel & Associates, Inc. (San Diego, CA) RECON Environmental (San Diego, CA) In accordance with the District’s Policy 21, staff evaluated and scored all written proposals and interviewed the five (5) firms on April 5, 2018. ICF received the highest score for their services based on their extensive experience in the management of habitat areas, comprehensive understanding of the scope of work, proposed method to accomplish the work, and overall strength of their project team. A summary of the complete evaluation is shown in Exhibit B. Staff worked with ICF in negotiating the fee for services, which resulted in a fee decrease of $13,521.82 from their original proposal fee of $497,309.22, yielding the revised proposed fee of $483,787.40. 3 The reduction of fee was based on a reduction in the maintenance hours for the overall HMA. Based on District staff’s past 11 years of experience managing the HMA contract, ICF had slightly over- estimated the hours for this task and the new hours are more appropriate without compromising the effort that will be required. Staff reviewed the new level of effort and the revised fee and concluded that the modifications were appropriate. ICF submitted the Company Background Questionnaire, as required by the RFP, and staff did not find any significant issues. In addition, staff checked their references and performed an internet search on the company. Staff found the references to be excellent and did not find any outstanding issues with the internet search. FISCAL IMPACT: Joe Beachem, Chief Financial Officer This contract totals $483,787.40 and will be expended from June 2018 through June 2021, encompassing Fiscal years 2018-2021. The Project Manager expects that this contract amount is sufficient to cover the required expenditures in each of these years. The Operating Budget amount for 2018 is $130,000. The Project Manager anticipates this amount is sufficient to cover the expenses for this fiscal year. The requested budget for 2019 is $130,000 and, if approved, the Project Manager anticipates the requested budget to be sufficient to cover the operating expenses for the HMA maintenance, monitoring and reporting services required. Likewise future operating budgets will be requested to support these required expenditures. 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. LCB/BK:mlc P:\WORKING\CIP P1253\Subproject 004000 - HMA\HMA Contract - 2018-2021\Staff Report\BD 05-02-18, Staff Report, San Miguel HMA Services Contract – 2018-2021 (LCB-BK).doc Attachments: Attachment A – Committee Action Attachment B – Summary of Proposal Rankings Exhibit A – Location Map ATTACHMENT A SUBJECT/PROJECT: P1253-004000 Award of a Professional Environmental Services Contract for the San Miguel Habitat Management Area and CIP-Associated Mitigation Projects for Three Years (June 2018–June 2021) COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) reviewed this item at a meeting held on April 16, 2018, and the following comments were made: Staff reviewed the staff report with the Committee and recommended that the Board award a Professional Environmental Services Contract to ICF Jones & Stokes, Inc. (ICF) for the maintenance and monitoring of the San Miguel Habitat Management Area (HMA) and CIP-Associated Mitigation Projects for a three year period (June 2018–June 2021) and authorizes the General Manager to execute an agreement in an amount not-to-exceed $483,787.40. It was noted that staff worked with ICF in negotiating a decrease of their original fee of $497,309.22. Based on staffs experience with the effort required to maintain the HMA, the hours for the maintenance of the HMA were slightly over estimated by ICF. Staff stated that the new level of effort is more appropriate without compromising the integrity of the HMA. The fee was reduced by $13,521.82. In response to questions and comments from the Committee, staff stated that since 2002, the cost to maintain the HMA is approximately $2,132,000. The contracts have usually included off-site mitigation projects (e.g., the 640 Reservoirs on-site mitigation and the 850-4 Reservoir on-site mitigation areas), which were subtracted out of the contract costs in order to get a more accurate total for just the HMA. The majority of the HMA is Coastal Sage Scrub (CSS) habitat. Currently, CSS habitat in San Diego County is selling at approximately $80,000 per acre. If it is considered that the 230 acres is all CSS, the value of the land, as habitat, would be over $18,000,000. It is actually worth more than that number because the HMA also includes areas of habitat with higher values, such as the ponds and their surrounding wetlands, southern willow scrub, maritime succulent scrub habitat, burrowing owl habitat, and Otay tarplant areas. An additional question was posed as to whether it might have been more cost-efficient to have simply purchased the mitigation acreage the District has needed for past projects from various mitigation banks. This question is not easily answered because it is difficult to go back and determine the costs of the types of mitigation at the time it was needed for these past projects and whether it was even available. Also, it is not easy to predict what mitigation ratios the wildlife agencies might have imposed for land purchased at a mitigation bank not owned by the District. Because the District owns and manages the HMA as our mitigation bank, the ratio is generally 1:1, for purchases of mitigation land outside of our own bank, ratios could range from a minimum of 3:1 and a maximum of 9:1. In response to a question from the Committee, the U.S. Fish and Wildlife Service and the California Department of Fish & Wildlife do not have funds to take on the responsibility of providing maintenance service for the HMA; therefore, the District continues to take on the responsibility to ensure the HMA area is maintained. The Committee inquired if the maintenance of the HMA included past and future projects. Staff stated yes. In response to a question from the Committee, staff stated that ICF maintains some areas that are in the fringe of the golf course to ensure that the HMA is free of invasive species. Upon completion of the discussion, the Committee accepted staffs’ report and supported presentation to the full board as a consent item. Attachment B Qualifications of Staff Understanding of Scope, Schedule and Resources Soundness and Viability of Proposed Project Plan INDIVIDUAL SUBTOTAL - WRITTEN AVERAGE SUBTOTAL - WRITTEN Proposed Fee* Consultant's Commitment to DBE AVERAGE TOTAL WRITTEN Additional Creativity and Insight Strength of Project Manager Presentation, Communication Skills Quality of Response to Questions INDIVIDUAL TOTAL - ORAL AVERAGE TOTAL ORAL 30 25 30 85 85 15 Y/N 100 15 15 10 10 50 50 150 Poor/Good/ Excellent Steve Beppler 24 23 26 73 11 12 8 7 38 Kevin Cameron 27 22 24 73 12 11 7 8 38 Lisa Coburn-Boyd 25 23 25 73 12 13 8 8 41 Jeff Marchioro 27 22 25 74 13 13 8 8 42 Kent Payne 23 23 25 71 9 10 8 8 35 Steve Beppler 27 21 25 73 12 12 9 8 41 Kevin Cameron 28 24 27 79 13 13 8 8 42 Lisa Coburn-Boyd 27 24 26 77 13 14 8 8 43 Jeff Marchioro 28 23 27 78 13 13 9 9 44 Kent Payne 27 24 28 79 13 13 8 8 42 Steve Beppler 26 24 27 77 15 14 10 10 49 Kevin Cameron 28 23 26 77 15 14 9 9 47 Lisa Coburn-Boyd 28 25 28 81 15 14 10 10 49 Jeff Marchioro 27 24 27 78 14 14 10 10 48 Kent Payne 26 23 26 75 15 14 9 10 48 Steve Beppler 24 22 25 71 12 10 6 8 36 Kevin Cameron 26 22 24 72 11 10 7 7 35 Lisa Coburn-Boyd 26 22 24 72 12 11 7 7 37 Jeff Marchioro 26 22 25 73 11 10 6 7 34 Kent Payne 25 23 26 74 10 9 6 6 31 Steve Beppler 25 21 26 72 13 12 9 8 42 Kevin Cameron 25 21 23 69 14 15 9 8 46 Lisa Coburn-Boyd 26 23 25 74 14 14 9 8 45 Jeff Marchioro 26 20 23 69 14 14 10 9 47 Kent Payne 23 22 25 70 12 12 9 8 41 Review Panel does not see or consider fee when scoring other categories. Fee is scored by the PM, who is not on Review Panel. Consultant Proposed Fee Position Score Merkel $428,010.40 lowest 15 Helix $461,486.00 12 Recon $470,896.06 11 ICF $497,309.22 8 ESA $565,758.00 highest 1 134 73 77 78 Y 82 126 FEE SCORING CHART Helix ESA 131 Y 89 122 RECON 11 35 REFERENCES 87 1 12 8 15 WRITTEN 113 SUMMARY OF PROPOSAL RANKINGS San Miguel HMA Environmental Services TOTAL SCORE 72 71 44 Y 86 74 Y MAXIMUM POINTS Merkel Y 48 ORAL 39 42 ICF Y:\Board\CurBdPkg\ENGRPLAN\2018\05-02-2018\Award of a Professional Contract for the San Miguel Habitat Management Area\BD 05-02-18, Att. A -Summary of Proposal Rankings.xls P:\ W o r k i n g \ P 2 4 9 5 - S a n M i g u e l H M A a n d A s s o c . M i t i g a t i o n P r o j e c t s \ S t a f f R e p o r t s \ E x h i b i t A (;+,%,7$ ! VICINITY MAP NTS ?ò Aä ?Ë ;&s DIV 5 DIV 1 DIV 2 DIV 4 DIV 3 ?p SITE HMA SITE OTAY WATER DISTRICT Environmental Setting MapSan Miguel Habitat Management Area F CIP P2495 F CIP P1253 P: \ W O R K I N G \ C I P P 1 2 5 3 \ S u b p r o j e c t 0 0 4 0 0 0 - H M A \ H M A C o n t r a c t - 2 0 1 8 - 2 0 2 1 \ S t a f f R e p o r t \ B D 0 5 - 0 2 - 1 8 , E x h i b i t A - S a n M i g u e l H M A l o c a tio n m a p . m x d STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: May 2, 2018 SUBMITTED BY: Lisa Coburn-Boyd Environmental Specialist Bob Kennedy Engineering Manager CIP./G.F. NO: D0909- 090331 DIV. NO. NA APPROVED BY: Rod Posada, Chief, Engineering Mark Watton, General Manager SUBJECT: Approval of Water Supply Assessment and Verification Report (March 2018) for the Otay Ranch Resort Village Project GENERAL MANAGER’S RECOMMENDATION: That the Otay Water District (District) Board of Directors (Board) approves the Water Supply Assessment and Verification Report (WSA&V Report) dated March 2018 for the Otay Ranch Resort Village Project (Resort Project), as required by Senate Bill 610 and 221 (see Exhibit A for Project location). COMMITTEE ACTION: Please see Attachment A. PURPOSE: To obtain Board approval of the March 2018 WSA&V Report for the Resort Project, as required by Senate Bill 610 and Senate Bill 221 (SB 610 and SB 221). ANALYSIS: The County of San Diego submitted a request to the District for an updated WSA&V report pursuant to SB 610 and SB 221. SB 610 and SB 221 require that, upon the request of the City or County, a water purveyor, such as the District, prepare a water supply assessment and verification report to be included in the California Environmental Quality Act (CEQA) environmental documentation. The original WSA&V report for the Project was approved in February 2009 and an update to that report was approved in January 2014. The County has requested that the 2 Board approve an updated WSA&V for a new Land Use alternative (Alternative H) that they are considering for the Project, which has a reduced footprint and less water demand and use. Since 2009 and 2014, there have also been updates to the County planning documents that include the Resort Project. SB 610 requires a city or county to evaluate whether water supplies will be sufficient to meet the projected water demand for certain “projects” that are otherwise subject to the requirement of the CEQA. SB 610 provides its own definition of “project” in Water Code Section 10912. SB 221 requires affirmative written verification from the water purveyor of the public water system that sufficient water supplies are planned to be available for certain residential subdivisions of property. The requirements of SB 610 and SB 221 are addressed by the January 2014 WSA&V Report for this Project. The WSA&V Report was prepared by the District in consultation with Dexter Wilson Engineering, the San Diego County Water Authority (Water Authority), and the County of San Diego (County). Prior to transmittal to the County, the WSA&V Report must be approved by the Board of Directors. An additional explanation of the intent of SB 610 and SB 221 is provided in Exhibit B, and the Resort Project WSA&V Report is provided as Exhibit D. As the responsible land use agency for the Resort Project, the County has requested the WSA&V report from the District because the project meets one or more of the SB 610 and SB 221 criteria. The Resort Project is located in the unincorporated area of San Diego County and is bound by Lower Otay Reservoir to the south and the Upper Otay Reservoir to the northwest. The Resort Project is not currently within the jurisdictions of the District, Water Authority, and Metropolitan Water District of Southern California (MWD), but will be annexed into these jurisdictions at a later date. The Resort Project is a proposed development of approximately 1,869 acres. It is planned to include 1,881 single-family dwelling units, a mixed-use area with 57 multi-family residences and up to 20,000 square feet of commercial use, and a 15 acre resort hotel with 200 guest rooms with an additional 20,000 square feet of ancillary commercial/office uses (total commercial use of 40,000 sq. ft.). The Project also includes an elementary school site, five private and one public park sites, 3 a public safety site and approximately 1,408 acres of open space (preserve and non-preserve). The Project site will be developed in multiple phases. The expected potable water demand for the Otay Ranch Resort Village Project is 1.18 million gallons per day (MGD) or about 1,318 acre-feet per year (AFY). This is 296 AFY lower than the demand estimate in the January 2014 WSA&V report that was prepared for the project and approved by the Board in March 2014. Although the land uses for the project have not changed significantly since the January 2014 report, the reduction in water demand reflects the revised water duty factors currently used by the District to project water demands as a result of water conservation efforts in recent years. Additional water demand reduction is realized as a result of a change in the footprint of the developed areas which has reduced the amount of irrigated areas. The previously estimated 1,615 AFY demand (January 2014 WSA&V) was accounted for in the District’s 2015 Urban Water Management Plan (UWMP) and the Water Authority’s 2015 UWMP. Therefore, based on the findings from the District’s 2015 UWMP and the Water Authority’s 2015 UWMP, this Project will result in no unanticipated demands. The entire watershed of the Otay Ranch Resort Village is tributary to the Lower Otay Reservoir. The use of recycled water within watersheds tributary to surface water storage reservoirs that provide supply for potable domestic water uses must be approved by the owners of the reservoirs in order to protect water quality in these reservoirs. The Applicant for the project discussed the use of recycled water with the City of San Diego, the operator of the Lower Otay Reservoir. In an email to the Applicant, dated February 27, 2018 (Exhibit C), the City states that it is restricting the expansion of a reclaimed water system into the Village (Otay Ranch Resort Village) development to protect the reservoir from excessive salt loading. For this reason, the projected water use within the Otay Ranch Resort Village has been estimated without the use of recycled water. The request for compliance with SB 221 requirements was made by the County because the Project will exceed the SB 221 criteria of a proposed residential development subdivision of more than 500 dwelling units. Pursuant to SB 610 and SB 221, the WSA&V Report incorporates by reference the current Urban Water Management Plans and other water resources planning documents of the District, the Water 4 Authority, and the MWD. The District prepared the WSA&V Report in consultation with Dexter Wilson Engineering, the Water Authority, and the County, which demonstrates and documents that sufficient water supplies are planned for and are intended to be made available over a 20-year planning horizon under normal supply conditions and in single and multiple-dry years to meet the projected demand of the Otay Ranch Resort Village Project, and other planned development projects within the District. FISCAL IMPACT: Joe Beachem, Chief Financial Officer The District has been reimbursed $8,000 for all costs associated with the preparation of the Otay Ranch Resort Village Project WSA&V Report. The reimbursement was accomplished via an $8,000 deposit the Project proponents placed with the District on January 5, 2018. STRATEGIC GOAL: The preparation and approval of the WSA&V Report for the Otay Ranch Resort Village Project supports the District’s Mission statement, "To provide the best quality of water and wastewater services to the customers of the Otay Water District, in a professional, effective, and efficient manner” and the District’s Strategic Goal, in planning for infrastructure and supply to meet current and future potable water demands. LEGAL IMPACT: Approval of a WSA&V Report for the Otay Ranch Resort Village Project in form and content satisfactory to the Board of Directors would allow the District to comply with the requirements of Senate Bill 610 and 221. LCB/BK:jf P:\WORKING\WO D0909 - Resort Village\Staff Report Documents\D0909-090331\BD 05-02-18 Staff Report Otay Ranch Resort Village 13 WSAV (LCB-BK).doc Attachments: Attachment A – Committee Action Exhibit A – Project Location Map Exhibit B – Explanation of the Intent of SB 610 & SB 221 Exhibit C – E-mail from the City of San Diego Exhibit D – Otay Ranch Resort Village Project WSA&V Report Exhibit E – Presentation ATTACHMENT A SUBJECT/PROJECT: D0909-090331 Approval of Water Supply Assessment and Verification Report (March 2018) for the Otay Ranch Resort Village Project COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) reviewed this item at a meeting held on April 16, 2018, and the following comments were made: Staff reviewed a PowerPoint presentation with the Committee and recommended that the Board approve the Water Supply Assessment and Verification Report (WSA&V Report) dated March 2018 for the Otay Ranch Resort Village Project (Resort Project), as required by Senate Bills (SBs) 610 and 221. Staff indicated that the County of San Diego (County) submitted a request to the District for a WSA&V report for the project pursuant to SBs 610 and 221. It was noted that the primary intent of these bills is to improve the link between water supply availability and land use decisions. Staff stated that SBs 610 and 221 require water purveyor to prepare the assessment and verification reports that will be included in the project’s CEQA documentation. Staff indicated that Board approval is required for submittal of the WSA&V Report to the County of San Diego. It was discussed that the District had prepared two previous WSA&V reports for the project; one in 2009 and another one in 2014. However, the County has requested that the Board approve an updated WSA&V report for a new Land Use alternative (Alternative H) that they are considering for the project which has a reduced footprint and less water demand and use. Since 2009 and 2014, there have also been updates to the County planning documents that include the Resort Project. Staff provided a description of the Resort Project (See Page 2 of the staff report for detail). Overall, the total water demand of the project is about 1,318 AFY of potable water. This is 296 AFY lower than the 2014 report due to a result of using the revised water duty factors currently used by the District for water conservation efforts and a change in the developed area footprint that reduces the amount of area to be irrigated. It was noted that Recycled water will not be used because it is restricted by the City of San Diego in this area due to potential impact to the Lower Otay Reservoir. Staff stated that based on the finding from the District’s 2015 Urban Water Management Plan (UWMP) and the Water Authority’s UWMP, there are no unanticipated demands for this project. Staff concluded that water demand and supply forecasts are included in the planning documents of the Metropolitan Water District, the Water Authority, and the Otay Water District; actions necessary to develop the identified water supplies are documented. The state of the current water supply situation is documented in the Otay Ranch Resort Village WSA&V Report and shows that the Otay Water District has met the intent of SBs 610 and 221. The Committee inquired about approving the WSA&V Report when the project is not yet annexed to the District’s boundary. Staff stated that the project is located within the District’s sphere of influence, which is indicated in the District’s and Water Authority’s UWMPs. The project location must be in the District’s sphere of influence, and listed in the UWMPs, prior to being annexed. In response to a question from the Committee, staff stated that in addition to the City of San Diego, the District has other resources that were taken into consideration to project the balance of supply and demand for recycled water for the next 20 years. Upon completion of the discussion, the Committee accepted staffs’ report and supported presentation to the full board as an action item. EXHIBIT B Background Information The Otay Water District (District) prepared the March 2018 Water Supply Assessment and Verification (WSA&V) Report for the Otay Ranch Resort Village Project at the request of the County of San Diego. The County’s WSA&V request letter dated March 21, 2018 was received by the District on March 21, 2018 so the 90-day deadline for the District to provide the Board an approved WSA&V Report to the City ends June 19, 2018. The March 2018 WSA&V Report for the Otay Ranch Resort Village Project has been prepared by the District in consultation with Dexter Wilson Engineering, the Water Authority, and the County pursuant to Senate Bills (SB) 610 and 221. The requirements of SB 610 and SB 221 are addressed in the March 2018 WSA&V Report for the Otay Ranch Resort Village Project. The Otay Ranch Resort Village Project (Resort Project) is included within a land use planning document known as the Otay Ranch General Development Plan/Sub-regional Plan (Otay Ranch GDP), jointly prepared and adopted by the County of San Diego and City of Chula Vista. The Resort Project, identified as Village 13 in the Otay Ranch GDP, is located within what is defined as the Proctor Valley Parcel of the Otay Ranch GDP. The Resort Project current development plan approval is dependent on the County’s eventual adoption of their entitlement application. The proposed development concept for the approximately 1,869 acres of Village 13 is generally planned as a combination of land uses consisting of a resort/hotel and associated facilities, a mix of single-family residential neighborhoods, a multiple use neighborhood, an elementary school, a public safety facilities site, commercial, open space, preserve land, circulation elements, parks, and recreational facilities. The expected potable water demand for the Otay Ranch Resort Village Project is 1.18 million gallons per day (MGD) or about 1,318 acre-feet per year (AFY). This is 296 AFY lower than the demand estimate in the January 2014 WSA&V that was prepared for the Project and approved by the Board in March 2014. Therefore, based on the findings from the Otay WD’s 2015 UWMP and the Water Authority’s 2015 UWMP, this Project will result in no unanticipated demands. The entire watershed of the Resort Project is tributary to the Upper and Lower Otay Reservoirs. The developers of the Resort Village 13 Project have met with and discussed the use of recycled water with the City of San Diego, the operator of the reservoirs. The City of San Diego has requested that the Project not use recycled water because they are concerned about the runoff from the Project entering the reservoirs and increasing nutrients and salinity. For this reason, the projected water use within the Resort Project has been estimated without the use of recycled water. The District currently depends on the Water Authority and the MWD for all of its potable water supplies and regional water resource planning. The District’s 2015 Urban Water Management Plan (UWMP) relies heavily on the UWMP’s and Integrated Water Resources Plans (IRPs) of the Water Authority and MWD for documentation of supplies available to meet projected demands. These plans are developed to manage the uncertainties and variability of multiple supply sources and demands over the long-term through preferred water resources strategy adoption and resource development target approvals for implementation. With District Board approval of the Otay Ranch Resort Village Project WSA&V Report, the Otay Ranch Resort Village Project proponents can proceed with the draft environmental documentation required for the CEQA review process. The water supply issues will be addressed in these environmental documents, consistent with the WSA&V Report. The District, as well as others, can comment on the draft EIR with recommendations that water conservation measures and actions be employed on the Otay Ranch Resort Village Project. Water supplies necessary to serve the demands of the proposed Otay Ranch Resort Village Project, along with existing and other projected future users, as well as the actions necessary to develop these supplies, have been identified in the water supply planning documents of the District, the Water Authority, and MWD. The WSA&V Report includes, among other information, an identification of existing water supply entitlements, water rights, water service contracts, or agreements relevant to the identified water supply needs for the proposed Otay Ranch Resort Village Project. The WSA&V Report demonstrates and documents that sufficient water supplies are planned and are intended to be available over a 20-year planning horizon, under normal conditions and in single and multiple-dry years, to meet the projected demand of the proposed Otay Ranch Resort Village Project and the existing and other planned development projects within the District. EXHIBIT C From: Steve Nielsen <Steve@dwilsoneng.com> Sent: Friday, March 9, 2018 1:57 PM To: Bob Kennedy Cc: Lisa Coburn-Boyd Subject: FW: Village 13 Reclaimed Water From: Amen, Rania [mailto:RAmen@sandiego.gov] Sent: Tuesday, February 27, 2018 2:24PM To: TShaw@atlantissd.com Subject: FW: Reclaimed water question Mr. Shaw, Vic asked me to follow up with you on your question since the Recycled Water System is within my purview. As you may know, Otay Village 13 is immediately adjacent to Otay Reservoir. The City of San Diego is restricting the expansion of the reclaimed water system into Village 13, to protect Otay Reservoir from salt loading. Excessive salt loading is a concern for the reservoir as a drinking source water. The City is very concerned about salt loading from the project areas into Otay Reservoir. This problem would be exacerbated by the use of recycled water to irrigate landscaping in the project area. Recycled water carries salt loads well in excess of the drinking water standard. Salt in recycled water is about double that in imported water and about four times that in local runoff. Even if there is no direct runoff of recycled water to the reservoir, the salt in the irrigation water accumulates on the land surface or in shallow soil, and is subsequently carried by rainfall runoff to the reservoir. Let me know if you have additional questions. Thanks! Rania S. Amen, P.E. Assistant Director- System Management and Operations Branch City of San Diego Public Utilities Department T (858) 292-6418 The City of SAN DIEGO - A world-class city for all - EXHIBIT D OTAY WATER DISTRICT WATER SUPPLY ASSESSMENT AND VERIFICATION REPORT for the County of San Diego Otay Ranch Resort Village Prepared by: Lisa Coburn-Boyd Environmental Compliance Specialist and Bob Kennedy, P.E. Engineering Manager Otay Water District In consultation with Dexter Wilson Engineering, Inc. And San Diego County Water Authority March 2018 Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village Otay Water District Water Supply Assessment and Verification Report March 2018 Otay Ranch Resort Village Table of Contents Executive Summary .................................................................................................................. 1 Section 1 - Purpose .................................................................................................................... 5 Section 2 - Findings ................................................................................................................... 6 Section 3 - Project Description ................................................................................................ 9 Section 4 – Otay Water District ............................................................................................... 9 Section 5 – Historical and Projected Water Demands ........................................................ 12 5.1 Demand Management (Water Conservation)………………………………..17 Section 6 - Existing and Projected Supplies ......................................................................... 20 6.1 Metropolitan Water District of Southern California 2015 Urban Water Management Plan ......................................................................................... 21 6.1.2 MWD Capital Investment Plan .......................................................... 22 6.2 San Diego County Water Authority Regional Water Supplies ................ 23 6.2.1 Availability of Sufficient Supplies and Plans for Acquiring Additional Supplies ............................................................................................. 24 6.2.1.2 All-American Canal and Coachella Canal Lining Projects .. 31 6.2.1.3 Carlsbad Seawater Desalination Project ............................... 35 6.2.2 Water Authority Capital Improvement Program and Financial Information ........................................................................... 38 6.3 Otay Water District ...................................................................................... 39 6.3.1 Availability of Sufficient Supplies and Plans for Acquiring Additional Supplies ............................................................................................. 40 6.3.1.1 Imported and Regional Supplies ........................................... 41 6.3.1.2 Recycled Water Supplies ...................................................... 43 Section 7 – Conclusion: Availability of Sufficient Supplies ................................................ 51 Source Documents ................................................................................................................... 57 Appendices Appendix A: Otay Ranch Resort Village Vicinity Map Appendix B: Otay Ranch Resort Village Development Plan Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 1 Otay Water District Water Supply Assessment and Verification Report March 2018 Otay Ranch Resort Village Executive Summary The Otay Water District (Otay WD) prepared this Water Supply Assessment and Verification Report (WSA&V Report) at the request of the County of San Diego (County) for the Otay Ranch Village 13 Project (Otay Ranch Resort Village). The County is having an environmental impact report (EIR) prepared for the development of this project. Baldwin and Sons, LLC and Moller Otay Lakes Investment, LLC are the project applicants. Otay Ranch Resort Village Overview and Water Use The Otay Ranch Resort Village is not currently located within the jurisdictions of the Otay WD, the San Diego County Water Authority (Water Authority), and the Metropolitan Water District of Southern California (MWD). In order to obtain permanent imported water supply service, the project is required to annex into the jurisdictions of the Otay WD, Water Authority, and MWD. The Otay Ranch Resort Village is identified and described within a land use planning document known as the Otay Ranch General Development Plan/Sub-regional Plan (Otay Ranch GDP). The County of San Diego and City of Chula Vista jointly prepared and adopted the Otay Ranch GDP. The Resort Village project, identified as Village 13 within the Otay Ranch GDP, is located in what is defined as the Proctor Valley Parcel of the Otay Ranch GDP. The Resort Village is part of the designated 14 villages and 5 planning areas within the Otay Ranch GDP area. The Chula Vista City Council and the County of San Diego Board of Supervisors adopted the Otay Ranch GDP on October 28, 1993, which was accompanied by a Program Environmental Impact Report EIR-90-01 (SCH #89010154). As the Otay Ranch area has developed over time, The Otay Ranch GDP has been periodically amended to address land use and circulation element issues specific to individual villages. Baldwin and Sons, LLC and Moller Otay Lakes Investment, LLC (“applicants”) proposed development concept for the approximately 1,869 acre Otay Ranch Resort Village property is generally planned as a combination of land uses. These land uses consist of a resort/hotel and associated facilities, a mix of single and multi-family residential neighborhoods, an elementary school, a public safety facilities site, commercial, open space, preserve land, circulation elements, parks, and recreational facilities. The total number of resort/hotel units Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 2 is planned to be 200. Approximately 520 acres of the total project site are dedicated for 1,881 single family detached homes and 57 multi-family homes are part of a mixed use site. Typically a development of this magnitude is constructed in several phases over many years. The expected potable water demand for the Otay Ranch Resort Village is 1,177,200 gallons per day (gpd) or about 1,318.7 acre feet per year (AFY). This is 296.3 AFY less than the projected water demand in the January 2014 Water Supply Assessment and Verification Report that was previously approved for the project. Although the land use plan has not changed significantly since the January 2014 report, the reduction in water demand reflects the revised water duty factors currently used by Otay WD to project water demands as a result of water conservation efforts in recent years. For the current land use plan, the number of dwelling units and the areas for commercial development, parks, schools and public safety sites match the total approved units and approximately match the non-residential areas noted on Table C-4 in Appendix C (Population, Employment and Development Forecasting) of the District’s Water Facilities Master Plan Update, dated March 2016 (WFMP Update). However, the actual area of development has been reduced resulting in a higher dwelling unit density and less irrigated area per home. Additionally, the area of irrigated areas in parks, open space and adjacent to streets will be reduced further, lowering the demand for potable water. The entire watershed of the Otay Ranch Resort Village is tributary to the Lower Otay Reservoir. The use of recycled water within watersheds tributary to surface water storage reservoirs that provide supply for potable domestic water uses must be approved by the owners of the reservoirs in order to protect water quality in these reservoirs. The Applicant for the project discussed the use of recycled water with the City of San Diego, the operator of the Lower Otay Reservoir. In an email to the Applicant, dated February 27, 2018, the City states that it is restricting the expansion of a reclaimed water system into the Village 13 (Otay Ranch Resort Village) development to protect the reservoir from excessive salt loading. For this reason, the projected water use within the Otay Ranch Resort Village has been estimated without the use of recycled water. Planned Imported Water Supplies from the Water Authority and MWD The Water Authority and MWD have an established process that ensures supplies are being planned to meet future growth. Any annexations and revisions to established land use plans are captured in the San Diego Association of Governments (SANDAG) updated forecasts for land use planning, demographics, and economic projections. SANDAG serves as the regional, intergovernmental planning agency that develops and provides forecast information. The Water Authority and MWD update their demand forecasts and supply needs based on the most recent SANDAG forecast approximately every five years to coincide with preparation of their UWMP’s. Prior to the next forecast update, local jurisdictions with land use authority may require water supply assessment and/or verification reports for proposed land developments that are not within the OTAY WD, Water Authority, or MWD jurisdictions (i.e. pending or proposed annexations) or that have revised land use plans with either lower or Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 3 higher development intensities than reflected in the existing growth forecasts. Proposed land areas with pending or proposed annexations, or revised land use plans, typically result in creating higher demand and supply requirements than previously anticipated. The Otay WD, Water Authority, and MWD next demand forecast and supply requirements and associated planning documents would then capture any increase or decrease in demands and required supplies as a result of annexations or revised land use planning decisions. An important planning document utilized by MWD, the Water Authority and Otay WD is the Integrated Resources Plan (IRP) which describes an agency’s long term water plan. MWD’s 2015 IRP offers an adaptive management strategy to protect the region from future supply shortages. This adaptive management strategy has five components: achieve additional conservation savings, develop additional local water supplies, maintain Colorado River Aqueduct supplies, stabilize State Water Project supplies, and maximize the effectiveness of storage and transfer. MWD’s 2015 IRP has a plan for identifying and implementing additional resources that expand the ability for MWD to meet future changes and challenges as necessary to ensure future reliability of supplies. The proper management of these resources help to ensure that the southern California region, including San Diego County, will have adequate water supplies to meet long-term future demands. Another important planning document is the UWMP. The California Urban Water Management Planning Act (Act), which is included in the California Water Code, requires all urban water suppliers within the state to prepare an UWMP and update it every five years. The purpose and importance of the UWMP has evolved since it was first required 25 years ago. State agencies and the public frequently use the document to determine if agencies are planning adequately to reliably meet future demands. As such, UWMPs serve as an important element in documenting supply availability for the purpose of compliance with state laws, Senate Bills 610 and 221, linking water supply sufficiency to large land-use development approval. Agencies must also have a UWMP prepared, pursuant to the Act, in order to be eligible for state funding and drought assistance. MWD’s 2015 UWMP Findings state that MWD has supply capabilities that would be sufficient to meet expected demands from 2020 through 2040. MWD has plans for supply implementation and continued development of a diversified resource mix including programs in the Colorado River Aqueduct, State Water Project, Central Valley Transfers, local resource projects, and in-region storage that enables the region to meet its water supply needs. The County Water Authority Act, Section 5 subdivision 11, states that the Water Authority “as far as practicable, shall provide each of its member agencies with adequate supplies of water to meet their expanding and increasing needs.” As part of preparation of a written water supply assessment report, an agency’s shortage contingency analysis should be considered in determining sufficiency of supply. Section 11 of the Water Authority’s 2015 UWMP Update contain a detailed shortage contingency analysis that addresses a regional catastrophic shortage situation and drought management. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 4 The analysis demonstrates that the Water Authority and its member agencies, through the Integrated Contingency Plan, Emergency Storage Project, and Water Shortage and Drought Response Plan are taking actions to prepare for and appropriately handle an interruption of water supplies. The Water Shortage and Drought Response Plan, provides the Water Authority and its member agencies with a series of potential actions to take when faced with a shortage of imported water supplies from MWD due to prolonged drought or other supply shortfall conditions. The actions will help the region avoid or minimize the impacts of shortages and ensure an equitable allocation of supplies. Water supply agencies throughout California continue to face climate, environmental, legal, and other challenges that impact water source supply conditions, such as the court rulings regarding the Sacramento-San Joaquin Delta issues and reoccurring droughts impacting the western states. Even with these ever present challenges, the Water Authority and MWD, along with Otay WD fully intend to have sufficient, reliable supplies to serve demands. Otay Water District Water Supply Development Program In evaluating the availability of sufficient water supply, the Otay Ranch Resort Village will be required to participate in the water supply development program being implemented by the Otay WD. This is intended to be achieved through financial participation in several local and/or regional water supply development projects envisioned by the Otay WD. These water supply projects are in addition to those identified as sustainable supplies in the current Water Authority and MWD UWMP, IRP, Master Plans, and other planning documents, and are in response to the regional water supply issues. These new water supply projects are not currently developed and are in various stages of the planning process. Imported water supplies along with the development of these additional Otay WD water supply development projects supplies are intended to increase water supplies to serve the Otay Ranch Resort Village water supply needs and that of other similar development projects. The Otay WD water supply development program includes but is not limited to projects such as the Middle Sweetwater River Basin Groundwater Well project, the Rancho del Rey Groundwater Well project, the North District Recycled Water Supply Concept, and the Otay Mesa Conveyance and Disinfection System Project. The Water Authority and MWD’s next forecasts and supply planning documents would capture any increase in water supplies resulting from any new water resources developed by the Otay WD. Findings The WSA&V Report identifies and describes the processes by which water demand projections for the proposed Otay Ranch Resort Village will be fully included in the water demand and supply forecasts of the Urban Water Management Plans and other water resources planning documents of the Water Authority and MWD. Water supplies necessary to serve the demands of the proposed project, along with existing and other projected future Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 5 users, as well as the actions necessary and status to develop these supplies, have been identified in the Otay Ranch Resort Village WSA&V Report and will be included in the future water supply planning documents of the Water Authority and MWD. This WSA&V Report includes, among other information, an identification of existing water supply entitlements, water rights, water service contracts, water supply projects, or agreements relevant to the identified water supply needs for the proposed Otay Ranch Resort Village. The WSA&V Report demonstrates and documents that sufficient water supplies are planned for and are intended to be available over a 20-year planning horizon, under normal conditions and in single and multiple dry years to meet the projected demand of the proposed Otay Ranch Resort Village and the existing and other planned development projects to be served by the Otay WD. Accordingly, after approval of a WSA&V Report for the Otay Ranch Resort Village by the Otay WD Board of Directors (Board), the WSA&V Report may be used to comply with the requirements of the legislation enacted by Senate Bills 610 and 221 as follows: 1. Senate Bill 610 Water Supply Assessment: The Otay WD Board approved WSA&V Report may be incorporated into the California Environmental Quality Act (CEQA) Environmental Impact Report (EIR) compliance process for the Otay Ranch Resort Village as a water supply assessment report consistent with the requirements of the legislation enacted by SB 610. The County, as lead agency under CEQA for the Otay Ranch Resort Village EIR and Alternatives, may cite the approved WSA&V Report as evidence that a sufficient water supply is planned for and is intended to be made available to serve the Otay Ranch Resort Village. 2. Senate Bill 221 Water Supply Verification: The Otay WD Board approved WSA&V Report may be incorporated into the County’s Tentative Map approval process for the Otay Ranch Resort Village as a water supply verification report, consistent with the requirements of the legislation enacted by SB 221. The County, within their process of approving the Otay Ranch Resort Village Tentative Map, may cite the approved WSA&V Report as verification of intended sufficient water supply to serve the Otay Ranch Resort Village. Section 1 - Purpose The County of San Diego is having an environmental impact report (EIR) prepared for the development of the 1869 acre project (Otay Ranch Resort Village). The project is located within the Otay Ranch General Development Plan along Otay Lakes Road on the north side of Lower Otay Reservoir. The County requested that the Otay WD prepare a Water Supply Assessment and Verification (WSA&V) Report for the Otay Ranch Resort Village. The Otay Ranch Resort Village project description is provided in Section 3 of this WSA&V Report. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 6 This WSA&V Report for the Otay Ranch Resort Village has been prepared by the Otay WD in consultation with Dexter Wilson Engineering, Inc., the Water Authority, and the County pursuant to Public Resources Code Section 21151.9 and California Water Code Sections 10631, 10656, 10910, 10911, 10912, and 10915 referred to as Senate Bill (SB) 610 and Business and Professions Code Section 11010 and Government Code Sections 65867.5, 66455.3, and 66473.7 referred to as SB 221. SB 610 and SB 221 amended state law, effective January 1, 2002, is intended to improve the link between the information on water supply availability and certain land use decisions made by cities and counties. SB 610 requires that the water purveyor of the public water system prepare a water supply assessment to be included in the CEQA documentation and approval process of certain proposed projects. SB 221 requires affirmative written verification from the water purveyor of the public water system that sufficient water supplies are to be available for certain residential subdivisions of property prior to approval of a tentative map. The requirements of SB 610 and SB 221 are being addressed by this WSA&V Report. The County also requested, since the requirements of SB 610 and SB 221 are substantially similar, that Otay WD prepare both the water supply assessment and verification concurrently. This WSA&V Report evaluates water supplies that are planned to be available during normal, single dry year, and multiple dry water years during a 20-year planning horizon to meet existing demands, expected demands of the Otay Ranch Resort Village, and reasonably foreseeable planned future water demands to be served by Otay WD. The Otay Water District Board of Directors approved WSA&V Report is planned to be used by the County in its evaluation of the Otay Ranch Resort Village under the CEQA approval process procedures. Section 2 - Findings The Otay WD prepared this WSA&V Report at the request of the County for the Otay Ranch Resort Village. Baldwin and Sons, LLC and Moller Otay Lakes Investment, LLC submitted an entitlement application to the County for the project. The Otay Ranch Resort Village is not currently within the jurisdictions of the Otay WD, the Water Authority, and MWD. To obtain permanent imported water supply service, Otay Ranch Resort Village is required to annex into the jurisdictions of the Otay WD, Water Authority, and MWD to utilize imported water supply. The expected potable water demand for the Otay Ranch Resort Village is 1,177,200 gallons per day (gpd) or about 1,318.7 acre feet per year (AFY). This is 296.3 AFY less than the projected water demand in the January 2014 Water Supply Assessment and Verification Report that was previously approved for the project. Although the land use plan has not Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 7 changed significantly since the January 2014 report, the reduction in water demand reflects the revised water duty factors currently used by Otay WD to project water demands as a result of water conservation efforts in recent years. For the current land use plan, the number of dwelling units and the areas for commercial development, parks, schools and public safety sites match the total approved units and approximately match the non-residential areas noted on Table C-4 in Appendix C (Population, Employment and Development Forecasting) of the District’s Water Facilities Master Plan Update, dated March 2016 (WFMP Update). However, the actual area of development has been reduced resulting in a higher dwelling unit density and less irrigated area per home. Additionally, the area of irrigated areas in parks, open space and adjacent to streets will be reduced further, lowering the demand for potable water. Recycled water is not proposed to be used on the project due to its proximity to Lower Otay Reservoir. The Water Authority and MWD have an established process that ensures supplies are being planned to meet future growth. Any annexations and revisions to established land use plans are captured in the San Diego Association of Governments (SANDAG) updated forecasts for land use planning, demographics, and economic projections. SANDAG serves as the regional, intergovernmental planning agency that develops and provides forecast information. The Water Authority and MWD update their demand forecasts and supply needs based on the most recent SANDAG forecast approximately every five years to coincide with preparation of their urban water management plans. Prior to the next forecast update, local jurisdictions may require water supply assessment and/or verification reports for proposed land developments that are not within the Otay WD, Water Authority, or MWD jurisdictions (i.e. pending or proposed annexations) or that have revised land use plans with lower or higher land use intensities than reflected in the existing growth forecasts. Proposed land areas with pending or proposed annexations, or revised land use plans, typically result in creating higher demand and supply requirements than anticipated. The Otay WD, the Water Authority, and MWD next demand forecast and supply requirements and associated planning documents would then capture any increase or decrease in demands and required supplies as a result of annexations or revised land use planning decisions. This process is utilized by the Water Authority and MWD to document the water supplies necessary to serve the demands of the Otay Ranch Resort Village, along with existing and other projected future users, as well as the actions necessary to develop any required water supplies. Through this process the necessary demand and supply information is thus assured to be identified and incorporated within the water supply planning documents of the Water Authority and MWD. This WSA&V Report includes, among other information, an identification of existing water supply entitlements, water rights, water service contracts, proposed water supply projects, and agreements relevant to the identified water supply needs for the proposed Otay Ranch Resort Village. This WSA&V Report incorporates by reference the current Urban Water Management Plans and other water resources planning documents of the Otay WD, the Water Authority, and MWD. The Otay WD prepared this WSA&V Report to assess and document Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 8 that sufficient water supplies are planned for and are intended to be acquired to meet projected water demands of the Otay Ranch Resort Village as well as existing and other reasonably foreseeable planned development projects within the Otay WD for a 20-year planning horizon, in normal supply years and in single dry and multiple dry years. The Otay Water District 2015 UWMP includes a water conservation component to comply with Senate Bill 7 of the Seventh Extraordinary Session (SBX 7-7), which became effective February 3, 2010. This new law was the water conservation component to the Delta legislation package, and seeks to achieve a 20 percent statewide reduction in urban per capita water use in California by December 31, 2020. Specifically, SBX 7-7 from this Extraordinary Session requires each urban retail water supplier to develop urban water use targets to help meet the 20 percent reduction goal by 2020 (20x2020), and an interim water reduction target by 2015. Otay WD adopted Method 1 to set its 2015 interim and 2020 water use targets. Method 1 requires setting the 2020 water use target to 80 percent of baseline per capita water use target as provided in the State’s 20x2020 Water Conservation Plan. The Otay WD 2015 target was 172 gpcd which it met (2015 actual was 124 gpcd) and the 2020 gpcd target (80 percent of baseline) is 153 gpcd. The Otay WD’s recent per capita water use has been declining and current water use already meets the 2020 target as calculated using Method 1. This recent decline in per capita water use is largely due to drought water use restrictions, increased water costs, and economic conditions. However, Otay WD’s effective water use awareness campaign and enhanced conservation mentality of its customers will likely result in some long-term carryover of these reduced consumption rates. Based on a normal water supply year, the five-year increments for a 20-year projection indicate projected potable and recycled water supply is being planned for and is intended to be acquired to meet the estimated water demand targets of the Otay WD per the Otay Water District 2015 UWMP. Based on dry year forecasts, the estimated water supply is also being planned for and is intended to be acquired to meet the projected water demand, during single dry and multiple dry year scenarios. On average, the dry-year demands are about 6.64 percent higher than the normal year demands. The Otay WD recycled water supply is assumed to be drought-proof and not subject to reduction during dry periods. Together, these findings assess, demonstrate, and document that sufficient water supplies are planned for and are intended to be acquired for the Otay Ranch Resort Village. In addition, the actions necessary to develop these supplies are and will be further documented, to serve the proposed project and the existing and other reasonably foreseeable planned development projects within the Otay WD in both normal and single and multiple dry year forecasts for a 20-year planning horizon. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 9 Section 3 - Project Description The Otay Ranch Resort Village is located along Otay Lakes Road within the Proctor Valley Parcel of the Otay Ranch Development. Refer to Appendix A for a vicinity map of the proposed Otay Ranch Resort Village. The project is proposed to be located on 1,869 acres within the Otay Ranch General Development Plan. Although the proposed development is located within the County and subject to the County’s land use jurisdiction, the Otay WD is the potable and recycled water purveyor. The Otay Ranch Resort Village is required to be annexed into the jurisdictions of the Otay WD, the Water Authority, and MWD. Baldwin and Sons, LLC and Moller Otay Lakes Investment, LLC (“applicants”) proposed development concept for the approximately 1,869 acre Otay Ranch Resort Village property is generally planned as a combination of land uses. These land uses consist of a resort/hotel and associated facilities, a mix of single and multi-family residential neighborhoods, an elementary school, a public safety facilities site, commercial, open space, preserve land, circulation elements, parks, and recreational facilities. The total number of resort/hotel units is planned to be 200. Approximately 520 acres of the total project site are dedicated for 1,881 single family detached homes and 57 multi-family homes are part of a mixed use site. Typically a development of this magnitude is constructed in several phases over many years. The County has discretionary authority on land use decisions for the Otay Ranch Resort Village and can establish actions and/or permit approval requirements. The projected potable water demands associated with the Otay Ranch Resort Village EIR has considered the anticipated County discretionary actions and/or permit approvals and are incorporated into and used in this WSA&V Report. The water demands for the proposed Otay Ranch Resort Village are included in the projected water demand estimates provided in Section 5 – Historical and Projected Water Demands. Section 4 – Otay Water District The Otay WD is a municipal water district formed in 1956 pursuant to the Municipal Water District Act of 1911 (Water Code §§ 71000 et seq.). The Otay WD joined the Water Authority as a member agency in 1956 to acquire the right to purchase and distribute imported water throughout its service area. The Water Authority is an agency responsible for the wholesale supply of water to its 24 public agency members in San Diego County. The Otay WD currently meets all its potable demands with imported treated water from the Water Authority. The Water Authority is the agency responsible for the supply of imported water into San Diego County through its membership in MWD. The Water Authority currently obtains about 40% of its imported supply from MWD, but is in the process of further diversifying its available supplies. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 10 The Otay WD provides water service to residential, commercial, industrial, and agricultural customers, and for environmental and fire protection uses. In addition to providing water throughout its service area, Otay WD also provides sewage collection and treatment services to a portion of its service area known as the Jamacha Basin. The Otay WD also owns and operates the Ralph W. Chapman Water Reclamation Facility (RWCWRF) which has an effective treatment capacity of 1.2 million gallons per day (mgd) or about 1,300 acre feet per year to produce recycled water. On May 18, 2007, an additional source of recycled water supply of up to 6 mgd, or about 6,720 acre feet per year, became available to Otay WD from the City of San Diego’s South Bay Water Reclamation Plant (SBWRP). The Otay WD jurisdictional area is generally located within the south central portion of San Diego County and includes approximately 125 square miles. The Otay WD serves portions of the unincorporated communities of southern El Cajon, La Mesa, Rancho San Diego, Jamul, Spring Valley, Bonita, and Otay Mesa, the eastern portion of the City of Chula Vista and a portion of the City of San Diego on Otay Mesa. The Otay WD jurisdiction boundaries are roughly bounded on the north by the Padre Dam Municipal Water District, on the northwest by the Helix Water District, and on the west by the South Bay Irrigation District (Sweetwater Authority) and the City of San Diego. The southern boundary of Otay WD is the international border with Mexico. The planning area addressed in the Otay WD WFMP Update and the Otay WD 2015 UWMP includes both the land within the jurisdictional boundary of the Otay WD and those areas outside of the present Otay WD boundaries considered to be in the Area of Influence of the Otay WD. Figure 3-1 contained within the Otay WD 2015 UWMP shows the jurisdictional boundary of the Otay WD and the Area of Influence. The planning area is approximately 143 square miles, of which approximately 125 square miles are within the Otay WD current boundaries and approximately 18 square miles are in the Area of Influence. The area east of Otay WD is rural and currently not within any water purveyor jurisdiction and potentially could be served by the Otay WD in the future if the need for imported water becomes necessary, as is the case for the Area of Influence. The City of Chula Vista, the City of San Diego, and the County of San Diego are the three land use planning agencies within the Otay WD jurisdiction. Data on forecasts for land use planning, demographics, economic projections, population, and the future rate of growth within Otay WD were obtained from the San Diego Association of Governments (SANDAG). SANDAG serves as the regional, intergovernmental planning agency that develops and provides forecast information through the year 2050. Population growth within the Otay WD service area is expected to increase from the 2015 figure of 217,339 to an estimated 285,340 by 2040. Land use information used to develop water demand projections are based upon Specific or Sectional Planning Areas, the Otay Ranch General Development Plan/Sub- regional Plan, East Otay Mesa Specific Plan Area, San Diego County Community Plans, and City of San Diego, City of Chula Vista, and County of San Diego General Plans. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 11 The Otay WD long-term historic growth rate has been approximately 4 percent. The growth rate has significantly slowed due to the current economic conditions and it is expected to slow as the inventory of developable land is diminished. Climatic conditions within the Otay WD service area are characteristically Mediterranean near the coast, with mild temperatures year round. Inland areas are both hotter in summer and cooler in winter, with summer temperatures often exceeding 90 degrees and winter temperatures occasionally dipping to below freezing. Most of the region’s rainfall occurs during the months of December through March. Average annual rainfall is approximately 10.08 inches per year. Historic climate data were obtained from the Western Regional Climate Center for Station 042706 (El Cajon). This station was selected because its annual temperature variation is representative of most of the Otay WD service area. While there is a station in the City of Chula Vista, the temperature variation at the City of Chula Vista station is more typical of a coastal environment than the conditions in most of the Otay WD service area. Urban Water Management Plan In accordance with the California Urban Water Management Planning Act and recent legislation, the Otay WD Board of Directors adopted an UWMP in June 2016 and subsequently submitted the plan to the California Department of Water Resources (DWR). As required by law, the Otay Water District 2015 UWMP includes projected water supplies required to meet future demands through 2040. In accordance with Water Code Section 10910 (c)(2) and Government Code Section 66473.7 (c)(3), information from the Otay WD 2015 UWMP along with supplemental information from the Otay WD WFMP Update have been utilized to prepare this WSA Report and are incorporated herein by reference. The state Legislature passed Senate Bill 7 as part of the Seventh Extraordinary Session (SBX 7-7) on November 10, 2009, which became effective February 3, 2010. This new law was the water conservation component to the Delta legislation package and seeks to achieve a 20 percent statewide reduction in urban per capita water use in California by December 31, 2020. Specifically, SBX 7-7 from this Extraordinary Session requires each urban retail water supplier to develop urban water use targets to help meet the 20 percent reduction goal by 2020 (20x2020), and an interim water reduction target by 2015. The SBX 7-7 target setting process includes the following: (1) baseline daily per capita water use; (2) urban water use target; (3) interim water use target; (4) compliance daily per capita water use, including technical bases and supporting data for those determinations. In order for an agency to meet its 2020 water use target, each agency can increase its use of recycled water to offset potable water use and also step up its water conservation measures. The required water use targets for 2020 and an interim target for 2015 are determined using one of four target methods – each method has numerous methodologies. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 12 In 2015, urban retail water suppliers were required to report interim compliance followed by actual compliance in 2020. Interim compliance is halfway between the baseline water use and 2020 target. Baseline, target, and compliance-year water use estimates are required to be reported in gallons per capita per day (gpcd). Failure to meet adopted targets will result in the ineligibility of a water supplier to receive grants or loans administered by the State unless one (1) of two (2) exceptions is met. Exception one (1) states a water supplier may be eligible if they have submitted a schedule, financing plan, and budget to DWR for approval to achieve the per capita water use reductions. Exception two (2) states a water supplier may be eligible if an entire water service area qualifies as a disadvantaged community. Otay WD adopted Method 1 to set its 2015 interim and 2020 water use targets. Method 1 requires setting the 2020 water use target to 80 percent of baseline per capita water use target as provided in the State’s 20x2020 Water Conservation Plan. The Otay WD was well below its required 2015 target of 172 gpcd, with an actual 2015 gpcd of 124. The 2020 gpcd target which is 80 percent of baseline is 153 gpcd. The Otay WD’s recent per capita water use has been declining to the point where current water use already meets the 2020 target for Method 1. This recent decline in per capita water use is largely due to drought water use restrictions and increased water costs. However, Otay WD’s effective water use awareness campaign and enhanced conservation mentality of its customers will likely result in some long-term carryover of these reduced consumption rates beyond the current period. Section 5 – Historical and Projected Water Demands The projected demands for Otay WD are based on Specific or Sectional Planning Areas, the Otay Ranch General Development Plan/Sub-regional Plan, the East Otay Mesa Specific Plan Area, San Diego County Community Plans, and City of San Diego, City of Chula Vista, and County of San Diego General Plans. This land use information is also used by SANDAG as the basis for its most recent forecast data. This land use information was utilized for the preparation of the Otay Water District WFMP Update and Otay Water District 2015 UWMP to develop the forecasted demands and supply requirements. In 1994, the Water Authority selected the Institute for Water Resources-Municipal and Industrial Needs (MAIN) computer model to forecast municipal and industrial water use for the San Diego region. The MAIN model uses demographic and economic data to project sector-level water demands (i.e. residential and non-residential demands). This econometric model has over a quarter of a century of practical application and is used by many cities and water agencies throughout the United States. The Water Authority’s version of the MAIN Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 13 model was modified to reflect the San Diego region’s unique parameters and is known as CWA-MAIN. The foundation of the water demand forecast is the underlying demographic and economic projections. This was a primary reason why, in 1992, the Water Authority and SANDAG entered into a Memorandum of Agreement (MOA) in which the Water Authority agreed to use the SANDAG current regional growth forecast for water supply planning purposes. In addition, the MOA recognizes that water supply reliability must be a component of San Diego County’s regional growth management strategy required by Proposition C, as passed by the San Diego County voters in 1988. The MOA ensures a strong linkage between local general plan land use forecasts and water demand projections and resulting supply needs for the San Diego region. Consistent with the previous CWA-MAIN modeling efforts, on October 15, 2013, the SANDAG Board of Directors accepted the Series 13: 2050 Regional Growth Forecast. The 2050 Regional Growth Forecast will be used by SANDAG as the foundation for the next Regional Comprehensive Plan update. SANDAG forecasts were used by local governments for planning, including the Water Authority 2015 UWMP update. The municipal and industrial forecast also included an updated accounting of projected conservation savings based on projected regional implementation of the California Urban Water Conservation Council (CUWCC) Best Management Practices and SANDAG demographic information for the period 2015 through 2050. These savings estimates were then factored into the baseline municipal and industrial demand forecast. Agricultural demand projections were developed through a cooperative effort between Water Authority staff, Water Authority member agencies, SANDAG, County of San Diego Agricultural Weights and Measures, and the California Avocado Commission. Forecast driver variables include irrigated acreage within the Water Authority’s service area, estimated crop type distribution, and calculated historic water-use factors. SANDAG’s projection of agricultural land conversions to other land use categories provides the long-term trend in acreage used to forecast agricultural water use. The total agricultural forecast is then separated into two categories: (1) projected demands in the Water Authority’s Transitional Special Agricultural Water Rate (TSAWR) program and (2) demands under the Water Authority M&I rate or agricultural demands met through local supplies. The Water Authority and MWD update their water demand and supply projections within their jurisdictions utilizing the SANDAG most recent growth forecast to project future water demands. This provides for the important strong link between demand and supply projections to the land use plans of the cities and the county. This provides for consistency between the retail and wholesale agencies water demand projections, thereby ensuring that adequate supplies are and will be planned for the Otay WD existing and future water users. Existing land use plans, any revisions to land use plans, and annexations are captured in the SANDAG updated forecasts. The Water Authority and MWD update their demand forecasts based on Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 14 the SANDAG most recent forecast approximately every five years to coincide with preparation of their urban