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09-04-13 Board Packet (Part 1)
1 OTAY WATER DISTRICT BOARD OF DIRECTORS MEETING DISTRICT BOARDROOM 2554 SWEETWATER SPRINGS BOULEVARD SPRING VALLEY, CALIFORNIA WEDNESDAY September 4, 2013 3:30 P.M. AGENDA 1. ROLL CALL 2. PLEDGE OF ALLEGIANCE 3. APPROVAL OF AGENDA 4. APPROVE THE MINUTES OF THE REGULAR MEETING OF AUGUST 7, 2013 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 PUBLIC HEARING 6. PUBLIC HEARING ON RATE INCREASES THE BOARD WILL BE HOLDING A PUBLIC HEARING TO CONSIDER THE PROPOSED RATE INCREASES TO BE IMPLEMENTED IN THE FISCAL YEAR 2013-2014 OPERATING AND CAPITAL BUDGET. THE BOARD INVITES THE PUBLIC TO PROVIDE COMMENTS ON THE PROPOSED INCREASES a) APPROVE THE IMPLEMENTATION OF RATE CHANGES AS PRO-POSED FOR THE FISCAL YEAR 2013-2014 OPERATING AND CAPI-TAL BUDGET THROUGH THE ADOPTION OF ORDINANCE NO. 539 AMENDING SECTION 25, CONDITIONS FOR WATER SERVICE; SEC-TION 31, TEMPORARY WATER SERVICE; SECTION 34, ISSUANCE AND PAYMENT OF WATER BILLS; SECTION 38, SERVICE FOR FIRE PROTECTION SYSTEMS; SECTION 53, FEES, RATES, CHARGES AND CONDITIONS FOR SEWER SERVICE; AND APPENDIX A, SCHEDULE OF FEES OF THE DISTRICT’S CODE OF ORDINANCES; AUTHORIZE, FOR A PERIOD OF FIVE-YEARS, THE PASS-THROUGH OF COST IN- 2 CREASES FROM WATER WHOLESALERS AND SEWER SERVICE PROVIDERS; AUTHORIZE DISTRICT RATE INCREASES, FOR A PE-RIOD OF FIVE YEARS, NOT-TO-EXCEED 10% ANNUALLY; AND AU-THORIZE THE DETACHMENT OF PARCELS WITHIN IMPROVEMENT DISTRICTS (IDs) 19 AND 25 TO BE ANNEXED INTO IDs 22 AND 20 RESPECTIVELY (BEACHEM) 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) APPROVE A PROFESSIONAL AS-NEEDED LAND SURVEYING SER-VICES CONTRACT WITH AIRX UTILITY SURVEYOR, INC. AND AU-THORIZE THE GENERAL MANAGER TO EXECUTE AN AGREEMENT WITH AIRX IN AN AMOUNT NOT-TO-EXCEED $175,000 FOR A PERI-OD OF TWO (2) FISCAL YEARS (FY 2014 AND FY 2015) b) APPROVE RESOLUTION NO. 4217 AMENDING THE DISTRICT’S DEBT POLICY c) DECLARE FOUR (4) PARCELS OF PROPERTY AS SURPLUS AND AUTHORIZE THE GENERAL MANAGER TO DISPOSE OF THE PAR-CELS IN THE BEST INTEREST OF THE DISTRICT ACTION ITEMS 8. FINANCE, ADMINISTRATION AND INFORMATION TECHNOLOGY a) APPROVE AND UPHOLD STAFFS’ DECISION TO IMPOSE A FINE OF $5,000 TO SEAWORLD, d.b.a. AQUATICA SAN DIEGO, FOR AN ILLE-GAL CONNECTION TO A FIRE HYDRANT (CAREY) b) APPROVE RESOLUTION NO. 4216 SUPPORTING THE METRO WASTEWATER JOINT POWERS AUTHORITY’S GOAL TO DEVELOP A LONG-RANGE REGIONAL WATER REUSE PLAN THAT INCLUDES IN-DIRECT POTABLE REUSE AND RESULTS IN A SMALLER SECOND-ARY EQUIVALENT POINT LOMA WASTEWATER TREATMENT PLANT (SCOTT TULLOCH, ASST. CITY MANAGER, CITY OF CHULA VISTA) 9. ENGINEERING, OPERATIONS AND WATER RESOURCES a) APPROVE CHANGE ORDER NO. 2 TO THE EXISTING CONTRACT WITH SEPULVEDA CONSTRUCTION FOR A CREDIT IN THE AMOUNT OF <$8,972.14> FOR THE 30-INCH HUNTE PARKWAY POTABLE WA-TER PIPELINE PROJECT (MARTIN) 3 b) APPROVE CHANGE ORDER NOS. 3 AND 4 TO THE EXISTING CON-TRACT WITH SEPULVEDA CONSTRUCTION IN THE AMOUNTS OF $52,642.88 AND $28,427.49 RESPECTIVELY FOR THE 944-1R RECY-CLED WATER PUMP STATION UPGRADES AND SYSTEM EN-HANCEMENTS PROJECT (MARTIN) 10. BOARD a) DISCUSSION OF 2013 BOARD MEETING CALENDAR INFORMATIONAL ITEMS 11. THE FOLLOWING ITEM IS PROVIDED TO THE BOARD FOR INFORMATION-AL PURPOSES ONLY. NO ACTION IS REQUIRED ON THE FOLLOWING AGENDA ITEM: a) REPORT ON DIRECTORS’ EXPENSES FOR THE 4TH QUARTER OF FISCAL YEAR 2013 (BENHAM) b) FOURTH QUARTER OF FISCAL YEAR 2013 CAPITAL IMPROVEMENT PROGRAM REPORT (MARTIN) REPORTS 12. GENERAL MANAGER’S REPORT a) 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 LEGAL COUNSEL – ANTICIPATED LITIGATION [GOVERNMENT CODE §54956.9] 3 CASES 16. REPORT ON ANY ACTIONS TAKEN IN CLOSED SESSION. THE BOARD MAY ALSO TAKE ACTION ON ANY ITEMS POSTED IN CLOSED SESSION RETURN TO OPEN SESSION 4 17. REPORT ON ANY ACTIONS TAKEN IN CLOSED SESSION. THE BOARD MAY ALSO TAKE ACTION ON ANY ITEMS POSTED IN CLOSED SESSION 18. ADJOURNMENT All items appearing on this agenda, whether or not expressly listed for action, may be deliberated 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 participate 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 August 30, 2013, I posted a copy of the foregoing agenda near the regular meeting place of the Board of Directors of Otay Water District, said time be-ing at least 72 hours in advance of the regular meeting of the Board of Directors (Gov-ernment Code Section §54954.2). Executed at Spring Valley, California on August 30, 2013. /s/ Susan Cruz, District Secretary 1 MINUTES OF THE BOARD OF DIRECTORS MEETING OF THE OTAY WATER DISTRICT August 7, 2013 1. The meeting was called to order by President Lopez at 3:46 p.m. 2. ROLL CALL Directors Present: Croucher, Gonzalez, Lopez, Robak, and Thompson Directors Absent: None Staff Present: General Manager Mark Watton, General Counsel Dan Shinoff, Asst. GM German Alvarez, Chief of Engineering Rod Posada, Chief of Information Technology Geoff Stevens, Chief of Administration Rom Sarno, Chief of Water Operations Pedro Porras and District Secretary Susan Cruz and others per attached list. 3. PLEDGE OF ALLEGIANCE 4. APPROVAL OF AGENDA A motion was made by Director Gonzalez, seconded by Director Croucher and carried with the following vote: Ayes: Directors Croucher, Gonzalez, Lopez, Robak, and Thompson Noes: None Abstain: None Absent: None to approve the agenda. 5. APPROVE THE MINUTES OF THE REGULAR MEETING OF JULY 3, 2013 A motion was made by Director Gonzalez, seconded by Director Thompson and carried with the following vote: Ayes: Directors Gonzalez, Lopez, Robak, and Thompson Noes: None Abstain: Director Croucher Absent: None to approve the minutes of the regular meeting of July 3, 2013. 6. APPROVE THE MINUTES OF THE SPECIAL MEETING OF JUNE 13, 2013 2 A motion was made by Director Gonzalez, seconded by Director Thompson and carried with the following vote: Ayes: Directors Croucher, Gonzalez, Lopez, Robak, and Thompson Noes: None Abstain: None Absent: None to approve the minutes of the special meeting of June 13, 2013. 7. PUBLIC PARTICIPATION – OPPORTUNITY FOR MEMBERS OF THE PUBLIC TO SPEAK TO THE BOARD ON ANY SUBJECT MATTER WITHIN THE BOARD'S JURISDICTION BUT NOT AN ITEM ON TODAY'S AGENDA No one wished to be heard. CONSENT CALENDAR 8. ITEMS TO BE ACTED UPON WITHOUT DISCUSSION, UNLESS A REQUEST IS MADE BY A MEMBER OF THE BOARD OR THE PUBLIC TO DISCUSS A PARTICULAR ITEM: Director Robak pulled item 6f, APPROVE A ONE-YEAR FIXED WITH FOUR OPTION YEAR RENEWALS (FIVE-YEAR TERM) AGREEMENT WITH PAYMENTUS TO PROVIDE PHONE PAYMENT SERVICES IN AN AMOUNT NOT-TO-EXCEED $250,000 ($50,000 ANNUALLY), for discussion. Director Thompson pulled item 6c, APPROVE A PROFESSIONAL COATING INSPECTION SERVICES CONTRACT WITH HARPER & ASSOCIATES ENGINEERING, INC. IN AN AMOUNT NOT-TO-EXCEED $75,160 FOR A PERIOD OF ONE (1) YEAR (AUGUST 2013 THROUGH JULY 2014), for discussion. Upon a motion by Director Croucher, seconded by Director Robak and carried with the following vote: Ayes: Directors Croucher, Gonzalez, Lopez, Robak and Thompson Noes: None Abstain: None Absent: None to approve the following consent calendar items: a) APPROVE CHANGE ORDER NO. 3 TO THE EXISTING CONTRACT WITH LAYFIELD ENVIRONMENTAL SYSTEMS CORPORATION FOR A CREDIT IN THE AMOUNT OF <$39,618.43> FOR THE 624-1 RESERVOIR FLOATING COVER REPLACEMENT PROJECT 3 b) AWARD A PROFESSIONAL CONTRACT FOR AS-NEEDED PLAN REVIEW, INSPECTION, AND PROJECT MANAGEMENT SERVICES TO AEGIS ENGINEERING MANAGEMENT, INC. FOR DEVELOPER POTABLE AND RECYCLED WATER PROJECTS IN AN AMOUNT NOT-TO-EXCEED $350,000 FOR A PERIOD OF TWO (2) FISCAL YEARS (FYs 2014 AND 2015) d) APPROVE TWO (2) AGREEMENTS WITH BMB TOWER HOLDINGS, LLC, AN OKLAHOMA LIMITED LIABILITY COMPANY, FOR THE INSTALLATION OF A COMMUNICATIONS FACILITIES AT THE 485-1 AND 458-1 RESERVOIR SITES e) DECLARE THE IDENTIFIED VEHICLES AND EQUIPMENT AS SURPLUS TO THE DISTRICT’S NEEDS President Lopez presented item 6c for discussion: c) APPROVE A PROFESSIONAL COATING INSPECTION SERVICES CONTRACT WITH HARPER & ASSOCIATES ENGINEERING, INC. IN AN AMOUNT NOT-TO-EXCEED $75,160 FOR A PERIOD OF ONE (1) YEAR (AUGUST 2013 THROUGH JULY 2014) Director Thompson inquired with regard to the proposal rankings, how the rates are scored (how staff translates pricing into point scoring) and the rational for “pricing” to represent 15% of the score. Assistant Civil Engineer Kevin Cameron stated that 15% is utilized for all consultant proposals. He indicated this consultant will monitor the coating contractor as he applies the coating to the reservoirs. The rates presented are the consultants’ hourly rates and it was determined that it will take approximately four (4) months to complete the coating for the first tank and approximately three (3) months for the second tank. It is expected that the consultant would be at the job sites approximately 760 hours. In response to another inquiry from Director Thompson, Mr. Cameron indicated that if the consultant takes longer than the number of hours indicated in the contract, per the contract, the consultant would pay for the additional inspection hours. Staff noted that there have been times when the consultant has completed a job faster than estimated, but generally, staff can quantify from past projects the number of hours required to coat reservoirs. It was discussed that the inspection consultant would not need to be onsite when the coating contractor is blasting the old reservoir coating, he would only need to be onsite to inspect upon the completion of the blasting. Director Croucher indicated that six (6) or more years ago, the District only looked at the consultants’ qualifications when soliciting for service contracts. Through board/committee action and staffs’ support, the pricing was included as part of the rating. Approximately three (3) years later the ranking system was readjusted to where pricing became a little more important. Qualifications are 4 still the key element as the District wants to assure the consultant is qualified to provide the services, but pricing is given some consideration now. Director Thompson indicated that he felt that something worth looking into, in terms of the criteria, is where consultants’ pricing comes in. If the consultant charges less than the maximum, then he feels some evaluation of this is worth noting in the rankings. He stated that he did not really have the knowledge and wanted to inquire so he could have more understanding. General Manager Watton noted that because every job is a little different, it is difficult to do an across the board analysis. He stated in the case of recoating tanks, the District is not entirely sure what will be found in the field. A project may require more inspection services over a longer period of time depending on what is found. Staff manages the contracts through documentation, thus, consultants do not “low ball” their bids as they know that they will not be able to make up the difference through change orders as work on District’s projects is well-documented. Upon a motion by Director Thompson, seconded by Director Lopez and carried with the following vote: Ayes: Directors Croucher, Gonzalez, Lopez, Robak and Thompson Noes: None Abstain: None Absent: None to approve staffs’ recommendation. President Lopez presented item 6f for discussion: f) APPROVE A ONE-YEAR FIXED WITH FOUR OPTION YEAR RENEWALS (FIVE-YEAR TERM) AGREEMENT WITH PAYMENTUS TO PROVIDE PHONE PAYMENT SERVICES IN AN AMOUNT NOT-TO-EXCEED $250,000 ($50,000 ANNUALLY) Director Robak indicated that he was made aware of a bill payment service, “PayNearMe,” that had allowed another agency’s customer to pay his/her water bill at a 7-11 convenience store. He noted that, through a conversation with General Manager Watton, he understands that Otay customers can pay their bills at Walmart, Kmart and the Postal Annex. He inquired how the District advises customers of these payment options. Customer Service Manager Andrea Carey indicated that the information is located under the customer service area of the District’s website. Customer Service is currently working with Communications Officer Armando Buelna to see if the District could make this information even more visible on the website. The information was also provided in the Customer Pipeline Newsletter and in bill inserts. Director Robak suggested that the District add a link on the main page indicating, “bill pay options,” which then links to a list showing the different bill pay options. 5 In response to another inquiry from Director Robak, Ms. Carey indicated that the customers do pay a surcharge when paying their bills at Walmart, Kmart or the Postal Annex. The cost varies by location. Walmart charges a flat fee of $0.85 per payment; the Postal Annex charges $1.00 per payment and if the customer wishes to “rush” the payment (payment is forwarded within 24 hours), they pay a little more. She also indicated that Walmart allows customers to pay by debit card. The other locations only accept cash. It was discussed that if the District wished to provide customers the ability to pay their bill at 7-11, 7-11 requires that the District include the 7-11 logo on its website. The District is concerned with including the 7-11 logo on its website and is currently reviewing this option. Ms. Carey indicated that 5% of the District’s customers walk into the District’s office to pay their bill, 5% pay by phone, 30% pay by forwarding a check in the mail, 35% pay via the District’s website (auto payment) and 25% pay through payments forwarded from their bank accounts. The most cost effective payment is payments forwarded from a customer’s bank account. The District pays a small fee for this type transaction. The next most cost effective is auto payment which is about $.30 per payment. The District has doubled the number of customers utilizing auto pay from 4000 in 2010 to 8000 today. The District has seen a steady increase and expects it to continue to increase over time. Staff has discussed providing customers’ incentives to move to the two most cost effective options to pay their bill as it would reduce the District’s cost to process bill payments. One incentive discussed is to provide customers a discount on their bill. However, staff still needs to research this possibility and look at the administrative cost for doing so. Staff is not aware of what other Districts have done, but staff could survey other agencies to find out. Upon a motion by Director Robak, seconded by Director Thompson and carried with the following vote: Ayes: Directors Croucher, Gonzalez, Lopez, Robak and Thompson Noes: None Abstain: None Absent: None to approve staffs’ recommendation. ACTION ITEMS 9. ENGINEERING AND WATER OPERATIONS a) APPROVE RECOMMENDATIONS IN THE PUBLIC HEALTH GOAL REPORT (PHG) THAT NO FURTHER ACTIONS ARE NECESSARY TO 6 REDUCE THE LEVELS OF THE SEVEN CONSTITUENTS LISTED IN THE REPORT TO LEVELS AT OR BELOW THE PHG’s Water Systems Manager Gary Stalker presented the findings of the District’s Public Health Goal Report. He indicated that staff is requesting that the board approve the recommendations in the PHG Report and support that no further action is necessary to reduce the levels of the seven constituents listed in the report to levels at or below the PHGs. The primary health standard is that the District must ensure that the water is safe to drink. The secondary standard regulates the compounds that account for color, clarity and taste of the water. The third category is the goals. The USEPA sets the goals for the whole Country and the California EPA can set additional Public Health Goals specifically for the state of California. The District met all state of California, Department of Public Health and USEPA drinking water standards. He noted that previously, only agencies that treated water were required to produce this report. It is now required that all water agencies complete the report. Please reference the Committee Action notes (Attachment A) attached to staff’s report for further details of Mr. Stalker’s report. Director Croucher indicated that the Engineering, Operations and Water Resources Committee inquired how the District compared with its surrounding agencies. It was discussed that the water that the District receives from MWD, CWA, etc. is already treated and that the surrounding agencies receive the same water. He indicated that the District could spend a lot of money to enhance water treatment, however, it could still be possible that the District would not see a change in the testing levels. Thus, the District could spend a lot of money, but see no difference. Director Robak inquired with regard to pharmaceuticals how the thresholds are determined. Mr. Stalker indicated that the same studies are utilized to determine contaminate levels for pharmaceuticals which are usually a one in one million risk factor. One person in a million would be affected by the contaminate level. The PHG extracts the number down to where the risk faction is zero in a million. It is a theoretical extrapolation based on health data. General Manager Watton indicated that when the District had the cross connect issue in Chula Vista, staff had the water tested by a lab for every element that could be potentially detected. He stated that the test for potable water showed “non-detect” for all elements. When the recycled water was tested, the tests detected Personal Care Products (PCPs) and pharmaceuticals to low levels. He noted that when this water is further treated to the potable level, Indirect Potable Reuse (IPR), no PCP’s/pharmaceuticals were detected. He stated there is a real sensitivity, particularly with hormone (estrogen, testosterone, etc.) compounds for the receiving waters, such as rivers and what it does to fish and other water life, as there is for treated water. He stated he feels that there are people who do not support IPR or DPR water, so they create discussion around PCP’s/pharmaceuticals in the water to scare the public. He indicated, however, if 7 we look at the results of the water tests, it shows that there is no real issue as the levels are so minute that the tests cannot even detect the compounds. Director Croucher indicated that the Colorado River itself receives treated discharge water from various cities, including Las Vegas, along the river. He commented, at what point is the River water considered “reclaimed water.” He noted that the city of Las Vegas also receives credit for discharging treated water back into the River. Director Thompson indicated that when public health issues related to water are discussed, he sees two basic issues: 1) the ingesting of the water; and 2) bodily contact with water (such as, through bathing). He asked if the publics’ concern is mainly about bodily contact with the water. General Manager Watton indicated no, it is mainly about the water that is ingested. Upon a motion by Director Croucher, seconded by Director Robak and carried with the following vote: Ayes: Directors Gonzalez, Lopez, Robak and Thompson Noes: None Abstain: None Absent: Croucher to approve staffs’ recommendation. 10. BOARD a) DISCUSSION OF 2013 BOARD MEETING CALENDAR There were no changes to the board meeting calendar. REPORTS 11. GENERAL MANAGER’S REPORT General Manager Watton shared that on the dias, at each board members’ seat, is a copy of a letter forwarded to Assemblymember Anthony Rendon, Chair of the Assembly Water, Parks & Wildlife Committee. He stated that the District provided Assemblymember Rendon comments on the Assembly Water, Parks & Wildlife Committee’s proposed principles for “Developing a Water Bond” which is attached to the correspondence forwarded to the Assemblymember. He indicated that the District is essentially advocating for a “real” state water bond. In the past, the proposed water bond included several billion dollars for water related issues along with many billions for other projects that are not necessarily related to water projects. The District, along with others, is advocating that the proposed water bond be focused on funding projects related to actual water projects. 8 General Manager Watton also shared from his report an update on the Jamul water main break, Water Conservation Garden, upcoming employee events, ESRI International Users Conference, fiscal year-end answer rate, the financial audit, water sales, an update on the Avocado Louisa Sewer Replacement Project, and the 12” potable water pipeline project at East Orange. Mr. Watton also introduced new employee, Mr. Oscar Ramirez, the District’s new Safety and Security Specialist. He also noted that the District’s two pipeline projects with CalTrans are coming to a successful close very soon. In response to a question from Director Robak, General Manager Watton stated that he believes that the Principles for the Proposed Water Bond were drafted by the staff of the Assembly Water, Parks & Wildlife Committee. SAN DIEGO COUNTY WATER AUTHORITY UPDATE Director Croucher indicated with regard to the Carlsbad Desalination Project, that CWA is looking to adjust the alignment for the pipeline from the Carlsbad Plant to CWA’s system. This will cause an increase in cost of approximately $6 million. The original pipeline alignment was to construct the pipe on the side of a bridge. After looking at the various options, it was found that the proposed new alignment would cost more than $6 million, so it was decided to go back to the original plan of mounting the water pipes to the side of the bridge. He also indicated with regard to the water conservation programs that MWD is setting aside more funds than they have been able to spend in the past years. MWD’s staff, however, is not recommending reducing future conservation budgets, instead they are moving forward to research how they can spend more money on conservation. One of the concerns in MWD continuing to fund the conservation programs is that quite a bit of the funds comes from San Diego for these programs and San Diego only gets a portion of these funds back. San Diego County has also met its conservation goals and has even surpassed the 2020 requirements. He stated that MWD indicates that other Counties are not experiencing the same success as San Diego County and they wish to continue the programs and they don’t seem to feel that San Diego County should have any input in the funding of the conservation programs. The San Diego representatives will continue to assure that the San Diego County concerns are being communicated. 