water management plans. Prior to the next forecast update, local jurisdictions may require water supply assessment and/or verification reports consistent with Senate Bills 610 and 221 for proposed land use developments that either have pending or proposed annexations into the Otay WD, Water Authority, and MWD or that have revised land use plans than originally anticipated. The Water Authority and MWD’s next forecasts and supply planning documents would then capture any increase or decrease in demands caused by annexations or revised land use plans. In evaluating the availability of sufficient water supply, the Otay Ranch Resort Village proponents are required to participate in the development of alternative water supply project(s). This can be achieved through payment of the New Water Supply Fee adopted by the Otay WD Board in May 2010. These water supply projects are in addition to those identified as sustainable supplies in the current Water Authority and MWD UWMP, IRP, Master Plans, and other planning documents. These new water supply projects are in response to the regional water supply issues related to the Sacramento-San Joaquin Delta and the current ongoing western states drought conditions. These additional water supply projects are not currently developed and are in various stages of the planning process. A few examples of these alternative water supply projects include the Middle Sweetwater River Basin Groundwater Well project, the Otay WD Otay Mesa Conveyance and Disinfection System project, and the Rancho del Rey Groundwater Well project. The Water Authority and MWD next forecast and supply planning documents would capture any increase in water supplies resulting from verifiable new water resources developed by the Otay WD. In addition, MWD’s 2015 UWMP identified potential reserve supplies in the supply capability analysis (Tables 2-4, 2-5, and 2-6), which could be available to meet any unanticipated demands. The Water Authority and MWD’s next forecasts and supply planning documents would capture any increase in necessary supply resources resulting from any new water supply resources. Demand Methodology The Otay WD water demand projection methodology in the WFMP Update utilizes a component land use approach. This is done by applying representative values of water use to the acreage of each land use type and then aggregating these individual land use demand projections into an overall total demand for the Otay WD. This is called the water duty method, and the water duty is the amount of water used in gallons per day per acre per year. This approach is used for all the land use types except residential development where a demand per dwelling unit was applied. In addition, commercial and industrial water use categories are further subdivided by type including separate categories for golf courses, schools, jails, prisons, hospitals, etc. where specific water demands are established. To determine water duties for the various types of land use, the entire water meter database of the Otay WD is utilized and sorted by the appropriate land use types. The metered Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 15 consumption records are then examined for each of the land uses, and water duties are determined for the various types of residential, commercial, industrial, and institutional land uses. For example the water duty factors for commercial and industrial land uses are estimated using 1,785 and 893 gallons per day per acre (gpd/acre) respectively. Residential water demand is established based on the same data but computed on a per-dwelling unit basis. The focus is to ensure that for each of the residential land use categories (very low, low, medium, and high densities), the demand criteria used is adequately represented based upon actual data. This method is used because residential land uses constitute a substantial percentage of the total developable planning area of the Otay WD. The WFMP Update calculates potable water demand by taking the gross acreage of a site and applying a potable water reduction factor (PWRF), which is intended to represent the percentage of acreage to be served by potable water and that not served by recycled water for irrigation. For industrial land use, as an example, the PWRF is 0.95 (i.e., 95% of the site is assumed to be served by potable water, 5% of the site is assumed to be irrigated with recycled water, if available). The potable net acreage is then multiplied by the unit demand factor corresponding to its respective land use. This approach is used in the WFMP Update for all the land use types except residential development where a demand per dwelling unit is applied. In addition, commercial and industrial water use categories are further subdivided by type including separate categories for golf courses, schools, jails, prisons, hospitals, etc. where specific water demands are allocated. Otay Water District Projected Demand By applying the established water duties to the proposed land uses, the projected water demand for the entire Otay WD planning area at ultimate development is determined. Projected water demands for the intervening years were determined using growth rate projections consistent with data obtained from SANDAG and the experience of the Otay WD. The historical and projected potable water demands for Otay WD are shown in Table 1. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 16 Table 1 Historical and Projected Potable Water Fiscal Year Demands (acre-feet) Water Use Sectors 2010 2015 2020 2025 2030 2035 2040 Single Family Residential 17,165 16,228 17,072 19,806 20,752 20,649 23,224 Multi-Family Residential 3,605 3,460 5,557 6,732 7,342 7,585 8,837 Commercial, Industrial & Institutional 4,110 4,953 6,577 7,949 8,653 8,923 10,378 Landscape 3,732 4,079 4,400 4,600 4,700 4,900 5,200 AFG* - University I. D. 11.7 11.7 11.7 11.7 11.7 AFG – PA 12 46 46 46 46 46 AFG – Otay 250 836 836 836 836 836 Near-term Annexations 2,973 2,973 2,973 2,973 2,973 Other 2,563 1,578 470 470 470 470 470 Totals 31,175 30,298 37,943 43,424 45,784 46,394 51,976 Source: Otay Water District 2015 UWMP. *Accelerated Forecasted Growth Increment Otay Ranch Resort Village Projected Water Demand Using the land use demand projection methodology noted above, the projected potable water demand for the proposed Otay Ranch Resort Village is shown in Table 2. The projected potable water demand is 1,177,200 gpd, or about 1,318.7 ac-ft/yr. The number of dwelling units and the areas for commercial development, parks, schools and public safety sites match the total approved units and approximately match the non-residential acreages noted on Table C of the District’s Water Facilities Master Plan Update dated March 2016 (WFMP Update). Table 2 Otay Ranch Resort Village Projected Potable Water Annual Average Demands Neighborhood Land Use Designation Gross Acres Quantity, Units Water Duty Factor Total Average Water Demand, GPD R-1 SF Residential 33.0 149 435 gpd/unit 64,815 R-2 SF Residential 38.3 211 435 gpd/unit 91,785 R-3 SF Residential 89.2 288 435 gpd/unit 125,280 R-4 SF Residential 115.4 281 700 gpd/unit 196,700 Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 17 Neighborhood Land Use Designation Gross Acres Quantity, Units Water Duty Factor Total Average Water Demand, GPD R-5 SF Residential 18.1 55 435 gpd/unit 23,925 R-6 SF Residential 38.6 149 435 gpd/unit 64,815 R-7 SF Residential 30.3 184 435 gpd/unit 80,040 R-8 SF Residential 65.8 249 435 gpd/unit 108,315 R-9 SF Residential 58.6 206 435 gpd/unit 89,610 R-10 SF Residential 29.1 109 435 gpd/unit 47,415 MU-R Mixed Use - Res 3.9 57 200 gpd/unit 11,400 MU-C Mixed Use-Com 2.0 --- 1,785 gpd/ac 3,570 P-1 Park 10.5 --- 1,900 gpd/ac 19,950 P-2 Park 2.5 --- 1,900 gpd/ac 4,750 P-3 Park 3.6 --- 1,900 gpd/ac 6,840 P-4 Park 2.6 --- 1,900 gpd/ac 4,940 P-5 Park 2.9 --- 1,900 gpd/ac 5,510 P-6 Park 2.5 --- 1,900 gpd/ac 4,750 --- Public Safety 2.7 --- 1,785 gpd/ac 4,820 S-1 School 10.1 --- 1,785 gpd/ac 18,030 HOA HOA 6.0 --- 1,900 gpd/ac 11,400 Resort Resort Units 14.7 200 200 gpd/unit 40,000 Resort Resort Commercial 2.0 --- 1,785 gpd/ac 3,570 Irrigated Areas 76.3 --- 1,900 gpd/ac 144,970 Preserve Open Space 1,177.1 --- 0 0 Circulation Open Space 32.2 --- 0 0 TOTAL 1,9381 1,177,200 1 Total Residential Units. 5.1 Demand Management (Water-Use Efficiency) Demand management, or water-use efficiency is a critical part of the Otay Water District’s 2015 Urban Water Management Plan (UWMP) and its long-term strategy for meeting the water supply needs of its customers. Water conservation is frequently the lowest cost resource available to any water agency. The Otay WD’s water conservation program Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 18 objectives are to: • Reduce the demand for more expensive, imported water. • Ensure a reliable water supply. The Otay WD was one of the original signatories to the Memorandum of Understanding (MOU) regarding Urban Water Conservation in California, which created the California Urban Water Conservation Council (CUWCC) in 1991 in an effort to reduce California's long-term water demands. The Otay WD has been a long-standing supporter of the CUWCC through its implementation of Best Management Practices (BMPs), which required the District to submit biannual reports that detailed the implementation of its conservation programs. As a result of the 2014-2017 drought and the state’s changing regulatory, political, social, economic, and environmental climate, CUWCC members and its Board, in 2017, restructured the organization and renamed it the California Water Efficiency Partnership (CWEP). The new framework allows the organization to better fulfill its members’ needs, quickly adapt to the changing climate, provide resources about water-use efficiency issues in California, and foster collaboration among a wide variety of stakeholders. The Otay WD is currently a member of CWEP as part of its effort to continue upholding its long-term commitment in reducing the state’s water demands, diversifying local water supply, and encouraging its customer to make conservation a way of life. In addition to meeting customer demands during a drought, the District consistently advocates for state policies and legislation that include supply development and water-use efficiency. The District continues to work closely with the Water Authority, the Association of California Water Agencies, and other water agencies in the region to ensure that the targets and measures in the State Water Resources Control Board’s (SWRCB) long-term framework support a balanced approach and reflect local water supply investments and conditions. Water conservation programs are developed and implemented on the premise that water conservation increases the local water supply by reducing the demand on available imported supply, which is vital to the optimal utilization of a region's water supply resources. The Otay WD participates in many water conservation programs designed and typically operated on a shared cost-participation program basis among the Water Authority, MWD, and their member agencies. The demands shown in Tables 1 and 2 take into account implementation of water conservation measures within Otay WD. As part of the preceding CUWCC’s BMPs requirements, the Otay WD implemented water conservation programs and provided services to its customers to promote water-use efficiencies and water savings. It continues to do so today. As a member of the Water Authority, Otay WD also benefits from regional programs performed on behalf of its member agencies. In partnership with the Water Authority, the County of San Diego, City of San Diego, City of Chula Vista, and developers, the Otay WD water-use efficiency efforts are expected to grow and expand. The resulting savings directly relate to additional available water in the San Diego County region for beneficial use within the Water Authority service area, Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 19 including the Otay WD. Additional conservation or water-use efficiency measures or programs practiced by the Otay WD include the following: Supervisory Control and Data Acquisition System The Otay WD implemented and has operated for many years a Supervisory Control and Data Acquisition (SCADA) system to control, monitor, and collect data regarding the operation of the water system. The major facilities that have SCADA capabilities are the water-flow control supply sources, transmission network, pumping stations, and water storage reservoirs. The SCADA system allows for many and varied useful functions. Some of the functions they provide for operating personnel are the ability to monitor the water supply source flow rates, reservoir levels, tum on or off pumping units, etc. The SCADA system aids in the prevention of water reservoir overflow events and increases energy efficiency. Water Conservation Ordinance California Water Code Sections 375 et seq. permit public entities, which supply retail water to adopt and enforce a water conservation program to reduce the quantity of water used by the customers, resulting in the conservation of water supplies for that public entity. In 1988, the Otay WD Board of Directors established a comprehensive water conservation program pursuant to California Water Code Sections 375 et seq., based upon the need to conserve water supplies and to avoid or minimize the effects of any future shortage. A water shortage could exist based upon the occurrence of one or more of the following conditions: 1. A general water supply shortage due to increased demand or limited supplies. 2. Distribution or storage facilities of the Water Authority or other agencies become inadequate. 3. A major failure of the supply, storage, and distribution facilities of MWD, Water Authority, and/or Otay WD. The Otay WD water conservation ordinance specifies that the conditions prevailing in the San Diego County area require that the available water resources be put to maximum beneficial use to the extent to which they are capable, and that the waste or unreasonable use, or unreasonable method of use, of water be prevented. In addition, the ordinance encourages the conservation of such water with a view to the maximum reasonable and beneficial use thereof in the interests of the people of the Otay WD and for the public welfare. Otay WD continues to promote water-use efficiency and conservation at community and business events, including those involving developers in its service area. In addition, Otay WD, working with the Water Authority and MWD manages a number of programs. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 20 Otay WD is currently engaged in a number of conservation and water-use efficiency activities. Listed below are programs that either are current or have been concluded: • Residential Water Surveys • Large Landscape Surveys • Cash for Water Smart Plants Landscape Retrofit Program • Rotating Nozzles Rebates • Residential Weather-Based Irrigation Controller (WBIC) Incentive Program • Residential High Efficiency Clothes Washers • Residential ULFT/HET Rebate Program • Outreach Efforts to Otay WD Customers - the Otay WD promotes its conservation programs through outreach at community and business events, bill inserts, articles in the Otay WD's quarterly customer Pipeline newsletter, direct mailings to Otay WD customers, the Otay WD's webpage and social media platforms, and through the Water Authority's marketing efforts. • School Education Programs - the Otay WD funds school tours of the Water Conservation Garden and school assemblies, co-funds Splash Labs, and maintains school-age appropriate water-themed books, DVDs, and videos. • Water efficiency in new construction through Cal Green and the Model Water Efficient Landscape Ordinance • Focus on Commercial/Institutional/Industrial through Promoting MWD's Save a Buck (Commercial) Program in conjunction with the Otay WD's own Commercial Process Improvement Program • Landscape Contest for homeowners in the Otay WD’s service area The county’s residents and businesses also exceeded the SWRCB’s emergency water-use reduction mandates during 2015 and 2016, and they continue to use less water than they did in 2013 even though drought conditions have ended. Since the SWRCB’s conservation mandate began in June 2015, Otay customers have saved an average of 16 to 19 percent more water compared to 2013 water-use totals. Section 6 - Existing and Projected Supplies The Otay WD currently does not have an independent raw or potable water supply source. The Otay WD is a member public agency of the Water Authority and the Water Authority is a member public agency of MWD. The statutory relationships between the Water Authority and its member agencies, and MWD and its member agencies, respectively, establish the scope of the Otay WD entitlement to water from these two agencies. The Water Authority currently supplies the Otay WD with 100 percent of its potable water through two delivery pipelines, referred to as Pipeline No. 4 and the Helix Flume Pipeline. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 21 The Water Authority in turn, currently purchases the majority of its water from MWD. Due to the Otay WD reliance on these two agencies, this WSA&V Report includes referenced documents that contain information on the existing and projected supplies, supply programs, and related projects of the Water Authority and MWD. The Otay WD, Water Authority, and MWD are actively pursuing programs and projects to further diversify their water supply resources. The description of local recycled water supplies available to the Otay WD is also discussed below. 6.1 Metropolitan Water District of Southern California 2015 Urban Water Management Plan MWD has prepared its 2015 UWMP which was adopted on May 9, 2016. The 2015 UWMP provides MWD’s member agencies, retail water utilities, cities, and counties within its service area with, among other things, a detailed evaluation of the supplies necessary to meet future demands, and an evaluation of reasonable and practical efficient water uses, recycling, and conservation activities. During the preparation of the 2015 UWMP, MWD utilized the previous SANDAG regional growth forecast in calculating regional water demands for the Water Authority service area. 6.1.1 Availability of Sufficient Supplies and Plans for Acquiring Additional Supplies MWD is a wholesale supplier of water to its member public agencies and obtains its supplies from two primary sources: the Colorado River, via the Colorado River Aqueduct (CRA), which it owns and operates, and Northern California, via the State Water Project (SWP). The 2015 UWMP documents the availability of these existing supplies and additional supplies necessary to meet future demands. MWD’s IRP identifies a mix of resources (imported and local) that, when implemented, will provide 100 percent reliability for full-service demands through the attainment of regional targets set for conservation, local supplies, State Water Project supplies, Colorado River supplies, groundwater banking, and water transfers. The 2015 update to the IRP (2015 IRP Update) describes an adaptive management strategy to protect the region from future supply shortages. This adaptive management strategy has five components: achieve additional conservation savings, develop additional local water supplies, maintain Colorado River Aqueduct supplies, stabilize State Water Project supplies, and maximize the effectiveness of storage and transfer. MWD’s 2015 IRP Update has a plan for identifying and implementing additional resources that expand the ability for MWD to meet future changes and challenges as necessary to ensure future reliability of supplies. The proper management of these resources help to ensure that the southern California region, including San Diego County, will have adequate water supplies to meet long-term future demands. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 22 In May 2016, MWD adopted its 2015 UWMP in accordance with state law. The resource targets included in the preceding 2015 IRP Update serve as the foundation for the planning assumptions used in the 2015 UWMP. MWD’s 2015 UWMP contains a water supply reliability assessment that includes a detailed evaluation of the supplies necessary to meet demands over a 20-year period in average, single dry year, and multiple dry year periods. As part of this process, MWD also uses the current SANDAG regional growth forecast in calculating regional water demands for the Water Authority’s service area. As stated in MWD’s 2015 UWMP, the plan may be used as a source document for meeting the requirements of SB 610 and SB 221 until the next scheduled update is completed in 5 years (2020). The 2015 UWMP includes a “Justifications for Supply Projections” in Appendix A.3, that provides detailed documentation of the planning, legal, financial, and regulatory basis for including each source of supply in the plan. A copy of MWD’s 2015 UWMP can be found on the internet at the following site address: http://www.mwdh2o.com/PDF_About_Your_Water/2015_UWMP.pdf The UWMP updates for both MWD and the Water Authority included the increase in demand projections included in SANDAG’s Series 13 Update and from the projections from Otay Water District WFMP Update. Water supply agencies throughout California continue to face climate, environmental, legal, and other challenges that impact water source supply conditions, such as the court rulings regarding the Sacramento-San Joaquin Delta and the current western states drought conditions. Challenges such as these essentially always will be present. The regional water supply agencies, the Water Authority and MWD, along with Otay WD nevertheless fully intend to have sufficient, reliable supplies to serve demands. 6.1.2 MWD Capital Investment Plan MWD prepares a Capital Investment Plan as part of its annual budget approval process. The cost, purpose, justification, status, progress, etc. of MWD’s infrastructure projects to deliver existing and future supplies are documented in the Capital Investment Plan. The financing of these projects is addressed as part of the annual budget approval process. MWD’s Capital Investment Plan includes a series of projects identified from MWD studies of projected water needs, which, when considered along with operational demands on aging facilities and new water quality regulations, identify the capital projects needed to maintain infrastructure reliability and water quality standards, improve efficiency, and provide future cost savings. All projects within the Capital Investment Plan are evaluated against an objective set of criteria to ensure they are aligned with the MWD’s goals of supply reliability and quality. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 23 6.2 San Diego County Water Authority Regional Water Supplies The Water Authority has adopted plans and is taking specific actions to develop adequate water supplies to help meet existing and future water demands within the San Diego region. This section contains details on the supplies being developed by the Water Authority. A summary of recent actions pertaining to development of these supplies includes: In accordance with the Urban Water Management Planning Act, the Water Authority adopted their 2015 UWMP in June 2016. The updated Water Authority 2015 UWMP identifies a diverse mix of local and imported water supplies to meet future demands. A copy of the updated Water Authority 2015 UWMP can be found on the internet at: http://www.sdcwa.org/sites/default/files/UWMP2015.pdf As part of the October 2003 Colorado River Quantification Settlement Agreement (QSA), the Water Authority was assigned MWD’s rights to 77,700 acre feet per year of conserved water from the All-American Canal (AAC) and Coachella Canal (CC) lining projects. Deliveries of this conserved water from the CC reached the region in 2007 and deliveries from the AAC reached the region in 2010. Expected supplies from the canal lining projects are considered verifiable Water Authority supplies. Deliveries of conserved agricultural water from the Imperial Irrigation District (IID) to San Diego County have increased annually since 2003, with 70,000 acre feet per year of deliveries in Fiscal Year (FY) 2010. The quantities will increase annually to 200,000 acre feet per year by 2021, and then remain fixed for the duration of the transfer agreement. Development of seawater desalination in San Diego County assists the region in diversifying its water resources; reduces dependence on imported supplies; and provides a new drought‐proof, locally treated water supply. The Carlsbad Desalination Project is a fully operational seawater desalination plant and conveyance pipeline developed by Poseidon, a private investor–owned company that develops water and wastewater infrastructure. The Carlsbad Desalination Project, located at the Encina Power Station in Carlsbad, began commercial operation on December 23, 2015, and can provide a highly reliable local supply of up to 56,000 AF/YR for the region. Of the total Carlsbad Desalination Plant production, Vallecitos Water District has a direct connection and a contract to receive 4,083 AFY. Carlsbad MWD has agreed to a take or pay of 2,500 AFY. Through implementation of the Water Authority and member agency planned supply projects, along with reliable imported water supplies from MWD, the region anticipates having adequate supplies to meet existing and future water demands. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 24 To ensure sufficient supplies to meet projected growth in the San Diego region, the Water Authority uses the SANDAG most recent regional growth forecast in calculating regional water demands. The SANDAG regional growth forecast is based on the plans and policies of the land-use jurisdictions with San Diego County. The existing and future demands of the member agencies are included in the Water Authority’s projections. 6.2.1 Availability of Sufficient Supplies and Plans for Acquiring Additional Supplies The Water Authority currently obtains imported supplies from MWD, conserved water from the AAC and CC lining projects, an increasing amount of conserved agricultural water from IID, and desalinated seawater from the Carlsbad desalination plant. Of the twenty-seven member agencies that purchase water supplies from MWD, the Water Authority is MWD’s largest customer. Section 135 of MWD’s Act defines the preferential right to water for each of its member agencies. Until recently, the Water Authority paid about 22 percent of MWD's total revenue, but had preferential rights to only 18.53 percent of MWD's water supply. The Water Authority’s rate case litigation against MWD produced a significant increase in the Water Authority’s preferential rights to MWD water. The courts ruled that MWD unlawfully under calculated the Water Authority’s statutory right to MWD’s supply and ordered MWD to recalculate the preferential rights to include the Water Authority’s wheeling payments. After accounting for those payments, the Water Authority’s preferential right to MWD water supply increased from 18.53 percent to 24.22 percent. Under preferential rights, MWD could allocate water without regard to historic water purchases or dependence on MWD. The Water Authority and its member agencies are taking measures to reduce dependence on MWD through development of additional supplies and a water supply portfolio that would not be jeopardized by a preferential rights allocation. MWD has stated, consistent with Section 4202 of its Administrative Code that it is prepared to provide the Water Authority’s service area with adequate supplies of water to meet expanding and increasing needs in the years ahead. When and as additional water resources are required to meet increasing needs, MWD stated it will be prepared to deliver such supplies. In Section ES-5 of their 2015 UWMP, MWD states that MWD has supply capacities that would be sufficient to meet expected demands from 2020 through 2040. MWD has plans for supply implementation and continued development of a diversified resource mix including programs in the Colorado River Aqueduct, State Water Project, Central Valley Transfers, local resource projects, and in-region storage that enables the region to meet its water supply needs. The Water Authority has made large investments in MWD’s facilities and will continue to include imported supplies from MWD in the future resource mix. As discussed in the Water Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 25 Authority’s 2015 UWMP, the Water Authority and its member agencies are planning to diversify the San Diego regions supply portfolio and reduce purchases from MWD. As part of the Water Authority’s diversification efforts, the Water Authority is now taking delivery of conserved agricultural water from IID, water saved from the AAC and CC lining projects and desalinated seawater from the Carlsbad desalination plant. Table 3 summarizes the Water Authority’s supply sources with detailed information included in the sections to follow. Deliveries from MWD are also included in Table 3, which is further discussed in Section 6.1 above. The Water Authority’s member agencies provided the verifiable local supply targets for groundwater, recycled water, potable reuse and surface water, which are discussed in more detail in Section 5 of the Water Authority’s 2015 UWMP. Table 3 Projected Verifiable Water Supplies – Water Authority Service Area Normal Year (acre feet)1 Water Supply Sources 2020 2025 2030 2035 2040 Water Authority Supplies MWD Supplies 136,002 181,840 207,413 224,863 248,565 Water Authority/IID Transfer 190,000 200,000 200,000 200,000 200,000 AAC and CC Lining Projects 80,200 80,200 80,200 80,200 80,200 Regional Seawater Desalination 50,000 50,000 50,000 50,000 50,000 Member Agency Supplies Surface Water 51,580 51,480 51,380 51,280 51,180 Water Recycling 40,459 43,674 45,758 46,118 46,858 Seawater Desalination 6,000 6,000 6,000 6,000 6,000 Brackish GW Recovery 12,100 12,500 12,500 12,500 12,500 Groundwater 17,940 19,130 20,170 20,170 20,170 Potable Reuse 3,300 3,300 3,300 3,300 3,300 Total Projected Supplies 587,581 648,124 676,721 694,431 718,773 Source: Water Authority 2015 Urban Water Management Plan – Table 9-1. 1Normal water year demands based on 1960-2013 hydrology. Section 5.6.1 of the Water Authority’s 2015 UWMP also includes a discussion on the local supply target for seawater desalination. Seawater desalination supplies represent a significant local resource in the Water Authority’s service area. The Carlsbad Desalination Project (Project) is a fully-permitted seawater desalination plant and conveyance pipeline designed to provide a highly reliable local supply of up to 56,000 acre-feet (AF) per year for the region. In 2020, the Project would account for approximately 8% of the total projected regional supply and 30% of all locally generated water in San Diego County. The project became operational in late 2015 and it more than doubles the amount of local supplies developed in the region since 1991. The desalination plant itself was fully financed, built, and is being operated by Poseidon. The Water Authority purchases water Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 26 from the plant under a water purchase agreement. The new pipeline connecting the desalination plant with the Water Authority’s Second Aqueduct is owned and operated by the Water Authority, but Poseidon had the responsibility for design and construction through a separate Design-Build Agreement. The Water Authority was responsible for aqueduct improvements, including the relining and rehabilitation of Pipeline 3 to accept desalinated water under higher operating pressures, modifications to the San Marcos Vent that allows the flow of water between Pipelines 3 and 4, and improvements at the Twin Oaks Valley Water Treatment Plant necessary to integrate desalinated water into the Water Authority’s system for optimal distribution to member agencies. The Water Authority’s existing and planned supplies from the IID transfer, canal lining, and desalination projects are considered “drought-proof” supplies and should be available at the yields shown in Table 4 in normal water year supply and demand assessment. Single dry year and multiple dry year scenarios are discussed in more detail in Section 9 of the Water Authority’s 2015 UWMP. As part of preparation of a written water supply assessment and/or verification report, an agency’s shortage contingency analysis should be considered in determining sufficiency of supply. Section 11 of the Water Authority’s 2015 UWMP contains a detailed shortage contingency analysis that addresses a regional catastrophic shortage situation and drought management. The analysis demonstrates that the Water Authority and its member agencies, through the Emergency Response Plan, Emergency Storage Project, and Drought Management Plan (DMP) are taking actions to prepare for and appropriately handle an interruption of water supplies. The Water Authority’s Board of Directors approved the Drought Management Plan (DMP) in 2006. The DMP outlined a series of orderly, progressive steps for the Water Authority and its member agencies to take during shortages to minimize impacts to the region’s economy and quality of life. It also included an allocation methodology to equitably allocate water supplies to the member agencies. The DMP was first activated in 2007 in response to MWD drawing water from storage to meet demands, and deactivated in 2011 when supply conditions improved. In 2008, the Water Authority’s Board approved another drought management document, the Model Drought Response Conservation Program Ordinance. The model ordinance focuses on core water use restrictions and is intended to assist the member agencies when updating or drafting local drought response ordinances. The intent of the model ordinance is to provide regional consistency in drought response levels and messaging to the public and media. Also in 2008, the Water Authority’s Board adopted Resolution 2008-11, that established procedures to administer the supply allocation methodology contained in the DMP. In 2012, the DMP’s supply allocation methodology was updated, using lessons from the previous shortage periods, and the DMP was renamed the Water Shortage and Drought Response Plan (WSDRP). In 2014, the WSDRP was activated due to critically dry weather in California and the impact on water supply conditions. It deactivated in 2016 when supply conditions improved. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 27 In each instance when the DMP and WSDRP were activated, a smooth transition into and out of water allocations for the member agencies was possible due to the advanced planning of the Water Authority and its member agencies. Those planning efforts also resulted in an approach that allowed for regional consistency in public drought messaging. On August 24, 2017, the Water Authority’s Board approved proposed revisions of the WSDRP and renamed it the Water Shortage Contingency Plan (WSCP) to align the WSCP with the framework outlined in the April 2017 Final Report, Making Water Conservation a California Way of Life, Implementing Executive Order B-37-16 in the areas of water use efficiency and shortage response planning. The WSCP continues a proactive and comprehensive approach to shortage response planning for the region. The plan will be reviewed and potentially updated at least every five years in coordination with the preparation of the Water Authority’s Urban Water Management Plan for 2020, which will include any final requirements approved through legislation implementing the state’s framework report. The approval of the WSCP does not require the member agencies to update their planning document or conservation ordinance at this time. 6.2.1.1 Water Authority-Imperial Irrigation District Water Conservation and Transfer Agreement The QSA was signed in October 2003, and resolves long-standing disputes regarding priority and use of Colorado River water and creates a baseline for implementing water transfers. With approval of the QSA, the Water Authority and IID were able to implement their Water Conservation and Transfer Agreement. This agreement not only provides reliability for the San Diego region, but also assists California in reducing its use of Colorado River water to its legal allocation. On April 29, 1998, the Water Authority signed a historic agreement with IID for the long-term transfer of conserved Colorado River water to San Diego County. The Water Authority-IID Water Conservation and Transfer Agreement (Transfer Agreement) is the largest agriculture-to- urban water transfer in United States history. Colorado River water will be conserved by Imperial Valley farmers who voluntarily participate in the program and then transferred to the Water Authority for use in San Diego County. Implementation Status On October 10, 2003, the Water Authority and IID executed an amendment to the original 1998 Transfer Agreement. This amendment modified certain aspects of the Transfer Agreement to be consistent with the terms and conditions of the QSA and related agreements. It also modified other aspects of the agreement to lessen the environmental impacts of the transfer of conserved water. The amendment was expressly contingent on the approval and implementation of the Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 28 QSA, which was also executed on October 10, 2003. Section 6.2.1, “Colorado River,” contains details on the QSA. On November 5, 2003, IID filed a complaint in Imperial County Superior Court seeking validation of 13 contracts associated with the Transfer Agreement and the QSA. Imperial County and various private parties filed additional suits in Superior Court, alleging violations of the California Environmental Quality Act (CEQA), the California Water Code, and other laws related to the approval of the QSA, the water transfer, and related agreements. The lawsuits were coordinated for trial. The IID, Coachella Valley Water District, MWD, the Water Authority, and state are defending these suits and coordinating to seek validation of the contracts. In January 2010, a California Superior Court judge ruled that the QSA and 11 related agreements were invalid, because one of the agreements created an open-ended financial obligation for the state, in violation of California’s constitution. The QSA parties appealed this decision and on July 2013, a Sacramento Superior Court judge entered a final judgment validating the QSA and rejecting all of the remaining legal challenges. The judge affirmed all of the contested actions, including the adequacy of the environmental documents prepared by the IID. In May 2015, the state Court of Appeal issued a ruling that dismissed all remaining appeals. Expected Supply Deliveries into San Diego County from the transfer began in 2003 with an initial transfer of 10,000 acre feet per year. The Water Authority received increasing amounts of transfer water each year, according to a water delivery schedule contained in the transfer agreement The quantities will increase annually to 200,000 acre feet per year by 2021 then remain fixed for the duration of the transfer agreement. The initial term of the Transfer Agreement is 45 years, with a provision that either agency may extend the agreement for an additional 30-year term. During dry years, when water availability is low, the conserved water will be transferred under IID’s Colorado River rights, which are among the most senior in the Lower Colorado River Basin. Without the protection of these rights, the Water Authority could suffer delivery cutbacks. In recognition for the value of such reliability, the 1998 contract required the Water Authority to pay a premium on transfer water under defined regional shortage circumstances. The shortage premium period duration is the period of consecutive days during which any of the following exist: 1) a Water Authority shortage; 2) a shortage condition for the Lower Colorado River as declared by the Secretary; and 3) a Critical Year. Under terms of the October 2003 amendment, the shortage premium will not be included in the cost formula until Agreement Year 16. Transportation The Water Authority entered into a water exchange agreement with MWD on October 10, 2003, to transport the Water Authority–IID transfer water from the Colorado River to San Diego County. Under the exchange agreement, MWD takes delivery of the transfer water through its Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 29 Colorado River Aqueduct. In exchange, MWD delivers to the Water Authority a like quantity and quality of water. The Water Authority pays MWD’s applicable wheeling rate for each acre- feet of exchange water delivered. Under the terms of the water exchange agreement, MWD will make delivery of the transfer water for 35 years, unless the Water Authority and MWD elect to extend the agreement another 10 years for a total of 45 years. Cost/Financing The costs associated with the transfer are financed through the Water Authority’s rates and charges. In the agreement between the Water Authority and IID, the price for the transfer water started at $258 per acre-feet and increased by a set amount for the first seven years. In December 2009, the Water Authority and IID executed a fifth amendment to the water transfer agreement that sets the price per acre-feet for transfer water for calendar years 2010 through 2015, beginning at $405 per acre-feet in 2010 and increasing to $624 per acre-feet in 2015. For calendar years 2016 through 2034, the unit price will be adjusted using an agreed-upon index. The amendment also required the Water Authority to pay IID $6 million at the end of calendar year 2009 and another $50 million on or before October 1, 2010, provided that a transfer stoppage is not in effect as a result of a court order in the QSA coordinated cases. Beginning in 2035, either the Water Authority or IID can, if certain criteria are met, elect a market rate price through a formula described in the water transfer agreement. The October 2003 exchange agreement between MWD and the Water Authority set the initial cost to transport the conserved water at $253 per acre-feet. Thereafter, the price is set to be equal to the charge or charges set by MWD’s Board of Directors pursuant to applicable laws and regulation, and generally applicable to the conveyance of water by MWD on behalf of its member agencies. The Water Authority is providing $10 million to help offset potential socioeconomic impacts associated with temporary land fallowing. IID will credit the Water Authority for these funds during years 16 through 45. In 2007, the Water Authority prepaid IID an additional $10 million for future deliveries of water. IID will credit the Water Authority for this up-front payment during years 16 through 30. As part of implementation of the QSA and water transfer, the Water Authority also entered into an environmental cost sharing agreement. Under this agreement the Water Authority is contributing a total of $64 million to fund environmental mitigation projects and the Salton Sea Restoration Fund. Written Contracts or Other Proof The supply and costs associated with the transfer are based primarily on the following documents: Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 30 Agreement for Transfer of Conserved Water by and between IID and the Water Authority (April 29, 1998). This Agreement provides for a market-based transaction in which the Water Authority would pay IID a unit price for agricultural water conserved by IID and transferred to the Water Authority. Revised Fourth Amendment to Agreement between IID and the Water Authority for Transfer of Conserved Water (October 10, 2003). Consistent with the executed Quantification Settlement Agreement (QSA) and related agreements, the amendments restructure the agreement and modify it to minimize the environmental impacts of the transfer of conserved water to the Water Authority. Amended and Restated Agreement between MWD and Water Authority for the Exchange of Water (October 10, 2003). This agreement was executed pursuant to the QSA and provides for delivery of the transfer water to the Water Authority. Environmental Cost Sharing, Funding, and Habitat Conservation Plan Development Agreement among IID, Coachella Valley Water District (CVWD), and Water Authority (October 10, 2003). This Agreement provides for the specified allocation of QSA-related environmental review, mitigation, and litigation costs for the term of the QSA, and for development of a Habitat Conservation Plan. Quantification Settlement Agreement Joint Powers Authority Creation and Funding Agreement (October 10, 2003). The purpose of this agreement is to create and fund the QSA Joint Powers Authority and to establish the limits of the funding obligation of CVWD, IID, and Water Authority for environmental mitigation and Salton Sea restoration pursuant to SB 654 (Machado). Fifth Amendment to Agreement Between Imperial Irrigation District and San Diego County Water Authority for Transfer of Conserved Water (December 21, 2009). This agreement implements a settlement between the Water Authority and IID regarding the base contract price of transferred water. Federal, State, and Local Permits/Approvals Federal Endangered Species Act Permit. The U.S. Fish and Wildlife Service (USFWS) issued a Biological Opinion on January 12, 2001, that provides incidental take authorization and certain measures required to offset species impacts on the Colorado River regarding such actions. State Water Resources Control Board (SWRCB) Petition. SWRCB adopted Water Rights Order 2002-0016 concerning IID and Water Authority’s amended joint petition for approval of a long- term transfer of conserved water from IID to the Water Authority and to change the point of diversion, place of use, and purpose of use under Permit 7643. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 31 Environmental Impact Report (EIR) for Conservation and Transfer Agreement. As lead agency, IID certified the Final EIR for the Conservation and Transfer Agreement on June 28, 2002. U. S. Fish and Wildlife Service Draft Biological Opinion and Incidental Take Statement on the Bureau of Reclamation's Voluntary Fish and Wildlife Conservation Measures and Associated Conservation Agreements with the California Water Agencies (12/18/02). The U. S. Fish and Wildlife Service issued the biological opinion/incidental take statement for water transfer activities involving the Bureau of Reclamation and associated with IID/other California water agencies' actions on listed species in the Imperial Valley and Salton Sea (per the June 28, 2002 EIR). Addendum to EIR for Conservation and Transfer Agreement. IID as lead agency and Water Authority as responsible agency approved addendum to EIR in October 2003. Environmental Impact Statement (EIS) for Conservation and Transfer Agreement. Bureau of Reclamation issued a Record of Decision on the EIS in October 2003. CA Department of Fish and Game California Endangered Species Act Incidental Take Permit #2081-2003-024-006). The California Department of Fish and Game issued this permit (10/22/04) for potential take effects on state-listed/fully protected species associated with IID/other California water agencies' actions on listed species in the Imperial Valley and Salton Sea (per the June 28, 2002 EIR). California Endangered Species Act (CESA) Permit. A CESA permit was issued by California Department of Fish and Game (CDFG) on April 4, 2005, providing incidental take authorization for potential species impacts on the Colorado River. 6.2.1.2 All-American Canal and Coachella Canal Lining Projects As part of the QSA and related contracts, the Water Authority was assigned MWD’s rights to 77,700 acre-feet per year of conserved water from projects that will line the All-American Canal (AAC) and Coachella Canal (CC). The projects will reduce the loss of water that currently occurs through seepage, and the conserved water will be delivered to the Water Authority. This conserved water will provide the San Diego region with an additional 8.5 million acre-feet over the 110-year life of the agreement. Implementation Status The CC lining project began in November 2004 and was completed in 2006. Deliveries of conserved water to the Water Authority began in 2007. The project constructed a 37-mile parallel canal adjacent to the CC. The AAC lining project was begun in 2005 and was completed in 2010. The lining project constructed a concrete-lined canal parallel to 24 miles of the existing AAC from Pilot Knob to Drop 3. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 32 In July 2005, a lawsuit (CDEM v United States, Case No. CV-S-05-0870-KJD-PAL) was filed in the U. S. District Court for the District of Nevada on behalf of U.S. and Mexican groups challenging the lining of the AAC. The lawsuit, which names the Secretary of the Interior as a defendant, claims that seepage water from the canal belongs to water users in Mexico. California water agencies note that the seepage water is actually part of California's Colorado River allocation and not part of Mexico's allocation. The plaintiffs also allege a failure by the United States to comply with environmental laws. Federal officials have stated that they intend to vigorously defend the case. Expected Supply The AAC lining project makes 67,700 acre-feet of Colorado River water per year available for allocation to the Water Authority and San Luis Rey Indian water rights settlement parties. The CC lining project makes 26,000 acre-feet of Colorado River water each year available for allocation. The 2003 Allocation Agreement provides for 16,000 acre-feet per year of conserved canal lining water to be allocated to the San Luis Rey Indian Water Rights Settlement Parties. The remaining amount, 77,700 acre-feet per year, is to be available to the Water Authority, with up to an additional 4,850 acre-feet per year available to the Water Authority depending on environmental requirements from the CC lining project. For planning purposes, the Water Authority assumes that 2,500 acre-feet of the 4,850 acre-feet will be available each year for delivery, for a total of 80,200 acre-feet per year of that supply. According to the Allocation Agreement, IID has call rights to a portion (5,000 acre-feet per year) of the conserved water upon termination of the QSA for the remainder of the 110 years of the Allocation Agreement and upon satisfying certain conditions. The term of the QSA is for up to 75 years. Transportation The October 2003 Exchange Agreement between the Water Authority and MWD provides for the delivery of the conserved water from the canal lining projects. The Water Authority pays MWD’s applicable wheeling rate for each acre-foot of exchange water delivered. In the Agreement, MWD will deliver the canal lining water for the term of the Allocation Agreement (110 years). Cost/Financing Under California Water Code Section 12560 et seq., the Water Authority received $200 million in state funds for construction of the canal lining projects. In addition, $20 million was made available from Proposition 50 and $36 million from Proposition 84. The Water Authority was responsible for additional expenses above the funds provided by the state. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 33 The rate to be paid to transport the canal lining water will be equal to the charge or charges set by MWD’s Board of Directors pursuant to applicable law and regulation and generally applicable to the conveyance of water by MWD on behalf of its member agencies. In accordance with the Allocation Agreement, the Water Authority is responsible for a portion of the net additional Operation, Maintenance, and Repair (OM&R) costs for the lined canals. Any costs associated with the lining projects as proposed are to be financed through the Water Authority’s rates and charges. Written Contracts or Other Proof The expected supply and costs associated with the lining projects are based primarily on the following documents: U.S. Public Law 100-675 (1988). Authorized the Department of the Interior to reduce seepage from the existing earthen AAC and CC. The law provides that conserved water will be made available to specified California contracting water agencies according to established priorities. California Department of Water Resources - MWD Funding Agreement (2001). Reimburse MWD for project work necessary to construct the lining of the CC in an amount not to exceed $74 million. Modified by First Amendment (2004) to replace MWD with the Authority. Modified by Second Amendment (2004) to increase funding amount to $83.65 million, with addition of funds from Proposition 50. California Department of Water Resources - IID Funding Agreement (2001). Reimburse IID for project work necessary to construct a lined AAC in an amount not to exceed $126 million. MWD - CVWD Assignment and Delegation of Design Obligations Agreement (2002). Assigns design of the CC lining project to CVWD. MWD - CVWD Financial Arrangements Agreement for Design Obligations (2002). Obligates MWD to advance funds to CVWD to cover costs for CC lining project design and CVWD to invoice MWD to permit the Department of Water Resources to be billed for work completed. Allocation Agreement among the United States of America, The MWD Water District of Southern California, Coachella Valley Water District, Imperial Irrigation District, San Diego County Water Authority, the La Jolla, Pala, Pauma, Rincon, and San Pasqual Bands of Mission Indians, the San Luis Rey River Indian Water Authority, the City of Escondido, and Vista Irrigation District (October 10, 2003). This agreement includes assignment of MWD’s rights and interest in delivery of 77,700 acre-feet of Colorado River water previously intended to be delivered to MWD to the Water Authority. Allocates water from the AAC and CC lining projects for at least 110 years to the Water Authority, the San Luis Rey Indian Water Rights Settlement Parties, and IID, if it exercises its call rights. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 34 Amended and Restated Agreement between MWD and Water Authority for the Exchange of Water (October 10, 2003). This agreement was executed pursuant to the QSA and provides for delivery of the conserved canal lining water to the Water Authority. Agreement between MWD and Water Authority regarding Assignment of Agreements related to the AAC and CC Lining Projects. This agreement was executed in April 2004 and assigns MWD's rights to the Water Authority for agreements that had been executed to facilitate funding and construction of the AAC and CC lining projects: Assignment and Delegation of Construction Obligations for the Coachella Canal Lining Project under the Department of Water Resources Funding Agreement No. 4600001474 from the San Diego County Water Authority to the Coachella Valley Water District, dated September 8, 2004. Agreement Regarding the Financial Arrangements between the San Diego County Water Authority and Coachella Valley Water District for the Construction Obligations for the Coachella Canal Lining Project, dated September 8, 2004. Agreement No. 04-XX-30-W0429 Among the United States Bureau of Reclamation, the Coachella Valley Water District, and the San Diego County Water Authority for the Construction of the Coachella Canal Lining Project Pursuant to Title II of Public Law 100-675, dated October 19, 2004. California Water Code Section 12560 et seq. This Water Code Section provides for $200 million to be appropriated to the Department of Water Resources to help fund the canal lining projects in furtherance of implementing California’s Colorado River Water Use Plan. California Water Code Section 79567. This Water Code Section identifies $20 million as available for appropriation by the California Legislature from the Water Security, Clean Drinking Water, Coastal, and Beach Protection Fund of 2002 (Proposition 50) to DWR for grants for canal lining and related projects necessary to reduce Colorado River water use. According to the Allocation Agreement, it is the intention of the agencies that those funds will be available for use by the Water Authority, IID, or CVWD for the AAC and CC lining projects. California Public Resources Code Section 75050(b) (1). This section identifies up to $36 million as available for water conservation projects that implement the Allocation Agreement as defined in the Quantification Settlement Agreement. Federal, State, and Local Permits/Approvals AAC Lining Project Final EIS/EIR (March 1994). A final EIR/EIS analyzing the potential impacts of lining the AAC was completed by the Bureau of Reclamation (Reclamation) in March 1994. A Record of Decision was signed by Reclamation in July 1994, implementing the preferred alternative for lining the AAC. A re-examination and analysis of these environmental compliance documents by Reclamation in November 1999 determined that these documents continued to meet the requirements of the NEPA and the CEQA and would be valid in the future. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 35 CC Lining Project Final EIS/EIR (April 2001). The final EIR/EIS for the CC lining project was completed in 2001. Reclamation signed the Record of Decision in April 2002. An amended Record of Decision has also been signed to take into account revisions to the project description. Mitigation, Monitoring, and Reporting Program for Coachella Canal Lining Project, SCH #1990020408; prepared by Coachella Valley Water District, May 16, 2001. Environmental Commitment Plan for the Coachella Canal Lining Project, approved by the US Bureau of Reclamation (Boulder City, NV) on March 4, 2003. Environmental Commitment Plan and Addendum to the All-American Canal Lining Project EIS/EIR California State Clearinghouse Number SCH 90010472 (June 2004, prepared by IID). Addendum to Final EIS/EIR and Amendment to Environmental Commitment Plan for the All-American Canal Lining Project (approved June 27, 2006, by IID Board of Directors). 6.2.1.3 Carlsbad Seawater Desalination Project Development of seawater desalination in San Diego County has assisted the region in diversifying its water resources, reduce dependence on imported supplies, and provide a new drought-proof, locally treated water supply. The Carlsbad Desalination Project is a fully- permitted seawater desalination plant and conveyance pipeline developed by Poseidon, a private investor–owned company that develops water and wastewater infrastructure. The project, located at the Encina Power Station in Carlsbad, has been in development since 1998 and was incorporated into the Water Authority’s 2003 Water Facilities Master Plan and the 2015 UWMP. The Carlsbad Desalination Project has obtained all required permits and environmental clearances and starting in late 2015 provides a highly reliable local supply of 48,000 to 56,000 acre-feet per year for the region. Implementation Status The Project has obtained all required permits and environmental clearances, including the following: National Pollutant Discharge Elimination System (NPDES) Discharge Permit (Regional Water Quality Control Board) Conditional Drinking Water Permit (California Department of Health Services) State Lands Commission Lease (State Lands Commission) Coastal Development Permit (California Coastal Commission) Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 36 IDE Technologies, a worldwide leader in the design, construction, and operation of desalination plants, is the desalination process contractor for the Project. On July 22, 2010, the Board approved a Term Sheet between the Water Authority and Poseidon Resources that outlined the key terms and conditions that would be detailed and incorporated in a comprehensive Water Purchase Agreement (WPA). Beginning in October 2011 and under the direction of the Board’s Carlsbad Desalination Project Advisory Group, staff began developing and negotiating with Poseidon a WPA consistent with the July 22, 2010 Board approved Term Sheet. The July 2010 Term Sheet also identified specific conditions precedent to Board consideration of the WPA. On November 29, 2012, the Water Authority Board adopted a resolution approving the Design-Build Agreement between the Water Authority and Poseidon. The Design-Build Agreement established the commercial and technical terms for implementation of the desalination product pipeline improvements. These improvements consisted of an approximate 10-mile long, 54-inch diameter conveyance pipeline connecting the Desalination Plant to the Water Authority’s Second Aqueduct. The pipeline was generally be constructed within improved streets in commercial and industrial areas in the cities of Carlsbad, Vista, and San Marcos. The Water Authority owns the Project Water Pipeline Improvements and has assumed operational control of all pipeline improvements. This system was placed into service in late 2015. Expected Supply The Project provides a highly reliable local supply of 48,000 to 56,000 acre-feet per year of supply for the region, available in both normal and dry hydrologic conditions. In 2020, the Project would account for approximately 10% of the total projected regional supply and 30% of all locally generated water in San Diego County. The project more than doubles the amount of local supplies developed in the region since 1991. Transportation On November 29, 2012, the Water Authority Board adopted a resolution approving the Design-Build Agreement between the Water Authority and Poseidon. The Design-Build Agreement establishes the commercial and technical terms for implementation of the desalination product pipeline improvements. These improvements consisted of an approximate 10-mile long, 54-inch diameter conveyance pipeline connecting the Desalination Plant to the Water Authority’s Second Aqueduct. The pipeline was generally constructed within improved streets in commercial and industrial areas in the cities of Carlsbad, Vista, and San Marcos. The Water Authority owns the Project Water Pipeline Improvements and has assumed operational control of all pipeline improvements. The Water Authority was responsible for aqueduct improvements, including the relining and rehabilitation of Pipeline 3 to accept desalinated water under higher operating pressures, Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 37 modifications to the San Marcos Vent that allows the flow of water between Pipelines 3 and 4, and improvements at the Twin Oaks Valley Water Treatment Plant necessary to integrate desalinated water into the Water Authority’s system for optimal distribution to member agencies. Cost/Financing The plant and the offsite pipeline is being financed through tax exempt government bonds issued for the Water Authority by the California Pollution Control Financing Authority (CPCFA). On November 29, 2012, the Water Authority Board adopted a resolution approving agreements to accomplish tax exempt project financing through the CPCFA. Based on current electricity cost estimates, the Water Purchase Agreement sets the price of the water from the Carlsbad Desalination Project at $2,131 to $2,367 per acre foot in 2016. The Water Authority’s water purchase costs would be financed through Water Authority rates and charges. Poseidon is financing the capital cost of the Project with a combination of private equity and tax-exempt Private Activity Bonds. Written Contracts or Other Proof The expected supply and costs associated with the Carlsbad Desalination Project are based primarily on the following documents: Development Agreement between City of Carlsbad and Poseidon (October 2009). A Development Agreement between Carlsbad and Poseidon was executed on October 5, 2009 Agreement of Term Sheet between the Water Authority and Poseidon Resources (July 2010). The Water Authority approved the Term Sheet at its July 2010 Board Meeting. The Term Sheet outlines the terms and conditions of a future Water Purchase Agreement with Poseidon and allocates the resources to prepare the draft Water Purchase Agreement. Federal, State, and Local Permits/Approvals Carlsbad Desalination Project Final EIR The City of Carlsbad, acting as lead agency for Carlsbad Seawater Desalination Plant and appurtenant facilities proposed by Poseidon (the “Project”) prepared an Environmental Impact Report for the Project in compliance with the California Environmental Quality Act (“CEQA”), which the City of Carlsbad certified on June 13, 2006. http://www.sdcwa.org/rwfmp-peir Regional Water Facilities Master Plan EIR On November 20, 2003, the Water Authority Board of Directors adopted Resolution No. 2003-34 certifying the Final Program Environmental Impact Report (State Clearinghouse No. 2003021052) for the Water Authority’s Regional Water Facilities Master Plan Project (the “Master Plan EIR”), which evaluated, among other things, potential growth inducing impacts Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 38 associated with new water supplies to the region including, but not limited to, up to 150 million gallons per day (“MGD”) of new supplies from seawater desalination. This certification included a 50 MGD plant located in the City of Carlsbad. The environmental documents and permits are found at the following links: http://www.sdcwa.org/rwfmp-peir Sub regional Natural Community Conservation Plan/Habitat Conservation Plan (NCCP/HCP) On December 8, 2010, the Board adopted Resolution No. 2010-18 certifying a Final environmental Impact Report/Environmental Impact Statement for the San Diego County Water Authority Subregional Natural Community Conservation Plan/Habitat Conservation Plan (State Clearinghouse No. 2003121012) (the “Habitat Conservation Plan EIR/EIS”), which Plan was implemented on December 28, 201. The environmental documents and permits are found at the following links: http://www.sdcwa.org/nccp-hcp Twin Oaks Valley Water Treatment Plant EIR On September 8, 2005, the Board adopted Resolution No. 2005-31 certifying a Final Environmental Impact Report for the Twin Oaks Valley Water Treatment Plant Project (State Clearinghouse No. 20040071034) (the “Twin Oaks EIR”), which project was constructed as a 100 MGD submerged membrane water treatment facility, including treated water holding tanks and distribution pipelines and other facilities, consistent with the conditions and mitigation measures included in the Twin Oaks EIR. http://www.sdcwa.org/twin-oaks-valley-treatment-plant-final-eir Drinking Water Permit (October 2006). The California Department of Health Services approved the Conditional Drinking Water Permit on October 19, 2006. 6.2.2 Water Authority Capital Improvement Program and Financial Information The Water Authority’s Capital Improvement Program (CIP) can trace its beginnings to a report approved by the Board in 1989 entitled, The Water Distribution Plan, and a Capital Improvement Program through the Year 2010. The Water Distribution Plan included ten projects designed to increase the capacity of the aqueduct system, increase the yield from existing water treatment plants, obtain additional supplies from MWD, and increase the reliability and flexibility of the aqueduct system. Since that time the Water Authority has made numerous additions to the list of projects included in its CIP as the region’s infrastructure needs and water supply outlook have changed. The current list of projects included in the CIP is based on the results of planning studies, including the 2015 UWMP and the 2013 Regional Water Facilities Master Plan. These CIP projects, which are most recently described in the Water Authority’s Adopted Multi-Year Budget Fiscal Years 2018 and 2019, include projects valued at $118 million. These CIP Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 39 projects are designed to meet projected water supply and delivery needs of the member agencies. The projects include a mix of new facilities that will add capacity to existing conveyance, storage, and treatment facilities, as well as repair and replace aging infrastructure: Asset Management – The primary components of the asset management projects include relining and replacing existing pipelines and updating and replacing metering facilities. New Facilities – These projects will expand the capacity of the aqueduct system and evaluate new supply opportunities. Emergency Storage Project – Projects remaining to be completed under the ongoing ESP include the San Vicente Dam Raise, the Lake Hodges projects, and a new pump station to extend ESP supplies to the northern reaches of the Water Authority service area. Other Projects – This category includes out-of-region groundwater storage, increased local water treatment plant capacity, and projects that mitigate environmental impacts of the CIP. The Water Authority Board of Directors is provided a semi-annual and annual report on the status of development of the CIP projects. As described in the Water Authority’s biennial budget, a combination of long and short term debt and cash (pay-as-you-go) will provide funding for capital improvements. Additional information is included in the Water Authority’s biennial budget, which also contains selected financial information and summarizes the Water Authority’s investment policy. 6.3 Otay Water District The Otay Water District WFMP Update and the 2015 UWMP contain comparisons of projected supply and demands through the year 2040. Projected potable water resources to meet planned demands as documented were planned to be supplied entirely with imported water received from the Water Authority. Recycled water resources to meet projected demands are planned to be supplied from local wastewater treatment plants. The Otay WD currently has no local supply of raw water, potable water, or groundwater resources. The development and/or acquisition of potential groundwater, recycled water market expansion, and seawater desalination supplies by the Otay WD have evolved and are planned to occur in response to the regional water supply issues. These water supply projects are in addition to those identified as sustainable supplies in the current Water Authority and MWD UWMP, IRP, Master Plans, and other planning documents. These new additional water supply projects are not currently developed and are in various stages of the planning process. These local and regional water supply projects will allow for less reliance upon imported water and are considered a new water supply resource for the Otay WD. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 40 The supply forecasts contained within this WSA Report do consider development and/or acquisition of potential groundwater, recycled water market expansion, and seawater desalination supplies by the Otay WD. 6.3.1 Availability of Sufficient Supplies and Plans for Acquiring Additional Supplies The availability of sufficient potable water supplies and plans for acquiring additional potable water supplies to serve existing and future demands of the Otay WD is founded upon the preceding discussions regarding MWD’s and the Water Authority’s water supply resources and water supplies to be acquired by the Otay WD. Historic imported water deliveries from the Water Authority to Otay WD and recycled water deliveries from the Otay WD Ralph W. Chapman Water Reclamation Facility (RWCWRF) are shown in Table 4. Since the year 2000 through mid-May 2007, recycled water demand has exceeded the recycled water supply capability typically in the summer months. The RWCWRF is limited to a maximum production of about 1,300 acre-feet per year. The recycled water supply shortfall had been met by supplementing with potable water into the recycled water storage system as needed by adding potable water supplied by the Water Authority. On May 18, 2007 an additional source of recycled water supply from the City of San Diego’s South Bay Water Reclamation Plant (SBWRP) became available. The supply of recycled water from the SBWRP is a result of completing construction and the operation of the transmission, storage, and pump station systems necessary to link the SBWRP recycled water supply source to the existing Otay WD recycled water system. Table 4 Otay Water District Historic Imported and Local Water Supplies Calendar Year Imported Water (acre-feet) Recycled Water (acre-feet) Total (acre-feet) 1980 12,558 0 12,558 1985 14,529 0 14,529 1990 23,200 0 23,200 1995 20,922 614 21,536 2000 29,901 948 30,849 2005 37,678 1,227 38,905 2010 29,270 4,090 33,270 2015 26,494 3,777 30,271 Source: Otay Water District operational records. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 41 6.3.1.1 Imported and Regional Supplies The availability of sufficient imported and regional potable water supplies to serve existing and planned uses within Otay WD is demonstrated in the above discussion on MWD and the Water Authority’s water supply reliability. The County Water Authority Act, Section 5 subdivision 11, states that the Water Authority “as far as practicable, shall provide each of its member agencies with adequate supplies of water to meet their expanding and increasing needs.” The Water Authority provides between 75 to 95 percent of the total supplies used by its 24 member agencies, depending on local weather and supply conditions. Potable Water System Facilities The Otay WD continues to pursue diversification of its water supply resources to increase reliability and flexibility. The Otay WD also continues to plan, design, and construct potable water system facilities to obtain these supplies and to distribute potable water to meet customer demands. The Otay WD has successfully negotiated two water supply diversification agreements that enhance reliability and flexibility, which are briefly described as follows. The Otay WD entered into an agreement with the City of San Diego, known as the Otay Water Treatment Plant (WTP) Agreement. The Otay WTP Agreement provides for raw water purchase from the Water Authority and treatment by the City of San Diego at their Otay WTP for delivery to Otay WD. The supply system link to implement the Otay WTP Agreement to access the regions raw water supply system and the local water treatment plant became fully operational in August 2005. This supply link consists of the typical storage, transmission, pumping, flow measurement, and appurtenances to receive and transport the treated water to the Otay WD system. The City of San Diego obligation to supply 10 mgd of treated water under the Otay WTP Agreement is contingent upon there being available 10 mgd of surplus treatment capacity in the Otay WTP until such time as Otay WD pays the City of San Diego to expand the Otay WTP to meet the Otay WD future needs. In the event that the City of San Diego’s surplus is projected to be less than 10 mgd the City of San Diego will consider and not unreasonably refuse the expansion of the Otay WTP to meet the Otay WD future needs. The Otay WTP existing rated capacity is 40 mgd with an actual effective capacity of approximately 34 mgd. The City of San Diego’s typical demand for treated water from the Otay WTP is approximately 20 mgd. It is at the City of San Diego’s discretion to utilize either imported raw water delivered by the Water Authority Pipeline No. 3 or local water stored in Lower Otay Reservoir for treatment to supply the Otay WD demand. The Otay WD entered into an agreement with the Water Authority, known as the East County Regional Treated Water Improvement Program (ECRTWIP Agreement). The ECRTWIP Agreement provides for transmission of raw water to the Helix WD R. M. Levy WTP for treatment and delivery to Otay WD. The supply system link to implement the ECRTWIP Agreement is complete allowing access to the regions raw water supply Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 42 system and the local water treatment plant. This supply link consists of the typical transmission, pumping, storage, flow control, and appurtenances to receive and transport the potable water from the R. M. Levy WTP to Otay WD. The Otay WD is required to take a minimum of 10,000 acre-feet per year of treated water from the R.M. Levy WTP supplied from the regions raw water system. Cost and Financing The capital improvement costs associated with water supply and delivery are financed through the Otay WD water meter capacity fee and user rate structures. The Otay WD potable water sales revenue are used to pay for the wholesale cost of the treated water supply and the operating and maintenance expenses of the potable water system facilities. Written Agreements, Contracts, or Other Proof The supply and cost associated with deliveries of treated water from the Otay WTP and the R.M. Levy WTP is based on the following documents. Agreement for the Purchase of Treated Water from the Otay Water Treatment Plant between the City of San Diego and the Otay Water District. The Otay WD entered into an agreement dated January 11, 1999 with the City of San Diego that provides for 10 mgd of surplus treated water to the Otay WD from the existing Otay WTP capacity. The agreement allows for the purchase of treated water on an as available basis from the Otay WTP. The Otay WD pays the Water Authority at the prevailing raw water rate for raw water and pays the City of San Diego at a rate equal to the actual cost of treatment to potable water standards. Agreement between the San Diego County Water Authority and Otay Water District Regarding Implementation of the East County Regional Treated Water Improvement Program. The ECRTWIP Agreement requires the purchase of at least 10,000 acre-feet per year of potable water from the Helix WD R.M. Levy WTP at the prevailing Water Authority treated water rate. The ECRTWIP Agreement is dated April 27, 2006. Agreement between the San Diego County Water Authority and Otay Water District for Design, Construction, Operation, and Maintenance of the Otay 14 Flow Control Facility Modification. The Otay WD entered into the Otay 14 Flow Control Facility Modification Agreement dated January 24, 2007 with the Water Authority to increase the physical capacity of the Otay 14 Flow Control Facility. The Water Authority and Otay WD shared the capital cost to expand its capacity from 8 mgd to 16 mgd. Federal, State, and Local Permits/Approvals The Otay WD acquired all the permits for the construction of the pipeline and pump station associated with the Otay WTP supply source and for the 640-1 and 640-2 water storage Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 43 reservoirs project associated with the ECRTWIP Agreement through the typical planning, environmental approval, design, and construction processes. The transmission main project constructed about 26,000 feet of a 36-inch diameter steel pipeline from the Otay 14 Flow Control Facility to the 640-1 and 640-2 Reservoirs project. The Otay 14 Flow Control Facility modification increased the capacity of the existing systems from 8 mgd to 16 mgd. CEQA documentation is complete for both projects. Construction of both of these projects was completed October 2010. The City of San Diego and the Helix Water District are required to meet all applicable federal, state, and local health and water quality requirements for the potable water produced at the Otay WTP and the R.M. Levy WTP respectively. 6.3.1.2 Recycled Water Supplies Wastewater collection, treatment, and disposal services provided by the Otay WD is limited to a relatively small area within what is known as the Jamacha Basin, located within the Middle Sweetwater River Basin watershed upstream of the Sweetwater Reservoir and downstream of Loveland Reservoir. Water recycling is defined as the treatment and disinfection of municipal wastewater to provide a water supply suitable for non-potable reuse. The Otay WD owns and operates the Ralph W. Chapman Water Reclamation Facility, which produces recycled water treated to a tertiary level for landscape irrigation purposes. The recycled water market area of the Otay WD is located primarily within the eastern area of the City of Chula Vista. The Otay WD distributes recycled water to a substantial market area that includes but is not limited to the U.S. Olympic Training Center, the Eastlake Golf Course, Otay Ranch, and other development projects. The Otay WD projects that annual average demands for recycled water will increase to 6,500 acre-feet per year by 2050. About 1,300 acre-feet per year of supply is generated by the RWCWRF, with the remainder planned to be supplied to Otay WD by the City of San Diego’s SBWRP. North District Recycled Water Concept The Otay WD is a recognized leader in the use of recycled water for irrigation and other commercial uses. The Otay WD continues to investigate all viable opportunities to expand the successful recycled water program into areas that are not currently served. One of these areas is in the portion of the service area designated as the North District, located within the Middle Sweetwater River Basin watershed upstream of the Sweetwater River. The close proximity of the recycled water markets in the North District to the Otay WD source of recycled water, the RWCWRF, means that the distribution system to serve this area could be constructed relatively cost effectively. This makes the North District a logical location for the expansion of the Otay WD recycled water system and market area. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 44 The purpose of the North District Recycled Water System Development Project, Phase I Concept Study, was to identify the feasibility of using recycled water in the North District and to investigate and assess any limitations or constraints to its use. The Phase I study components of the North District Recycled Water Concept encompassed the preparation of six technical memorandums including the project definition, a discussion of the regulatory process, a discussion of the protection of the watershed that would be affected by recycled water use in the North District, identification of stakeholders, public outreach, and an implementation plan. Several opportunities that could be realized with the implementation of the use of recycled water in the North District were identified. These include a reduction of demand on the potable water system and maximizing recycled water resources which in turn minimizes treated wastewater discharges to the local ocean outfall. Other opportunities are a possible partnership with Sweetwater Authority to monitor any benefits and impacts of increased recycled water use in the watershed and stakeholder outreach to resolve any water quality concerns and to retain consumer confidence. Also identified were two major constraints associated with the North District Recycled Water System Development Project. One constraint is the water quality objectives for the Middle Sweetwater Basin that will affect the effluent limitations for the recycled water produced at the RWCWRF. The effluent limit of concern was total nitrogen. The RWCWRF underwent an upgrade in 2012 to enhance nitrogen removal through the treatment process. The other major constraint is the cost of the infrastructure needed to convey and store recycled water in the North District. These costs are estimated to be in the range of $14 to $15 million dollars. There are two additional phases proposed for the North District Recycled Water System Development Project. Phase II would include further investigation of the issues identified in Phase I as requiring further study. These include stakeholder outreach, regulatory issues, and facility planning. The third phase of the effort would include the facility planning, permitting, environmental compliance, design, and construction of the improvements necessary for delivery of recycled water to the North District markets. The estimated amount of imported water saved at full implementation of the North District Recycled Water System Development Project is 1,200 acre-feet per year. This saved imported water could then be used to offset new potable water demands. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 45 Recycled Water System Facilities The Otay WD has constructed recycled water storage, pumping, transmission, and distribution facilities and will continue to construct these facilities to meet projected recycled water market demands. The Supply Link project consisting of a transmission main, storage reservoir, and a pump station to receive and transport the recycled water from the City of San Diego’s SBWRP was completed in 2007 and recycled water deliveries began on May 18, 2007. Cost and Financing The capital improvement costs associated with the recycled water supply and distribution systems are financed through the Otay WD water meter capacity fee and user rate structures. The Otay WD recycled water sales revenue, along with MWD and the Water Authority’s recycled water sales incentive programs are used to help offset the costs for the wholesale purchase and production of the recycled water supply, the operating and maintenance expenses, and the capital costs of the recycled water system facilities. Written Agreements, Contracts, or Other Proof The supply and cost associated with deliveries of recycled water from the SBWRP is based on the following document. Agreement between the Otay Water District and the City of San Diego for Purchase of Reclaimed Water from the South Bay Water Reclamation Plant. The agreement provides for the purchase of at least 6,721 acre-feet per year of recycled water from the SBWRP at an initial price of $350 per acre-foot. The Otay Water District Board of Directors approved the final agreement on June 4, 2003 and the San Diego City Council approved the final agreement on October 20, 2003. Effective January 1, 2016, the City of San Diego raised the cost of recycled water 116% to $754 per acre-foot. Federal, State, and Local Permits/Approvals The Otay WD has in place an agreement with MWD for their recycled water sales incentive program for supplies from the RWCWRF and the SBWRP. Also, the Otay WD has in place an agreement with the Water Authority for their recycled water sales incentive program for supplies from the RWCWRF and the SBWRP. The Water Authority sales incentive agreement was approved by Water Authority on July 26, 2007 and by Otay WD on August 1, 2007. All permits for the construction of the recycled water facilities to receive, store, and pump the SBWRP supply have been acquired through the typical planning, environmental approval, design, and construction processes. The California Regional Water Quality Control Board San Diego Region (RWQCB) “Master Reclamation Permit for Otay Water District Ralph W. Chapman Reclamation Facility” was adopted on May 9, 2007 (Order No. R9-2007-0038). This order establishes master Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 46 reclamation requirements for the production, distribution, and use of recycled water in the Otay WD service area. The order includes the use of tertiary treated water produced and received from the City of San Diego‘s SBWRP. Recycled water received from and produced by the SBWRP is regulated by Regional Board Order No. 2000-203 and addenda. The City of San Diego is required to meet all applicable federal, state, and local health and water quality requirements for the recycled water produced at the SBWRP and delivered to Otay WD in conformance with Order No. 2000-203. 6.3.1.3 Potential Groundwater Supplies The Otay Water District WFMP Update, 2015 UWMP, and the 2015 Integrated Water Resources Plan Update all contain a description of the development of potential groundwater supplies. Over the past several years, Otay WD has studied numerous potential groundwater supply options that have shown, through groundwater monitoring well activities, poor quality water and/or insufficient yield from the basins at a cost effective level. The Otay WD has developed capital improvement program projects to continue the quest to develop potential groundwater resources. Local Otay WD groundwater supply development is currently considered as a viable water supply resource to meet projected demands. The development and/or acquisition of potential groundwater supply projects by the Otay WD have been on hold in response to the regional water supply issues related to water source supply conditions. Local ground water supply projects will allow for less reliance upon imported water, achieve a level of independence of the regional wholesale water agencies, and diversify the Otay WD water supply portfolio consistent with the Otay Water District 2015 IRP Update. In recognition of the need to develop sufficient alternative water supplies, the Otay WD has taken the appropriate next steps towards development of production groundwater well projects. There are three groundwater well projects that the Otay WD is actively pursuing to develop as new local water supplies. They are known as the Middle Sweetwater River Basin Groundwater Well, the Otay Mesa Lot 7 Groundwater Well, and the Rancho del Rey Groundwater Well projects. Middle Sweetwater River Basin Groundwater Well The Middle Sweetwater River Basin Groundwater Well is an additional water supply project that was thoroughly studied and documented in the 1990s. The Middle Sweetwater River Basin is located within the Sweetwater River watershed and that reach of the river extends from Sweetwater Reservoir to the upstream Loveland Reservoir. The next step in development of the Middle Sweetwater River Basin Groundwater Well is the implementation of a pilot well project. The ultimate objective of the Otay WD is to develop a groundwater Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 47 well production system within the Middle Sweetwater River Basin capable of producing a sustainable yield of potable water as a local supply. The purpose of the Middle Sweetwater River Basin Groundwater Well Pilot project is to identify the feasibility of developing a groundwater resource production system and then determine and assess any limitations or constraints that may arise. The Middle Sweetwater River Basin Groundwater Well Pilot Project will accomplish six primary goals: Update project setting Update applicable project alternatives analysis Prepare groundwater well pilot project implementation plan Construct and test pilot monitoring and extraction wells Provide recommendations regarding costs and feasibility to develop a groundwater well production system within the Middle Sweetwater River Basin capable of producing a sustainable yield of potable water Prepare groundwater well production project implementation plan and scope of work The groundwater conjunctive use concept is described as the extraction of the quantity of water from the groundwater basin that was placed there by customers of the Otay Water District, Helix Water District, and Padre Dam Municipal Water District by means of their use of imported treated water that contributed to the overall volume of groundwater within the basin. An estimated quantity was developed to be approximately 12.5 percent of the total consumption of the Otay WD customers within that basin, as measured by water meters. In the 1994-1995 period, the quantity of water that was returned to the groundwater basin by Otay WD customers was estimated to be 810 acre-feet per year. Currently, that 12.5 percent quantity could be on the order of 1,000 acre-feet per year. A future scope of work will need to addresses this concept while considering further development of the groundwater basin as an additional supply resource. If it is deemed that a Middle Sweetwater River Basin Groundwater Well Production Project is viable then the consultant will develop and provide a groundwater well production project implementation plan, cost estimate, and related scope of work. Further development of the groundwater basin to enhance the total groundwater production could be accomplished by the Otay WD by means of additional extraction of water from the basin that is placed there by means of either injection and/or spreading basins using imported untreated water as the resource supply. The existing La Mesa Sweetwater Extension Pipeline, owned by the Water Authority, once converted to an untreated water delivery system, could be the conveyance system to transport untreated water for groundwater recharge in support of this conjunctive use concept. These two distinct water resource supply conjunctive use concepts will be addressed so they may coexist and to allow for their development as separate phases. The scope of work to complete Middle Sweetwater River Basin Groundwater Well Pilot Project consists of many major tasks and is to address the groundwater supply concepts Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 48 outlined above. It is anticipated that the cost for the entire scope of work, will be on the order of $2,000,000, which includes a contingency and may take up to one and a half years to complete. The primary desired outcome of the Middle Sweetwater River Basin Groundwater Well Pilot Project is for the engineering consultant to determine and make recommendations if it is financially prudent and physically feasible to develop a Phase I groundwater well production system within the Middle Sweetwater River Basin capable of producing a sustainable yield of up to 1,500 ac-ft/yr of potable water for the Otay WD. If it is deemed that a Middle Sweetwater River Basin Groundwater Well Production Project is viable then the consultant will develop and provide a groundwater well production project implementation plan and related scope of work. Otay Mesa Lot 7 Groundwater Well In early 2001 the Otay WD was approached by a landowner representative about possible interest in purchasing an existing well or alternatively, acquiring groundwater supplied from the well located on Otay Mesa. The landowner, National Enterprises, Inc., reportedly stated that the well could produce 3,200 acre-feet per year with little or no treatment required prior to introducing the water into the Otay WD potable water system or alternatively, the recycled water system. In March 2001 authorization to proceed with testing of the Otay Mesa Lot 7 Groundwater Well was obtained and the Otay WD proceeded with the investigation of this potential groundwater supply opportunity. The May 2001 Geoscience Support Services, Inc. completed for the Otay WD the preparation of a report entitled, “Otay Mesa Lot 7 Well Investigation,” to assess the Otay Mesa Lot 7 Well. The scope of work included a geohydrologic evaluation of the well, analyses of the water quality samples, management and review of the well video log, and documentation of well pump testing. The primary findings, as documented in the report, formed the basis of the following recommendations: For the existing well to be use as a potable water supply resource, a sanitary seal must be installed in accordance with the DDW guidelines. Drawdown in the well must be limited to avoid the possibility of collapsing the casing. Recover from drawdown from pumping is slow and extraction would need to be terminated for up to 2 days to allow for groundwater level recovery. The well water would need to be treated and/or blended with potable water prior to introduction into the potable water distribution system. The existing Otay Mesa Lot 7 Well, based upon the above findings, was determined not to be a reliable municipal supply of potable water and that better water quality and quantity perhaps could be discovered deeper or at an alternative location within the San Diego Formation. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 49 The Otay WD may still continue to pursue the Otay Mesa groundwater well opportunity with due consideration of the recommendations of the existing report. Based on the recommendations of the investigation report, a groundwater well production facility at Otay Mesa Lot 7 could realistically extract approximately 300 acre-feet per year. Rancho del Rey Groundwater Well In 1991, the McMillin Development Company drilled the Rancho del Rey Groundwater Well to augment grading water supplies for their Rancho del Rey development projects. Although the well was considered a “good producer,” little was known regarding its water quality and sustainable yield because the water was used solely for earthwork (i.e. dust control and soil compaction). The well was drilled to 865 feet, with a finished depth of 830 feet and produced approximately 400 acre-feet per year of low quality water for four years until its use was discontinued in April 1995 when the well was no longer needed. McMillin notified the Otay WD of its intent to sell off the groundwater well asset. In 1997, the Otay WD purchased an existing 7-inch well and the surrounding property on Rancho del Rey Parkway from the McMillin Company with the intent to develop it as a source of potable water. Treatment was required to remove salts and boron, among other constituents, using reverse osmosis membranes and ion exchange. In 2000, having received proposals for the design and construction of a reverse osmosis treatment facility that far exceeded the allocated budget, the Board of Directors instructed staff to suspend the project until such time as it became economically viable. In January 2010, citing the rising cost of imported water and the Otay WD's interest in securing its own water source for long-term supply reliability, the Board authorized Phase 1 for drilling and development of the Rancho del Rey Well. On March 3, 2010, the Board adopted the Mitigated Negative Declaration for this project and a Notice of Determination was filed with the County of San Diego on March 5, 2010. In September 2010, a new 12-inch production well was drilled to a depth of 900 feet through the groundwater formation and into fractured bedrock. Testing showed the long-term yield of the new well to be 450 gpm, higher than previous studies had estimated. Separation Processes, Inc. (SPI), a highly qualified membrane treatment firm, was hired to conduct a detailed economic feasibility study to confirm that the annualized unit cost of the new water source was economically competitive with other sources. The economic study estimated the unit cost of water to be $1, 500 to $2,000 per acre-feet for an alternative that utilizes a seawater membrane for treating both salts and boron. When compared with the current imported treated water rate from the Water Authority, and with the knowledge that this rate will continually increase as MWD and the Water Authority raise their rates, the Rancho del Rey Well project appears to be economically viable. The Otay WD is continuing to pursue the Rancho del Rey groundwater well opportunity with due consideration of the recommendations of the existing reports and plans to develop a Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 50 groundwater well production facility to extract approximately 500 acre-feet per year. For water planning purposes, production of groundwater from the Rancho del Rey well is considered “additional planned” for local supplies. 6.3.1.4 Otay Water District Otay Mesa Conveyance and Disinfection System Project The Otay WD is currently investigating the feasibility of purchasing desalinated water from a seawater reverse osmosis plant that is planned to be located in Rosarito, Mexico, known as the Otay Mesa Conveyance and Disinfection System project. The desalination treatment facility is intended to be designed, constructed, and operated in Mexico by a third party. The Otay WD’s draft Desalination Feasibility Study, prepared in 2008, discusses the likely issues to be considered in terms of water treatment and monitoring, potential conveyance options within the United States from the international border to potential delivery points, and environmental, institutional, and permitting considerations for the Otay WD to import the Desalination project product water as a new local water supply resource. While the treatment facility for the Desalination project will not be designed or operated by the Otay WD, it is important that the Otay WD maintain involvement with the planning, design, and construction of the facility to ensure that the implemented processes provide a product water of acceptable quality for distribution and use within the Otay WD’s system as well as in other regional agencies’ systems that may use the product water, i.e. City of San Diego, the Water Authority, etc. A seawater reverse osmosis treatment plant removes constituents of concern from the seawater, producing a water quality that far exceeds established United States and California drinking water regulations for most parameters, however, a two-pass treatment system may be required to meet acceptable concentrations of boron and chlorides, similar to the levels seen within the existing Otay WD supply sources. The Desalination Feasibility Study addresses product water quality that is considered acceptable for public health and distribution. The Otay WD, or any other potential participating agencies, will be required to get approval from the DDW in order to use the desalinated seawater as a water source. Several alternative approaches are identified for getting this approval. These alternatives vary in their cost and their likelihood of meeting DDW approval. The Rosarito Desalination Facility Conveyance and Disinfection System Project report addresses two supply targets for the desalinated water (i.e. local and regional). The local alternative assumes that only Otay WD would participate and receive desalinated water, while the regional alternative assumes that other regional and/or local agencies would also participate in the Rosarito project. On November 3, 2010, the Otay WD authorized the General Manager to enter into an agreement with AECOM for the engineering design, environmental documentation, and the Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 51 permitting for the construction of the conveyance pipeline, pump station, and disinfection facility to be constructed within the Otay WD. The supply target is assumed to be 50 mgd while the ultimate capacity of the plant will be 100 mgd. The Otay WD is proceeding with negotiations among the parties. 6.3.2 Otay Water District Capital Improvement Program The Otay WD plans, designs, constructs, and operates water system facilities to acquire sufficient supplies and to meet projected ultimate demands placed upon the potable and recycled water systems. In addition, the Otay WD forecasts needs and plans for water supply requirements to meet projected demands at ultimate build out. The necessary water facilities and water supply projects are implemented and constructed when development activities proceed and require service to achieve timely and adequate cost effective water service. New water facilities that are required to accommodate the forecasted growth within the entire Otay WD service area are defined and described within the Otay Water District WFMP Update. These facilities are incorporated into the annual Otay WD Six Year Capital Improvement Program (CIP) for implementation when required to support development activities. As major development plans are formulated and proceed through the land use jurisdictional agency approval processes, Otay WD prepares water system requirements specifically for the proposed development project consistent with the Otay WD WFMP Update. These requirements document, define, and describe all the potable water and recycled water system facilities to be constructed to provide an acceptable and adequate level of service to the proposed land uses, as well as the financial responsibility of the facilities required for service. The Otay WD funds the facilities identified as CIP projects. Established water meter capacity fees and user rates are collected to fund the CIP project facilities. The developer funds all other required water system facilities to provide water service to their project. Section 7 – Conclusion: Availability of Sufficient Supplies The Otay Ranch Resort Village is currently located within the jurisdictions of the Otay WD, Water Authority, and MWD. To obtain permanent imported water supply service, land areas are required to be within the jurisdictions of the Otay WD, Water Authority, and MWD to utilize imported water supply. The Water Authority and MWD have an established process that ensures supplies are being planned to meet future growth. Any annexations and revisions to established land use plans are captured in the SANDAG updated forecasts for land use planning, demographics, and economic projections. SANDAG serves as the regional, intergovernmental planning agency that develops and provides forecast information. The Water Authority and MWD update their Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 52 demand forecasts and supply needs based on the most recent SANDAG forecast approximately every five years to coincide with preparation of their urban water management plans. Prior to the next forecast update, local jurisdictions with land use authority may require water supply assessment and/or verification reports for proposed land developments that are not within the Otay WD, Water Authority, or MWD jurisdictions (i.e. pending or proposed annexations) or that have revised land use plans with either lower or higher development intensities than reflected in the existing growth forecasts. Proposed land areas with pending or proposed annexations, or revised land use plans, typically result in creating higher demand and supply requirements than previously anticipated. The Otay WD, Water Authority, and MWD next demand forecast and supply requirements and associated planning documents would then capture any increase or decrease in demands and required supplies as a result of annexations or revised land use planning decisions. MWD’s IRP identifies a mix of resources (imported and local) that, when implemented, will provide 100 percent reliability for full-service demands through the attainment of regional targets set for conservation, local supplies, State Water Project supplies, Colorado River supplies, groundwater banking, and water transfers. The 2015 IRP Update describes an adaptive management strategy to protect the region from future supply shortages. This adaptive management strategy has five components: achieve additional conservation savings, develop additional local water supplies, maintain Colorado River Aqueduct supplies, stabilize State Water Project supplies, and maximize the effectiveness of storage and transfer. MWD’s 2015 IRP has a plan for identifying and implementing additional resources that expand the ability for MWD to meet future changes and challenges as necessary to ensure future reliability of supplies. The proper management of these resources help to ensure that the southern California region, including San Diego County, will have adequate water supplies to meet long-term future demands. MWD adopted its 2015 UWMP, in accordance with state law, on May 9, 2016. The resource targets included in the preceding 2015 IRP Update serve as the foundation for the planning assumptions used in the 2015 UWMP. MWD’s 2015 UWMP contains a water supply reliability assessment that includes a detailed evaluation of the supplies necessary to meet demands over a 20-year period in average, single dry year, and multiple dry year periods. As part of this process, MWD also uses the current SANDAG regional growth forecast in calculating regional water demands for the Water Authority’s service area. As stated in MWD’s 2015 UWMP, the plan may be used as a source document for meeting the requirements of SB 610 and SB 221 until the next scheduled update is completed in 5 years (2020). The 2015 UWMP includes a “Justifications for Supply Projections” in Appendix A.3, that provides detailed documentation of the planning, legal, financial, and regulatory basis for including each source of supply in the plan. In the Findings Section of the Executive Summary (Page ES-5) of their 2015 UWMP, MWD states that MWD has supply capacities that would be sufficient to meet expected demands from 2020 through 2040 under the single dry-year and multiple dry-year conditions. MWD Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 53 has plans for supply implementation and continued development of a diversified resource mix including programs in the Colorado River Aqueduct, State Water Project, Central Valley Transfers, local resource projects, and in-region storage that enables the region to meet its water supply needs. MWD’s 2015 UWMP identifies potential reserve supplies in the supply capability analysis (Tables 2-4, 2-5 and 2-6), which could be available to meet the unanticipated demands. The County Water Authority Act, Section 5 subdivision 11, states that the Water Authority “as far as practicable, shall provide each of its member agencies with adequate supplies of water to meet their expanding and increasing needs.” As part of preparation of a written water supply assessment report, an agency’s shortage contingency analysis should be considered in determining sufficiency of supply. Section 11 of the Water Authority’s 2015 Updated UWMP contains a detailed shortage contingency analysis that addresses a regional catastrophic shortage situation and drought management. The analysis demonstrates that the Water Authority and its member agencies, through the Emergency Response Plan, Emergency Storage Project, Carlsbad Desalination Project, and Drought Management Plan (DMP) are taking actions to prepare for and appropriately handle an interruption of water supplies. The DMP, adopted in May 2006, provides the Water Authority and its member agencies with a series of potential actions to take when faced with a shortage of imported water supplies from MWD due to prolonged drought or other supply shortfall conditions. The actions will help the region avoid or minimize the impacts of shortages and ensure an equitable allocation of supplies. The WSA&V Report identifies and describes the processes by which water demand projections for the proposed Otay Ranch Resort Village will be fully included in the water demand and supply forecasts of the Urban Water Management Plans and other water resources planning documents of the Water Authority and MWD. Water supplies necessary to serve the demands of the proposed Otay Ranch Resort Village, along with existing and other projected future users, as well as the actions necessary and status to develop these supplies, have been identified in the Otay Ranch Resort Village WSA&V Report and will be included in the future water supply planning documents of the Water Authority and MWD. This WSA&V Report includes, among other information, an identification of existing water supply entitlements, water rights, water service contracts, water supply projects, or agreements relevant to the identified water supply needs for the proposed Otay Ranch Resort Village. This WSA Report assesses, demonstrates, and documents that sufficient water supplies are planned for and are intended to be available over a 20-year planning horizon, under normal conditions and in single and multiple dry years to meet the projected demand of the proposed Otay Ranch Resort Village and the existing and other planned development projects to be served by the Otay WD. Table 5 presents the forecasted balance of water demands and required supplies for the Otay WD service area under average or normal year conditions. The total actual demand for FY Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 54 2015 was 30,271 acre feet. The demand for FY 2015 is 2,999 acre feet lower than the demand in FY 2010 of 33,270 acre feet. The drop in demand is a result of the unit price of water and the conservation efforts of users as a result of a prolonged drought. Table 5 presents the forecasted balance of water demands and supplies for the Otay WD service area under single dry year conditions. Table 6 presents the forecasted balance of water demands and supplies for the Otay WD service area under multiple dry year conditions for the three year period ending in 2019. The multiple dry year conditions for periods ending in 2025, 2030, and 2035 are provided in the Otay Water District 2015 UWMP. The projected potable demand and supply requirements shown the Tables 5 and 6 are from the Otay WD 2015 UWMP. Hot, dry weather may generate urban water demands that are about 6.4 percent greater than normal. This percentage was utilized to generate the dry year demands shown in Table 6. The recycled water supplies are assumed to experience no reduction in a dry year. Table 5 Projected Balance of Water Demands and Supplies Normal Year Conditions (acre feet) Description FY 2020 FY 2025 FY 2030 FY 2035 FY 2040 Demands Otay WD Demands 47,328 54,771 57,965 59,279 65,913 Active Conservation Savings (2,111) (1,844) (1,585) (1,538) (1,587) Accelerated Forecast Growth (AFG) – Planning Area 12 46 46 46 46 46 AFG – Otay Sunroad EOM SPA 836 836 836 836 836 AFG University Innovation District 11.7 11.7 11.7 11.7 11.7 Passive Conservation Savings (2,497) (4,497) (5,489) (6,040) (6,744) Total Demand 43,613.7 49,323.7 51,784.7 52,594.7 58,475.7 Supplies Water Authority Supply 37,943.7 43,423.7 45,784.7 46,394.7 51,975.7 Recycled Water Supply 5,670 5,900 6,000 6,200 6,500 Total Supply 43,613.7 49,323.7 51,784.7 52,594.7 58,475.7 Supply Surplus/(Deficit) 0 0 0 0 0 Table 6 presents the forecasted balance of water demands and supplies for the Otay WD service area under single dry year and multiple dry year conditions from the Otay Water District 2015 UWMP. Table 6 Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 55 Projected Balance of Water Demands and Supplies Single Dry and Multiple Dry Year Conditions (acre feet) Normal Year Single Dry Year Multiple Dry Years FY 2011 FY 2017 FY 2017 FY 2018 FY 2019 Demands Otay WD Demands 37,176 38,749 38,844 40,378 42,430 Total Demand 37,176 38,749 38,844 40,378 42,430 Supplies Water Authority Supply 33,268 33,877 33,972 35,240 37,026 Recycled Water Supply 3,908 4,872 4,872 5,138 5,404 Total Supply 37,176 34,639 38,844 40,378 42,430 Supply Surplus/(Deficit) 0 0 0 0 0 District Demand totals with SBX7-7 conservation target achievement plus single dry year increase as shown. The Water Authority could implement its DMP. In this instances, the Water Authority may have to allocate supply shortages based on it equitable allocation methodology in its DMP. Dry year demands assumed to generate a 7% increase in demand over normal conditions for a single dry year. For multiple dry years an 8% increase in demand over normal conditions is projected in the first year, 14% in the second year and 21% increase is projected in the third year in addition to new demand growth. In evaluating the availability of sufficient water supply, the Otay Ranch Resort Village development proponents will be required to participate in the development of alternative water supply project(s). This can be achieved through payment of the New Water Supply Fee adopted by the Otay WD Board in May 2010. These water supply projects are in addition to those identified as sustainable supplies in the current Water Authority and MWD UWMP, IRP, Master Plans, and other planning documents. These new water supply projects are in response to the regional water supply issues related to climatological, environmental, legal, and other challenges that impact water source supply conditions, such as the court rulings regarding the Sacramento-San Joaquin Delta and the current ongoing western states drought conditions. These new additional water supply projects are not currently developed and are in various stages of the planning process. The Otay WD water supply development program includes but is not limited to projects such as the Middle Sweetwater River Basin Groundwater Well project, the North District Recycled Water Supply Concept, the Otay WD Otay Mesa Conveyance and Disinfection System project, and the Rancho del Rey Groundwater Well project. The Water Authority and MWD’s next forecasts and supply planning documents would capture any increase in water supplies resulting from any new water resources developed by the Otay WD. The Otay WD acknowledges the ever-present challenge of balancing water supply with demand and the inherent need to possess a flexible and adaptable water supply implementation strategy that can be relied upon during normal and dry weather conditions. The responsible regional water supply agencies have and will continue to adapt their resource Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 56 plans and strategies to meet climate, environmental, and legal challenges so that they may continue to provide water supplies to their service areas. The regional water suppliers along with Otay WD fully intend to maintain sufficient reliable supplies through the 20-year planning horizon under normal, single, and multiple dry year conditions to meet projected demand of the Otay Ranch Resort Village, along with existing and other planned development projects within the Otay WD service area. This WSA&V Report assesses, demonstrates, and documents that sufficient water supplies are planned for and are intended to be acquired, as well as the actions necessary and status to develop these supplies, to meet projected water demands of the Otay Ranch Resort Village as well as existing and other reasonably foreseeable planned development projects within the Otay WD for a 20-year planning horizon, in normal and in single and multiple dry years. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 57 Source Documents Otay Ranch Resort Village SB 610 and SB 221 Compliance request letter received March 21, 2018. Rania S. Amen, City of San Diego, “FW: Reclaimed Water Question”, message to T. Shaw, February 27, 2018. E-mail. CH2M and Otay Water District, “Otay Water District 2015 Urban Water Management Plan Update”, May 2016. City of Chula Vista, “Otay Ranch General Development Plan/Sub-regional Plan, The Otay Ranch Joint Planning Project,” October 1993 amended June 1996. Otay Water District, “2015 Water Facilities Master Plan Update,” March 2016. Carollo and Otay Water District, 2015 Integrated Water Resources Plan Update, June 2015. San Diego County Water Authority, “Final 2015 Urban Water Management Plan, June, 2016. MWD Water District of Southern California, “2015 Urban Water Management Plan,” June 2016. Camp Dresser & McKee, Inc., “Rosarito Desalination Facility Conveyance and Disinfection System Project,” June 21, 2010. PBS&J, “Draft Otay Water District North District Recycled Water System Development Project, Phase I Concept Study,” December 2008. NBS Lowry, “Middle Sweetwater River System Study Water Resources Audit,” June 1991. Michael R. Welch, “Middle Sweetwater River System Study Alternatives Evaluation,” May 1993. Michael R. Welch, “Middle Sweetwater River Basin Conjunctive Use Alternatives,” September 1994. Geoscience Support Services, Inc., “Otay Mesa Lot 7 Well Investigation,” May 2001. Boyle Engineering Corporation, “Groundwater Treatment Feasibility Study Ranch del Rey Well Site,” September 1996. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 58 Agreement for the Purchase of Treated Water from the Otay Water Treatment Plant between the City of San Diego and the Otay Water District. Agreement between the San Diego County Water Authority and Otay Water District regarding Implementation of the East County Regional Treated Water Improvement Program. Agreement between the San Diego County Water Authority and Otay Water District for Design, Construction, Operation, and Maintenance of the Otay 14 Flow Control Facility Modification. Agreement between the Otay Water District and the City of San Diego for Purchase of Reclaimed Water from the South Bay Water Reclamation Plant. Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 59 Appendix A Otay Ranch Resort Village Vicinity Map Otay Water District Water Supply Assessment and Verification Report Otay Ranch Resort Village 60 Appendix B Otay Ranch Resort Village Development Plan Otay Water District Board of Directors Meeting May 2, 2018 Water Supply Assessment & Verification Report for the Otay Ranch Resort Village Project SB 610 & SB 221 Compliance EXHIBIT E BACKGROUND •Senate Bills 610 and 221 -improve the link between water supply availability and land use decisions. •SB 610 requires a WSA and SB 221 requires a WSA&V to be included in the CEQA documents for a project. •Board approval required for submittal of the WSA&V Report to the County of San Diego. Otay Ranch Resort Village Project Potable Water Demand •Potable water demand is 1,318 acre- feet per year (1.18 MGD) •Recycled water use is restricted by City of San Diego because the project is tributary to the Upper and Lower Otay Reservoirs. Otay Water District Projected Balance of Supply and Demand Description FY 2020 FY 2025 FY 2030 FY 2035 FY 2040 Demands Otay WD Demands 47,328 54,771 57,965 59,279 65,913 Active Conservation Savings (2,111)(1,844)(1,585)(1,538)(1,587) Accelerated Forecast Growth (AFG) - Planning Area 12 46 46 46 46 46 AFG –Otay Sunroad EOM SPA 836 836 836 836 836 AFG –University Innovation District 11.7 11.7 11.7 11.7 11.7 Passive Conservation Savings (2,497)(4,497)(5,489)(6,040)(6,744) Total Demand 43,613.7 49,323.7 51,784.7 52,594.7 58,475.7 Supplies Water Authority Supply 37,943.7 43,423.7 45,784.7 46,394.7 51,975.7 Recycled Water Supply 5,670 5,900 6,000 6,200 6,500 Total Supply 43,613.7 49,323.7 51,784.7 52,594.7 58,475.7 Supply Surplus/(Deficit)0 0 0 0 0 CONCLUSION •Water demand and supply forecasts are included in the planning documents of MWD, CWA, and OWD. •Actions necessary to develop the identified water supplies are documented. •The WSA&V Report documents that sufficient water supplies are planned for and available over the next 20 years. •The Board has met the intent of the SB 610 and SB 221 statutes. Questions? STAFF REPORT TYPE MEETING: Regular Board Meeting MEETING DATE: May 2, 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 5-2-18.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: BOARD WORKSHOPS: Monday, May 21, at 3:00pm, Budget Workshop STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: May 2, 2018 SUBMITTED BY: Kevin Koeppen, Assistant Chief of Finance PROJECT: DIV. NO. All APPROVED BY: Joseph R. Beachem, Chief Financial Officer Mark Watton, General Manager SUBJECT: Informational Item Regarding the History of the Salt Creek Golf Course GENERAL MANAGER’S RECOMMENDATION: This is an informational item only. PURPOSE: To communicate the historical events of the Salt Creek Golf Course. ANALYSIS: On or about July 1, 1970, the District acquired approximately 509 acres, which were to be used as a recycled water disposal area. At that time, the District only had a small connection to the County of San Diego sewer main and the recycled water system was not developed as it is today. As a result, the District relied principally on the Chapman plant for sewer treatment and the acquired area for the disposal of the recycled water that was produced as a byproduct of the Chapman plant treatment process. Over time the District acquired a large connection to the County of San Diego sewer main and increased capacity in the San Diego Metro sewer. During this same time the District recycled water distribution system was expanded to the point that most all the recycled water produced at the Chapman plant was being distributed through the recycled system. As a result, the District no longer needed the acquired land to be used as a disposal area. Shortly thereafter, the District considered alternate uses that the City of Chula Vista would approve or the possible disposition of the land. After consideration of a number of options, approximately 239 acres were set aside for environmental mitigation for District projects, and remains an environmental mitigation area today. The remainder of the property was used for a land lease site for a golf course, which was fully funded by a private group. The District did not make any financial commitment or contribution to the development of the golf course and the course was constructed and operated at no risk to the District. At the time, this seemed to be a viable opportunity for the District to benefit from the land while preserving its ownership. In the late 1980’s the National Golf Foundation (NGF) projected that the U.S. golf industry could support the opening of a new golf course every day for a period of 10 years and retiring baby boomers would provide an ample supply of golfers. The golf course expansion began around 1999, and in 2000 approximately 400 golf courses were opened in the United States. However, the baby boomer supply of golfers never came to fruition and the economic recession, which began in 2007, had a significant adverse impact on the industry. As a result it is estimated that courses in Southern California were 25% to 28% overbuilt. In 1998, for San Diego, Orange and Los Angeles Counties, a well-run 18-hole course averaged 70,000 rounds per year. By 2008, the average rounds had dropped to 45,000 rounds per course per year. The causes of the drop in demand were dilution of market share due to overbuilding, loss of golf participation, and the national recession. The District and Auld Golf Course San Diego, LLC entered the Golf Course Construction and Lease Agreement dated September 2, 1998, under which Otay leased certain real property for the construction and operation of a golf course (the “Lease”). Auld Golf declared bankruptcy on or about March 8, 2006. At the time there was an outstanding bank loan of approximately $6 million and the bank hired JC Golf to maintain and operate the course to preserve the asset. The District had no part of the bankruptcy, or operation of the course, other than as a creditor. The Lease interest was subsequently acquired from the bankruptcy court by Salt Creek Golf, LLC (“Salt Creek”). On or about August 19, 2011, Salt Creek petitioned for bankruptcy and included its interests in the Lease in the bankruptcy. Again, the bank had a loan outstanding of approximately $4 million and the bank hired JC Resorts to maintain and operate the course. Again, the District had no part of the bankruptcy, or operation of the course, other than as a creditor. Subsequently, on March 16, 2012, the bankruptcy court approved the sale of the Lease to and assumption of the Lease as-is by Highlands Links Golf Group, LLC. The Lease and related exhibits are over 100 pages. Due to their size, it was not included as an attachment to this Staff Report, but is available upon request. The Salt Creek golf course lease is considered a land lease, which means the lessee owns the asset and is solely responsible for the operations and financing of the course. The District customers do not bear any financial risk associated with the operating losses and capital expenditures of the course. Based on the attached letter prepared by Jeff Woolson, a leasehold in a golf course has little or no value. Mr. Wilson’s letter also states that the best use of the land is a golf course with clustered residential development. The District will be considering this option, along with all other proposals for the land and will select the option that is most beneficial to the District’s ratepayers. In recent years, several golf courses in the San Diego region have closed or been sold as a result of the decline in the industry and economic downturn. Since Highlands acquired the Lease, these changes in the economy and golf market have damaged and adversely impacted their ability to operate the golf course despite the best efforts of Highlands. As a result, Highlands requested that the Lease be amended to more accurately reflect the changing times and to ensure continued operation of the golf course for the benefit of both Highlands and the District. In 2015, the District reduced the annual rent by approximately $118,000 and reduced the percentage rent calculations. The District and Highlands Links amended the lease on July 1, 2015. The Amendment provided for reduced rent and for an operational term of thirty six (36) years. On or about February 12, 2018, Highlands Golf communicated to the District, their desire to terminate the lease agreement due to financial hardship, on-going financial losses, and the golf course asset having little or no value. At that time, Highlands was in arrears $21,213.22 and had defaulted on the lease. In lieu of a bankruptcy filing with an asset of no value, a termination agreement was fully executed on March 19, 2018, and the lease was terminated on March 30, 2018. As part of the agreement, Highlands agreed to pay all sums owed and remove Highlands Links’ equipment from the premises and turn over, to the District, the golf course asset located on the District property. Highlands requested an extension to April 20, 2018 for the removal. District Options and Legal Obligations Is the District Required to Maintain the Property as a Golf Course? The short answer is “No”. After a diligent review of the Government Code, Water Code, other statutes, and relevant cases, there appears to be no statute or law that directly addresses the question of whether a public entity, or specifically, a special district, must maintain its own property in a similar manner and that was required of a prior lessee, or to continue the type of operations previously in existence. However, on the other hand, the law is clear that public entities are given great deference in how they manage their property. “Each district has the power generally to perform all acts necessary or proper to carry out fully the [duties applicable to a water district].” (Wat. Code, § 35400.) This power includes “tak[ing] conveyances, contracts, leases, or other assurances for property acquired by the district…” (Wat. Code, § 35405.) The determinative factor in whether a water district has the authority to perform certain acts is whether such acts are in furtherance of the water district’s purpose. (See Wat. Code, §§ 35600, 35604 (“A district may for a valuable consideration lease, sell, or contract for the sale of any property of the district whenever it may be necessary, advisable, or for the best interests of the district”).) For example, the District is provided the power to use its discretion to create and maintain on its property any facility for recreational use if the District determines that it is in the best interests of the District. (Wat. Code, § 12791.) In so doing, the District has the power to expend public funds on the recreational facility, and to charge the public for their use of the facility. (Wat. Code, § 12792.) It follows, therefore, that the District has the power to cease operation of a recreational facility previously installed on its property, or any other use that was allowed by the District (in its discretion) to be maintained on its property, should the District find that the discontinuance of such a use is in the District’s best interest. The District’s decision to cease expending water and ancillary resources to maintain a golf course at Salt Creek that no member of the public has the ability to use would likely be justified under its “necessary and proper” powers. The fact that the Salt Creek property was previously used as a golf course is of no consequence. In fact, the Government Code specifically allows the District to alter the use of the site should it find that it is in the best interests of the District to do so. For example, “a local agency may use any property acquired for such purpose, or any other real property owned or possessed by it and not needed for other public use, for the parking or storage of vehicles belonging to or operated by it.” (Gov. Code, § 54032.) In other words, California law specifically allows the District to change Salt Creek from a golf course to a parking lot should it choose to do so. Generally, decisions of a public entity to create or alter its property must abide by local building and zoning ordinances. (Govt. Code, § 53091; City of Lafayette v. East Bay Mun. Utility Dist. (1993) 16 Cal.App.4th 1005, 1013 (unless exempted by statute, water districts must abide by local planning decisions of cities and counties).) However, the law does provide a water district with the ability to “render a city or county zoning ordinance inapplicable to a proposed use of property if the local agency, at a noticed public hearing, determines by resolution that there is no feasible alternative to its proposal,” so long as the proposed use relates to the storage or transmission of water. (Govt. Code, § 53096.) Therefore, the District has broad discretion to determine what to do with the property, as long as it is in the best interests of the District. If the Board chooses to retain ownership of the property, it must ensure that future use complies with the law and applicable zoning ordinances. If the Board wishes to dispose of the property entirely, it may do so by following the statutory procedures required for Surplus Property, outlined in detail in Government Code section 54222. Operating Arrangement Types of Operating Options If the District were to continue to operate the course, there are three basic types of golf course operating options available for a public agency golf course, which are a facility lease, management agreement, or self-operating. Facility Lease or Land Lease Under a facility or land lease, the course or land is leased to a private golf course operator who owns the golf course asset, provides course maintenance, golf operations and overall facility management services. The operator’s lease payments are typically a minimum rental payment against a percentage of golf and food and beverage departmental gross revenue. The lessee is obligated to fund required capital improvements, operating expense and reserve for ongoing capital improvements. As such, the financial risk is borne by the lessee. Management Agreement and Self-Operating While there are many differences between a facility lease and management or self-operating arrangements, the primary difference is that the facility owner bears the financial risk under both the management and self-operating arrangements. As such, staff would not recommend either a management or self-operating structure, due to the financial risk they place on the District’s customers. FISCAL IMPACT: Joseph Beachem, Chief Financial Officer This is an informational item only. STRATEGIC GOAL: None. LEGAL IMPACT: Undetermined at this time. Attachments: A) Letter from Jeffrey Woolson B) Otay’s Update Regarding Salt Creek C) Artiano Shinoff Memo D) Presentation OTAY WATER DISTRICT UPDATE REGARDING THE SALT CREEK GOLF COURSE Public Hearing April 11, 2018 3:30 p.m. Background The Otay Water District (“District”) owns real property in northeast Chula Vista that, for many years, has been leased to various private entities for the operation of a golf course, which is known as “Salt Creek”. Most recently, Highlands Links Golf Group, LLC (“Highlands”) and the District were parties to a lease where Highlands operated Salt Creek as a golf course in exchange for the payment of rent and utilities to the District. Over the past year, Highlands has regularly defaulted on its rent and water payments due to declining revenue. On or about February 12, 2018, Highlands informed the District of its desire to terminate the lease early due to financial hardship and ongoing losses. At the time, Highlands owed the District approximately $21,000.00 in past due rent and water bills. Highlands’ alternative was to file for bankruptcy, as did the prior Salt Creek operators. The District agreed to terminate the lease in exchange for Highlands’ agreement to pay all sums due and owing to the District. On March 18, 2018, Highlands ceased golf operations at Salt Creek. To conserve water that would be spent on an otherwise vacant property, the District removed water meters from the property. Since 1998, the failure of various operators of Salt Creek to remain financially viable, has resulted in the cessation of golf operations. Exploration of Options Regarding Salt Creek With Highland’s (and its predecessors’) failure to maintain financially viable golf operations, the District is exploring its options for the Salt Creek location. One such option is to seek proposals from experienced golf course operators to lease the property and keep Salt Creek operating as a Attachment B Exploration of Options Regarding Salt Creek continued golf course. Should the District seek proposals, the law requires the District to follow specific procedures that will likely result in a lengthy consideration process, occurring over an approximate six to nine-month period. Should the District seek proposals for continued golf course operations, the District must also decide whether to maintain the grass on the property. The District has not budgeted for continued maintenance, as this cost is typically borne by the operator of the golf course. Therefore, water rates to consumers may be increased to support the continued maintenance of the vacant property. This, in turn, might expose the District to a constitutional challenge in court, placing into jeopardy additional public funds. The alternative is to halt maintenance, and return water to the grass upon finding a suitable operator. All or part of this cost could be passed to a new operator, rather than the rate payers, and only spent if and when a suitable operator is found. As golf operations have continued to fail at Salt Creek, the District is also considering disposing of the property, pursuant to the Surplus Land Act. Should the District pursue this option, the District would be required to follow specific procedures established in the Government Code that will likely result in a lengthy public process, occurring over an approximate six to nine-month period. The District’s Legal Obligations Regarding Salt Creek The Board of Directors for the District consists of elected representatives of the rate payers within the District’s boundaries, and is vested with the legal authority to manage and conduct the business and affairs of the District. (Wat. Code, §§ 34807, 35100.) The Board of Directors’ powers extend to all acts that it deems necessary and proper to fully carry out the duties applicable to a water district and which the Board of Directors deems are in the best interests of the District. (Wat. Code, §§ 35400, 35600, 35604.) Powers specifically granted to the District include making water management decisions, engaging in water conservation efforts, and establishing and ceasing recreational uses on District property. (Wat. Code, §§ 375, 380, 12791, 12792.) The cessation of expending water on a vacant property is within the District’s “necessary and proper” powers. The District is also granted the power to dispose of its real property, pursuant to the Surplus Land Act. (Govt. Code, §§ 54220(a), 54222.) INTRODUCTION The District owns real property in northeast Chula Vista that for many years has been used to operate the Salt Creek Golf Course (“Salt Creek”). Most recently, Highlands Links Golf Group, LLC (“Highlands”) and the District were parties to a lease wherein Highlands operated Salt Creek and paid rent and utilities to the District. On or about February 12, 2018, Highlands Golf communicated to the District, their desire to terminate the lease agreement due to financial hardship and on-going financial losses. At that time, Highlands was in arrears $21,213.22 and had defaulted on the lease. A Lease Cancellation and Termination Agreement, dated March 15, 2018, was fully executed on March 19, 2018 and the lease was terminated on March 30, 2018. As part, of the agreement Highlands agreed to pay all sums owed and remove Highlands Links’ equipment from the premises. Highlands initially requested an extension to April 13, 2018, to remove its personal property and clean up the premises. It subsequently requested that have until the end of April to vacate the premises at the pro-rated rental rate of $416.74. Highlands closed the golf course on or about March 18, 2018, and shortly thereafter, the District removed the water meters from the property. Accordingly, golf operations have now ceased and Salt Creek will be vacant once Highlands has removed its equipment. The District must now determine to what use it will put the property, or, if it is no longer of use to the District, the Board can declare the property as surplus. Chapter 4 Section 4.05 of the District’s Code of Ordinances provides: DISPOSAL OF SURPLUS PROPERTY All property, real or personal, which has been declared surplus to the District's needs, shall be disposed of in accordance with the District Purchasing Manual or applicable statutes and laws. The requirements for declaring the property surplus and disposing of the property once it has been declared surplus, are set forth below. TO: The Board of Directors of the Otay Water District FROM: Jeanne Blumenfeld, Esq., General Counsel RE: Surplus Property DATE: April 22, 2018 Page 2 ANALYSIS Local agencies1, including special districts, are required to inventory the land they own every year.2 If land is no longer needed, a local agency3 must follow certain procedures, which are set forth in the Surplus Land Act, Government Code §§ 54220 et. seq. (the "Act"), prior to disposal of surplus land.4 Surplus land is land owned by a local agency that is no longer necessary for the agency’s use. It excludes property being held by the agency for the purpose of exchange. (Gov. Code, § 54221 (b).) There are various exemptions, such as land parcels less than 5,000 square feet, that are not applicable to the Salt Creek property.5 The intent behind the disposal procedures is to promote the use of surplus land for affordable housing, parks and recreation purposes, open-space purposes, and transit-oriented development. The District has never designated the Salt Creek property as surplus property, and it does not qualify as exempt property. Whenever a local agency sells or leases its surplus property, the disposal provisions set forth in the Act apply. (Gov. Code, §§ 54220 (a), 54222.) Local agencies must make a written offer to sell or lease surplus land to various “preferred entities” before selling or leasing the property on the open market. “Preferred entities” include local housing public entities (such as the county housing department, the housing authority, and state housing agencies), parks agencies, school districts, nonprofit enterprises, zone associations and transportation agencies (if the property is in an infill zone or transit village area). In 1 Government Code Section 54221(a) defines “local agency” to include counties, both charter and general law cities and special districts such as school districts and transit agencies. The term "local agency" means every city, whether organized under general law or by charter, county, city and county, and district empowered to acquire and hold real property. 