12. DIRECTORS' REPORTS/REQUESTS Director Robak indicated that he had an opportunity to speak with Mr. Bill Rose, Director of Engineering at CWA, at a community event and who also happens to be one of his constituents. He stated that they had a very interesting discussion regarding the Carlsbad Desalination Project pipeline alignment. He also shared that he had golfed at the Salt Creek Golf Course and, as this was the first time he has golfed at Salt Creek, he did not have a basis for comparison on how well it is being maintained. He stated that their customers commented that the course 9 was in much better shape. He also noted that the Golf Course was working on renovating their pro shop and bar area. Director Thompson indicated he had been out-of-town and thanked Director Gonzalez for attending, on his behalf, the City of Chula Vista Redevelopment Oversight Board meeting held July 8, 2013. Director Gonzalez reported that he attended the City of Chula Vista Redevelopment Oversight Board and they had discussed a couple properties that the oversight board will be placing on the open market for sale. 13. PRESIDENT’S REPORT President Lopez requested a briefing on the Special meeting of the Metro Commission that Director Gonzalez had attended on his behalf. He reported on meetings he had attended during the month of July 2013 (a list of meetings he attended is attached). He also stated with regard to a Metro Commission meeting he attended on August 1, 2013 that the board will be hearing more about the waiver for the Point Loma Wastewater Treatment Plant (PLWTP) and their Regional Water Reuse Plan. He stated that a presentation will be provided the board soon requesting support, through the adoption of a resolution, of the development of a long range Regional Water Reuse Plan and Secondary Equivalency for the PLWTP. RECESS TO CLOSED SESSION 14. CLOSED SESSION The board recessed to closed session at 5:42 p.m. to discuss the following matter: b. CONFERENCE WITH LEGAL COUNSEL – ANTICIPATED LITIGATION [GOVERNMENT CODE §54956.9] 1 CASE RETURN TO OPEN SESSION 15. REPORT ON ANY ACTIONS TAKEN IN CLOSED SESSION. THE BOARD MAY ALSO TAKE ACTION ON ANY ITEMS POSTED IN CLOSED SESSION The board reconvened at 6:37 p.m. and General Counsel Dan Shinoff indicated that the board rejected a claim unanimously in closed session. The board also provided Counsel direction on a complaint filed with the Sacramento Superior Court against many agencies throughout the state of California, including Otay WD. The board directed Counsel to prepare a response to the complaint and file it in a timely fashion. 10 16. ADJOURNMENT With no further business to come before the Board, President Lopez adjourned the meeting at 6:39 p.m. ___________________________________ President ATTEST: District Secretary 11 President’s Report August 7, 2013 Board Meeting A) Meetings attended during the Month of July 2013: 1) July 3: Attended the District’s Regular Board Meeting 2) July 11: a. Met with the District’s Auditor, David Foreman, to review the audit process. b. Met with General Manager Watton who provided an update on Otay matters. 3) July 19: Committee Agenda Briefing. Met with Director Gonzalez and General Manager Watton to review items that will be presented at the July Committee meetings and reviewed issues being discussed by the Metro Commission. 4) July 23: Attended the District’s Finance, Administration and Communications Committee. Reviewed, discussed, and made recommendation on items that will be presented at the July Committee Meetings. B) Meetings attended during the Month of August 2013: 1) August 1: a. Board Agenda Briefing. Met with General Manager Watton and General Counsel Dan Shinoff to review items that will be presented at the August Board Meeting. b. Attended a meeting of the Metro Commission: i. The Commission took action on a Joint Resolution supporting development of a long range Regional Water Reuse Plan and Secondary Equivalency for the Pt. Loma Wastewater Treatment Plant (see attached copy of agenda). AGENDA ITEM 6a Approve the Implementation of Rate Changes as Proposed for the Fiscal Year 2013-2014 Operating and Capital Budget Through the Adoption of Ordinance No. 539 Amending Section 25, Conditions for Water Service; Section 31, Temporary Water Service; Section 34, Issuance and Payment of Water bills; Section 38, Service for Fire Protection Systems; Section 53, Fees, Rates, Charges and Conditions for Sewer Service; and Appendix A, Schedule of Fees of the District’s Code of Ordinances; Authorize, for a period of Five-Years, the Pass-Through of Cost Increases from Water Wholesalers and Sewer Service Providers; Authorize District Rate Increases, for a Period of Five Years, Not-to-Exceed 10% Annually; and Authorize the Detachment of Parcels within Improvement Districts (IDs) 19 and 25 to be Annexed into IDs 22 and 20 Respectively This agenda item has been posted as a separate attachment on the Otay Water District Website. STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: September 4, 2013 SUBMITTED BY: Michael O’Donnell Supervising Land Surveyor Dan Martin Engineering Manager PROJECT/ SUBPROJECT: Various DIV. NO. ALL APPROVED BY: Rod Posada, Chief, Engineering German Alvarez, Assistant General Manager Mark Watton, General Manager SUBJECT: Award of As-Needed Land Surveying Services Contract to AIRX Utility Surveyors, Inc. for Fiscal Years 2014 and 2015 GENERAL MANAGER’S RECOMMENDATION: That the Otay Water District (District) Board of Directors (Board) award a Professional As-Needed Land Surveying Services contract to AIRX Utility Surveyors, Inc. (AIRX) and to authorize the General Manager to execute an agreement with AIRX in an amount not-to-exceed $175,000 for a period of two (2)fiscal years (FY 2014 and FY 2015). COMMITTEE ACTION: Please see Attachment A. PURPOSE: To obtain Board authorization for the General Manager to enter into a Professional As-Needed Land Surveying Services Agreement with AIRX in an amount not-to-exceed $175,000 for a period of two (2) fiscal years (FY 2014 and FY 2015). ANALYSIS: The District will require the services of a professional land surveying consultant on an as-needed basis for two (2) fiscal years to support the following: AGENDA ITEM 7a 2 District’s Capital Improvement Program(CIP) USA Mark-Out Program Geographic Information System Program (GIS) Right-of-Way Management Program It is more efficient and cost effective to issue an as-needed contract for land surveying services which will provide the District with the ability to obtain consulting services in a timely and cost efficient manner. In addition to land surveying services, this concept has also been used in the past for other disciplines, such as engineering design, construction management, electrical, and environmental services. The District will issue task orders to the consultant for specific projects during the contract period. The Consultant will then prepare a detailed scope of work, schedule, and cost estimate for each task order assigned under the agreement. Upon written task order authorization from the District, the Consultant shall then proceed with the project. The District solicited professional as-needed land surveying services from land surveying consultant firms by placing an advertisement on the District's website on May 6, 2013 and with various other publications including the San Diego Daily Transcript. Sixteen (16) firms submitted a Letter of Interest and a Statement of Qualifications. The Request for Proposal (RFP) for As-Needed Land Surveying Services was sent to all sixteen (16) firms resulting in five (5) proposals received by June 4, 2013. They are as follows: Calvada Surveying, Inc. Excel Engineering Alta Land Surve ying, Inc. Hunsaker and Associates San Diego, Inc. AirX Utility Surveyors, Inc . The eleven (11) firms that chose not to propose are Rick Engineering, Towill, Inc., Psomas, Nasland Engineering, Project Design Consultants, NV5, BDS Engineering, Guida Surveying, D. Woolley and Associates, Inc., F3 and Associates, Inc., and SWS Engineering. In accordance with the District’s Policy 21, staff evaluated and scored all written proposals. Excel Engineering (Excel) received the highest score for their services; however, Excel’s proposal contained requested revisions to the District’s Professional Services Agreement language including revisions to the District’s language regarding indemnification. Staff reviewed the requested changes with the 3 District’s Legal Counsel and it was determined that the requested revisions would have weakened the District’s indemnity rights. Staff discussed this with Excel and their Insurer informing them that the requested revisions were unacceptable, thus rejected. As a result, Excel relinquished the award on June 26, 2013, via the attached letter (see Attachment C). Subsequent to receiving the letter, District’s Legal Counsel initiated additional discussion with Excel and their Insurer regarding the District’s position. Ultimately, Excel relinquished the award. AIRX received the second highest score for their services based on their experience, understanding of the scope of work, proposed method to accomplish the work, and their composite hourly rate. AIRX did not present any exceptions to the District’s Professional Service Agreement. A summary of the complete evaluation is shown in Attachment B. AIRX 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. Presently, Alta Land Surveying is providing the As-Needed Land Surveying services. Their contract expires June 30, 2014. FISCAL IMPACT: Joe Beachem, Chief Financial Officer The funds for this contract will be expended from the Fiscal Years 2014 and 2015 budgets for various projects or programs, as previously noted above. This contract is for professional as-needed services based on the District's need and schedule, and expenditures will not be made until a task order is approved by the District for the consultant's services on a specific project or program. Based on a review of the financial budget, the Project Manager anticipates that the Fiscal Years 2014 and 2015 budgets will be sufficient to support the professional as-needed land surveying consulting services required for the projects or programs noted above. The Finance Department anticipates that the funds to cover this contract are available as budgeted for these projects or programs. 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.” as well as the General Manager’s vision, “A District that is 4 innovative in providing water services at affordable rates, with a reputation for outstanding customer service.” LEGAL IMPACT: None. General Manager P:\WORKING\As Needed Services\Land Surveying\FY 2014-2015\Staff Report\BD 09-4-13, Staff Report, As-Needed Land Surveying, (MO-DM).doc MO/DM:mlc Attachments: Attachment A – Committee Action Attachment B – Summary of Proposal Rankings Attachment C – Excel Engineering’s Relinquishment Letter, dated June 26, 2013 ATTACHMENT A SUBJECT/PROJECT: Various Award of a Professional As-Needed Land Surveying Services Contract to AIRX Utility Surveyors, Inc. for Fiscal Years 2014 and 2015 COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) reviewed this item at a meeting held on August 20, 2013, and the following comments were made: Staff requested that the Board award a Professional As- Needed Land Surveying Services contract to AIRX Utility Surveyors, Inc. (AIRX) and to authorize the General Manager to execute an agreement with AIRX in an amount not-to- exceed $175,000 for a period of two (2)fiscal years (FY 2014 and FY 2015). Staff indicated that the current As-Needed Land Surveying contract amount is nearly fully committed and that the District requires the services of a land surveying consulting firm to provide professional services to support the District’s Capital Improvement Program, USA mark out program, Geographic Information Program, and the Right-of- Way Management Program. Staff provided a background of the selection process that was in accordance with the District’s Policy 21. It was indicated that Excel Engineering (Excel) received the highest score for their services; however, Excel’s proposal contained requested revisions to the District’s Professional Services Agreement language including revisions to the District’s language regarding indemnification. Legal Counsel and staff reviewed Excel’s requested changes and it was determined that the changes would have weakened the District’s indemnity rights. Staff discussed this with Excel and its insurer and informed them that their requested changes were unacceptable, thus rejected. On June 6 26, 2013, Excel relinquished the Award via the attached letter (See Attachment C of the staff report for further details). Subsequent to receiving the letter, the District’s Legal Counsel initiated additional discussion with Excel and their insurer with regards to the District’s decision. AIRX received the second highest score for their services based on their experience, understanding of the scope of work, proposed method to accomplish the work, and their composite hourly rate. It was noted that AIRX did not present any exceptions to the District’s Professional Service Agreement. A summary of the complete evaluation is shown in Attachment B. Staff checked AIRX Utility Surveryors, Inc. references, reviewed their Company Background Questionnaire form, and performed an internet search on the company. It was indicated that staff did not find any significant issues. In response to a question by the Committee, the District’s Legal Counsel stated that he engaged in discussions with Excel and its insurance broker to discuss relevant state law provisions, but the company ultimately relinquished the award since the District continued to maintain its position to reject Excel’s requested changes. The Committee concurred with the staff’s recommendation not to make changes to the Professional Service Agreement that would weaken the District’s position as requested by Excel. Following the discussion, the committee supported staffs’ recommendation and presentation to the full board as a consent item. ATTACHMENT B ATTACHMENT C STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: September 4, 2013 SUBMITTED BY: Kevin Koeppen, Finance Manager PROJECT: DIV. NO. All APPROVED BY: Joseph R. Beachem, Chief Financial Officer German Alvarez, Assistant General Manager Mark Watton, General Manager SUBJECT: Adopt Resolution No. 4217 Amending Policy No. 45, the Debt Policy, of the District’s Code of Ordinances GENERAL MANAGER’S RECOMMENDATION: That the Board adopt Resolution No. 4217 amending Policy No. 45, the Debt Policy, of the District’s Code of Ordinances. COMMITTEE ACTION: See Attachment A. PURPOSE: The Debt Policy is being updated in an effort to reflect the current debt standards and environment. The proposed Debt Policy (Attachment C) revises and expands upon the existing Policy (Exhibit 1) that was previously approved by the Board on January 3, 2007. ANALYSIS: While there were some minor changes in terminology, the proposed changes listed on the following page, along with further guidance on the purpose of the change, were deemed material to the document: AGENDA ITEM 7b 2 Section 5.0 Debt Structure – Added “Use the higher of the 10 year average rate or current weekly rate when estimating variable interest rate debt.” In the assessment of whether to issue fixed or variable rate debt, this change will require a more comprehensive comparison of interest costs by assessing both the current and historic rate environments. Section 7.0 Competitive and Negotiated Sale Criteria - Added “new financing techniques” and “private placement” as alternatives that the District would consider if they were cost effective. This increases the number of alternatives that the District could utilize to achieve the most cost effective borrowing facility. Section 10.0 Derivatives - Removed section 10.0 Derivatives as an allowable debt instrument. Derivatives are inherently more risky and the GFOA recommends that proper understanding, expertise, and controls to manage these products be established prior to use. The District currently does not have the required expertise or controls in place for utilizing derivatives. In the event that the District wishes to utilize derivatives, the expertise and controls will be established and the policy revised. Section 11.0 Financing Participants - Changed Letter of Credit agreement limit from “5-7 years” to “3 years” which reflects the current insurance environment. Section 11.0 Municipal Bond Insurers - Eliminated the reference to AAA ratings, which reflects the current rating environment. Section 12.0 Continuing Disclosure – Updated the listing of material events to what is currently defined by the Securities and Exchange Commission. Section 15.0 Rating Agency Applications – Modified the requirement that allows the District to determine if more than one rating be obtained. If a single rating is deemed fair, the District may not wish to obtain a second rating. 3 The policy is consistent with the current law and the overall objectives of the policy are being met. FISCAL IMPACT: Joe Beachem, Chief Financial Officer A debt policy improves the quality of decisions, provides guidelines for the structure of debt issuance, and demonstrates a commitment to long-term capital and financial planning. Adherence to a debt policy signals to rating agencies and the capital markets that the District is well managed and therefore is likely to meet its debt obligations. The District’s fiscal budgeting process includes a five year projection of debt financing needs. According to the FY2014 budget, the District does not foresee issuing debt for potable and recycled water projects, but identifies the need for financing in fiscal 2015 for sewer projects. The District uses the Debt Coverage ratio as a Key Performance Indicator for evaluating the financial ability to repay debt. The District has a debt covenant requiring a ratio of at least 125%. The actual ratio for fiscal 2012 was 132%. The District currently maintains an AA-/AA rating. STRATEGIC GOAL: Demonstrate financial health through formalized policies, prudent investing, and efficient operations. The strategic plan measurement goal for fiscal 2013 is to obtain a debt coverage ratio of 191%. LEGAL IMPACT: None. Attachments: A) Committee Action B) Resolution No. 4217 Exhibit 1: Strike-through Debt Policy C) Proposed Debt Policy D) Presentation ATTACHMENT A SUBJECT/PROJECT: Adopt Resolution No. 4217 Amending Policy No. 45, the Debt Policy, of the District’s Code of Ordinances COMMITTEE ACTION: The Finance, Administration, and Communications Committee (Committee) reviewed this item at a meeting held on August 21, 2013 and the following comments were made: Staff presented the District’s existing outstanding debt which totals $111,645,000 (please reference page 3 of the powerpoint presentation attached to staffs’ report). The final maturities of the outstanding debt range between 2022 and 2040. The currently available call options are on the debts issued in 1996 (Certificates of Participation [COPs]) and in 2010 (Build America Bonds [BABs]). It was indicated that the 1996 COPs has a variable interest rate and the current rate is 0.05% and the Letter of Credit rate is 1.1% with an effective rate of 1.15%. Staff indicated that it is not feasible, at this time, to refinance the COPs. The BABs have a “Make Whole” provision in the issuance which would require that the investors be compensated the net present value of future coupon payments. As such, this debt is not feasible to refinance at this time. Based on the current five-year rate model, staff does not anticipate issuing any debt related to the potable or recycled systems. However, staff expects to issue debt of approximately $5.2 million for sewer projects in FY 2015. The debt coverage ratio measures the District’s ability to generate cash to pay debt payments is 1.62 in FY 2014 and is expected to increase to 2.89 in FY 2019. At the close of FY 2013, the District’s debt coverage ratio was 1.50%. The District’s minimum debt coverage ratio for debt covenant is 1.25%. The District referenced the following professional finance organizations when developing the debt policy guidelines: Government Finance Officers Association (GFOA) Association of Public Treasurers of the United States & Canada (APT US&C) 5 California Municipal Treasurers Association (CMTA) California society of Municipal Finance Officers (CSMFO) The current Debt Policy was approved in 2007. Staff is recommending updates to basic terminology which are not included in staffs’ presentation. Staff reviewed the material updates in detail which is referenced on page two (2) of staffs’ report. It was noted that in Section 11.0: Financing Participants of the Debt Policy, staff is proposing eliminating the reference to AAA ratings for Municipal Bond Insurers as none of the insurers have a AAA rating. The committee commented with regard to the Negotiated Sale section of the Debt Policy that it indicates the District may consider issuing its debt by private placement or through the California Statewide Communities Development Authority and inquired if the District should not restrict the policy to a specific authority. It was discussed that the verbiage could be changed to indicate “any qualified JPA in the State of California whose principal business is issuing bonds” (copy of revised strike-through is attached to these note). Staff explained in response to another inquiry from the committee regarding the Debt Policy’s Fixed Rate Bonds section, that the policy is indicating a credit enhancement could be used, even in cases where it may not be cost effective, if in the opinion of the CFO, the credit enhancement meets the District’s objectives. As an example, the use of reserve funding may not be considered the most cost effective method at the time, but from a risk standpoint, a Letter of Credit may not be the best option as it would need to be renewed every three (3) years. The risk associated with a 30 year obligation is that it requires renewing the Letter of Credit ten (10) times during the life of the issuance. There is a level of uncertainty associated with renewing a letter of credit and obtaining a new letter of credit can be costly. Thus, the CFO may select to utilize reserve funding in this situation. Upon completion of the discussion, the committee supported staffs’ recommendation with the suggested change to the Negotiated Sale section as noted above and presentation to the full Board as a consent item. 6 OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number 45 Date Adopted 4/13/04 Date Revised 1/3/07 9/4/13 The District will use a competitive bidding process in the sale of debt unless the nature of the issue or specific circumstances warrants a negotiated sale. The CFO will determine the best bid in a competitive sale by calculating the true interest cost (TIC) of each bid. Negotiated Sale Types of debt that would typically lend themselves to the negotiated sale format are variable rate debt and unrated debt. Circumstances that might warrant a negotiated sale may occur when the issue is of a limited size that would not attract wide-spread investor interest, during periods of high levels of issuance by other entities in the State, or during periods of market volatility or with relatively new financing techniques. In the event the District decides to use a negotiated sale, it will pay management fees only to those firms that place orders for bonds. If the size of the District’s proposed issue is not cost effective, the District may also consider issuing its debt by private placement or through the California Statewide Communities Development Authorityany qualified Joint Power Authority (JPA) in the State of California whose principal business is issuing bonds. which provides a mechanism for pooling financings with similar issuers to obtain economies of scale. 8.0: REFUNDING DEBT Purpose Periodic reviews of all outstanding debt will be undertaken by the Chief Financial Officer to determine refunding (refinancing) opportunities. The purpose of the refinancing may be to: 1. Lower annual debt service by taking advantage of lower current interest rates. 2. Update or revise covenants on outstanding debt issue if a Rate Covenant appears to be too high, has precluded the District from implementing its financing plan, or has caused the District to increase rates to customers. 3. Restructure debt service associated with an issue to facilitate the issuance of additional debt, usually in order to smooth out Page 6 of 25 ATTACHMENT B RESOLUTION NO. 4217 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT AMENDING DEBT POLICY NO.45 OF THE DISTRICT’S CODE OF ORDINANCES WHEREAS, the Otay Water District Board of Directors has been presented with an amended Debt Policy No. 45 of the District’s Code of Ordinances for the financial management of the Otay Water District; and WHEREAS, the amended Debt Policy has been reviewed and considered by the Board, and it is in the interest of the District to adopt the amended Debt Policy; and WHEREAS, the strike-through copy of the proposed policy is attached as Exhibit 1 to this resolution; and NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by the Board of Directors of the Otay Water District that the amended Debt Policy, incorporated herein as Attachment C, is hereby adopted. PASSED, APPROVED AND ADOPTED by the Board of Directors of Otay Water District at a board meeting held this 4th day of September 2013, by the following vote: Ayes: Noes: Abstain: Absent: ________________________ President ATTEST: ____________________________ District Secretary OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 1 of 25 1.0: POLICY It is the policy of the Otay Water District to finance the acquisition of high value assets that have an extended useful life through a combination of current revenues and debt financing. Regularly updated debt policies and procedures are an important tool to insure the use of the District’s resources to meet its commitments, to provide the highest quality of service to the District’s customers, and to maintain sound financial management practices. These guidelines are for general use and allow for exceptions as circumstances dictate. 2.0: SCOPE This policy is enacted in an effort to standardize the issuance and management of debt by the Otay Water District. The primary objective is to establish conditions for the use of debt, to minimize the District’s debt service requirements and cost of issuance, to retain the highest practical credit rating, maintain full and complete financial disclosure and reporting, and to maintain financial flexibility for the District. This policy applies to all debt issued by the District including general obligation bonds, revenue bonds, capital leases and special assessment debt. 3.0: LEGAL & REGULATORY REQUIREMENTS The Chief Financial Officer (CFO) and the District’s Legal Counsel will coordinate their activities to ensure that all securities are issued in full compliance with Federal and State law. 4.0: CAPITAL FACILITIES FUNDING Financial Planning The District maintains a six-year financial projection that identifies operating requirements and public facility and equipment requirements, and has developed a Rate Model for funding the District’s 6-Year Capital Improvement Program (CIP). The District’s CIP Budget places the capital requirements in order of priority and schedules them for funding and implementation. It identifies a full range of capital needs, provides for the ranking of the importance of such needs, and identifies all the funding sources that are available to cover the costs of the projects. In cases where the program identifies project funding through the use of debt financing, the budget should provide Exhibit 1 OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 2 of 25 information needed to determine debt capacity. The Rate Model and the CIP Budget give the Board part of the data needed to make informed judgments concerning the possibility of issuing debt. Funding Criteria The Chief Financial Officer (CFO) will evaluate all capital project requests and develop a proposed funding plan. Priority may be given to those projects that can be funded with current resources (annual cash flow, fund balances or reserves). Those projects that cannot be funded with current resources may be deferred or the CFO may recommend that they be funded with debt financing. However, debt financing will not be considered appropriate for any recurring purpose such as current operating and maintenance expenditures. The issuance of short-term cash-flow instruments is excluded from this limitation. The General Manager will recommend the funding plan to the Board. The General Manager may deem it necessary or desirable in certain circumstances to convene a Finance Committee meeting to evaluate funding options presented by the Chief Financial Officer. Funding Sources The District’s capital improvements can be classified in three categories: those related to an expansion of the system (“expansion”), those related to upgrading the existing system (“betterment”) and those related to repairing or replacing existing infrastructure (“replacement”). In general, capital improvements for betterment or replacement are financed primarily through user charges, availability charges, and betterment charges. Capital improvements for expansion are financed through capacity fees. Accordingly, these fees are reviewed at least annually or more frequently as required and set at levels sufficient to ensure that new development pays its fair share of the costs of constructing necessary infrastructure. Additionally, the District will seek State and Federal grants and other forms of intergovernmental aid wherever possible. Pay-As-You-Go Projects The District’s capacity fees are the major funding source in financing additions to the water system and the recycled water system. Over time, the fees collected and the cost to construct the capital projects should balance. However, collection of these fees is subject to significant fluctuation based on the rate of new development. Accordingly, the Chief Financial Officer, in developing the funding OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 3 of 25 plan for the CIP, will determine that current revenues and adequate fund balances are available so project phasing can be accomplished. If this is not the case, the Chief Financial Officer may recommend that: 1. The project be deferred until funds are available, or 2. Based on the priority of the project, long-term debt is issued to finance the project. Debt Financed Projects If a project or projects are to be financed with long-term debt, the District should use the following criteria to evaluate the suitability of the financing for the particular project or projects: 1. The life of the project or asset to be financed is 10 years or longer and its useful life is expected to exceed the term of the financing. 2. Revenues available for debt service are deemed to be sufficient and reliable so that long-term financing can be marketed without jeopardizing the credit rating of the District. 3. Market conditions present favorable interest rates and demand for District financing. 4. The project is mandated by State and/or Federal requirements and current resources are insufficient or unavailable. 5. The project is immediately required to meet or relieve capacity needs and current resources are insufficient or unavailable. 5.0: DEBT STRUCTURE General The District will normally issue debt with a maturity of not more than 30 years. The structure should approximate level debt service for the term where it is practical or desirable. There will be no debt structures that include increasing debt service levels in subsequent years, with the first and second year of a debt payoff schedule the exception and related to projected additional income to be generated by the project to be funded. There will be no "balloon" debt repayment schedules that consist of low annual payments and one large payment of the balance due at the end of the term. There will always OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 4 of 25 be at least interest paid in the first fiscal year after debt issuance and principal starting no later than the first fiscal year after the date the facility or equipment is expected to be placed in service. Capitalized interest will not be for a period of more than necessary to provide adequate security for the financing. Limitations on the Issuance of Variable Rate Debt The District will normally issue debt with a fixed rate of interest. The District may issue variable rate for the purpose of managing its interest costs. At the same time, the District should protect itself from too much exposure to interest rate fluctuations. In determining that it is in the District’s best interest to issue certain debt at variable rates instead of fixed rates, at the time of issuing any variable rate debt, there should be at least a 10% estimated reduction in annual debt costs by issuing variable rate debt when compared to a similar issuance of fixed rate debt. If the estimated overall cost savings from issuing variable rate debt is not at least 10% at the time of issuance, relatively small fluctuations in rates could actually increase the District’s financing costs over the life of the bonds compared to a similar fixed rate financing. By using this 10% factor at the time of issuance, the District can be relatively assured that its variable rate financing will be cost-effective over the term of the bonds. The comparison will be based on the following criteria: 1. The interest rate used to estimate variable interest costs will be the higher of the 10 year average for rate or the current weekly variable rates. 2. The variable rate debt costs will include an estimate for annual costs such as letter of credit fees, liquidity fees, remarketing fees, monthly draw fees and annual rating fees applicable to the letter of credit. 3. Any potential reserve fund earnings will reduce the fixed rate debt service or variable rate debt service as applicable. Periodically, using the criteria described above, the Chief Financial Officer will compare the estimated annual debt service costs to maturity of any variable rate debt with estimated debt service if the debt was converted to fixed rates. If this analysis produces a break even in total payments over the life of the issue, the Chief Financial OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 5 of 25 Officer will recommend converting such variable rate debt to fixed rate. Variable rate debt should not represent more than 25% of the District’s total debt portfolio. This level of exposure to interest rate fluctuations is considered to be manageable in an environment of increasing interest rates. At a higher ratio than this, the District might be faced with an unplanned water rate increase to meet its Rate Covenants. Rating agencies use this ratio in their analysis of the District’s overall credit rating. Further, Rate Covenants applicable to variable rate debt shall not compromise the issuance of additional debt planned by the District and variable rate debt should always contain a provision to allow conversion to a fixed rate at the District’s option. 6.0: CREDIT OBJECTIVES The Otay Water District seeks to maintain the highest possible credit ratings for all categories of long-term debt that can be achieved without compromising delivery of basic services and achievement of District policy objectives. Factors taken into account in determining the credit rating for a financing include: 1. Diversity of the District’s customer base. 2. Proven track record of completing capital projects on time and within budget. 3. Strong, professional management. 4. Adequate levels of staffing for services provided. 5. Reserves. 6. Ability to consistently meet or exceed Rate Covenants. The District recognizes that external economic, natural, or other events may from time to time affect the creditworthiness of its debt. Nevertheless, the District is committed to ensuring that actions within its control are prudent and well planned. 7.0: COMPETITIVE AND NEGOTIATED SALE CRITERIA Competitive Sale OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 6 of 25 The District will use a competitive bidding process in the sale of debt unless the nature of the issue or specific circumstances warrants a negotiated sale. The CFO will determine the best bid in a competitive sale by calculating the true interest cost (TIC) of each bid. Negotiated Sale Types of debt that would typically lend themselves to the negotiated sale format are variable rate debt and unrated debt. Circumstances that might warrant a negotiated sale may occur when the issue is of a limited size that would not attract wide-spread investor interest, during periods of high levels of issuance by other entities in the State, or during periods of market volatility or with relatively new financing techniques. In the event the District decides to use a negotiated sale, it will pay management fees only to those firms that place orders for bonds. If the size of the District’s proposed issue is not cost effective, the District may also consider issuing its debt by private placement or through the California Statewide Communities Development Authority, which provides a mechanism for pooling financings with similar issuers to obtain economies of scale. 8.0: REFUNDING DEBT Purpose Periodic reviews of all outstanding debt will be undertaken by the Chief Financial Officer to determine refunding (refinancing) opportunities. The purpose of the refinancing may be to: 1. Lower annual debt service by taking advantage of lower current interest rates. 2. Update or revise covenants on outstanding debt issue if a Rate Covenant appears to be too high, has precluded the District from implementing its financing plan, or has caused the District to increase rates to customers. 3. Restructure debt service associated with an issue to facilitate the issuance of additional debt, usually in order to smooth out peaks in total debt service which can occur frequently as one debt issue is layered on top of existing debt issues. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 7 of 25 4. Alter bond characteristics such as call provisions or payment dates. 5. Pay for conversion costs such as funding a reserve fund or paying for credit enhancement when converting variable rate debt to fixed rate debt. Restrictions on Refunding Tax-exempt bonds typically have provisions that preclude early redemption of the bonds for a period of years after issuance. The number of times a tax-exempt bond can be refinanced prior to its Optional Redemption date (known as Advance Refunding) is limited by the IRS. For debt issued after 1986, issuers may only provide for Advance Refunding of obligations in advance of the Optional Redemption date one time. There is no limit by the IRS on the ability of issuers to redeem bonds early once the Optional Redemption date has been reached (known as Current Refunding). Savings Criteria In cases where an Advance Refunding or Current Refunding is intended to provide debt service savings, the District may commence the refinancing process if a minimum five percent (5%) present value savings net of issuance costs and any cash contributions can be demonstrated. Since interest rates may fluctuate between the time when a refinancing is authorized and when the debt is issued, beginning the process with at least a 5% savings should provide the District with some level of protection that it can achieve a minimum of three percent (3%) net present value savings of the refunding bonds when and if the debt is issued. These minimum standards are intended to protect the District staff from spending time on refinancings that become marginally cost-effective after the entire issuance process is complete. The savings target may be waived, however, if sufficient justification for lowering the savings target can be provided by meeting one or more of the other refunding objectives described above. 9.0: SUBORDINATE LIEN DEBT The District will issue subordinate lien debt only if it is financially beneficial to the District or consistent with creditworthiness objectives. Subordinate lien debt is structured to be payable second in priority to the District’s other outstanding debt. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 8 of 25 Typically, subordinate lien debt might be issued if the District desired a more flexible Rate Covenant with respect to its new obligations and did not want to refinance all of its existing debt to obtain that less restrictive Rate Covenant. 10.0: DERIVATIVES The District may consider the use of derivative products on a case-by- case basis, consistent with State statute and financial prudence. The most common derivatives include transactions known as “swaps,” in which the District, by contract with an investment bank (known as a “provider”), swaps its fixed rate debt payments for variable rate debt payments or vice versa, and “forwards,” in which the District enters into a purchase contract with an underwriter to purchase refunding bonds at a future date at interest rates locked in today (not at today’s rates, but at rates locked in today). Derivative products introduce an additional risk factor into a financing, called “third- party risk.” Once a derivative product is entered into, the District must rely upon the financial stability of the provider to perform under the contract. Because the nature of derivatives is speculative, that is, the District is assuming that rates will either go up or down over the period of the contract and therefore expects to lock in a financial benefit today based on that assumption, the financial benefits actually obtained from any derivative contract need to be monitored periodically to determine if it is in the District’s interest to terminate the contract and what the penalty might be for early termination. This requires a certain level of vigilance, and impartial advice in this area is actually difficult to obtain since the derivative market is not particularly liquid or price-transparent and is currently made up of a small handful of reputable providers. There must be an overwhelming demonstrable financial benefit to the District based on reasonable assumptions concerning future interest rates in order for the District to use derivative products. 1110.0: FINANCING PARTICIPANTS The District’s purchasing guidelines provide the process for securing professional services related to individual debt issues. The solicitation and selection process include encouraging participation from qualified service providers, both local and national, and securing services at competitive prices. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 9 of 25 Financial Advisor: The use of a Financial Advisor is necessary for the sale of debt by a competitive bid process and is desirable when issuing debt through a negotiated sale. The Financial Advisor has a fiduciary duty to the District and will seek to structure the District’s debt in the manner that is saleable, yet meets the District’s objectives for the financing. The Financial Advisor will advise the District on alternative structures for its debt, the cost of different debt structures and potential pricing mechanisms that can be expected from underwriters (such as call features, term bonds and premium and discount bond pricing) and, at the District’s direction, will write the offering document (preliminary official statement). With respect to competitive sales, the Financial Advisor will arrange for distributing the preliminary official statement, accepting bids via the internetan internet bidding platform, verifying the lowest bid and provide detailed instructions for the flow of funds at closing to the winning Underwriter, the Trustee and the District. In a negotiated sale, the Financial Advisor will provide independent confirmation on the Underwriter’s proposed pricing to ensure that interest rates and Underwriter’s compensation are appropriate for the credit quality of the issue and competitive in the overall public finance market in California. Underwriter: The Underwriter markets the bonds for sale to investors. While the District’s preference is to select the Underwriter for the debt via sale of the debt at competitive bid, there are circumstances when a negotiated issue is in the best interests of the District. Negotiated sales are preferable if the security features are particularly complex or market conditions are volatile. The Chief Financial Officer will recommend whether the method of sale is competitive or negotiated based on the type of issue and other market conditions. In the case of negotiated sales, the Underwriter will be required to demonstrate sufficient capitalization and sufficient experience related to the specific type of debt issuance. The Underwriter will work in connection with the District’s Financial Advisor on structuring the issue and offering different pricing ideas. Bond Counsel: The District’s Bond Counsel provides the primary legal documents that detail the security for the bonds and the authority under which bonds are issued. The Bond Counsel also provides an opinion to bond holders that the bonds are tax-exempt under both State and Federal law. All closing documents in connection with an issue are also prepared by Bond Counsel. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 10 of 25 Disclosure Counsel: The District’s Disclosure Counsel provides legal advice to the District regarding the adequacy of the District’s disclosure of financial information or risks of investing in the District’s debt issue to the investing public. The Disclosure Counsel can prepare the official statement or review the official statement and gives the District an opinion that there is no information missing from the official statement of a material nature that would be necessary for an investor to make an informed decision about investing in the District’s bonds. Trustee: The Trustee is a financial institution selected by the District to administer the collection of revenues pledged to repay the bonds and to distribute those funds to bondholders. Letter of Credit Bank: The Letter of Credit Bank is a U.S. or foreign bank that has issued a letter of credit providing both credit enhancement (the Letter of Credit Bank will pay the debt in the event that the District defaults on the payment) and liquidity for a variable rate bond issue. These banks have their own short-term credit rating, which is generallycan be higher than the District’s short-term credit rating. Liquidity is needed because variable rate bondholders are allowed to “put” their bonds back to the District if they do not like the interest rate currently being offered. The District’s Remarketing Agent then finds a new buyer for those bonds, but in the event that no buyer is found, a draw is made under the letter of credit to purchase the bonds that have been “put.” As soon as the bonds are remarketed to another buyer, the letter of credit is repaid. The letter of credit fees are paid annually or quarterly. Letter of credits are typically issued for 5-7not more than 3 years and must be renewed during the life of the bonds. Credit enhancement is discussed further under the heading “CREDIT ENHANCEMENT.” Municipal Bond Insurer: The Municipal Bond Insurer can be one of several insurance companies that provide municipal bond insurance policies securing payment of the District’s debt. These policies provide that the Municipal Bond Insurer will pay the District’s debt in the event that the District defaults on its payments. Debt which is insured carries the Municipal Bond Insurer’s credit rating, in most cases, AAA. The insurance premium for the bond insurance policy is paid one time at the issuance of the debt and is non-cancelable for the term of the debt. Unlike a letter of credit, bond insurance policies do not provide liquidity and are most typically purchased for fixed rate debt. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 11 of 25 Remarketing Agent: The Remarketing Agent is an investment bank that, each week, determines the interest rate for the District’s variable rate obligations. The rate is set at the rate at which the obligations could be sold on the open market at 100% of their face value. The Remarketing Agent also finds new buyers for any of the obligations that are “put” back to the District. Rating Agencies: Currently, there are three widely recognized rating agencies that rate municipal debt in the United States: Standard & Poor’s, Moody’s Investors Service, and Fitch Investors Service. Rating agencies establish objective criteria under which each type of financing undertaken by the District is to be analyzed. Upon request, a rating agency will rate the underlying strength of the District’s financings, without regard to the purchase of any credit enhancement. The rating is released to the general public and thereafter, the rating agency will periodically update its analysis of a particular issue, and may raise or lower the rating if circumstances warrant. Investment-grade ratings range from “AAA” to “BBB-.” A rating below “BBB-” is not investment grade. Many mutual funds cannot buy bonds that do not carry an investment grade. Verification Agent: In a refunding, the District will deposit funds with an escrow agent (usually the trustee) in an amount sufficient, together with earnings thereon, to pay the debt service and redemption price of the debt being refunded through and including the call date. The Verification Agent verifies the mathematical accuracy of calculation of the amount to be deposited in escrow and the bond counsel relies on this verification in giving their opinion that the debt is defeased within the meaning of the indenture and that the lien of the debt on the revenues pledged to the debt being refunded is released. 1211.0: CONFLICT OF INTEREST AND STANDARDS OF CONDUCT Members of the District, the Board of Directors and its consultants, service providers and underwriters shall adhere to standards of conduct and conflict of interest rules as stipulated by the California Political Reform Act or the Municipal Securities Rulemaking Board (MSRB), as applicable. All debt financing participants shall maintain the highest standards of professional conduct at all times, in accordance with MSRB Rules, including Rule G-37. There shall be no conflict of interest with the District with any debt financing participant. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 12 of 25 1312.0: CONTINUING DISCLOSURE The District acknowledges the responsibilities of the underwriting community and pledges to make all reasonable efforts to assist underwriters in their efforts to comply with SEC Rule 15c2-12 and MSRB Rule G-36. The District will file its official statements with the MSRB and the nationally recognized municipal securities information repositories. The District will also post copies of its comprehensive financial reports on the Internet and provide hard copies of these documents to interested parties upon requestMSRB’s Electronic Municipal Market Access(EMMA) website, and will disseminate other information that it deems pertinent to the market in a timely manner (For bonds issued after 2012, 10 days). While initial bond disclosure requirements pertain to underwriters, the District will provide financial information and notices of material events on an ongoing basis throughout the life of the issue. Material events are defined as those events which are considered to likely reflect on the credit supporting the securities. (a) The events considered material according to the SEC are: 1. Rating changes. 2. Non-payment related defaults. 3. Adverse tax opinions or events affecting the tax exempt status. 4. Unscheduled draws on debt service reserves or credit enhancements reflecting financial difficulties. 5. Modifications to the rights of securities holders. 6. Defeasance. 7. Bond calls. 8. Release, substitution, or sale of property securing repayment of the securities. 9. Substitution of credit or liquidity providers, or their failure to perform. 10. Principal and interest payment delinquencies. 1. Principal and interest payment delinquencies; OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 13 of 25 2. Unscheduled draws on debt service reserves reflecting financial difficulties; 3. Unscheduled draws on credit enhancements reflecting financial difficulties; 4. Substitution of credit or liquidity providers, or their failure to perform; 5. Adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability or of a Notice of Proposed Issue (IRS Form 5701-TEB); 6. Tender offers; 7. Defeasances; 8. Ratings changes; and 9. Bankruptcy, insolvency, receivership or similar proceedings. Note: for the purposes of the event identified in subparagraph (9) above, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 14 of 25 (b) Pursuant to the provisions of this section (b), the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: 1. Unless described in paragraph (a) above, notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; 2. The consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; 3. Appointment of a successor or additional trustee or the change of the name of a trustee; 4. Nonpayment related defaults; 5. Modifications to the rights of Owners of the Bonds; 6. Notices of redemption; and 7. Release, substitution or sale of property securing repayment of the Bonds. Whenever the District obtains knowledge of the occurrence of a Listed Event under (b) above, the District shall as soon as possible determine if such event would be material under applicable federal securities laws. 1413:0 INVESTMENT & ARBITRAGE COMPLIANCE Tax-exempt bonds are required to meet certain provisions of the federal tax code in order to maintain their tax-exempt status. In order to prevent municipal issuers from borrowing money at tax-exempt rates solely for the purpose of investing the proceeds in higher OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 15 of 25 yielding investments and making a profit (“arbitrage”), the federal tax code contains a provision that requires issuers to compare the interest earned on any bond funds held (such as a reserve fund) with interest that would theoretically be earned if the funds were invested at the yield of the bonds, and to “rebate” to the federal government any interest earned in excess of the theoretical earnings limit. The Chief Financial Officer shall invest the bond proceeds subject to the District’s Investment Policy in a timely manner, to ensure the availability of funds to meet operational requirements. In doing so, the CFO will maintain a system of record keeping and reporting to meet the arbitrage rebate compliance requirements of the federal tax code. 1514.0: TYPES OF DEBT FINANCING General Obligation Bonds General obligation bonds are secured by a pledge of the ad-valorem taxing power of the issuer and are also known as a full faith and credit obligations. Bonds of this nature must serve a public purpose to be considered lawful taxation of the property owners within the District and require a two third’s majority vote in a general election. The benefit of the improvements or assets constructed and acquired as a result of this type of bond must be generally available to all property owners. The District can issue general obligation bonds up to but not in excess of 15% of the assessed valuation under Article XVI, Section 18 of the State constitution. An annual amount of the levy necessary to meet debt service requirements is calculated and placed on the tax roll through the County of San Diego. The District also has a policy that the ad-valorem tax to be used to pay debt service on general obligation bonds will not exceed $.10 per $100 of assessed value. Voters within Improvement District No. 27 of the District authorized $100 million general obligation bonds in 1989. The District issued $11,500,000 general obligation bonds in 1992 and refinanced the bonds in 1998 and again in 2009. The District also has approximately $29 million in general obligation bonds authorized between 1960 and 1978 for various Improvement Districts throughout the District, but unissued. General obligation bonds can only be issued under these existing authorizations to the extent necessary to fund the improvements specified by each ballot measure. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 16 of 25 General obligation bonds generally are regarded as the broadest and soundest security among tax-secured debt instruments. An unlimited- tax pledge would enable a trustee to invoke mandamus to force the District to raise the tax rate as much as necessary to pay off the bonds. General obligation bonds have other credit strengths as well: the property tax tends to be a steady and predictable revenue source, and when a vote is required to issue them, bondholders have some indication of taxpayers’ willingness to pay. General obligation bonds carry the highest credit rating that a public agency can achieve and therefore, the lowest interest cost. General obligation bonds typically are issued to finance capital facilities and not for ongoing operational or maintenance costs. The District will use an objective analytical approach to determine whether it can afford to assume new general obligation debt for the improvement districts, or in the case of projects not approved by the original ID 27 vote, prior to any submission of a general obligation bond ballot measure to voters. This process will compare generally accepted standards of affordability to the current values for the District. These standards will include debt per capita, debt as a percent of taxable value, debt service payments as a percent of current revenues and current expenditures, and the level of overlapping net debt of all local taxing jurisdictions. The process will also examine the direct costs and benefits of the proposed expenditures. The decision on whether or not to assume new debt will be based on these costs and benefits, the current conditions of the municipal bond market, and the District’s ability to "afford" new debt as determined by the aforementioned standards. Revenue Bonds Revenue bonds are limited-liability obligations that pledge net revenues of the District to debt service. The net revenue pledge is after payment of all operating costs. Though Since revenue bonds are not generally secured by the full faith and credit of the District, the financial markets require coverage ratios of the pledged revenue stream and a covenant to levy rates and charges sufficient to produce net income at some level in excess of debt service (a Rate Covenant). Also there may be a test required to demonstrate that future revenues will be sufficient to maintain debt service coverage levels after any proposed additional bonds are issued. The District will strive to meet industry and financial market standards with such ratios without OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 17 of 25 impacting the current rating. Annual adjustments to the District’s rate structure may be necessary to maintain these coverage ratios. The underlying credit of revenue bonds is judged on the ability of the District’s existing rates to provide sufficient net income to pay debt service and the perceived willingness of the District to raise rates and charges in accordance with its Rate Covenant. Actual past performance also plays a role in evaluating the credit quality of revenue bonds, as well as the diversity of the customer base. Revenue bonds generally carry a credit rating one or two investment grades below a general obligation bond rating. The District may use a debt structure called “Certificates of Participation” to finance capital facilities. However, if the certificates contain a pledge of net revenues and a Rate Covenant, they are treated as essentially the same as a revenue bond. Lease/Purchase Agreements Over the lifetime of a lease, the total cost to the District will generally be higher than purchasing the asset outright. As a result, the use of lease/purchase agreements in the acquisition of vehicles, equipment and other capital assets will generally be avoided, particularly if smaller quantities of the capital asset(s) can be purchased on a "pay-as-you-go" basis. The District may utilize lease-purchase agreements to acquire needed equipment and facilities. Criteria for such agreements should be that the asset life is three years or more, the minimum value of the agreement is $50,000 and interest costs must not exceed the interest rate earned by the District’s portfolio for the average of the past 6 months. Lease payments of this type are considered operating expenses and would reduce net operating income available to pay any District revenue bonds. There are no coverage requirements or rate covenants associated with lease/purchase agreements. State Water Loans The State Water Resources Control Board makes certain funds available to water districts throughout the State. These loans typically carry a below-market rate of interest and are short term in nature. While State loans should be incorporated into the District’s debt portfolio for the financing of capital improvements, the payment of the loan should not compromise the District’s ability to issue other planned debt or cause the District to violate its rate covenants or make it OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 18 of 25 necessary for the District to increase rates to maintain existing rate covenants. Land Based Financing The District may consider developer or property owner initiated applications requesting the formation of community facilities or assessment districts and the issuance of bonds to finance eligible District facilities necessary to serve newly developing commercial, industrial and/or residential projects. Facilities will be financed in accordance with the provisions of the Municipal Improvement Act of 1913 and the Improvement Bond Act of 1915, or the Mello-Roos Community Facilities Act of 1982. Typically, the bonds issued would be used to prepay, in a lump-sum, the District’s capacity fees with respect to a large tract of land under development, or to finance in-tract infrastructure that will eventually be dedicated to the District. The bonds are secured by a special tax or assessment to be levied on property within the boundaries established for the community facilities district (sometimes known as a “Mello-Roos” district) or the assessment district. If the District becomes the sponsoring public agency for such financing district and the issuance of debt, the District will be required to enter into a Funding, Construction and Acquisition agreement for any of the facilities to be dedicated to the District upon completion. This agreement governs the type of facilities to be constructed with bond proceeds and how the facilities will be accepted by the District. In some cases, the District may not be asked to be the sponsoring agency for the formation of a financing district, rather, the developer or property owner may approach a school district or a city to be the sponsoring agency. Nonetheless, the property owner may want to include lump-sum payment of District fees in the financing or construction of certain facilities to be dedicated to the District upon completion. In this case, if the District desired to participate, the District would enter into a Joint Financing Agreement with the sponsoring agency, again governing the type of facilities to be constructed with bond proceeds and how the facilities will be accepted by the District. On a case-by-case basis, the Board shall make the determination as to whether a proposed district will proceed under the provisions of the Assessment Acts or the Mello-Roos Community Facilities Act. The Board OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 19 of 25 may confer with other consultants and the applicant to learn of any unique district requirements, such as long-term development phasing, prior to making any final determination. All District and District consultant costs incurred in the evaluation of new development, district applications and the establishment of districts will be paid by the applicant(s) by advance deposits in those instances where a party or parties other than the District have initiated a proposed district. Expenses not legally reimbursable by the financing district will be borne by the applicant. The District may incur expenses for analyzing proposed assessment or community facilities districts where the District is the principal proponent of the formation or financing of the district. Prior to the issuance of any land secured financing and in accordance with State law, the Board will adopt policies and procedures with criteria to be met before any special tax bonds or assessment district bonds may be issued. These criteria include the qualifications of the appraiser, the minimum value to lien ratio to be achieved prior to issuing the land secured debt and the maximum tax to be levied on different categories of property. 1615.0: RATING AGENCY APPLICATIONS The District may seek one or morea ratings on all new issues that are being sold in the public market. To ensure a fair rating, more than one rating agency shall be considered to rate the District’s issues. These rating agencies include, but are not limited to, Fitch Investors Service, Moody’s Investors Service, and Standard and Poor’s. When applying for a rating on an issue over $1 million or more, the District shall make a formal presentation of the finances and positive developments within the District to the rating agencies. The District will report all financial information to the rating agencies as they are published and upon request. This information shall include, but shall not be limited to, the District’s Comprehensive Annual Financial Report (CAFR), and the Adopted Operating and Capital Budget. 1716.0: USE OF CREDIT ENHANCEMENT Credit enhancement is a generic term that means any third-party guarantee of debt service. Credit enhancement providers include municipal bond insurance companies or financial institutions. The purchase of credit enhancement allows the District’s bond issue to carry the same credit rating as the credit provider. The District will OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 20 of 25 seek to use credit enhancement when such credit enhancement proves cost-effective. Selection of credit enhancement providers will be subject to a competitive bid process using the District’s purchasing guidelines, if applicable. Fixed Rate Bonds Credit enhancement for fixed rate bonds is obtained by the purchase of bond insurance. With few exceptions, bond insurance companies are rated AAA. If a commitment for bond insurance is obtained for a particular issue, the District will estimate the annual debt service for the issue based on current AAA-rated bond interest rates with the cost of issuance including the payment of the bond insurance premiumapplicable to the credit rating of the bond insurer. If the estimated debt service on this basis is less than or equal to estimated debt service for the issue based on interest rates for bonds with the District’s underlying or stand-alone credit rating, the District will purchase the bond insurance. Any intention of the District to prepay the debt ahead of its scheduled maturity will be taken into account in the analysis. Credit enhancement may be used to improve or establish a credit rating on a District debt obligation even if such credit enhancement is not cost effective if, in the opinion of the Chief Financial Officer, the use of such credit enhancement meets the District’s debt financing goals and objectives, such as, funding of a reserve fund for the bonds. Variable Rate Bonds Credit enhancement for variable rate bonds is comprised of two components: credit support and liquidity. The interest on variable rate bonds is based on a short-term7-day investment rate (usually 7 days). Any investor can tender their bonds back to the District to be repurchased on 7 shortdays’ notice (usually 7 days). Because of the short-term nature of the investment, the securities that the District is “competing” with for investors are AAA-rated or AA-rated mutual funds. Therefore, variable debt needs to have credit enhancement to achieve a comparable AAA or AA rating, as well as liquidity support to provide the District with a mechanism to purchase any bonds that are tendered before they can be remarketed to new investors. A limited number of financial institutions offer letters of credit that combine both credit support and liquidity for one fee. An alternative is to purchase bond insurance to provide credit support and enter into a separate purchase agreement with a financial institution to provide OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 21 of 25 liquidity. The difference in cost between the two structures will be analyzed before either alternative is selected for variable rate debt. 1817.0: GLOSSARY Ad Valorem Tax: A tax calculated “according to the value” of property. Such a tax is based on the assessed valuation of tangible personal property. In most jurisdictions, the tax is a lien on the property enforceable by seizure and sale of the property. General restrictions, such as overall restrictions on rates, or the percent of charge allowed, sometimes apply. As a result, ad valorem taxes often function as the balancing element in local budgets. Advance Refunding: A procedure whereby outstanding bonds are refinanced