2 Government Code §50568, et seq. and §54220, et seq. Each local government agency is required to inventory all property it holds or controls to determine if there is any in excess of the agency’s foreseeable needs. A list of excess properties must be made available to the public without charge. The local agency may sell or lease the excess property to certain entities for the purpose of developing affordable housing. The deed must specify that title will revert to the local government agency upon certain conditions. If excess property is not sold for affordable housing purposes, it must be offered for park or open-space purposes, school facilities, enterprise zone purposes, or for developing property located within an infill opportunity zone or transit village plan. 3 All references to “local agency” include special districts. 4 Government Code Section 54221(b) defines surplus land: As used in this article, the term "surplus land" means land owned by any agency of the state, or any local agency, that is determined to be no longer necessary for the agency's use, except property being held by the agency for the purpose of exchange. 5 Gov. Code § 54221 (e)-(f) provides the characteristics of exempt surplus property as follows: (e) As used in this article, the term “exempt surplus land” means either of the following: (1) Surplus land that is transferred pursuant to Section 25539.4. (2) Surplus land that is (A) less than 5,000 square feet in area, (B) less than the minimum legal residential building lot size for the jurisdiction in which the parcel is located, or 5,000 square feet in area, whichever is less, or (C) has no record access and is less than 10,000 square feet in area; and is not contiguous to land owned by a state or local agency that is used for park, recreational, open-space, or low- and moderate-income housing purposes and is located neither within an enterprise zone pursuant to Section 7073 nor a designated program area as defined in Section 7082. If the surplus land is not sold to an owner of contiguous land, it is not considered exempt surplus land and is subject to this article. (f) Notwithstanding subdivision (e), the following properties are not considered exempt surplus land and are subject to this article: (1) Lands within the coastal zone. (2) Lands within 1,000 yards of a historical unit of the State Parks System. (3) Lands within 1,000 yards of any property that has been listed on, or determined by the State Office of Historic Preservation to be eligible for, the National Register of Historic Places. (4) Lands within the Lake Tahoe region as defined in Section 66905.5. Page 3 addition, the Act provides that “housing sponsors are entitled to offers “upon written request.” A “housing sponsor" is any entity certified by the agency as qualified to develop housing. If one of the Preferred entities is interested in buying or leasing the land, it must notify the local agency within 60 days of receipt of the offer. The local agency is thereafter obligated to enter into good faith negotiations for a period of ninety (90) days. (Gov. Code § 54223.) When considering offers to purchase or lease surplus land, the local agency must give first priority, and enter into good faith negotiations, with an interested entity that proposes to make at least twenty-five (25) percent of the total number of units developed on the parcel affordable to lower-income households. (Gov. Code §54222.5.) The twenty-five (25) percent affordability requirement applies to both sales and rentals. Ownership units must be affordable to lower-income households earning less than seventy (70) percent of AMI, and sold to lower-income households earning less than eighty (80) percent of AMI. (Gov. Code § 54222.5; and Health and Safety Code § 50052.5(3).) If the land is going to be used for residential development and a local agency receives multiple offers from notified (preferred) entities, the local agency must give priority to the one that proposes to provide the greatest number of affordable units at the deepest level of affordability (i.e., affordable to households at the lowest income levels). (Gov. Code § 54227(a).) In the event a local agency enters into a contract to sell or lease the land to a preferred entity for park or recreation purposes, open-space purposes, school purposes, or for low and moderate-income housing purposes, that contract may provide for a payment period of up to 20 years. The term “open- space purposes” means the use of land for public recreation, enjoyment of scenic beauty, or conservation or use of natural resources. The local agency is not required to sell or lease surplus land at less than fair market value. (Gov. Code § 54226.) The term “fair market value” means fair market value as of the date the offer of sale is made by the selling agency. If the price or terms cannot be agreed upon after the ninety (90) day good faith negotiation period, the land may be disposed to a different entity without further regard to the disposal requirements. If surplus property is sold outside the preferred system to an entity that proposes to develop the property for with 10 or more residential units, the development must include at least 15% of the units at an affordable housing cost, or affordable rent, for low income households. Rental units must remain affordable to, and occupied by, lower income households for a period of at least 55 years. The initial occupants of all ownership units must be lower income households, and the units are subject to an equity sharing agreement that must provide for the distribution of any appreciation or improvements to the property. These requirements must be recorded against the property and are enforceable by the local agency or eligible residents. (Gov. Code §§ 54223 and 54233.) Page 4 A. How Does the District Designate the Property as Surplus? Prior to the disposal of surplus land, local agencies, including special districts, are required to inventory the land they own every year, to determine if there is any in excess of the agency’s foreseeable needs.6 If, after an inventory of the property owned by the District, the Board determines that the District no longer has use for the property, the Board may adopt a resolution which includes: (i) a finding that the property is not, and will not, be needed by the District; (ii) a declaration the property is surplus to the District's needs; and (iii) a statement that the District will solicit offers for the lease or purchase of the property. Once the resolution has been adopted by the Board, the District may solicit offers for the lease or sale of the surplus property. B. What Is The Procedure for the District to Sell or Lease Surplus Property? After designating the property as surplus, the following is the procedure required by the Surplus Land Act for the District to either lease or sell the surplus property. Step 1: Board Resolution. The Board initiates the leasing or selling process by adopting a resolution which includes: which includes: (i) a finding that the property is not, and will not, be needed by the District; (ii) a declaration the property is surplus to the District's needs; and (iii) a statement that the District will solicit offers for the lease or purchase of the property. Once the resolution has been adopted by the Board, the District may solicit offers from Preferred Entities for the lease or sale of the surplus property. (Notify specific entities of the opportunity to purchase or lease the property for specified priority uses. (Gov. Code § 54222 et seq.) Step 2: Written Offer to Lease or Sell for the Purpose of Developing Low- and Moderate-Income Housing. The District must send a written offer to lease or sell surplus property for the purpose of developing low- and moderate-income housing to any Local Public Entity, as defined in Section 50079 of the Health and Safety Code, 7 within whose jurisdiction the surplus land is located. Housing sponsors shall be sent, upon written request, a written offer to lease or sell the surplus land for the purpose of developing low- and moderate-income housing. 6 Government Code §50568, et seq. and §54220, et seq. 7 “Local public entity” means any county, city, city and county, the duly constituted governing body of an Indian reservation or rancheria, redevelopment agency organized pursuant to Part 1 (commencing with Section 33000) of Division 24, or housing authority organized pursuant to Part 2 (commencing with Section 34200) of Division 24, and also includes any state agency, public district or other political subdivision of the state, and any instrumentality thereof, which is authorized to engage in or assist in the development or operation of housing for persons and families of low or moderate income. “Local public entity” also includes two or more local public entities acting jointly. (Health & Safety Code § 50079.) Page 5 All notices must be sent by first-class mail and shall include the location and a description of the property. With respect to any offer to purchase or lease pursuant to this subdivision, priority must be given to development of the land to provide affordable housing for lower income elderly or disabled persons or households, and other lower income households. (Gov. Code § 54222.) A public entity proposing to use the surplus land for developing low- and moderate-income housing must agree to make available not less than 25 percent of the total number of units developed on the surplus land at an affordable housing cost, or affordable rent, to lower income households. Rental units shall remain affordable to, and occupied by, lower income households for a period of at least 55 years. The initial occupants of all ownership units must be lower income households, and the units are subject to an equity sharing agreement that must provide for the distribution of any appreciation or improvements to the property. These requirements must be recorded against the property and are enforceable by the local agency or eligible residents. (Gov. Code § 54222.5.) Step 3: Sale for Park, Recreation, or Open-Space Purposes. The Government Code sets forth detailed steps that the District must follow to lease or sell surplus land for park or recreational purposes. (Gov. Code, § 54220, et seq.) A written offer to lease or sell for park and recreational purposes or open-space purposes shall be sent: (1) To any park or recreation department of any city within which the land may be situated. (2) To any park or recreation department of the county within which the land is situated. (3) To any regional park authority having jurisdiction within the area in which the land is situated. (4) To the State Resources Agency or any agency that may succeed to its powers. Step 4: Offers to Schools. A written offer to lease or sell surplus land suitable for school facilities construction or use by a school district for open-space purposes must be sent to any school district in whose jurisdiction the land is located. (Gov. Code, § 54222 (c).) Step 5: Enterprise Zone. A written offer to lease or lease for enterprise zone purposes any surplus property in an area designated as an enterprise zone must be sent to the nonprofit neighborhood enterprise association corporation in that zone. (Gov. Code, § 54222 (d).) A written offer to lease or sell surplus land for the purpose of developing property located within an infill opportunity zone designated pursuant to Gov. Code § 65088.4 (infill housing and mixed use commercial developments within walking distance of mass transit facilities, downtowns, and town centers) must be sent to any county, city, city and county, community redevelopment agency, public transportation agency, or housing authority within whose jurisdiction the surplus land is located. (Gov. Code, § 54222 (e).) Page 6 Step 6: Timing for Notices and Written Offers. The District may send or publish the notices and written offers to the local planning commission or public agencies at the same time. In order to move through the process as quickly as possible, the notices and written offers should state that the District is concurrently offering the property to all other entities as required by the Government Code. The District must notify the local city or county planning agency, if such city or county has adopted a general plan, which affects or includes the area where the property is located. (Govt. Code § 65402(c).) Step 7: Negotiations With Priority Buyers If one of the Preferred entities is interested in buying or leasing the land, it must notify the local agency within 60 days of receipt of the offer. (Gov. Code, § 54222 (f).) The local agency is thereafter obligated to enter into good faith negotiations for a period of ninety (90) days. (Gov. Code § 54223.) When considering offers to purchase or lease surplus land, the local agency must give first priority, and enter into good faith negotiations, with an interested entity that proposes to make at least twenty-five (25) percent of the total number of units developed on the parcel affordable to lower-income households. (Gov. Code §54222.5.) The twenty-five (25) percent affordability requirement applies to both sales and rentals. Ownership units be affordable to lower-income households earning less than seventy (70) percent of AMI, and sold to lower-income households earning less than eighty (80) percent of AMI. (Gov. Code § 54222.5; and Health and Safety Code § 50052.5(3).) If the land is going to be used for residential development and a local agency receives multiple offers from notified (preferred) entities which meet this standard, the local agency must give priority to the one that proposes to provide the greatest number of affordable units at the deepest level of affordability (i.e., affordable to households at the lowest income levels). (Gov. Code § 54227(a).) In the event that a local agency enters into a contract to sell or lease the land to a notified entity for park or recreation purposes, open-space purposes, school purposes, or for low and moderate-income housing purposes, that contract may provide for a payment period of up to 20 years. Step 8: Public Competitive Bidding. If the District has offered the property to public entities as set forth above, and the property remains unsold after the expiration of the applicable time frames, the District may proceed to lease or sell the property to the public through a competitive and open bidding process. If surplus property is sold outside the preferred system to an entity that develops the property for the development of 10 or more residential units, the development must include at least 15% of the units at an affordable housing cost, or affordable rent, for low income households. Rental units must remain affordable to, and occupied by, lower income households for a period of at least 55 years. The initial occupants of all ownership units must be lower income households, and the units are subject to an equity sharing agreement that must provide for the distribution of any appreciation or improvements to the property. These requirements must be recorded against the property and are enforceable by the local agency or eligible residents. (Gov. C. §§ 54223 and 54233.) Page 7 There are specific requirements that must be followed before offering the lease or sale of any surplus property through competitive bidding, including (i) a Board declaration of intention to lease or sell, (b) notice of resolution, and (c) bid-opening meeting and acceptance of a proposal. (Public Contract Code §§ 20110-20118.4.) SALT CREEK Board Meeting May 2, 2018 Attachment D Clubhouse & Cart Area North Area of the Course and Driving Range South Area of the Course and Driving Range Hole #1 – Tee to Green STAFF REPORT TYPE MEETING: Regular Board Meeting MEETING DATE: May 2, 2018 SUBMITTED BY: Kevin Koeppen, Assistant Chief of Finance PROJECT: DIV. NO. All APPROVED BY: Joseph R. Beachem, Chief Financial Officer Mark Watton, General Manager SUBJECT: Communicate to the Board a Lower Cost Strategy for Funding CalPERs GENERAL MANAGER’S RECOMMENDATION: This is an informational item only. COMMITTEE ACTION: Please see Attachment A. PURPOSE: Communicate to the Board a lower cost strategy for funding CalPERs. BACKGROUND: In an effort to reduce the impact on rates for the cost of funding the CalPERs unfunded liability, staff is examining the impact of using reserves to fund a portion of the CalPERs unfunded liability. CalPERS would be funded using reserves that are currently designated by the Board to be used to fund CIP projects. The CIP projects would then be funded by reserves and the issuance of additional debt. This would effectively switch the highest cost debt for a much lower cost debt, potentially saving the ratepayers up to $15.3 million. The District is a part of the CalPERS Retirement System. The total liability as of June 30, 2016 is $121.8 million. The unfunded portion of this liability is $48.1 million. The estimate of the unfunded liability rolled forward to June 30, 2018 is $49.2 million, not taking into account the CalPERS approved reduction in the discount rate from 7.375% to 7.0%. The unfunded liability is based on the District’s contractual obligation and the District is unable to legally modify past pension terms to reduce the liability (Government Code section 7522.02-4(c)1). While the historical obligation cannot be reduced, steps have been taken to reduce future exposure to pension costs. In 2013, the District’s pension benefit was significantly reduced by the California Public Employees’ Pension Reform Act of 2013(PEPRA) from 2.7% at 55 years of age to 2.0% at 62 years of age for employees hired into CalPERS on or after January 1, 2013. The payments to amortize the unfunded portion of the liability by CalPERS is calculated at a rate of 7.375%, and will be reduced over the next two years to 7%. This debt, along with the OPEB debt, are the highest interest rate debt the District holds. It is anticipated that the CIP tax-exempt debt would be at a rate approximately half the 7% rate in April, 2018. The less CalPERS debt the District has the greater the savings to the ratepayers. However, the amount of debt to be issued is limited by the CIP projects that the District is building over the next three years. Staff anticipates that not all of the CalPERS debt can be paid off using this strategy alone. A second complementary strategy to fund the CalPERS debt is related to the OPEB plan. Just like the CalPERS plan, the OPEB plan has a portion of the liability that is not funded. However the OPEB fund is in a very strong position and will be fully funded in 2021. A significant reason for this strong position is that the District has not drawn on the OPEB fund to pay the OPEB benefits. The District has been funding the retiree benefits from reserves in order to improve the funding levels and eliminate the unfunded liability. When the OPEB plan is fully funded the benefits will begin to be paid from the OPEB trust. When this happens in 2021, staff is recommending that the general funds currently funding the OPEB benefits, be shifted to reduce the PERS liability. Through the shifting of these funds the District is able to reduce the high cost PERS debt at a faster rate. The CalPERS debt is made up of seventeen different layers of debt which can generally be paid off in any order. The District will identify those layers of debt to pay off first that will provide the greatest cash flow benefit. Addressing Potential Concerns Stock Market Fluctuations: The potential interest savings described are based on CalPERS achieving an investment rate at least equal to the discount rate (7%). The CalPERS benefits have a long-term time horizon. With a long-term time horizon, equities are a sound investment as they will recover from short-term volatility. When the District funds the CalPERS plan, those funds will be placed into the CalPERS portfolio which is made up of 44% global equities. The long- term nature of the CalPERS benefits is why this level of equities investment is appropriate. Some may feel uncomfortable with this level of equity, but again, the time horizon of the payments makes equities a sound investment for this long-term time horizon. CalPERS also currently amortizes investment gains and losses over 30 years, but amortizes assumption changes (such as the reduction from 7.735% discount rate to 7.0% discount rate) over 20 years. Beginning in 2021, all new amortization bases will be amortized over 20 years. While this is a positive for getting credit for investment gains, it will now shorten the amortization of investment losses from 30 years to 20 years. Debt Levels: Rating agencies evaluate the financial strength of the District. One of the factors they look at is the level of debt. Debt is measured as a ratio against asset values. The CWA is at a debt-to- plant of 60%. Other neighboring agencies have debt-to-plant ratios from 0% to 61%. Excluding agencies with no outstanding debt, the average debt-to-plant ratio is 27%. The District is currently considered to have a moderate level of debt, with a debt-to-plant ratio of 22%. Every $5.0 million of debt issued equates to a 1.1% increase in the District’s debt-to-plant ratio. If the District were to issue $30.0 million of debt, its debt-to-plant ratio would be approximately 28%. The District’s long-term debt load is an important factor and will be a part of the analysis that will be performed in the next few months. A financial advisor is being hired to assist in the evaluation of the District’s debt load and the advisability of this issuance. The sewer side of the District currently has no outstanding debt issuances. The proposed debt of $5.0 million for sewer improvements would put the sewer debt-to-plant ratio at 21%, which is considered moderate. Future Increases in the Liability: The current CalPERS liability discussed in this report doesn’t include the expected increase in the unfunded liability from the change in the discount rate from 7.375% to 7.0%. It also does not include the benefit of the CalPERS rate of return of 11.2% in 2016-17 compared to the 7.375% discount rate. Additional future changes in the CalPERS liability will occur as a result of changes in a number of actuarial assumptions, such as longevity or retirement ages. If future changes negatively affect the liability, those changes would be independent of the improvements in the funding being recommended here. Next Steps Staff will hire a financial advisor on this bond issuance and consider the various complexities of this plan. Alternatives will be considered and an evaluation will be performed. One consideration in this evaluation is the long-term need for debt. A recommendation will then be brought to the Board with the appropriate resolutions needed to move the project forward. Conclusion Due to the complexity of this debt issuance with its connection to the funding of CalPERS, the recommendation will not be finalized until a financial advisor has been hired and reviews the recommendation. Staff is expecting to incorporate a funding strategy into the upcoming proposed FY2019 budget recommendation. The savings are anticipated to lower the projected rate increases by up to 1.2% for water customers and 1.3% for sewer customers. FISCAL IMPACT: Joe Beachem, Chief Financial Officer This is an informational item only. STRATEGIC GOAL: The District ensures its continued financial health through sound policies and procedures. LEGAL IMPACT: None. Attachments: A) Committee Action B) Presentation ATTACHMENT A SUBJECT/PROJECT: Communicate to the Board a Lower Cost Strategy for Funding CalPERs COMMITTEE ACTION: The Finance and Administration Committee (Committee) reviewed this item at a meeting held on April 17, 2018 and the following comments were made: Staff is presenting to the Board a proposed strategy to fund a portion of the CalPERS unfunded liability at a lower cost. Staff reviewed information in the staff report. It was indicated that staff is exploring using unrestricted reserves to pay down the unfunded liability. In doing so, it would require that the District reallocate unrestricted reserves currently designated for CIP projects to CalPERS and issue debt for the CIP projects. To supplement this strategy, the District may also reassign $1.2 million in retiree medical funding to CalPERS. This reallocation is proposed only after the OPEB fund is fully funded in 2022. Staff reviewed multiple levels of CalPERS funding (75%, 85% and 100%) which are summarized on slide number four (4) by funding percentage. A financial advisor will be consulted to evaluate the potential impact the issuance of debt would have on the District’s credit rating and staff will focus on a recommendation that would not adversely impact the District’s financial strength. It was indicated that staff is also focusing on the changes in the liability increases or decreases due to CalPERS assumption modifications. CalPERS makes modifications to assumptions in each annual actuarial valuation. The most recent and significant of the known changes is CalPERS’ reduction in the discount rate from 7.5% to 7% which will be phased in over the next few years. The next steps is staff will work with a financial advisor to determine the best options for the District and incorporate the option into the FY 2019 budget. The expection is that significant savings can be achieved by advanced funding the CalPERS debt by substituting 7% debt with debt that is close to half this cost. The ratepayers for both water and sewer are expected to realize a significant savings should the District move forward with this strategy. Staff indicated in response to an inquiry from the Committee that the green line on the graph on slide number seven (7) of the powerpoint presentation represents the savings that will be achieved and in 2042 CalPERS is expected to be fully funded (approximately 22 years). At the 22 year point, the debt issuance starts costing the District as the debt is for another eight years (30-year debt issuance). The savings in the initial years due to the lower interest rate, offsets/exceeds the additional cost that you have in the later years of the issuance. Staff will discuss this aspect of the debt issuance with the financial advisor to determine if the issuance should be a 20-year term so that it matches when the CalPERS unfunded liability would be fully funded. It was also noted, as mentioned earlier in staff’s presentation, that once the OPEB unfunded liability is fully funded, then the District can shift the employees’ payment to the CalPERS unfunded liability. This will provide additional savings to the District. In response to an inquiry from the Committee, staff indicated that the goal is to have this analysis completed to incorporate the findings into the next budget year (FY 2019). Upon completion of the discussion, the committee supported staffs’ recommendation to explore this strategy and presentation to the full board as an informational item. CalPERS Funding Alternative Funding Solutions May 2, 2018 Background Overview of the District’s Pension Status Funding Options Recommendation Impact Questions 2 Overview –(Figures as of June 30, 2016) $48.1 million unfunded liability $46.3 million – Water $ 1.8 million – Sewer Funded percentage as of June 30, 2016: 60.5% Status Quo 100% funded in FY2041 Government Code section 7522.02-4(c)1 eliminated ability to reduce the benefit for individuals employed prior to January 1, 2013 PEPRA – Reduced benefit for new PERS members hired on or after January 1, 2013 % Funded Year 75% 2026 85% 2032 100% 2041 3 Savings Matrix 75% Funding Level (Status Quo 75% funded in 7 years) No additional funding needed 85% Funding Level (Status Quo 85% funded in 2032 = 13 years) 100% Funding Level Years to Achieve CIP Debt Funding PV of Savings Annual Rate Savings 10 $7.0 Million $4.6 Million 0.2% Years to Achieve CIP Debt Funding PV of Savings Annual Rate Savings 10 $36.0 Million $17.0 Million 1.3% 15 $30.5 Million $15.3 Million 1.2% 20 $15.0 Million $6.6 Million 0.6% Without shifting of $1.2 M of OPEB funding beginning 2021, and debt funding in 2019.4 Maximum Debt Scenario Water Transfer $30 million of unrestricted water reserves to CalPERs Water issues $30 million of debt to fund water CIP Based on 3-year CIP plan Sewer Transfer $1.8 million of unrestricted sewer reserves to CalPERS Based on UAL and 3-year CIP Plan 5 Water Impact $30 million payment •$15.3 million net present value savings over 30 years •$700,000 average annual savings over the next 6 years •1.2% benefit to rates •80% funded after payment •100% funded in 15 years 6 Sewer Impact $1.8 million payment •$437,000 net present value savings over 30 years •$40,000 average annual savings over the next 6 years •1.3% benefit to rates •100% funded and eliminates the UAL 7 Concerns Stock Market Fluctuations Long-term horizon Debt Levels Remain above the 150x debt coverage target Future Liability Increases/CalPERs assumption modification 8 Next Steps Financial Advisor Incorporate Advised Options into the FY 2019 Budget 9 Questions 10 STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: May 2, 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: GIS: Orthophoto Image for E-Facility Book - Staff processed and integrated the newly acquired orthophotos into the e-Facility book application. The new orthophotos, or aerial images, are crucial to Engineering staff to help verify meter permits, identify potential sewer laterals, and new construction vilification. Human Resources: Employee Picnic Scheduled - Please mark your calendars to attend the District’s Annual Employee Picnic. The picnic will be held at The San Diego Zoo on Saturday, August 11th, from 11:00 am – 2:00 pm. Recruitments/New Hires/Promotions: o A Utility Worker position was filled in April. o The District is recruiting for Accounting Technician, Water Systems Operator I/II/III, and Recycled Water Specialist (upcoming). o Applications are being collected to have on file in case there is an opening for Utility Worker. These vacancies are related to retirements or transfers to other departments and are critical to District operations. 2 IT Operations: Enterprise Content Management System (ECMS)/Public Portal - With the focus on public documentation access, staff began the configuration and implementation of the District’s new document management portal. The new access, Weblink, will serve as a public facing portal enabling the community to actively search for District documents; thus minimizing staff’s involvement for public records requests and other related document searches. The public will gain a simplified and customized searching experience by requesting public documents similar to other popular search engines on the Internet. Purchasing & Facilities: Rapid Water Bottle Filling Stations – At the Board of Directors’ request, Elkay water fill stations will be installed by Facilities staff at the Administration lobby, Administration gym, Warehouse, Operations lobby, and Operations Crew Lead office. Elkay's EZH2O™ bottle filling stations minimize plastic bottle waste, fill three times faster than standard drinking fountains, and provide one-handed operation with an electronic sensor for touchless and sanitary operation. Installation is schedule to be complete by the first week in May. BidSync Solicitations – There are currently two (2) solicitations out on BidSync: o “Interconnect Air-vac Valve Replacement (CIP P2623)” – For the replacement of existing combination air-vac valves and all other work and appurtenances with a budgeted amount of $80,000. o “Pipeline CIP Improvements - Phase II” – For the construction of cathodic protection improvements, including bond wires, cathodic test stations, insulating flanges, and rehabilitation of galvanic anodes and impressed current system rectifiers, and all other work and appurtenances in accordance with the contract documents at an engineer’s estimate of $350,000. Safety & Security: Mutual Aid Agreement Update – Staff attended the second planning meeting on April 4th. A collective review of agencies input and an update to the draft revision was completed. A copy of the revised draft will become available, once received, and staff will submit the same to District stakeholders for internal circulation/review and input. Additional information and updates will be shared as information develops. Monthly WebEOC Exercise – Staff completed the April monthly WebEOC exercise, which consisted of: “Locate the Sample Action Plan for Earthquakes under Plugins, File & map library, Sample Planning 3 documents. The water sector is located under the Ops Construction & Engineering branch”. This exercise was completed successfully. Meetings - Staff attended the American Red Cross Disaster Preparedness Academy. The key note speaker was former San Diego Mayor, Jerry Sanders. Topics discussed included: Emergency Action Planning, Communication Challenges in a Disaster, Active Threat Response, Stop the Bleed Training, and Disaster Recovery. District Security – The District is working with Facilities staff on securing (upon vacancy) the Salt Creek Golf course location. A list of security items and options for hardening the area, once vacated, was provided to staff. The list includes: securing front entrance with gate, alarming standing buildings, installing video surveillance cameras, check the removal of above ground fuel island and washout water recycling equipment, post ‘No Trespassing’ signs on chain link fence at intervals of every 600 ft. (English and Spanish), post ‘No Trespassing’/‘No Swimming’/‘No Drinking’ signs at pond area (English and Spanish, same rule applies every 600 ft), and standby random US Security patrols, if needed. FINANCE: CSMFO Awards – The California Society of Municipal Finance Officers (CSMFO) has awarded a Budget Excellence Award for both the District’s FY 2017-2018 Operating Budget and the FY 2017-2018 Capital Budget. This is the 12th consecutive award for the Operating Budget and 13th consecutive award for the Capital Budget. Sewer Debt - The District has selected a financial advisor and will begin performing an analysis to determine the best type of debt to issue. Through the process of updating the sewer rate model, the possibility of deferring this debt issue is being evaluated. Once this timeline is solidified, and the financial advisor is consulted, a plan will be put in place to issue the debt to fund several sewer CIPs, the largest being the Campo Road Sewer Main Replacement. Fiscal Year (FY) 2019 Budget – Staff is finalizing the FY 2019 Operating and Capital Budgets for presentation to the Board on May 21, 2018. Salt Creek Golf Course – Staff is communicating with the Salt Creek lessee regarding the exit of the golf course and the transfer of the property back to the District. The lease was terminated on March 30. Highlands Golf is onsite on a Per Diem basis to remove all personal property. 