by the proceeds of a new bond issue prior to the date on which outstanding bonds become due or are callable. Typically an advance refunding is performed to take advantage of interest rates that are significantly lower than those associated with the original bond issue. At times, however, an advance refunding is performed to remove restrictive language or debt service reserve requirements required by the original issue. Amortization: The planned reduction of a debt obligation according to a stated maturity or redemption schedule. Arbitrage: The gain that may be obtained by borrowing funds at a lower (often tax-exempt) rate and investing the proceeds at higher (often taxable) rates. The ability to earn arbitrage by issuing tax- exempt securities has been severely curtailed by the Tax Reform Act of 1986, as amended. Assessed Valuation: The appraised worth of property as set by a taxing authority through assessments for purposes of ad valorem taxation. Basis Point: One one-hundredth of one percent. Bond: A security that represents an obligation to pay a specified amount of money on a specific date in the future, typically with periodic interest payments. Bond Counsel: An attorney (or firm of attorneys) retained by the issuer to give a legal opinion concerning the validity of the securities. The bond counsel’s opinion usually addresses the subject OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 22 of 25 of tax exemption. Bond counsel may prepare, or review and advise the issuer regarding authorizing resolutions or ordinances, trust indentures, official statements, validation proceedings and litigation. Bond Insurance: A type of credit enhancement whereby a monocline insurance company indemnifies an investor against a default by the issuer. In the event of a failure by the issuer to pay principal and interest in-full and on-time, investors may call upon the insurance company to do so. Once assigned, the municipal bond insurance policy generally is irrevocable. The insurance company receives an up-front fee, or premium, when the policy is issued. Call Option: A contract through which the owner is given the right but is not obligated to purchase the underlying security or commodity at a fixed price within a limited time frame. Cap: A ceiling on the interest rate that would be paid. Capital Lease: The acquisition of a capital asset over time rather than merely paying rent for temporary use. A lease-purchase agreement, in which provision is made for transfer of ownership of the property for a nominal price at the scheduled termination of the lease, is referred to as a capital lease. Certificate of Participation: A financial instrument representing a proportionate interest in payments such as lease payments by one party (such as the District acting as a lessee) to another party (often a trustee). CIP: Capital Improvement Program. Competitive Sale: The sale of securities in which the securities are awarded to the bidder who offers to purchase the issue at the best price or lowest cost. Continuing Disclosure: The requirement by the Securities and Exchange Commission for most issuers of municipal debt to provide current financial information to the informational repositories for access by the general marketplace. Debt Service: The amount necessary to pay principal and interest requirements on outstanding bonds for a given year or series of years. Defeasance: Providing for payment of principal of premium, if any, and interest on debt through the first call date or scheduled OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 23 of 25 principal maturity in accordance with the terms and requirements of the instrument pursuant to which the debt was issued. A legal defeasance usually involves establishing an irrevocable escrow funded with only cash and U.S. Government obligations. Derivative: A financial product that is based upon another product. Generally, derivatives are risk mitigation tools. Discount: The difference between a bond’s par value and the price for which it is sold when the latter is less than par. Financial Advisor: A consultant who advises an issuer on matters pertinent to a debt issue, such as structure, sizing, timing, marketing, pricing, terms and bond ratings. General Obligation Bonds: Debt that is secured by a pledge of the ad valorem taxing power of the issuer. Also known as a full faith and credit obligation. Municipal Securities Rulemaking Board (MSRB): The MSRB, comprised of representatives from investment banking firms, dealer bank representatives, and public representatives, is entrusted with the responsibility of writing rules of conduct for the municipal securities market. Negotiated Sale: A sale of securities in which the terms of sale are determined through negotiation between the issuer and the purchaser, typically an underwriter, without competitive bidding. Official Statement: A document published by the issuer that discloses material information on a new issue of municipal securities including the purposes of the issue, how the securities will be repaid, and the financial, economic and social characteristics of the issuing government. Investors may use this information to evaluate the credit quality of the securities. Option: A derivative contract. There are two primary types of options (see Put Option and Call Option). An option is considered a wasting asset because it has a stipulated life to expiration and may expire worthless. Hence, the premium could be wasted. Optional Redemption: The redemption of an obligation prior to its stated maturity, which can only occur on dates specified in the bond indenture. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 24 of 25 Overlapping Debt: The legal boundaries of local governments often overlap. In some cases, one unit of government is located entirely within the boundaries of another. Overlapping debt represents the proportionate share of debt that must be borne by one unit of government because another government with overlapping or underlying taxing authority issued its own bonds. Par Value: The face value or principal amount of a security. Pay-as-you-go: To pay for capital improvements from current resources and fund balances rather than from debt proceeds. Put Option: A contract that grants to the purchaser the right but not the obligation to exercise. Rate Covenant: A covenant between the District and bondholders, under which the District agrees to maintain a certain level of net income compared to its debt payments, and covenants to increase rates if net income is not sufficient to meet such level. Refunding: A procedure whereby an issuer refinances an outstanding bond issue by issuing new bonds. Revenue Bonds: A bond which is payable from a specific source of revenue and to which the full faith and credit of an issuer with taxing power is not pledged. Revenue bonds are payable from identified sources of revenue, and do not permit the bondholders to compel a jurisdiction to pay debt service from any other source. Pledged revenues often are derived from the operation of an enterprise. Generally, no voter approval is required prior to issuance. Special Assessments: A charge imposed against property or parcel of land that receives a special benefit by virtue of some public improvement that is not, or cannot be enjoyed by the public at large. Special assessment debt issues are those that finance such improvements and are repaid by the assessments charged to the benefiting property owners. Swap: A customized financial transaction between two or more counterparties who agree to make periodic payments to one another. Swaps cover interest rate, equity, commodity and currency products. They can be simple floating for fixed exchanges or complex hybrid products with multiple option features. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 1/3/07 9/4/13 Page 25 of 25 True Interest Cost (TIC): A method of calculating the overall cost of a financing that takes into account the time value of money. The TIC is the rate of interest that will discount all future payments so that the sum of their present value equals the issue proceeds. Underwriter: The term used broadly in the municipal market, to refer to the firm that purchases a securities offering from a governmental issuer. Yield Curve: Refers to the graphical or tabular representation of interest rates across different maturities. The presentation often starts with the shortest-term rates and extends towards longer maturities. It reflects the market’s views about implied inflation/deflation, liquidity, economic and financial activity, and other market forces. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 1 of 23 1.0: POLICY It is the policy of the Otay Water District to finance the acquisition of high value assets that have an extended useful life through a combination of current revenues and debt financing. Regularly updated debt policies and procedures are an important tool to insure the use of the District’s resources to meet its commitments, to provide the highest quality of service to the District’s customers, and to maintain sound financial management practices. These guidelines are for general use and allow for exceptions as circumstances dictate. 2.0: SCOPE This policy is enacted in an effort to standardize the issuance and management of debt by the Otay Water District. The primary objective is to establish conditions for the use of debt, to minimize the District’s debt service requirements and cost of issuance, to retain the highest practical credit rating, maintain full and complete financial disclosure and reporting, and to maintain financial flexibility for the District. This policy applies to all debt issued by the District including general obligation bonds, revenue bonds, capital leases and special assessment debt. 3.0: LEGAL & REGULATORY REQUIREMENTS The Chief Financial Officer (CFO) and the District’s Legal Counsel will coordinate their activities to ensure that all securities are issued in full compliance with Federal and State law. 4.0: CAPITAL FACILITIES FUNDING Financial Planning The District maintains a six-year financial projection that identifies operating requirements and public facility and equipment requirements, and has developed a Rate Model for funding the District’s 6-Year Capital Improvement Program (CIP). The District’s CIP Budget places the capital requirements in order of priority and schedules them for funding and implementation. It identifies a full range of capital needs, provides for the ranking of the importance of such needs, and identifies all the funding sources that are available to cover the costs of the projects. In cases where the program identifies project funding through the use of debt financing, the budget should provide information needed to determine debt capacity. The Rate Model and the Attachment C OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 2 of 23 CIP Budget give the Board part of the data needed to make informed judgments concerning the possibility of issuing debt. Funding Criteria The Chief Financial Officer (CFO) will evaluate all capital project requests and develop a proposed funding plan. Priority may be given to those projects that can be funded with current resources (annual cash flow, fund balances or reserves). Those projects that cannot be funded with current resources may be deferred or the CFO may recommend that they be funded with debt financing. However, debt financing will not be considered appropriate for any recurring purpose such as current operating and maintenance expenditures. The issuance of short-term cash-flow instruments is excluded from this limitation. The General Manager will recommend the funding plan to the Board. The General Manager may deem it necessary or desirable in certain circumstances to convene a Finance Committee meeting to evaluate funding options presented by the Chief Financial Officer. Funding Sources The District’s capital improvements can be classified in three categories: those related to an expansion of the system (“expansion”), those related to upgrading the existing system (“betterment”) and those related to repairing or replacing existing infrastructure (“replacement”). In general, capital improvements for betterment or replacement are financed primarily through user charges, availability charges, and betterment charges. Capital improvements for expansion are financed through capacity fees. Accordingly, these fees are reviewed at least annually or more frequently as required and set at levels sufficient to ensure that new development pays its fair share of the costs of constructing necessary infrastructure. Additionally, the District will seek State and Federal grants and other forms of intergovernmental aid wherever possible. Pay-As-You-Go Projects The District’s capacity fees are the major funding source in financing additions to the water system and the recycled water system. Over time, the fees collected and the cost to construct the capital projects should balance. However, collection of these fees is subject to significant fluctuation based on the rate of new development. Accordingly, the Chief Financial Officer, in developing the funding plan for the CIP, will determine that current revenues and adequate OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 3 of 23 fund balances are available so project phasing can be accomplished. If this is not the case, the Chief Financial Officer may recommend that: 1. The project be deferred until funds are available, or 2. Based on the priority of the project, long-term debt is issued to finance the project. Debt Financed Projects If a project or projects are to be financed with long-term debt, the District should use the following criteria to evaluate the suitability of the financing for the particular project or projects: 1. The life of the project or asset to be financed is 10 years or longer and its useful life is expected to exceed the term of the financing. 2. Revenues available for debt service are deemed to be sufficient and reliable so that long-term financing can be marketed without jeopardizing the credit rating of the District. 3. Market conditions present favorable interest rates and demand for District financing. 4. The project is mandated by State and/or Federal requirements and current resources are insufficient or unavailable. 5. The project is immediately required to meet or relieve capacity needs and current resources are insufficient or unavailable. 5.0: DEBT STRUCTURE General The District will normally issue debt with a maturity of not more than 30 years. The structure should approximate level debt service for the term where it is practical or desirable. There will be no debt structures that include increasing debt service levels in subsequent years, with the first and second year of a debt payoff schedule the exception and related to projected additional income to be generated by the project to be funded. There will be no "balloon" debt repayment schedules that consist of low annual payments and one large payment of the balance due at the end of the term. There will always be at least interest paid in the first fiscal year after debt issuance and principal starting no later than the first fiscal year after the OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 4 of 23 date the facility or equipment is expected to be placed in service. Capitalized interest will not be for a period of more than necessary to provide adequate security for the financing. Limitations on the Issuance of Variable Rate Debt The District will normally issue debt with a fixed rate of interest. The District may issue variable rate for the purpose of managing its interest costs. At the same time, the District should protect itself from too much exposure to interest rate fluctuations. In determining that it is in the District’s best interest to issue certain debt at variable rates instead of fixed rates, at the time of issuing any variable rate debt, there should be at least a 10% estimated reduction in annual debt costs by issuing variable rate debt when compared to a similar issuance of fixed rate debt. If the estimated overall cost savings from issuing variable rate debt is not at least 10% at the time of issuance, relatively small fluctuations in rates could actually increase the District’s financing costs over the life of the bonds compared to a similar fixed rate financing. By using this 10% factor at the time of issuance, the District can be relatively assured that its variable rate financing will be cost-effective over the term of the bonds. The comparison will be based on the following criteria: 1. The interest rate used to estimate variable interest costs will be the higher of the 10 year average rate or the current weekly variable rate. 2. The variable rate debt costs will include an estimate for annual costs such as letter of credit fees, liquidity fees, remarketing fees, monthly draw fees and annual rating fees applicable to the letter of credit. 3. Any potential reserve fund earnings will reduce the fixed rate debt service or variable rate debt service as applicable. Periodically, using the criteria described above, the Chief Financial Officer will compare the estimated annual debt service costs to maturity of any variable rate debt with estimated debt service if the debt was converted to fixed rates. If this analysis produces a break even in total payments over the life of the issue, the Chief Financial Officer will recommend converting such variable rate debt to fixed rate. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 5 of 23 Variable rate debt should not represent more than 25% of the District’s total debt portfolio. This level of exposure to interest rate fluctuations is considered to be manageable in an environment of increasing interest rates. At a higher ratio than this, the District might be faced with an unplanned water rate increase to meet its Rate Covenants. Rating agencies use this ratio in their analysis of the District’s overall credit rating. Further, Rate Covenants applicable to variable rate debt shall not compromise the issuance of additional debt planned by the District and variable rate debt should always contain a provision to allow conversion to a fixed rate at the District’s option. 6.0: CREDIT OBJECTIVES The Otay Water District seeks to maintain the highest possible credit ratings for all categories of long-term debt that can be achieved without compromising delivery of basic services and achievement of District policy objectives. Factors taken into account in determining the credit rating for a financing include: 1. Diversity of the District’s customer base. 2. Proven track record of completing capital projects on time and within budget. 3. Strong, professional management. 4. Adequate levels of staffing for services provided. 5. Reserves. 6. Ability to consistently meet or exceed Rate Covenants. The District recognizes that external economic, natural, or other events may from time to time affect the creditworthiness of its debt. Nevertheless, the District is committed to ensuring that actions within its control are prudent and well planned. 7.0: COMPETITIVE AND NEGOTIATED SALE CRITERIA Competitive Sale The District will use a competitive bidding process in the sale of debt unless the nature of the issue or specific circumstances warrants OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 6 of 23 a negotiated sale. The CFO will determine the best bid in a competitive sale by calculating the true interest cost (TIC) of each bid. Negotiated Sale Types of debt that would typically lend themselves to the negotiated sale format are variable rate debt and unrated debt. Circumstances that might warrant a negotiated sale may occur when the issue is of a limited size that would not attract wide-spread investor interest, during periods of high levels of issuance by other entities in the State, or during periods of market volatility or with relatively new financing techniques. In the event the District decides to use a negotiated sale, it will pay management fees only to those firms that place orders for bonds. If the size of the District’s proposed issue is not cost effective, the District may also consider issuing its debt by private placement or through the California Statewide Communities Development Authority, which provides a mechanism for pooling financings with similar issuers to obtain economies of scale. 8.0: REFUNDING DEBT Purpose Periodic reviews of all outstanding debt will be undertaken by the Chief Financial Officer to determine refunding (refinancing) opportunities. The purpose of the refinancing may be to: 1. Lower annual debt service by taking advantage of lower current interest rates. 2. Update or revise covenants on outstanding debt issue if a Rate Covenant appears to be too high, has precluded the District from implementing its financing plan, or has caused the District to increase rates to customers. 3. Restructure debt service associated with an issue to facilitate the issuance of additional debt, usually in order to smooth out peaks in total debt service which can occur frequently as one debt issue is layered on top of existing debt issues. 4. Alter bond characteristics such as call provisions or payment dates. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 7 of 23 5. Pay for conversion costs such as funding a reserve fund or paying for credit enhancement when converting variable rate debt to fixed rate debt. Restrictions on Refunding Tax-exempt bonds typically have provisions that preclude early redemption of the bonds for a period of years after issuance. The number of times a tax-exempt bond can be refinanced prior to its Optional Redemption date (known as Advance Refunding) is limited by the IRS. For debt issued after 1986, issuers may only provide for Advance Refunding of obligations in advance of the Optional Redemption date one time. There is no limit by the IRS on the ability of issuers to redeem bonds early once the Optional Redemption date has been reached (known as Current Refunding). Savings Criteria In cases where an Advance Refunding or Current Refunding is intended to provide debt service savings, the District may commence the refinancing process if a minimum five percent (5%) present value savings net of issuance costs and any cash contributions can be demonstrated. Since interest rates may fluctuate between the time when a refinancing is authorized and when the debt is issued, beginning the process with at least a 5% savings should provide the District with some level of protection that it can achieve a minimum of three percent (3%) net present value savings of the refunding bonds when and if the debt is issued. These minimum standards are intended to protect the District staff from spending time on refinancings that become marginally cost-effective after the entire issuance process is complete. The savings target may be waived, however, if sufficient justification for lowering the savings target can be provided by meeting one or more of the other refunding objectives described above. 9.0: SUBORDINATE LIEN DEBT The District will issue subordinate lien debt only if it is financially beneficial to the District or consistent with creditworthiness objectives. Subordinate lien debt is structured to be payable second in priority to the District’s other outstanding debt. Typically, subordinate lien debt might be issued if the District desired a more flexible Rate Covenant with respect to its new OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 8 of 23 obligations and did not want to refinance all of its existing debt to obtain that less restrictive Rate Covenant. 10.0: FINANCING PARTICIPANTS The District’s purchasing guidelines provide the process for securing professional services related to individual debt issues. The solicitation and selection process include encouraging participation from qualified service providers, both local and national, and securing services at competitive prices. Financial Advisor: The use of a Financial Advisor is necessary for the sale of debt by a competitive bid process and is desirable when issuing debt through a negotiated sale. The Financial Advisor has a fiduciary duty to the District and will seek to structure the District’s debt in the manner that is saleable, yet meets the District’s objectives for the financing. The Financial Advisor will advise the District on alternative structures for its debt, the cost of different debt structures and potential pricing mechanisms that can be expected from underwriters (such as call features, term bonds and premium and discount bond pricing) and, at the District’s direction, will write the offering document (preliminary official statement). With respect to competitive sales, the Financial Advisor will arrange for distributing the preliminary official statement, accepting bids via an internet bidding platform, verifying the lowest bid and provide detailed instructions for the flow of funds at closing to the winning Underwriter, the Trustee and the District. In a negotiated sale, the Financial Advisor will provide independent confirmation on the Underwriter’s proposed pricing to ensure that interest rates and Underwriter’s compensation are appropriate for the credit quality of the issue and competitive in the overall public finance market in California. Underwriter: The Underwriter markets the bonds for sale to investors. While the District’s preference is to select the Underwriter for the debt via sale of the debt at competitive bid, there are circumstances when a negotiated issue is in the best interests of the District. Negotiated sales are preferable if the security features are particularly complex or market conditions are volatile. The Chief Financial Officer will recommend whether the method of sale is competitive or negotiated based on the type of issue and other market conditions. In the case of negotiated sales, the Underwriter will be required to demonstrate sufficient capitalization and sufficient experience related to the specific type of debt issuance. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 9 of 23 The Underwriter will work in connection with the District’s Financial Advisor on structuring the issue and offering different pricing ideas. Bond Counsel: The District’s Bond Counsel provides the primary legal documents that detail the security for the bonds and the authority under which bonds are issued. The Bond Counsel also provides an opinion to bond holders that the bonds are tax-exempt under both State and Federal law. All closing documents in connection with an issue are also prepared by Bond Counsel. Disclosure Counsel: The District’s Disclosure Counsel provides legal advice to the District regarding the adequacy of the District’s disclosure of financial information or risks of investing in the District’s debt issue to the investing public. The Disclosure Counsel can prepare the official statement or review the official statement and gives the District an opinion that there is no information missing from the official statement of a material nature that would be necessary for an investor to make an informed decision about investing in the District’s bonds. Trustee: The Trustee is a financial institution selected by the District to administer the collection of revenues pledged to repay the bonds and to distribute those funds to bondholders. Letter of Credit Bank: The Letter of Credit Bank is a U.S. or foreign bank that has issued a letter of credit providing both credit enhancement (the Letter of Credit Bank will pay the debt in the event that the District defaults on the payment) and liquidity for a variable rate bond issue. These banks have their own short-term credit rating, which can be higher than the District’s short-term credit rating. Liquidity is needed because variable rate bondholders are allowed to “put” their bonds back to the District if they do not like the interest rate currently being offered. The District’s Remarketing Agent then finds a new buyer for those bonds, but in the event that no buyer is found, a draw is made under the letter of credit to purchase the bonds that have been “put.” As soon as the bonds are remarketed to another buyer, the letter of credit is repaid. The letter of credit fees are paid annually or quarterly. Letter of credits are typically issued for not more than 3 years and must be renewed during the life of the bonds. Credit enhancement is discussed further under the heading “CREDIT ENHANCEMENT.” Municipal Bond Insurer: The Municipal Bond Insurer can be one of several insurance companies that provide municipal bond insurance policies securing payment of the District’s debt. These policies OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 10 of 23 provide that the Municipal Bond Insurer will pay the District’s debt in the event that the District defaults on its payments. Debt which is insured carries the Municipal Bond Insurer’s credit rating. The insurance premium for the bond insurance policy is paid one time at the issuance of the debt and is non-cancelable for the term of the debt. Unlike a letter of credit, bond insurance policies do not provide liquidity and are most typically purchased for fixed rate debt. Remarketing Agent: The Remarketing Agent is an investment bank that, each week, determines the interest rate for the District’s variable rate obligations. The rate is set at the rate at which the obligations could be sold on the open market at 100% of their face value. The Remarketing Agent also finds new buyers for any of the obligations that are “put” back to the District. Rating Agencies: Currently, there are three widely recognized rating agencies that rate municipal debt in the United States: Standard & Poor’s, Moody’s Investors Service, and Fitch Investors Service. Rating agencies establish objective criteria under which each type of financing undertaken by the District is to be analyzed. Upon request, a rating agency will rate the underlying strength of the District’s financings, without regard to the purchase of any credit enhancement. The rating is released to the general public and thereafter, the rating agency will periodically update its analysis of a particular issue, and may raise or lower the rating if circumstances warrant. Investment-grade ratings range from “AAA” to “BBB-.” A rating below “BBB-” is not investment grade. Many mutual funds cannot buy bonds that do not carry an investment grade. Verification Agent: In a refunding, the District will deposit funds with an escrow agent (usually the trustee) in an amount sufficient, together with earnings thereon, to pay the debt service and redemption price of the debt being refunded through and including the call date. The Verification Agent verifies the mathematical accuracy of calculation of the amount to be deposited in escrow and the bond counsel relies on this verification in giving their opinion that the debt is defeased within the meaning of the indenture and that the lien of the debt on the revenues pledged to the debt being refunded is released. 11.0: CONFLICT OF INTEREST AND STANDARDS OF CONDUCT Members of the District, the Board of Directors and its consultants, service providers and underwriters shall adhere to standards of OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 11 of 23 conduct and conflict of interest rules as stipulated by the California Political Reform Act or the Municipal Securities Rulemaking Board (MSRB), as applicable. All debt financing participants shall maintain the highest standards of professional conduct at all times, in accordance with MSRB Rules, including Rule G-37. There shall be no conflict of interest with the District with any debt financing participant. 12.0: CONTINUING DISCLOSURE The District acknowledges the responsibilities of the underwriting community and pledges to make all reasonable efforts to assist underwriters in their efforts to comply with SEC Rule 15c2-12 and MSRB Rule G-36. The District will file its official statements with the MSRB and the nationally recognized municipal securities information repositories. The District will also post copies of its comprehensive financial reports on the MSRB’s Electronic Municipal Market Access (EMMA) website, and will disseminate other information that it deems pertinent to the market in a timely manner (For bonds issued after 2012, 10 days). While initial bond disclosure requirements pertain to underwriters, the District will provide financial information and notices of material events on an ongoing basis throughout the life of the issue. Material events are defined as those events which are considered to likely reflect on the credit supporting the securities. (a) The events considered material according to the SEC are: 1. Principal and interest payment delinquencies; 2. Unscheduled draws on debt service reserves reflecting financial difficulties; 3. Unscheduled draws on credit enhancements reflecting financial difficulties; 4. Substitution of credit or liquidity providers, or their failure to perform; 5. Adverse tax opinions or the issuance by the Internal Revenue Service of proposed or final determinations of taxability or of a Notice of Proposed Issue (IRS Form 5701-TEB); 6. Tender offers; OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 12 of 23 7. Defeasances; 8. Ratings changes; and 9. Bankruptcy, insolvency, receivership or similar proceedings. Note: for the purposes of the event identified in subparagraph (9) above, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (b) Pursuant to the provisions of this section (b), the District shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material: 1. Unless described in paragraph (a) above, notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds; 2. The consummation of a merger, consolidation or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; 3. Appointment of a successor or additional trustee or the change of the name of a trustee; 4. Nonpayment related defaults; OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 13 of 23 5. Modifications to the rights of Owners of the Bonds; 6. Notices of redemption; and 7. Release, substitution or sale of property securing repayment of the Bonds. Whenever the District obtains knowledge of the occurrence of a Listed Event under (b) above, the District shall as soon as possible determine if such event would be material under applicable federal securities laws. 13:0 INVESTMENT & ARBITRAGE COMPLIANCE Tax-exempt bonds are required to meet certain provisions of the federal tax code in order to maintain their tax-exempt status. In order to prevent municipal issuers from borrowing money at tax-exempt rates solely for the purpose of investing the proceeds in higher yielding investments and making a profit (“arbitrage”), the federal tax code contains a provision that requires issuers to compare the interest earned on any bond funds held (such as a reserve fund) with interest that would theoretically be earned if the funds were invested at the yield of the bonds, and to “rebate” to the federal government any interest earned in excess of the theoretical earnings limit. The Chief Financial Officer shall invest the bond proceeds subject to the District’s Investment Policy in a timely manner, to ensure the availability of funds to meet operational requirements. In doing so, the CFO will maintain a system of record keeping and reporting to meet the arbitrage rebate compliance requirements of the federal tax code. 14.0: TYPES OF DEBT FINANCING General Obligation Bonds General obligation bonds are secured by a pledge of the ad-valorem taxing power of the issuer and are also known as a full faith and credit obligations. Bonds of this nature must serve a public purpose to be considered lawful taxation of the property owners within the District and require a two third’s majority vote in a general election. The benefit of the improvements or assets constructed and OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 14 of 23 acquired as a result of this type of bond must be generally available to all property owners. The District can issue general obligation bonds up to but not in excess of 15% of the assessed valuation under Article XVI, Section 18 of the State constitution. An annual amount of the levy necessary to meet debt service requirements is calculated and placed on the tax roll through the County of San Diego. The District also has a policy that the ad-valorem tax to be used to pay debt service on general obligation bonds will not exceed $.10 per $100 of assessed value. Voters within Improvement District No. 27 of the District authorized $100 million general obligation bonds in 1989. The District issued $11,500,000 general obligation bonds in 1992 and refinanced the bonds in 1998 and again in 2009. The District also has approximately $29 million in general obligation bonds authorized between 1960 and 1978 for various improvement districts throughout the District, but unissued. General obligation bonds can only be issued under these existing authorizations to the extent necessary to fund the improvements specified by each ballot measure. General obligation bonds generally are regarded as the broadest and soundest security among tax-secured debt instruments. An unlimited- tax pledge would enable a trustee to invoke mandamus to force the District to raise the tax rate as much as necessary to pay off the bonds. General obligation bonds have other credit strengths as well: the property tax tends to be a steady and predictable revenue source, and when a vote is required to issue them, bondholders have some indication of taxpayers’ willingness to pay. General obligation bonds carry the highest credit rating that a public agency can achieve and therefore, the lowest interest cost. General obligation bonds typically are issued to finance capital facilities and not for ongoing operational or maintenance costs. The District will use an objective analytical approach to determine whether it can afford to assume new general obligation debt for the improvement districts, or in the case of projects not approved by the original ID 27 vote, prior to any submission of a general obligation bond ballot measure to voters. This process will compare generally accepted standards of affordability to the current values for the District. These standards will include debt per capita, debt as a percent of taxable value, debt service payments as a percent of current revenues and current expenditures, and the level of overlapping net debt of all local taxing jurisdictions. The process will also examine the direct costs and benefits of the proposed OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 15 of 23 expenditures. The decision on whether or not to assume new debt will be based on these costs and benefits, the current conditions of the municipal bond market, and the District’s ability to "afford" new debt as determined by the aforementioned standards. Revenue Bonds Revenue bonds are limited-liability obligations that pledge net revenues of the District to debt service. The net revenue pledge is after payment of all operating costs. Since revenue bonds are not generally secured by the full faith and credit of the District, the financial markets require coverage ratios of the pledged revenue stream and a covenant to levy rates and charges sufficient to produce net income at some level in excess of debt service (a Rate Covenant). Also there may be a test required to demonstrate that future revenues will be sufficient to maintain debt service coverage levels after any proposed additional bonds are issued. The District will strive to meet industry and financial market standards with such ratios without impacting the current rating. Annual adjustments to the District’s rate structure may be necessary to maintain these coverage ratios. The underlying credit of revenue bonds is judged on the ability of the District’s existing rates to provide sufficient net income to pay debt service and the perceived willingness of the District to raise rates and charges in accordance with its Rate Covenant. Actual past performance also plays a role in evaluating the credit quality of revenue bonds, as well as the diversity of the customer base. Revenue bonds generally carry a credit rating one or two investment grades below a general obligation bond rating. The District may use a debt structure called “Certificates of Participation” to finance capital facilities. However, if the certificates contain a pledge of net revenues and a Rate Covenant, they are treated as essentially the same as a revenue bond. Lease/Purchase Agreements Over the lifetime of a lease, the total cost to the District will generally be higher than purchasing the asset outright. As a result, the use of lease/purchase agreements in the acquisition of vehicles, equipment and other capital assets will generally be avoided, particularly if smaller quantities of the capital asset(s) can be purchased on a "pay-as-you-go" basis. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 16 of 23 The District may utilize lease-purchase agreements to acquire needed equipment and facilities. Criteria for such agreements should be that the asset life is three years or more, the minimum value of the agreement is $50,000 and interest costs must not exceed the interest rate earned by the District’s portfolio for the average of the past 6 months. Lease payments of this type are considered operating expenses and would reduce net operating income available to pay any District revenue bonds. There are no coverage requirements or rate covenants associated with lease/purchase agreements. State Water Loans The State Water Resources Control Board makes certain funds available to water districts throughout the State. These loans typically carry a below-market rate of interest and are short term in nature. While State loans should be incorporated into the District’s debt portfolio for the financing of capital improvements, the payment of the loan should not compromise the District’s ability to issue other planned debt or cause the District to violate its rate covenants or make it necessary for the District to increase rates to maintain existing rate covenants. Land Based Financing The District may consider developer or property owner initiated applications requesting the formation of community facilities or assessment districts and the issuance of bonds to finance eligible District facilities necessary to serve newly developing commercial, industrial and/or residential projects. Facilities will be financed in accordance with the provisions of the Municipal Improvement Act of 1913 and the Improvement Bond Act of 1915, or the Mello-Roos Community Facilities Act of 1982. Typically, the bonds issued would be used to prepay, in a lump-sum, the District’s capacity fees with respect to a large tract of land under development, or to finance in-tract infrastructure that will eventually be dedicated to the District. The bonds are secured by a special tax or assessment to be levied on property within the boundaries established for the community facilities district (sometimes known as a “Mello-Roos” district) or the assessment district. If the District becomes the sponsoring public agency for such financing district and the issuance of debt, the District will be required to enter into a Funding, Construction and Acquisition agreement for any of the facilities to be dedicated to the District upon completion. This agreement governs the type of facilities to be OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 17 of 23 constructed with bond proceeds and how the facilities will be accepted by the District. In some cases, the District may not be asked to be the sponsoring agency for the formation of a financing district, rather, the developer or property owner may approach a school district or a city to be the sponsoring agency. Nonetheless, the property owner may want to include lump-sum payment of District fees in the financing or construction of certain facilities to be dedicated to the District upon completion. In this case, if the District desired to participate, the District would enter into a Joint Financing Agreement with the sponsoring agency, again governing the type of facilities to be constructed with bond proceeds and how the facilities will be accepted by the District. On a case-by-case basis, the Board shall make the determination as to whether a proposed district will proceed under the provisions of the Assessment Acts or the Mello-Roos Community Facilities Act. The Board may confer with other consultants and the applicant to learn of any unique district requirements, such as long-term development phasing, prior to making any final determination. All District and District consultant costs incurred in the evaluation of new development, district applications and the establishment of districts will be paid by the applicant(s) by advance deposits in those instances where a party or parties other than the District have initiated a proposed district. Expenses not legally reimbursable by the financing district will be borne by the applicant. The District may incur expenses for analyzing proposed assessment or community facilities districts where the District is the principal proponent of the formation or financing of the district. Prior to the issuance of any land secured financing and in accordance with State law, the Board will adopt policies and procedures with criteria to be met before any special tax bonds or assessment district bonds may be issued. These criteria include the qualifications of the appraiser, the minimum value to lien ratio to be achieved prior to issuing the land secured debt and the maximum tax to be levied on different categories of property. 