4 Financial Reporting: o For the nine months ending March 31, 2018, there are total revenues of $77,244,197 and total expenses of $74,278,329. The revenues exceeded expenses by $2,965,868. o The market value shown in the Portfolio Summary and in the Investment Portfolio Details as of March 31, 2018 total $87,735,325 with an average yield to maturity of 1.369%. The total earnings year-to-date are $755,943. 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 April 2018, Pacific Hydrotech completed the reconstruction the earthen reservoir wall 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. It is anticipated that disinfection of the reservoir and placement of the reservoir back into service will occur in late April 2018. Excavation for the 870-2 pump station below grade components also began in April. The project is within budget and scheduled to be completed 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. The District’s water main relocation consultant (NV5) submitted a Basis of Design Report and 90% drawings for the relocations in Enrico Fermi Drive and Alta Road in late February 2018. Caltrans has scheduled completion of the design in May 2018 and the start of construction in mid-2019. Utility agreements corresponding to the final design will be presented to the District’s Committee and Board in the June/July 2019 timeframe. As part of the SR-11 project, Caltrans will need to acquire a portion of the District’s fee-owned right-of-way that is located in the Alta Road alignment south of Otay Mesa Road. Caltrans has submitted an appraisal of the District’s property they intend to acquire. Work to draft the purchase agreement and grant of easement to the District to secure the District’s senior rights is being completed. (P2453) 5 978-1 & 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 to service in July 2017. The 850-2 Reservoir was placed back in service on January 12, 2018. Contract acceptance by the District is pending a close out change order, which is scheduled for the May 2nd meeting of the Board of Directors. 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’s response is pending. 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. Work in April 2018 included construction of the sewer pipe installation between the Campo Road/Jamacha Road intersection and the area that fronts the Sheriff’s substation. Work at the East Bore Pit, which is located at the Campo Road/Jamacha Boulevard intersection, was halted during March 2018 due to active nesting of endangered species. The contractor removed the temporary traffic control and k-rail located along westbound Campo Road to open up the third westbound lane at the East Bore Pit in March 2018. It is anticipated that this traffic control will be reinstalled in September 2018 to facilitate the work at the East Bore Pit when environmental surveys confirm that nesting has been completed. During April 2018, work continued at the West Bore Pit, which is located adjacent to the intersection of Campo Road and Via Mercado. Boring and pipe jacking operations at the West Bore Pit were constructed under and across State Route 94. It is anticipated that sewer installation work at the West Bore Pit will be completed in May 2018. It is estimated that the contractor will complete work to restore the parking lot and bus station area at the Rancho San Diego Towne Center in late April 2018. In early April 2018, staff worked with the Regency Center property management to review the planned sewer construction and provide notification for work in the Rancho San Diego Village shopping center. In mid-April, work began at this shopping center. Work in this shopping center is occurring 6 at night. A majority of the work in Campo Road, within the Caltrans’ right-of-way, continues to be performed at night under traffic control. The project is within budget and 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 April 2018, TC Construction Company, Inc., the District’s contractor, completed installation, disinfection, testing, and placement of the new 12-inch water line into service along Hillsdale between Jamacha Road and Vista Grande Road. Base paving operations along Hillsdale Road also continued during April 2018. It is anticipated that customer service connections to the new main will be completed in April 2018. A change order to restore pavement, curb, gutter, and sidewalk repairs associated with the main break damage that occurred in October 2017 will be presented to the Board at the May 2nd meeting of the Board of Directors. The project is within budget and on schedule to complete in May 2018. (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 preliminary design report has been completed, with the final report submitted to the District on January 10, 2018. The changing of the Vista Vereda water line from a transmission main to local distribution only, and upgrading the water lines in Hidden Mesa Road to become a transmission main, is recommended based upon assessment of the challenges of reconstructing a transmission main along the same current alignment. A task order change was executed to revise the scope of work to reflect this. A community meeting was held on February 10, 2018. Staff continues to discuss the project with property owners who have requested additional information. During March, the 60% design was reviewed and potholing of existing utilities performed to verify proposed water line alignments. 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) 7 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. The Board approved a construction contract with Burtech Pipeline, Inc., at the March 2018 Board Meeting. The District’s sewer work is scheduled to begin once the Helix Water District’s water main relocation work is complete. The project is within budget and scheduled to complete in June 2018, pending a June 1, 2018 permit to start work by the County of San Diego. (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. At the April 2018 meeting of the Board of Directors, the Board approved a construction contract with Frank and Son Paving, Inc., for the OWD Administration & Operations Parking Lot Improvements, PH. II – Pavement Restoration project. It is anticipated that work on this project will begin in May 2018. The project is on schedule and 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 April 2018, the contractor began replacement of the structural rafters and girders that are included in change order No. 1, which was approved by the Board on April 4, 2018. This structural work on the interior of the reservoir is being performed at night. During April 2018, the contractor also erected exterior scaffolding and wrap so that exterior blasting may begin during day time hours. The project is 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. The County has extended the construction completion date to 8 July 2018 in response to several change orders with the contractor. Testing of the pumps is scheduled to begin in April 2018. (S2027) United States Government Accountability Office (GAO) Visit: On April 9, 2018, District staff met with GAO representatives from Denver and San Francisco who were in San Diego to do a Workshop on the Bureau of Reclamation’s Title XVI Water Reclamation and Reuse Program funding with several of the agencies that have received funding from this program. Staff from the Water Authority, Escondido, Sweetwater Authority and the District attended the meeting at the Richard A. Reynolds Desalination Facility in Chula Vista for a discussion on the process for project selection, financial audits of the money spent, the amount of money each agency contributed leveraging the Title XVI funding to generate a significant reduction in the need for imported water from the Colorado River. The Water Authority also presented information on how this region has focused on reducing demand for water with a presentation that noted the region is using the same volume of water it used 30 years ago, but has experienced significant growth in the population, employment, and the GDP over that same period. The Workshop lasted for two days and staff had the opportunity to tour the Richard A. Reynold’s Groundwater Desalination Facility, East County Advanced Water Purification, and the Ray Stoyer Water Recycling Facility. For the month of March 2018, the District sold 61 meters (145 EDUs), generating $1,257,302 in revenue. Projection for this period was 23.6 meters (30.8 EDUs), with a budgeted revenue of $270,083. The total revenue for Fiscal Year 2018 is $5,776,588 against the annual budget of $3,241,000. WATER SYSTEM OPERATIONS (reporting for March): The Treatment Plant will be reporting one permit violation to the Regional Water Quality Control Board (RWQCB) in the March 2018 monthly discharge report. o On February 24, 2018, a sample was reported as 300 MPN-100mL and on March 21, 2018, a sample was reported as 30 MPN-100mL. The permit violation was for having total coliform bacteria greater than an MPN of 23 per 100 mL in more than one sample in any 30-day period. Treatment Plant staff are confident the Treatment Plant effluent total coliform bacteria sample results are back in compliance. The issue may be attributed to the sample detention time, which was less than 90 minutes before being analyzed to provide full disinfection treatment representative of the effluent force main. Staff are in communication with the RWQCB on possible solutions for this issue and will work with the agency to mitigate similar types of occurrences. After several process adjustments, staff will have 9 a consultant assist with investigating why the Treatment Plant continues to be upset. On March 10, staff performed an emergency shutdown that affected four residential meters from 5:00PM to 8:00PM at 1925 Otay Lakes Road, Chula Vista in order to isolate a hit fire hydrant. Due to the short duration of the shutdown a water trailer was not on site. On March 14, staff removed the existing emergency generator at the Cottonwood Sewer Lift Station and installed a new emergency generator that is much quieter and cleaner than the previous one. On March 19, the District received an invoice from the City of San Diego regarding recycled water purchases. The read was estimated from the City of San Diego from February 2 to March 2 to be 6,481 HCF against our actual reads of 56,473 HCF, creating a variance of - 771.36%. The City of San Diego was notified of the variance to reconcile and the District’s Assistant Chief of Finance, Kevin Koeppen, was informed. On March 28, staff performed a shutdown to replace a leaking 6-inch fire hydrant valve at Grand Avenue and Apple Street in Spring Valley. The shutdown affected thirteen meters; five residential and eight commercial. Two water trailers were on site for affected customers. The shutdown lasted from 8:00AM to 3:30PM. On March 29, staff performed a shutdown to replace a leaking 6-inch line valve at Apple Street and Grand Avenue in Spring Valley. The shutdown affected 54 meters; 46 residential and eight commercial. Four water trailers were on site for affected customers. The shutdown lasted from 10:00AM to 7:00PM. Staff continues to monitor nitrification issues. Water operators are monitoring the system by taking nitrification tests at SDCWA’s connections, cycling reservoirs and adjusting chloramination ratios. Purchases and Change Orders: The following table summarizes purchases and Change Orders issued during the period of March 22, 2018 through April 17, 2018 that were ithin staff signatory authority: Date Action Amount Contractor/ Consultant Project 03/22/18 P.O. $8,707.39 Groupware Technology, Inc. Data Center Equipment 03/22/18 P.O. $9,209.20 Webb Information Systems Desktop Computers 10 Water Conservation and Sales: Water Conservation – March 2018 usage was 19% lower than March 2013. Since March 2017, customers have saved an average of 8% over 2013 levels. 03/28/18 P.O. $7,623.31 Webb Information Systems Desktop Computers 03/28//18 P.O. $3,629.24 D&H Water Systems, Inc. Gas Monitor Parts 04/03/18 P.O. $1,401.13 8X8 Inc. Professional Services 04/03/18 P.O. $45,900.00 Innovyze, Inc. Software License 04/09/18 P.O. $8,566.13 Pinnacle Business Solutions Veeam Backup & Replication Enterprise 04/11/18 P.O. $6,084.63 U.S. Pure Water Corp. Water Stations 04/17/18 C.O. $44,495.77 TC Construction Co. Inc. Hillsdale Rd. 12- Inch Waterline Replacement Project (P2573) and Sewer Repairs Project (S2048) 11 The March potable water purchases were 1,813.0 acre-feet which is 6.0% above the budget of 1,710.1 acre-feet. The cumulative purchases through March were 21,951.3 acre-feet which is 11.1% above the cumulative budget of 19,755.0 acre-feet. The March recycled water purchases and production were 265.0 acre- feet which is 78.6% above the budget of 148.4 acre-feet. The cumulative production and purchases through March were 3,130.9 acre- feet which is 16.1% above the cumulative budget of 2,697.2 acre-feet. 12 Potable, Recycled, and Sewer (Reporting up to the month of March): Total number of potable water meters: 49,992. Recycled water consumption for the month of March: o Total consumption: 118.1 acre-feet or 38,457,672 gallons. o Average daily consumption: 1,240,570 gallons per day. o Total cumulative recycled water consumption since July 1, 2017: 3,108 acre-feet. o Total number of recycled water meters: 724. Wastewater flows for the month of March: o Total basin flow: 1,611,710 gallons per day. This is a decrease of 10% from March 2017. o Spring Valley Sanitation District Flow to Metro: 532,467 gallons per day. o Total Otay flow: 1,079,290 gallons per day. o Flow Processed at the Ralph W. Chapman Water Recycling Facility: 709,065 gallons per day. o Flow to Metro from Otay Water District: 370,226 gallons per day. By the end of March there were 6,109 wastewater EDUs. March flows were lower than normal. The Treatment Plant had a five-day shutdown to complete necessary maintenance on the chlorine scrubber. Check #Check Total 1,528.88 2,938.96 2,736.31 CHECK REGISTER Otay Water District Date Range: 3/22/2018 - 4/18/2018 Date Vendor Vendor Name Invoice Inv. Date Description Amount 2050079 04/11/18 18088 8X8 INC 2081875 10/10/17 PROFESSIONAL SVCS (INVOICE #2081875)1,400.00 2145909 03/14/18 TELECOM SYSTEM 127.75 2106941 12/13/17 PROFESSIONAL SVCS (INVOICE #2081875)1.13 2049987 03/28/18 18088 8X8 INC 2136972 03/01/18 TELECOM SVC & USAGE FEES (FEB-MAR 2018)5,921.27 5,921.27 2049988 03/28/18 01910 ABCANA INDUSTRIES INC 1021319 03/01/18 SODIUM HYPOCHLORITE 960.45 1021586 03/08/18 SODIUM HYPOCHLORITE 801.97 1021587 03/08/18 SODIUM HYPOCHLORITE 648.30 1021318 03/01/18 SODIUM HYPOCHLORITE 528.24 2050080 04/11/18 01910 ABCANA INDUSTRIES INC 1022160 03/22/18 SODIUM HYPOCHLORITE 835.59 1021912 03/15/18 SODIUM HYPOCHLORITE 672.31 1022159 03/22/18 SODIUM HYPOCHLORITE 652.14 1021911 03/15/18 SODIUM HYPOCHLORITE 576.27 2050081 04/11/18 08488 ABLEFORCE INC 7882 04/02/18 SHAREPOINT SERVICES (3/1/18-3/29/18)3,300.00 3,300.00 2049989 03/28/18 18122 ACC BUSINESS 180463233 02/27/18 INTERNET SERVICE (FEB 2018)1,072.20 1,072.20 2050037 04/04/18 18685 ADEL YELDA Ref002503153 04/02/18 UB Refund Cst #0000028112 32.83 32.83 2049990 03/28/18 11462 AEGIS ENGINEERING MGMT INC 1427 03/06/18 DEVELOPER PLAN REVIEW (2/3/18-3/2/18)3,965.00 3,965.00 2050082 04/11/18 15024 AIRX UTILITY SURVEYORS INC 2602282018 03/14/18 UTILITY LOCATING SERVICES (2/1/18-2/28/18)7,964.00 7,964.00 2050038 04/04/18 08967 ANTHEM EAP 76603 03/26/18 EMPLOYEE ASSIST PROG (APR-JUNE 2018)929.91 929.91 2050122 04/18/18 18733 AQUA CLEAN Ref002503961 04/17/18 UB Refund Cst #0000239842 1,749.95 1,749.95 2050083 04/11/18 03492 AQUA-METRIC SALES COMPANY 0068949IN 03/22/18 INVENTORY 10,875.52 10,875.52 2049991 03/28/18 17264 ARTIANO SHINOFF 300364 03/12/18 LEGAL SERVICES (THRU 2/28/18)35,596.05 35,596.05 2049992 03/28/18 07785 AT&T 000010907662 02/12/18 TELEPHONE SERVICES (1/12/18-2/11/18)4,091.34 4,091.34 2049993 03/28/18 18599 ATKINSON, ANDELSON, LOYA, RUUD 540680 02/28/18 LEGAL SERVICES (FEBRUARY 2018)2,832.38 2,832.38 2050084 04/11/18 03509 BELL, RITA 041018 04/10/18 STAFF EXPENSE REIMB (4/10/18)200.00 200.00 2050039 04/04/18 17613 BIENVENUE, DONALD 03292018BD 03/29/18 TUITION REIMBURSEMENT 381.57 381.57 2050085 04/11/18 18726 BRETT OLSON 2635040618 04/06/18 CUSTOMER REFUND 294.93 294.93 2049994 03/28/18 08156 BROWNSTEIN HYATT FARBER 713860 03/15/18 LEGISLATIVE ADVOCACY (THRU 2/28/18)4,227.10 4,227.10 2050123 04/18/18 18154 BUSINESSOLVER.COM INC 0045232 03/26/18 ACA SERVICES (MAR 2018)327.00 327.00 2049995 03/28/18 08490 CALIFORNIA BANK & TRUST 502282018 03/07/18 RET/TC CONST A#7003 (ENDING 2/28/18)9,439.04 9,439.04 2050086 04/11/18 15177 CAROLLO ENGINEERS INC 0165587 03/15/18 CONSTRUCTION 870-2 PS (2/1/18-2/28/18)25,759.75 25,759.75 Page 1 of 8 Check #Check Total CHECK REGISTER Otay Water District Date Range: 3/22/2018 - 4/18/2018 Date Vendor Vendor Name Invoice Inv. Date Description Amount 4,001.00 882.68 1,377.00 8,851.74 376.51 2050086 04/11/18 15177 CAROLLO ENGINEERS INC 0165587 03/15/18 CONSTRUCTION 870-2 PS (2/1/18-2/28/18)25,759.75 25,759.75 2050040 04/04/18 13953 CARSON TRAILER INC 251390 02/13/18 CP# 11 HIGHLINE TRAILER 5,894.58 5,894.58 2050124 04/18/18 18731 CHRISTINA AHUMADA Ref002503959 04/17/18 UB Refund Cst #0000222954 63.08 63.08 2050125 04/18/18 18730 CHRISTOPHER ROBINSON Ref002503958 04/17/18 UB Refund Cst #0000174986 26.67 26.67 2049996 03/28/18 04119 CLARKSON LAB & SUPPLY INC 95097 02/28/18 BACTERIOLOGICAL TESTING (2/23/18-2/25/18)1,188.00 95091 02/28/18 BACTERIOLOGICAL TESTING (2/13/18-2/14-18)604.00 95093 02/28/18 BACTERIOLOGICAL TESTING (2/21/18)529.00 95094 02/28/18 BACTERIOLOGICAL TESTING 456.00 95095 02/28/18 BACTERIOLOGICAL TESTING 304.00 95089 02/28/18 BACTERIOLOGICAL TESTING (2/5/18)263.00 95092 02/28/18 BACTERIOLOGICAL TESTING (2/20/18)263.00 95096 02/28/18 BACTERIOLOGICAL TESTING (2/20/18)206.00 95090 02/28/18 BACTERIOLOGICAL TESTING (2/6/18)188.00 2050041 04/04/18 08406 COBURN-BOYD, LISA 032518032818 04/02/18 TRAVEL EXPENSE REIMB (3/25/18-3/28/18)259.79 259.79 2050042 04/04/18 11056 CONCHAS, FREDERICK 040218FC 04/03/18 BOOT REIMBURSEMENT 150.00 150.00 2049997 03/28/18 18331 CORE & MAIN LP I445558 CREDIT MEMO -808.13 I445554 CREDIT MEMO -808.13 I471315 03/12/18 INVENTORY 2,498.94 2050087 04/11/18 18331 CORE & MAIN LP I575656 03/16/18 INVENTORY 8,356.02 8,356.02 2050126 04/18/18 02612 COUNCIL OF WATER UTILITIES 04172018 04/16/18 BUSINESS MEETING 45.00 45.00 2049998 03/28/18 00099 COUNTY OF SAN DIEGO DPWAROTAYMWD01021803/08/18 EXCAVATION PERMITS (JAN-FEB 2018)19,841.22 19,841.22 2050127 04/18/18 00184 COUNTY OF SAN DIEGO 2003193E60829031804/04/18 SHUT DOWN TEST (3/26/18)918.00 2003193E60212031804/04/18 SHUT DOWN TEST (3/19/18)229.50 2003193E60249031804/04/18 SHUT DOWN TEST (3/19/18)229.50 2050128 04/18/18 00184 COUNTY OF SAN DIEGO 2818021418 02/14/18 UPFP PERMIT RENEWAL (4/30/18-4/30/19)625.00 625.00 2050088 04/11/18 17770 COX BUSINESS 6702032418 03/24/18 TELECOM SVCS / METRO-E (3/24/18-4/23/18)8,717.27 0301032918 03/29/18 TELECOM SVCS / METRO-E (3/28/18-4/27/18)134.47 2050043 04/04/18 17770 COX BUSINESS 6801031318 03/13/18 TELECOM SVCS / METRO-E (3/12/18-4/11/18)242.04 6701031518 03/15/18 TELECOM SVCS / METRO-E (3/14/18-4/13/18)134.47 2050044 04/04/18 18695 DANIEL MANGIAVILLANO Ref002503164 04/02/18 UB Refund Cst #0000233186 14.99 14.99 2050089 04/11/18 18705 DELPAK SYSTEMS LTD EI1883000043 03/27/18 GPS TRACKING SYSTEM 1,525.75 1,525.75 2050045 04/04/18 18699 DOUGLAS SHELLSTROM Ref002503168 04/02/18 UB Refund Cst #0000240454 1,437.39 1,437.39Page 2 of 8 Check #Check Total CHECK REGISTER Otay Water District Date Range: 3/22/2018 - 4/18/2018 Date Vendor Vendor Name Invoice Inv. Date Description Amount 17,819.00 2050045 04/04/18 18699 DOUGLAS SHELLSTROM Ref002503168 04/02/18 UB Refund Cst #0000240454 1,437.39 1,437.39 2050090 04/11/18 17612 ECS IMAGING INC 12916 03/09/18 SOFTWARE LICENSE 36,000.00 36,000.00 2050046 04/04/18 18686 ELENA FLORES Ref002503154 04/02/18 UB Refund Cst #0000032826 5.32 5.32 2050047 04/04/18 18684 EUSEBIO CARDOSA Ref002503152 04/02/18 UB Refund Cst #0000019065 37.28 37.28 2049999 03/28/18 03546 FERGUSON WATERWORKS # 1083 0626174 03/06/18 INVENTORY 9,145.50 9,145.50 2050000 03/28/18 17888 FIRST AMERICAN DATA TREE LLC 9003400218 02/28/18 ONLINE DOCUMENTS 99.00 99.00 2050001 03/28/18 16469 FIRST CHOICE SERVICES 099011 03/01/18 COFFEE SERVICES 842.60 842.60 2050091 04/11/18 11607 FISHER SCIENTIFIC COMPANY LLC 8969171 03/28/18 LABORATORY EQUIPMENT 9,793.62 9,793.62 2050002 03/28/18 11962 FLEETWASH INC x-1262313 03/02/18 FLEET VEHICLE WASHING (3/2/18)145.80 145.80 2050048 04/04/18 18600 FRANCHISE TAX BOARD Ben2503221 04/05/18 BI-WEEKLY PAYROLL DEDUCTION 125.00 125.00 2050129 04/18/18 18600 FRANCHISE TAX BOARD Ben2503988 04/19/18 BI-WEEKLY PAYROLL DEDUCTION 125.00 125.00 2050130 04/18/18 18727 FRANCHISE TAX BOARD Ben2503990 04/19/18 BI WEEKLY PAYROLL DEDUCTION 481.00 481.00 2050003 03/28/18 13563 FRIENDS OF THE WATER 425 02/07/18 GARDEN TOURS (1/16/18-1/31/18)3,800.00 3,800.00 2050049 04/04/18 13563 FRIENDS OF THE WATER 437 03/29/18 GARDEN TOURS (3/6/18-3/15/18)3,040.00 3,040.00 2050092 04/11/18 17855 GASTELUM, HECTOR 032818032918 04/05/18 EXPENSE REIMBURSEMENT (3/28/18-3/29/18)39.00 39.00 2050004 03/28/18 12907 GREENRIDGE LANDSCAPE INC 16624 02/28/18 LANDSCAPING SERVICES (FEB 2018)8,909.50 16452 01/17/18 LANDSCAPING SERVICES (JAN 2018)8,909.50 2050093 04/11/18 09715 GUTIERREZ, JUAN 1226783 04/09/18 PRESCRIPTION GLASSES REIMBURSEMENT 342.00 342.00 2050005 03/28/18 00174 HACH COMPANY 10857228 02/28/18 MONOCHLORAMINE ANALYZER SUPPLIES 3,587.29 3,587.29 2050094 04/11/18 03668 HARRELL & COMPANY ADVISORS LLC 032118 03/21/18 PREP & FILING OF DISCLOSURE ANNUAL RPTS 1,250.00 1,250.00 2050050 04/04/18 18700 HAZARD CONSTRUCTION CO Ref002503169 04/02/18 UB Refund Cst #0000240625 1,078.42 1,078.42 2050095 04/11/18 18436 HAZEN AND SAWYER DPC 200940001 03/16/18 HYDRAULIC MODELING (2/1/18-2/28/18)4,052.50 4,052.50 2050096 04/11/18 10973 HDR INC 1200109491 03/19/18 SEWER RATE STUDY (2/4/18-3/3/18)5,085.30 5,085.30 2050131 04/18/18 18734 HELIX ENVIRONMENTAL CONST GRP Ref002503962 04/17/18 UB Refund Cst #0000241282 1,903.82 1,903.82 2050006 03/28/18 02008 HELIX ENVIRONMNTL PLANNING INC 64972 03/12/18 ENVIRONMENTAL SERVICES (2/1/18-2/28/18)10,234.68 10,234.68 2050007 03/28/18 13349 HUNSAKER & ASSOCIATES 2018020003 03/05/18 LAND SURVEYING (2/1/18-2/28/18)5,384.00 5,384.00 2050097 04/11/18 15622 ICF JONES & STOKES INC 0128652 03/21/18 ENVIRONMENTAL SVCS (1/27/18-2/23/18)3,880.00 0128575 03/21/18 ENVIRONMENTAL SVCS (1/27/18-2/23/18)3,032.51 Page 3 of 8 Check #Check Total CHECK REGISTER Otay Water District Date Range: 3/22/2018 - 4/18/2018 Date Vendor Vendor Name Invoice Inv. Date Description Amount 12,596.05 17,364.79 27,813.00 0128649 03/21/18 ENVIRONMENTAL SVCS (1/27/18-2/23/18)2,474.07 0128581 03/21/18 ENVIRONMENTAL SVCS (1/27/18-2/23/18)1,910.00 0128666 03/21/18 ENVIRONMENTAL SVCS (1/27/18-2/23/18)1,299.47 2050008 03/28/18 17816 INDUSTRIAL SCIENTIFIC CORP 2076299 02/28/18 GAS DETECTION PROGRAM (FEB 2018)704.58 704.58 2050009 03/28/18 08969 INFOSEND INC 133501 02/28/18 BILL PROCESSING SVCS (FEB 2018)11,867.69 133500 02/28/18 BILL PROCESSING SVCS (FEB 2018)3,277.93 133722 03/02/18 BILL PROCESSING SVCS (FEB 2018)2,219.17 2050098 04/11/18 15368 INTEGRITY MUNICIPAL SYSTEMS 7595 03/20/18 SCRUBBER MAINTENANCE 42,258.75 42,258.75 2050099 04/11/18 17106 IWG TOWERS ASSETS II LLC 438001 04/01/18 ANTENNA SUBLEASE (APR 2018)1,673.00 1,673.00 2050010 03/28/18 10563 JCI JONES CHEMICALS INC 750018 03/05/18 CHLORINE GAS 1,837.80 1,837.80 2050011 03/28/18 18682 JESUS ESPINOZA 6911032318 03/23/18 CUSTOMER REFUND 1,594.49 1,594.49 2050100 04/11/18 18725 JODIE SAWINA 2254040618 04/06/18 CUSTOMER REFUND 790.00 790.00 2050132 04/18/18 18735 JOHN CANTON Ref002503963 04/17/18 UB Refund Cst #0000242506 1,832.73 1,832.73 2050051 04/04/18 18689 JOSE ANGULO Ref002503158 04/02/18 UB Refund Cst #0000147566 10.91 10.91 2050052 04/04/18 18693 JUDITH CHAVEZ Ref002503162 04/02/18 UB Refund Cst #0000229843 25.20 25.20 2050053 04/04/18 18701 JUDY OSTBERG Ref002503170 04/02/18 UB Refund Cst #0000241523 233.69 233.69 2050054 04/04/18 18694 JULIA FLORES Ref002503163 04/02/18 UB Refund Cst #0000232429 23.71 23.71 2050012 03/28/18 05840 KIRK PAVING INC 6729 02/28/18 PAVING SERVICES 19,826.00 6730 02/28/18 PAVING SERVICES 4,512.00 6731 02/28/18 PAVING SERVICES 3,475.00 2050055 04/04/18 14149 LARA JOA Ref002503157 04/02/18 UB Refund Cst #0000143133 33.27 33.27 2050101 04/11/18 07591 MA, DONGXING 030518030918 03/23/18 TRAVEL EXPENSE REIMB (3/5/18-3/9/18)1,351.32 1,351.32 2050056 04/04/18 07591 MA, DONGXING 030518030918 03/23/18 TRAVEL EXPENSE REIMB (3/5/18-3/9/18)1,415.32 1,415.32 2050057 04/04/18 18690 MARIA VALENZUELA Ref002503159 04/02/18 UB Refund Cst #0000214300 7.15 7.15 2050058 04/04/18 18691 MARILYN COTA Ref002503160 04/02/18 UB Refund Cst #0000216939 58.62 58.62 2050013 03/28/18 06648 MEASUREMENT CONTROL 199135 03/05/18 ZENNER BARREL LOCK & CAP 91.33 91.33 2050059 04/04/18 16613 MISSION RESOURCE CONSERVATION 387 04/02/18 WATERSMART SERVICES (MAR 2018)250.00 250.00 2050060 04/04/18 17818 MUFG SECURITIES AMERICAS INC 0402180017 04/02/18 REMARKETING FEE (1/1/18-3/31/18)1,674.58 1,674.58 2050133 04/18/18 16255 NATIONWIDE RETIREMENT Ben2503978 04/19/18 BI-WEEKLY DEFERRED COMP PLAN 15,311.12 15,311.12 2050061 04/04/18 16255 NATIONWIDE RETIREMENT Ben2503211 04/05/18 BI-WEEKLY DEFERRED COMP PLAN 15,311.12 15,311.12Page 4 of 8 Check #Check Total CHECK REGISTER Otay Water District Date Range: 3/22/2018 - 4/18/2018 Date Vendor Vendor Name Invoice Inv. Date Description Amount 13,479.52 2050061 04/04/18 16255 NATIONWIDE RETIREMENT Ben2503211 04/05/18 BI-WEEKLY DEFERRED COMP PLAN 15,311.12 15,311.12 2050102 04/11/18 18172 NIGHTCODERS 134 04/02/18 WEB CONSULTING 1,485.00 1,485.00 2050014 03/28/18 18172 NIGHTCODERS 131 03/12/18 WEB CONSULTING 3,080.00 3,080.00 2050015 03/28/18 00761 NINYO & MOORE GEOTECHNICAL 215784 02/27/18 GEOTECHNICAL SERVICES (12/30/17-1/26/18)2,153.00 2,153.00 2050103 04/11/18 00761 NINYO & MOORE GEOTECHNICAL 216122 03/14/18 GEOTECHNICAL SERVICES (1/27/18-2/23/18)1,318.75 1,318.75 2050016 03/28/18 07447 NTU TECHNOLOGIES INC 10164 02/20/18 POLYMER 929 TOTE 3,288.53 3,288.53 2050017 03/28/18 18332 NV5 INC 83461 02/28/18 ENGINEERING DESIGN (1/1/18-1/27/18)45,890.00 45,890.00 2050018 03/28/18 03215 O'DONNELL, MICHAEL 030518030818 03/26/18 TRAVEL EXPENSE REIMB (3/5/18-3/8/18)154.51 154.51 2050104 04/11/18 06646 PACIFIC HYDROTECH CORPORATION 302282018 03/13/18 870-2 PS REPLACEMENT (ENDING 2/28/18)1,461,892.22 1,461,892.22 2050105 04/11/18 01002 PACIFIC PIPELINE SUPPLY INC 320906 03/16/18 INVENTORY 8,186.63 8,186.63 2050019 03/28/18 01002 PACIFIC PIPELINE SUPPLY INC 320675 03/07/18 INVENTORY 2,883.39 2,883.39 2050106 04/11/18 18562 PACIFIC WESTERN BANK 302282018 03/13/18 RET/PACIFIC HYDRO A#7533 (ENDING 2/28/18)76,941.70 76,941.70 2050107 04/11/18 00137 PETTY CASH CUSTODIAN 041018 04/10/18 PETTY CASH REIMBURSEMENT 397.51 397.51 2050020 03/28/18 15081 PINOMAKI DESIGN 5679 02/28/18 GRAPHIC DESIGN 445.00 445.00 2050108 04/11/18 03562 PIPELINE PRODUCTS INC 62685 03/26/18 VALVE ENCLOSURES 6,739.76 62668 03/23/18 VALVE ENCLOSURES 6,739.76 2050109 04/11/18 06419 PLANT SOUP INC 1162 03/22/18 PROFESSIONAL WRITING SERVICES 1,260.00 1,260.00 2050062 04/04/18 03351 POSADA, ROD 031118031618 03/28/18 TRAVEL EXPENSE REIMB (3/11/18-3/16/18)2,166.30 2,166.30 2050063 04/04/18 18641 PROFESSIONAL PIPE SERVICES Ref002503173 04/02/18 UB Refund Cst #0000242554 261.79 261.79 2050064 04/04/18 18697 PULICE CONSTRUCTION INC Ref002503166 04/02/18 UB Refund Cst #0000239869 778.32 778.32 2050065 04/04/18 18704 RAMONA PAVING & CONSTRUCTION Ref002503174 04/02/18 UB Refund Cst #0000242606 1,293.22 1,293.22 2050021 03/28/18 15647 RFYEAGER ENGINEERING LLC 18031 03/02/18 CORROSION SERVICES (2/1/18-2/28/18)8,100.00 8,100.00 2050022 03/28/18 18683 RICARDO GARCIA 8800032718 03/27/18 CUSTOMER REFUND 1,944.44 1,944.44 2050066 04/04/18 18692 RICHARD CHESHIRE Ref002503161 04/02/18 UB Refund Cst #0000217719 60.81 60.81 2050134 04/18/18 09588 ROGERS, CLOMA 041618 04/16/18 CUSTOMER SERVICE TRAINING 167.89 167.89 2050110 04/11/18 00003 SAN DIEGO COUNTY WATER AUTH 0000001653 03/22/18 WATERSMART PROGRAM (FEB 2018)1,090.00 1,090.00 2050023 03/28/18 00121 SAN DIEGO GAS & ELECTRIC 032018 03/26/18 UTILITY EXPENSES (MONTHLY)20,301.25 20,301.25 2050111 04/11/18 00121 SAN DIEGO GAS & ELECTRIC 040318 04/03/18 UTILITY EXPENSES (MONTHLY)70,317.19 Page 5 of 8 Check #Check Total CHECK REGISTER Otay Water District Date Range: 3/22/2018 - 4/18/2018 Date Vendor Vendor Name Invoice Inv. Date Description Amount 88,785.15 54,535.97 259.27 15,391.81 47.39 032618a 03/26/18 UTILITY EXPENSES (MONTHLY)18,467.96 2050135 04/18/18 00121 SAN DIEGO GAS & ELECTRIC 032518 03/25/18 UTILITY EXPENSES (MONTHLY)1,700.35 1,700.35 2050067 04/04/18 00121 SAN DIEGO GAS & ELECTRIC 032718 03/27/18 UTILITY EXPENSES (MONTHLY)33,130.36 032618 03/26/18 UTILITY EXPENSES (MONTHLY)20,807.99 032218 03/22/18 UTILITY EXPENSES (MONTHLY)597.62 2050024 03/28/18 18396 SIMPSON SANDBLASTING & SPECIAL 202282018 03/06/18 RESRVR COAT & UPGRADES (ENDING 2/28/18)40,381.79 40,381.79 2050025 03/28/18 16229 SMITH, TIMOTHY 020118021818 03/05/18 EXPENSE REIMBURSEMENT (FEB 2018)8.66 8.66 2050112 04/11/18 16229 SMITH, TIMOTHY 030118033118a 04/03/18 EXPENSE REIMBURSEMENT (MAR 2018)172.07 030118033118 04/04/18 MILEAGE REIMBURSEMENT (MAR 2018)87.20 2050136 04/18/18 09711 SPATIAL WAVE INC INV12504 02/08/18 GETAC S410 TOUGHBOOKS 6,299.07 6,299.07 2050068 04/04/18 01460 STATE WATER RESOURCES 03292018FC 03/29/18 CERTIFICATE RENEWAL 90.00 90.00 2050069 04/04/18 05755 STATE WATER RESOURCES 032918 03/29/18 CERTIFICATE RENEWAL 150.00 150.00 2050137 04/18/18 05755 STATE WATER RESOURCES 0851041618 04/16/18 CERTIFICATE RENEWAL 150.00 150.00 2050113 04/11/18 10339 SUPREME OIL COMPANY 449434 03/15/18 UNLEADED FUEL 11,054.93 449437 03/15/18 DIESEL FUEL 4,336.88 2050138 04/18/18 18376 SVPR COMMUNICATIONS 1205 02/28/18 COMMUNICATION CONSULTANT (FEB 2018)2,500.00 2,500.00 2050114 04/11/18 17704 T&T JANITORIAL INC 20184529 02/28/18 JANITORIAL SVCS (FEB 2018)4,780.00 4,780.00 2050026 03/28/18 07809 TC CONSTRUCTION CO 5400032618 03/26/18 CUSTOMER REFUND 419.00 419.00 2050027 03/28/18 01834 TC CONSTRUCTION CO INC 502282018 03/07/18 HILLSDALE RD PROJECTS (ENDING 2/28/18)179,341.85 179,341.85 2050028 03/28/18 03608 TELLIARD CONSTRUCTION OWD22018 03/07/18 AERATION CHANNEL & AIR PIPE RPLMNT 7,020.00 7,020.00 2050139 04/18/18 18736 TERRANCE PIRTLE Ref002503964 04/17/18 UB Refund Cst #0000242995 36.52 36.52 2050140 04/18/18 18064 THE HOWARD E NYHART CO INC 0138732 03/31/18 ACTUARIAL SERVICES (MAR 2018)265.00 265.00 2050141 04/18/18 18729 THOMAS ENGELHORN Ref002503957 04/17/18 UB Refund Cst #0000046967 7.48 7.48 2050115 04/11/18 14177 THOMPSON, MITCHELL 030118033118 03/29/18 MILEAGE REIMBURSEMENT (MAR 2018)28.89 030118033118a 03/29/18 EXPENSE REIMBURSEMENT (MAR 2018)18.50 2050029 03/28/18 18123 TRACE3 LLC 76541A 02/16/18 PROFESSIONAL SERVICES 2,400.00 2,400.00 2050116 04/11/18 18609 TRANSENE COMPANY INC 154123 01/24/18 POTASSIUM IODIDE 1,411.03 1,411.03 2050070 04/04/18 18703 TRANSTAR PIPELINE INC Ref002503172 04/02/18 UB Refund Cst #0000242369 1,215.66 1,215.66 2050030 03/28/18 00427 UNDERGROUND SERVICE ALERT 220180492 03/01/18 UNDERGROUND ALERTS 361.45 361.45 Page 6 of 8 Check #Check Total CHECK REGISTER Otay Water District Date Range: 3/22/2018 - 4/18/2018 Date Vendor Vendor Name Invoice Inv. Date Description Amount 588.93 21,062.00 2050117 04/11/18 15675 UNITED SITE SERVICES INC 1146479983 03/14/18 PORT. TOILET RENTAL (3/13/18-4/9/18)98.20 1146479975 03/14/18 PORT. TOILET RENTAL (3/13/18-4/9/18)80.01 1146479985 03/14/18 PORT. TOILET RENTAL (3/13/18-4/9/18)79.96 1146479980 03/14/18 PORT. TOILET RENTAL (3/13/18-4/9/18)79.96 1146479967 03/14/18 PORT. TOILET RENTAL (3/13/18-4/9/18)79.96 1146479972 03/14/18 PORT. TOILET RENTAL (3/13/18-4/9/18)79.96 1146479968 03/14/18 PORT. TOILET RENTAL (3/13/18-4/9/18)79.96 1146471509st 03/29/18 PORT. TOILET RENTAL (SALES TAX)10.92 2050142 04/18/18 06829 US SECURITY ASSOCIATES INC 2116798 03/29/18 PATROLLING SERVICES (MAR 2018)110.00 110.00 2050031 03/28/18 18517 UTILITY SERVICES ASSOC LLC 125666 02/28/18 2018 LEAK DETECTION SVCS 5,292.99 5,292.99 2050032 03/28/18 08028 VALLEY CONSTRUCTION MANAGEMENT SD177609 03/01/18 MGMT/INSP (2/1/18-2/28/18)19,412.00 SD23605 03/01/18 MGMT/INSP (2/1/18-2/28/18)1,650.00 2050071 04/04/18 01095 VANTAGEPOINT TRANSFER AGENTS Ben2503217 04/05/18 BI-WEEKLY DEFERRED COMP PLAN 14,884.55 14,884.55 2050143 04/18/18 01095 VANTAGEPOINT TRANSFER AGENTS Ben2503984 04/19/18 BI-WEEKLY DEFERRED COMP PLAN 14,882.79 14,882.79 2050072 04/04/18 06414 VANTAGEPOINT TRANSFER AGENTS Ben2503219 04/05/18 BI-WEEKLY 401A PLAN 5,060.39 5,060.39 2050144 04/18/18 06414 VANTAGEPOINT TRANSFER AGENTS Ben2503986 04/19/18 BI-WEEKLY 401A PLAN 4,260.39 4,260.39 2050145 04/18/18 18732 VIANKA ROSALES Ref002503960 04/17/18 UB Refund Cst #0000231750 30.24 30.24 2050118 04/11/18 10340 WAGEWORKS INC INV610478 03/23/18 FLEXIBLE SPENDING ACCT (MAR 2018)359.75 359.75 2050073 04/04/18 18687 WARREN CARTER Ref002503155 04/02/18 UB Refund Cst #0000072070 79.70 79.70 2050074 04/04/18 18698 WARREN HIBI Ref002503167 04/02/18 UB Refund Cst #0000240348 82.32 82.32 2050119 04/11/18 15807 WATCHLIGHT CORPORATION 567116 03/15/18 ALARM MONITORING (APR 2018)1,941.92 1,941.92 2050033 03/28/18 15807 WATCHLIGHT CORPORATION 559057 01/15/18 RE-INSTALL SECURITY EQUIP 16,398.67 16,398.67 2050120 04/11/18 14879 WATER CONSERVATION GARDEN 1203 03/26/18 GARDEN COSTS (4TH QTR FY 2018)24,112.50 24,112.50 2050121 04/11/18 15596 WEBB INFORMATION SYSTEMS 7903 03/14/18 DESKTOP COMPUTER 2,680.43 2,680.43 2050034 03/28/18 18173 WESTERN ALLIANCE BANK 802282018 03/07/18 RET/WEIR CONST (2/1/18-2/28/18)26,492.58 26,492.58 2050035 03/28/18 18101 WIER CONSTRUCTION CORP 802282018 03/07/18 SEWER REPLACEMENT (2/1/18-2/28/18)503,359.02 503,359.02 2050146 04/18/18 08023 WORKTERRA 0087242IN 02/28/18 EMPLOYEE BENEFITS (FEB 2018)795.00 795.00 2050075 04/04/18 18696 XANIA BANUELOS Ref002503165 04/02/18 UB Refund Cst #0000239280 24.19 24.19 2050076 04/04/18 18499 XPERA GROUP 006650018345 01/31/18 ECONOMIC OUTLOOK STUDY FY19 12,100.00 12,100.00 2050147 04/18/18 17088 YOKO MIYAI Ref002503956 04/17/18 UB Refund Cst #0000034268 95.21 95.21Page 7 of 8 Check #Check Total CHECK REGISTER Otay Water District Date Range: 3/22/2018 - 4/18/2018 Date Vendor Vendor Name Invoice Inv. Date Description Amount 2050147 04/18/18 17088 YOKO MIYAI Ref002503956 04/17/18 UB Refund Cst #0000034268 95.21 95.21 2050077 04/04/18 18702 YOUNGREN CONSTRUCTION Ref002503171 04/02/18 UB Refund Cst #0000241532 1,659.16 2050078 04/04/18 18688 ZAISER FAMILY TRUST Ref002503156 04/02/18 03/28/18 18215 ZAYO GROUP LLC 2018030024566 03/01/18 1,659.16 UB Refund Cst #0000119385 211.65 211.65 COLOCATION SERVICES (MAR 2018)2,148.96 2,148.96 Amount Pd Total:3,163,861.64 Check Grand Total:3,163,861.64 2050036 Page 8 of 8