15.0: RATING AGENCY APPLICATIONS The District may seek one or more ratings on all new issues that are being sold in the public market. These rating agencies include, but are not limited to, Fitch Investors Service, Moody’s Investors OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 18 of 23 Service, and Standard & Poor’s. When applying for a rating on an issue over $1 million or more, the District shall make a formal presentation of the finances and positive developments within the District to the rating agencies. The District will report all financial information to the rating agencies upon request. This information shall include, but shall not be limited to, the District’s Comprehensive Annual Financial Report (CAFR), and the Adopted Operating and Capital Budget. 16.0: USE OF CREDIT ENHANCEMENT Credit enhancement is a generic term that means any third-party guarantee of debt service. Credit enhancement providers include municipal bond insurance companies or financial institutions. The purchase of credit enhancement allows the District’s bond issue to carry the same credit rating as the credit provider. The District will seek to use credit enhancement when such credit enhancement proves cost-effective. Selection of credit enhancement providers will be subject to a competitive bid process using the District’s purchasing guidelines, if applicable. Fixed Rate Bonds Credit enhancement for fixed rate bonds is obtained by the purchase of bond insurance. If a commitment for bond insurance is obtained for a particular issue, the District will estimate the annual debt service for the issue based on current interest rates applicable to the credit rating of the bond insurer. If the estimated debt service on this basis is less than or equal to estimated debt service for the issue based on interest rates for bonds with the District’s underlying or stand-alone credit rating, the District will purchase the bond insurance. Any intention of the District to prepay the debt ahead of its scheduled maturity will be taken into account in the analysis. Credit enhancement may be used to improve or establish a credit rating on a District debt obligation even if such credit enhancement is not cost effective if, in the opinion of the Chief Financial Officer, the use of such credit enhancement meets the District’s debt financing goals and objectives, such as, funding of a reserve fund for the bonds. Variable Rate Bonds Credit enhancement for variable rate bonds is comprised of two components: credit support and liquidity. The interest on variable rate bonds is based on a short-term investment rate (usually 7 days). OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 19 of 23 Any investor can tender their bonds back to the District to be repurchased on short notice (usually 7 days). Because of the short- term nature of the investment, the securities that the District is “competing” with for investors are AA-rated mutual funds. Therefore, variable debt needs to have credit enhancement to achieve a comparable AA rating, as well as liquidity support to provide the District with a mechanism to purchase any bonds that are tendered before they can be remarketed to new investors. A limited number of financial institutions offer letters of credit that combine both credit support and liquidity for one fee. An alternative is to purchase bond insurance to provide credit support and enter into a separate purchase agreement with a financial institution to provide liquidity. The difference in cost between the two structures will be analyzed before either alternative is selected for variable rate debt. 17.0: GLOSSARY Ad Valorem Tax: A tax calculated “according to the value” of property. Such a tax is based on the assessed valuation of tangible personal property. In most jurisdictions, the tax is a lien on the property enforceable by seizure and sale of the property. General restrictions, such as overall restrictions on rates, or the percent of charge allowed, sometimes apply. As a result, ad valorem taxes often function as the balancing element in local budgets. Advance Refunding: A procedure whereby outstanding bonds are refinanced by the proceeds of a new bond issue prior to the date on which outstanding bonds become due or are callable. Typically an advance refunding is performed to take advantage of interest rates that are significantly lower than those associated with the original bond issue. At times, however, an advance refunding is performed to remove restrictive language or debt service reserve requirements required by the original issue. Amortization: The planned reduction of a debt obligation according to a stated maturity or redemption schedule. Arbitrage: The gain that may be obtained by borrowing funds at a lower (often tax-exempt) rate and investing the proceeds at higher (often taxable) rates. The ability to earn arbitrage by issuing tax- exempt securities has been severely curtailed by the Tax Reform Act of 1986, as amended. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 20 of 23 Assessed Valuation: The appraised worth of property as set by a taxing authority through assessments for purposes of ad valorem taxation. Basis Point: One one-hundredth of one percent. Bond: A security that represents an obligation to pay a specified amount of money on a specific date in the future, typically with periodic interest payments. Bond Counsel: An attorney (or firm of attorneys) retained by the issuer to give a legal opinion concerning the validity of the securities. The bond counsel’s opinion usually addresses the subject of tax exemption. Bond counsel may prepare, or review and advise the issuer regarding authorizing resolutions or ordinances, trust indentures, official statements, validation proceedings and litigation. Bond Insurance: A type of credit enhancement whereby a monocline insurance company indemnifies an investor against a default by the issuer. In the event of a failure by the issuer to pay principal and interest in-full and on-time, investors may call upon the insurance company to do so. Once assigned, the municipal bond insurance policy generally is irrevocable. The insurance company receives an up-front fee, or premium, when the policy is issued. Call Option: A contract through which the owner is given the right but is not obligated to purchase the underlying security or commodity at a fixed price within a limited time frame. Cap: A ceiling on the interest rate that would be paid. Capital Lease: The acquisition of a capital asset over time rather than merely paying rent for temporary use. A lease-purchase agreement, in which provision is made for transfer of ownership of the property for a nominal price at the scheduled termination of the lease, is referred to as a capital lease. Certificate of Participation: A financial instrument representing a proportionate interest in payments such as lease payments by one party (such as the District acting as a lessee) to another party (often a trustee). CIP: Capital Improvement Program. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 21 of 23 Competitive Sale: The sale of securities in which the securities are awarded to the bidder who offers to purchase the issue at the best price or lowest cost. Continuing Disclosure: The requirement by the Securities and Exchange Commission for most issuers of municipal debt to provide current financial information to the informational repositories for access by the general marketplace. Debt Service: The amount necessary to pay principal and interest requirements on outstanding bonds for a given year or series of years. Defeasance: Providing for payment of principal of premium, if any, and interest on debt through the first call date or scheduled principal maturity in accordance with the terms and requirements of the instrument pursuant to which the debt was issued. A legal defeasance usually involves establishing an irrevocable escrow funded with only cash and U.S. Government obligations. Derivative: A financial product that is based upon another product. Generally, derivatives are risk mitigation tools. Discount: The difference between a bond’s par value and the price for which it is sold when the latter is less than par. Financial Advisor: A consultant who advises an issuer on matters pertinent to a debt issue, such as structure, sizing, timing, marketing, pricing, terms and bond ratings. General Obligation Bonds: Debt that is secured by a pledge of the ad valorem taxing power of the issuer. Also known as a full faith and credit obligation. Municipal Securities Rulemaking Board (MSRB): The MSRB, comprised of representatives from investment banking firms, dealer bank representatives, and public representatives, is entrusted with the responsibility of writing rules of conduct for the municipal securities market. Negotiated Sale: A sale of securities in which the terms of sale are determined through negotiation between the issuer and the purchaser, typically an underwriter, without competitive bidding. Official Statement: A document published by the issuer that discloses material information on a new issue of municipal securities including the purposes of the issue, how the securities will be repaid, and the OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 22 of 23 financial, economic and social characteristics of the issuing government. Investors may use this information to evaluate the credit quality of the securities. Option: A derivative contract. There are two primary types of options (see Put Option and Call Option). An option is considered a wasting asset because it has a stipulated life to expiration and may expire worthless. Hence, the premium could be wasted. Optional Redemption: The redemption of an obligation prior to its stated maturity, which can only occur on dates specified in the bond indenture. Overlapping Debt: The legal boundaries of local governments often overlap. In some cases, one unit of government is located entirely within the boundaries of another. Overlapping debt represents the proportionate share of debt that must be borne by one unit of government because another government with overlapping or underlying taxing authority issued its own bonds. Par Value: The face value or principal amount of a security. Pay-as-you-go: To pay for capital improvements from current resources and fund balances rather than from debt proceeds. Put Option: A contract that grants to the purchaser the right but not the obligation to exercise. Rate Covenant: A covenant between the District and bondholders, under which the District agrees to maintain a certain level of net income compared to its debt payments, and covenants to increase rates if net income is not sufficient to meet such level. Refunding: A procedure whereby an issuer refinances an outstanding bond issue by issuing new bonds. Revenue Bonds: A bond which is payable from a specific source of revenue and to which the full faith and credit of an issuer with taxing power is not pledged. Revenue bonds are payable from identified sources of revenue, and do not permit the bondholders to compel a jurisdiction to pay debt service from any other source. Pledged revenues often are derived from the operation of an enterprise. Generally, no voter approval is required prior to issuance. OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject DEBT POLICY Policy Number Date Adopted Date Revised 45 4/13/04 9/4/13 Page 23 of 23 Special Assessments: A charge imposed against property or parcel of land that receives a special benefit by virtue of some public improvement that is not, or cannot be enjoyed by the public at large. Special assessment debt issues are those that finance such improvements and are repaid by the assessments charged to the benefiting property owners. Swap: A customized financial transaction between two or more counterparties who agree to make periodic payments to one another. Swaps cover interest rate, equity, commodity and currency products. They can be simple floating for fixed exchanges or complex hybrid products with multiple option features. True Interest Cost (TIC): A method of calculating the overall cost of a financing that takes into account the time value of money. The TIC is the rate of interest that will discount all future payments so that the sum of their present value equals the issue proceeds. Underwriter: The term used broadly in the municipal market, to refer to the firm that purchases a securities offering from a governmental issuer. Yield Curve: Refers to the graphical or tabular representation of interest rates across different maturities. The presentation often starts with the shortest-term rates and extends towards longer maturities. It reflects the market’s views about implied inflation/deflation, liquidity, economic and financial activity, and other market forces. DISTRICT DEBT POLICY Debt Policy No. 45 Board of Director’s Meeting September 4, 2013 Attachment D 1 POLICY REVIEW Review Existing Outstanding Debt Debt Coverage Ratio Update of the Debt Policy 2 Schedule of Debt Description Year Issued Year of Final Payment Call Options Effective Rate Original Amount Amount Outstanding Purpose 1996 Certificates of Participation (Non-taxable) 1996 2026 Any time Variable (1.15% as of 8/7/13) $15,400,000 $10,400,000 Terminal Storage, Water Stoage Ponds, Pump Stations, Operational Reservoirs, Pipeline Projects, Headquarters 2007 Certificates of Participation (Non-taxable) 2007 2036 9/1/2017 4.33%$42,000,000 $38,665,000 640-1 and 640-2 Reservoirs, which were both 10MM Gallon reservoirs 2009 General Obligation Bonds (Non-taxable) 2009 2022 Not Callable 3.39%$7,780,000 $6,235,000 Redemption of 1998 GO Bonds, which were used for ID 27 including: 30MM gallon reservoir and replacement/addition of pipeline 2010 Build America Bonds - A (Non-taxable)2010 2024 3/1/2020 4.18%$13,840,000 $12,255,000 2010 Build America Bonds - B (Taxable)2010 2040 Any time (Make- Whole*) 4.18%$36,355,000 $36,355,000 2013 Water Revenue Refunding Bonds 2013 2023 Not Callable 1.56%$7,735,000 $7,735,000 Refunding 1993/2004 COPS, which were used for terminal storage reservoirs, pump stations, operational reservoirs and 50,000 feet of pipeline Total $123,110,000 $111,645,000 * If these are refunded the investors must be compensated. Compensation is derived from a formula based on the net present value of future coupon payments. Jamacha Road Pipeline Project Conveyance System for desal plant 3 Debt Coverage Ratio 1.62 2.24 2.35 2.64 2.92 2.89 1.34 1.64 1.58 1.52 1.69 1.51 1.25 1.25 1.25 1.25 1.25 1.25 0% 50% 100% 150% 200% 250% 300% 350% 2014 2015 2016 2017 2018 2019 Debt Ratio Operational Debt Ratio Minimum Debt Ratio * * FY14 Stategic Plan Debt ratio is 191%. 4 DEBT POLICY GUIDELINES Professional Finance Organizations: Government Finance Officers Association (GFOA) Association of Public Treasurers of the United States & Canada (APT US&C) California Municipal Treasurers Association (CMTA) California Society of Municipal Finance Officers (CSMFO) 5 DEBT POLICY CHANGES 5.0: Debt Structure Limitations on the Issuance of Variable Rate Debt “ The interest rate used to estimate variable interest costs will be the higher of the 10 year average rate or the current weekly variable rate.” This update will require a comprehensive evaluation of interests costs by assessing both historic and current rate environments. 6 DEBT POLICY CHANGES 7.0: Negotiated Sale Added “new financing techniques” and “private placement” as alternatives that the District would consider if they were cost effective. This increases the alternatives that the District could utilize to achieve the most cost effective borrowing facility. 7 DEBT POLICY CHANGES 10.0: Derivatives Derivatives were removed as a financing option. The GFOA advises great caution in the use of derivatives and to use them only when issuers have developed: 1.A sufficient understanding of the products. 2.The internal staffing expertise and controls to manage, monitor and evaluate these products properly. In the event that the District wishes to utilize derivatives, the expertise and controls will be established and the policy revised. 8 DEBT POLICY CHANGES Section 11.0: Financing Participants Letter of Credit – Changed agreement limit from “5-7 years” to “3 years” Municipal Bond Insurers - Eliminated the reference to AAA ratings These changes reflect the current debt environment. 9 DEBT POLICY CHANGES Section 12.0: Continuing Disclosure Material Events – Updated the list of material events for changes in SEC regulations. •Changed the events that are defined as material. •Added a new listing of material events that, if occur, must be evaluated for materiality. •Defined the time period for notification (10 days) These changes reflect the current SEC regulations. 10 DEBT POLICY CHANGES Section 15.0 Rating Agency Applications Modified the requirement that allows the District to determine if more than one rating be obtained. •If a single rating is deemed reasonable the District may not wish to incur the costs associated with obtaining a second rating. 11 REQUESTED BOARD ACTION The Finance, Administration and Communications Committee reviewed the amended Debt Policy No. 45 and recommends the Board adopt Resolution No. 4217 amending the Debt Policy. 12 STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: September 4, 2013 PROJECT: Various DIV. NO. ALL SUBMITTED BY: Stephen Dobrawa Purchasing and Facilities Manager APPROVED BY: Rom Sarno, Chief, Administrative Services German Alvarez, Assistant General Manager Mark Watton, General Manager SUBJECT: REQUEST AUTHORIZATION FOR THE GENERAL MANAGER TO DECLARE AND DISPOSE OF SURPLUS REAL ESTATE GENERAL MANAGER’S RECOMMENDATION: That the Board: 1. Declare the real estate properties identified as items 1-4 in this report as surplus (please see Attachment B for maps). 2. Authorize the General Manager to dispose of the declared properties in accordance with applicable statutes and laws in the best interest of the District. COMMITTEE ACTION: See Attachment A. PURPOSE: To provide a list of real estate properties that have been determined to be surplus to the needs of the District, request authorization allowing the General Manager to dispose of the properties, and provide information on mandated requirements for the disposal of real estate. ANALYSIS: As a regular course of business, the District periodically reviews the need and use of real estate (properties) it owns. This is done to ensure that the District’s current and future property needs are AGENDA ITEM 7c provided for, and that properties that are no longer required are disposed of in order to minimize costs and associated liabilities of property ownership. The retention of real property that is surplus to the District’s needs increase operating expense by increasing the requirement to maintain and manage the properties. The properties listed herein were identified after review by the Engineering, Operations, and Administrative Services departments. An evaluation of District-owned properties identified the following four properties as not required for District use: Area (acres) Property Location APN 1 2.41 On Sweetwater Springs Blvd, near US Elevator Road, Spring Valley 505-230-51-00 2 0.34 On Dorchester Street, near Cornwall Street, Spring Valley 577-461-06-00 3 0.35 On Wild Mustang Place, near Hidden Trail Drive, Jamul 519-312-61-00 4 0.93 West of SR-125 and North of Proctor Valley Road, Chula Vista 595-020-07-00 If declared surplus, the District will dispose of the properties in accordance with applicable statutes and laws as required by the District’s Code of Ordinances, Section 4.05 (Attachment C). The disposal of the real properties declared surplus will be in accordance with State mandates and guidelines. Prior to being offered, appraisals to determine current values will be performed. It is anticipated that in the event the four properties are not sold to other public entities, the District will solicit proposals and enter into an agreement with a real estate broker who will list the properties on the open market. Disposal of Surplus Real Properties Procedures and Requirements: The following is an outline of the procedure that the District must use to sell or otherwise dispose of District owned parcels: I. General Sale and Disposal Procedures and Priorities Municipal water districts, such as the Otay Water District, may “ . . . dispose of real . . . property of every kind” [Water Code Section 71690]. Such a disposal, however, is subject to the procedural requirements found in Government Code Section 54220, et seq., pertaining to the disposition of “surplus land” by a local agency. There are certain exemptions that may apply depending on the characteristics of the property in question. 1. Surplus Land The District must first determine that the land in question is surplus. "Surplus land" is defined in Section 54221(b) as land owned by the District "that is determined to be no longer necessary for the [District's] use, except for property being held by the [District] for the purpose of exchange.” 2. Written Offers to Sell or Lease Property Once the property is declared surplus, the District must send a written offer to sell or lease the property to the following entities, in the order set forth below: (1) Local Public Entities A written offer to sell or lease the surplus property for the purposes of developing low- and moderate-income housing must be sent to any “Local Public Entity” as that term is defined in Section 50079 of the Health and Safety Code within whose jurisdiction the surplus land is located. (2) Housing Sponsors Upon written request, “Housing Sponsors” as defined in Section 50074 of the Health and Safety Code, shall also be sent a written offer to sell or lease the surplus land for the development of low- and moderate- income housing. Notices to Local Public Entities and Housing Sponsors must be sent by first-class mail and are to include the location and description of the property. Priority is to be given to the development of land to provide affordable housing for lower income, elderly, or disabled persons or households, and other low income households. (3) Parks and Recreational Purposes A written offer to sell or lease the surplus property is to be made to various entities for parks and recreational or open space purposes. These written offers are to be sent to the following entities: (a) To any Park and Recreation Department of any city where the surplus land is located. (b) To any Park and Recreation Department of the county within the area on which the land is situated. (c) To any regional park authority having jurisdiction within the area on which the land is located. (d) To the State Resources Agency or any agency which may succeed to its powers. (4) School Districts If the land is suitable for school facilities construction or use by a school district for open-space purposes, a written offer to sell or lease is to be made to any school district in whose jurisdiction the land is located. (5) Enterprise Zones If the area is in an "Enterprise Zone," a written offer to sell or lease shall be sent to the nonprofit neighborhood enterprise association in that zone. 3. Sixty (60) Day Window to Accept Offer to Sell or Lease Once the written offer has been sent to the various entities, these entities have sixty (60) days after receipt of the offer to notify the District in writing of their intent to purchase or lease the property. 4. Good Faith Negotiations for Sixty (60) Days If the District receives notice from any of the entities listed above expressing their interest in purchasing or leasing the surplus property, the District must then enter into good faith negotiations to determine a mutually satisfactory sales price or a lease term. If, after a sixty day period of good faith negotiations, the price or terms cannot be agreed upon, then the District may dispose of the land without further regard to the provisions of Section 54220, et seq. It should be emphasized that the basic rule is that the District must offer the land to these agencies, but it is not obligated to sell at less than fair market value. Should the District reach an acceptable price with any entity interested in purchasing the property, the sale may provide for terms of payment up to twenty years and a contract of sale or sale by deed of trust. The District, under the provisions of Section 54226, may sell or lease the property at less than, full, or in excess of the fair market value of the property. In addition, an examination of the proposed sale or lease should be made under CEQA as discussed below. 5. Multiple Offers - Priority to Parks and Affordable Housing In the event the District receives interest from one or more entities interested in purchasing or leasing the surplus property, Section 54227 provides that first priority is to be given to those entities which agree to use the property as a site for housing of persons and families of low or moderate income. However, park and recreational purposes may be given priority if the land being offered is already being used and will continue to be used for park and recreational purposes; or if the land is designated for park and recreational use in the local general plan and will be developed for that purpose. II. Sale of the Property if No Section 54220 Interest is Shown or Negotiations Fail Assuming the District is not able to reach agreement on the sale of the property with any of the entities, Water Code Section 71690 provides that the District may purchase or receive real property and may "hold, use, enjoy, lease, or dispose of real … property of every kind.” Public Contract Code Section 20643 provides that the District may dispose of real property “without calling for competitive bids.” These sections provide the District with great discretion as to how to proceed with the sales transaction. FISCAL IMPACT: Joe Beachem, Chief Financial Officer It is anticipated that the District will obtain the fair market value for the properties. The proceeds from the sale of each property will be credited to the funds that provided for their purchase. STRATEGIC GOAL: • Ensure financial health through formalized policies, prudent investing and efficient operations. • Optimize District efficiencies. LEGAL IMPACT: None. Attachments: Attachment A – Committee Action Report Attachment B – Maps of Properties 1-4 Attachment C – Section 4.05 of the District’s Code of Ordinances ATTACHMENT A SUBJECT/PROJECT: REQUEST AUTHORIZATION FOR THE GENERAL MANAGER TO DECLARE AND DISPOSE OF SURPLUS REAL ESTATE COMMITTEE ACTION: The Finance, Administration, and Communications Committee (Committee) reviewed this item at a meeting held on August 21, 2013 and the following comments were made: • Staff is requesting that the board declare four properties (identified as APN Nos. 505-230-51-00, 577-461-06-00, 519-312-61-00 and 595-020-07-00) as surplus and authorize disposal in accordance with applicable statutes and laws in the best interest of the District. • As a regular course of business, the District periodically reviews its holdings in real estate. The reason for the review is to minimize costs associated with managing and maintaining District property. • Following an evaluation of District-owned properties, staff identified four parcels that are no longer required by the District for future facilities. The acreage and location of each property are identified on page two (2) of staffs’ report. • If the board declares the properties surplus, staff will obtain current appraised values for each parcel and follow the applicable statutes and laws as required by the District’s Code of Ordinances. • Staff stated that the District must notify other public agencies that the properties are available for sale. If there is interest, the District would enter into good faith negotiations for the sale of the property(ies). If the good faith negotiations fail or there is no interest from other agencies, the District will forward a RFP to real estate brokers. Once a broker has been selected, the properties will be listed on the open market for sale. • Staff presented slides showing the location of each property within the District’s service area. The committee requested that staff provide another map with a less close-up view of the property that would help Directors have a better understanding of where within the District’s service area the parcels are located. In response to this request, additional location maps have been provided with Attachment B to staffs’ report for each of the parcels. • Staff indicated that the parcel located on Sweetwater Springs Boulevard (APN No. 505-230-51-00) above the District’s Administrative Offices is no longer required as the District had acquired a parcel, which came on the market a couple years ago, located next to the District’s operations building. This parcel will be adequate for expansion needs. • With regard to the parcel located on Dorchester Street (APN No. 577- 461-06-00), the District had removed a reservoir and the property has been cleaned and is construction ready. The committee inquired if the neighboring residents have been made aware that the District is planning to sell the property. Staff indicted when the reservoir was demolished on the property, the District had advised the neighboring residents that the property would be declared surplus and sold. Staff will advise the residents again when the property is placed on the market. • The property on Wild Mustang Place (APN No. 519-312-61-00) was reserved for a potential pump station which is no longer required. • The last property located west of SR-125 and north of Proctor Valley Road (APN No. 595-020-07-00) was a potential site for future facilities and staff has determined that it is no longer needed. • It was discussed that the District had surplused nine (9) properties approximately ten (10) years ago. A few of the properties did not sell at that time. Staff is planning to market those unsold properties with the newly proposed surplus properties. It was noted that if the four (4) parcels are declared surplus, the properties, along with the previously unsold surplus properties, will be appraised and a real estate broker will be selected through an RFP process to market the parcels. Staff will bring back the information to the board prior to selling the properties. Upon completion of the discussion, the committee supported staffs’ recommendation and presentation to the full Board as a consent item. DR DR JAMACHA S. BLVD. VALL E Y WATE R S WATERS MAGICAL CT PKWY F O L E X W A Y GLEN T R E S LAGOS CT B L V D CALLE B L V D JAMACHA BLVD. P O I N T E P K W Y P O I N T E VALLEY SPRING SPRING OF LIFE CT J A M A C H A S P R I N G S GOLF POINTE DR MARINERO SWEETWATER SPRINGS CT. JAM A C H A B L V D POINTE PKWY. U.S. ELEVATOR RD. 01/28 99/541 0702 Jamacha Blvd Sweetwater Springs Blvd 10th St 5th St 9th St US Elevator RdPointe Pkwy W illi e B a k e r W a y 1 0th St ROW 5052313500 5052312600 5056720300 R O W 5052313400 5052310200 5056721000 5052304700 5057201500 5056720900 5052301600 5802320300 5052311500 5052310600 5052305100 5052302300 5057201800 R O W 5057201700 5 0 5 2 3 0 3 7 0 0 5057200500 5052300500 5052305200 5056721100 DIV. 5 DIV. 2 DIV. 1 DIV. 3 DIV. 4 5 8 8 805 11 9454 94 125 905 125 905 125 0 270 540 810 1,080135FeetLOCA T I O N M A P V I C I N I T Y M A PAttachment B - Map 1 N/A N/A 505-230-51-00 2.41 ACRES On Sweetwater Springs Blvd nearUS Elevator Road, Spring Valley OTAY WATER DISTRICT DIV. 3 ID 20 6/26/2013 DEVELOPER: PROJECT#: APN: AREA: OWNER: PROPERTYLOCATION: DATE: DIR: WID: Parcel to be surplused:505-230-51-00 Ja m acha Blvd CA-94 ECA-94 W Austin Dr Singer Ln Del Rio Rd Reservoir Dr S Barcelona St Pointe Pkwy Sweetwater Springs Blvd Fairhill Dr Calavo Dr Ivy St Madrid Way 6th St Highlands Blvd S Bonita St Apple St Campo Rd Ybarra RdCristobal Dr Mo o r p ar k S t D on Pic o Rd Cuyamaca Ave Jacoby Rd 2nd St Trace Rd Villa Bonita 4th St San Bernardino Ave Avenue A Sangamon Ave San Carlos Dr G re e nle af R d L e d g e sid e S t D o u bletr e e R d Elmdale Dr Diversion Dr W hite sto n e R d Loma Ln Fabled Waters Dr G l e n D r Via La m para C liff vi e w P l Ivanho St La Mesa Ave Eubank Ln B a r Bit R d Fi e l d c r e s t S t Vi a C o r d o v a 9th St Javelin Way Arapaho St La Cresta Rd Avenida Roberta Norte Mesa Dr N u e r t o L n Canyonview CtGlenside St Daleridge Pl Contut Ct D ale Rd Casa Nueva St Calle Marinero Sierra Bonita St S Cordoba Ave Coach Dr Limetree Ln Harmony Ln Via de Oro A v e n u e G B rig h t C t US Elevator Rd Scenic Ter Lake Breeze Ct Felicia Ln View Crest Ct Anoel Ct Gayla Ct M a n d y L n Alwood Ct Campo Rd Campo Rd La Mesa Ave Calavo Dr C a m p o R d 94 94 Parcel to be surplussed:505-230-51-00 LP 23 Dorchester St Cornwall St ROW 5774610600 5774610700 5774610800 5774610400 5774610500 5772520500 5772520600 5772520700 5772520400 5772520800 5772520900 5774620500 57746305005774630400 5 7 7 2 5 2 1 0 0 0 5774630600 5774630700 DIV. 5 DIV. 2 DIV. 1 DIV. 3 DIV. 4 5 8 8 805 11 9454 94 125 905 125 905 125 0 40 80 120 16020FeetLOCA T I O N M A P V I C I N I T Y M A PAttachment B - Map 2 N/A N/A 577-461-06-00 0.34 ACRES On Dorchester Street nearCornwall Street, Spring Valley OTAY WATER DISTRICT DIV. 3 ID 01 8/12/2013 DEVELOPER: PROJECT#: APN: AREA: OWNER: PROPERTYLOCATION: DATE: DIR: WID: Parcel to be surplused:577-461-06-00 B a y E l k elt o n C a rl s b a d Kempton O s a g e Felicita Orville Quarry W o rt h i n g t o n P a r k b r o o k B r o a d v ie w N o elin e Concepcion Lakeview I n n s d ale S w e e t w a t e r Walbollen Jamacha Paradise Valley D a r b y Cacus L e ig h Brucker Tarleton Akard E nfield Faxon Gillespie Alpha A rr a n Delr ose Thayer L a n c e Hiel Blossom Swapmeet Leland A l e n e Outinda C a m i n o L a g o CA-125 Ruxton Via Tapia Potrero Verde Ridge Ashmore Dorchester Presioca Lin a z a Adriana Tarango G r e e n rid g e Eppick Glen Vista Dathe Jamie Jamacha Alpha B a y Alpha Osage Jamacha Elkelton Osage 125 Parcel to be surplussed:577-461-06-00 1001 Hidden Trail Dr W i l d M u s t a n g P lROW 5193126000 5193126100 5193121400 5193120900 DIV. 5 DIV. 2 DIV. 1 DIV. 3 DIV. 4 5 8 8 805 11 9454 94 125 905 125 905 125 0 30 60 90 12015FeetL O C A T I O N M A P V I C I N I T Y M A PAttachment B - Map 3 N/A N/A 519-312-61-00 0.35 ACRES OnWild Mustang Place nearHidden Trail Drive, Jamul OTAY WATER DISTRICT DIV. 5 ID 20 6/27/2013 DEVELOPER: PROJECT#: APN: AREA: OWNER: PROPERTYLOCATION: DATE: DIR: WID: Parcel to be surplused:519-312-61-00 Lyons Valley Olive Vista Skyline Truck Jamul Alta Loma Babel Jamul Highlands H i d d e n T r a il Campo Jefferson A l t o r o P e g L eg M in e Heide Hector Myrtle Reservoir Ja ma c ha Hil l s Y u cc a Mi ra mo nte s Paleo Hillsid e E state s Ur Hidden Ridge Vista de Chaparros M a L o u Rocky Mountain Pleasant View Alkosh Rocky Sage Armagosa Bartley Via de Jamul Loma Vista Chaparral Heights Raven Hill Kemberly Lois Canyon Coyote Vista Tuk A Wile Wild Colt Monterey Crest Avenida de Oro Orange Sip o Impink 94 Parcel to be surplussed:519-312-61-00 V A L L E Y CALL E L A MARINA W. R D .PROCTOR P L A Z A K A D I E CIR C U L O C O R O N A D O P L A Z A L O S O S O S CORTECORTECONDESA CORTE 1 P L A ZA P A R AIS O MARLINA CASTILLO 0241 Proctor Valley Rd Circulo C oronado Plaza Kadie R O W 5950311400 5950311700 ROW 5950311500 5950200800 5950200600 5950200700 5950200400 5950200500 5950201700 5950207300 5950202000 R O W 5950208400 5950207200 5950201600 5950201800 5950205100 5950200300 5950201000 5950205600 5950205400 5957901000 DIV. 5 DIV. 2 DIV. 1 DIV. 3 DIV. 4 5 8 8 805 11 9454 94 125 905 125 905 125 0 130 260 390 52065FeetLOCA T I O N M A P V I C I N I T Y M A PAttachment B - Map 4 N/A N/A 595-020-07-00 0.93 ACRES West of SR-125 andNorth of Proctor Valley Road,Chula Vista OTAY WATER DISTRICT DIV. 3 NULL 6/27/2013 DEVELOPER: PROJECT#: APN: AREA: OWNER: PROPERTYLOCATION: DATE: DIR: WID: Parcel to be suplused:595-020-07-00 H CA-125 Lane G otha m Proctor Valley O ta y L a k e s E a s tl a k e Jonel San Miguel Yale C o rr a l C a n y o n Mount Miguel Fe n to n Rutgers Boswell Elm hurst Miller Old Trail G r e e n s vie w K u h n M ills Country Vistas R e d la n d s Ith aca S a n M i g u e l R a n c h C al l e l a Ma ri na Camino Mojave B a ylo r Avenida Loretta Avenida Altamira D uke P oin t Zinfandel H arv ard Marquette MacKenzie Creek Hillside Augusta Lakeshore R o c k i n g H o r s e E a strid g e T r ailrid g e Cabernet Shore Eton Stanford Brookstone Cumbre Olive Carolyn Rolling Ridge B r i s t o l River Rock C o lu m b i a Hamden Port Renwick L a C o s t a R e islin g B e n t T r ail Calle la Quinta C l e a r b r o o k El Rancho Grande Palo Alto Ve r s a ill e s Xavier Plaza C alim ar Bu c k n e l l ColtridgeCherry H il l s El Portal Rue Michelle Speyers Ridgewat er Port Cardiff Waterbury Waterside Drake S a d dl e h o r n Mt Miguel C or t e V ie j o Lafayette H ale Rolling Hills Cita del Clearwater New Haven C a b o B a hia Riverbend Plaza Los O sos Bowsprit B a r o n Woodside C orte B elize Pueblo H i c k o r y P o rt C l a ri d g e H C A- 12 5 Otay Lakes Mount Miguel Olive 125 125 Parcel to be surplussed:595-020-07-00 4-1 Revised 4/2/08, Ord. 515 CHAPTER 4 PURCHASING SECTION 4 PURCHASES AND PAYMENTS 4.01 PURCHASES OF PROPERTY OR SERVICES With the exception of real property, all purchases shall be made in conformity with the District Purchasing Manual promulgated by the General Manager and approved by the Board. 4.02 PAYMENT OF INVOICES Payments to suppliers shall be made only upon receipt of invoices satisfactory to the District staff with the proper purchase order numbers indicated thereon, when applicable. Invoices shall not be paid until the following documents are delivered to Accounts Payable for issuance of a check and payment is made in accordance with Chapter 3, Section 3.06 of the Code of Ordinance: A. Supplier's invoice, which shall be checked for purchase order number, where applicable, accuracy, and an appropriate signature for receipt of the goods or services. B. District purchase order, where applicable. C. Receiving document, where applicable. 4.03 PETTY CASH PURCHASE Purchase of supplies and services may be made from petty cash funds in accordance with District Policy 15 of the Code of Ordinance. 4.04 PUBLIC WORKS CONTRACTS All public works contracts shall be let in accordance with applicable provisions of the California Water Code and the District Purchasing Manual. 4.05 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. STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: September 4, 2013 SUBMITTED BY: Andrea Carey Customer Service Manager PROJECT: DIV. NO. All APPROVED BY: Joseph R. Beachem, Chief Financial Officer German Alvarez, Assistant General Manager Mark Watton, General Manager SUBJECT: Customer Sea World, LLC d.b.a. Aquatica San Diego’s Appeal GENERAL MANAGER’S RECOMMENDATION: That the Board uphold staff’s decision to impose a $5,000 fine to Sea World, d.b.a. Aquatica San Diego for an illegal connection to a fire hydrant. COMMITTEE ACTION: See Attachment A. PURPOSE: To present to the Board for consideration, Sea World, d.b.a Aquatica San Diego’s written appeal requesting the Board waive the $5,000 fine issued June 7, 2013. ANALYSIS: Investigation On May 23, 2013, Otay Water District Assistant Survey Technician, Gus Gracia, arrived at Sea World Aquatica water park and noticed a 4” hose hooked up to an unmetered fire hydrant. Mr. Gracia contacted contractor Andy Kifer from F.J. Willert Contracting Co., Inc. and asked that he meet him by the fire hydrant. When Mr. Kifer arrived, Mr. Gracia asked if the hose connected to the fire hydrant was being used by F. J. Willert. Mr. Kifer confirmed the hose had been used to fill up a water truck being used for construction at the water park. Mr. Kifer estimated 4,000 gallons had been taken from the fire hydrant. Mr. Gracia asked that F.J. Willert remove the connection AGENDA ITEM 8a immediately and use the metered fire hydrant onsite for all further water needs. In February 2013, Mr. Gracia had mitigated another incident with F.J. Willert Contracting Co., Inc. at this site. The contractor had intended to connect to District water without a meter but Mr. Gracia stopped the customer before a connection could be made. Inspection Supervisor, Brandon DiPietro, spoke to representatives for Sea World and F.J. Willert after this incident and advised them that a temporary water meter needed to be installed before water could be used for construction purposes or to fill up water tank trucks. A temporary meter was installed on a fire hydrant located at the Sea World Aquatica water park on March 8, 2013 and was still onsite on May 23, 2013. As per the Temporary Water Meter Uses and Procedures form (Attachment B) signed by a Sea World representative on March 7, 2013, a $5,000 charge per occurrence will be imposed for any person or company who operates any part of the District water system without proper authorization. The District’s costs to investigate and document this incident and determine an appropriate course of action was $818.25. Per Section 72.01 of the District’s Code of Ordinances, customers are “responsible for all costs and damages in connection with any violation of this Code relating to their service.” Costs incurred to investigate and remedy a violation are not appealable to the Board and are treated as inseparable from all other fees and charges on the customer’s account, per subsection (D) of Section 72.01. These charges have been paid by the customer. Pursuant to Section 72 of the District’s Code of Ordinances, the District assessed a $5,000 fine to the owner of the parcel, Sea World, LLC. Section 72.06 specifies that a Type II fine is assessed on “any violation that has the potential to endanger the health and safety, including, but not limited to, unauthorized or illegal connections, meter tampering, water theft, or knowingly filing a false statement or report required by a local health officer.” A Type II fine carries a maximum penalty of $5,000 per each day the violation continues. This charge was placed on the customer’s water account and it was paid. They are now asking that this fine be reversed. Related Correspondence June 7, 2013 - District Notice of Violation to Sea World, LLC advising of violations and charges. (Attachment C) June 26, 2013 - District Notice of Violation follow-up to Sea World, LLC advising of the fine being assessed to the water account. (Attachment D) July 29, 2013 - Letter from Sea World, LLC appealing to the Board of Directors to waive the fine. (Attachment E) FISCAL IMPACT: Joe Beachem, Chief Financial Officer The fiscal impact is limited to the $5,000 fine. STRATEGIC GOAL: Maintain the health and safety of the District’s water supply. LEGAL IMPACT: None. Attachments: Attachment A - Committee Action Attachment B – Temporary Water Meter Uses and Procedures Form Attachment C - District Notice of Violation to Sea World, LLC Attachment D - District Notice of Violation follow-up to Sea World, LLC Attachment E – Appeal Letter from Sea World, LLC Attachment F – Photos: Map, Fire Hydrant, Tank Truck ATTACHMENT A SUBJECT/PROJECT: Customer Sea World, LLC d.b.a. Aquatica San Diego’s Appeal COMMITTEE ACTION: The Finance, Administration, and Communications Committee (Committee) reviewed this item at a meeting held on August 21, 2013 and the following comments were made: Staff is requesting that the board uphold the $5,000 fine imposed on SeaWorld, d.b.a. Aquatica San Diego, for connecting illegally to a fire hydrant in the District’s water system. On May 23, 2013, the District’s Assistant Survey Technician, Mr. Gus Gracia, noticed a 4” hose hooked to an unmetered fire hydrant at SeaWorld Aquatica. He contacted the contractor, F. J. Willert, and the contractor confirmed that the hose was being used for construction at the park and that they had taken approximately 4000 gallons through the hook-up. Mr. Gracia asked that they remove the hose hook-up immediately and use the metered fire hydrant onsite for all further water needs. Staff also indicated that in February 2013, Mr. Gracia had mitigated another incident with F. J. Willert at the SeaWorld Aquatica site. The contractor had intended to connect to the District’s system without a meter and Mr. Gracia had stopped the contractor before they could make the connection. Following the incident, Inspection Supervisor, Mr. Brandon DiPietro, advised the contractor and SeaWorld that they were required to obtain from the District a temporary meter for water they need for construction purposes, including filling water trucks. Subsequent to Mr. DiPietro’s contact with the contractor and SeaWorld Aquatica, a temporary water meter was installed on a fire hydrant on March 8, 2013 and was still onsite on May 23, 2013. Following Mr. Gracia’s discovery of the illegal connection on May 23, 2013 and pursuant to Section 72 of the District’s Code of Ordinances, the District assessed a $5,000 fine to the owner of the parcel, SeaWorld, LLC, for the illegal connection to the District’s water system. The charge was placed on the customer’s water account and the fine has been paid. SeaWorld, LLC is requesting that the fine be reversed. Mr. Kevin Prescott, Project Manager for F. J. Willert, and Mr. William Andy Kifer, Foreman for F. J. Willert, were in attendance of the committee meeting to appeal the fine. Mr. Prescott indicated that he agreed with the account presented by the District’s staff with the exception of the prior incident/notice. He indicated that they are not aware of a prior incident and would like copies of any reports documenting the incident, including the name of their employee if possible. Mr. Prescott stated that his firm does not deny hooking up to the hydrant, however, they wished the District to understand the circumstances surrounding the illegal hook up. Mr. Kifer indicated that they had a concrete pump set-up and the metered hydrant was being utilized to supply the concrete pump and pourer. They were working towards the back where they were close to the residential homes in the area. The Santa Ana winds were blowing and making it extremely dusty and he was worried about the dust and the possible impact to the homeowners. He indicated that sometimes a meter is hooked up to a hydrant onsite so the property owner could see how much water is being utilized for construction and he had mistakenly thought that the water was metered coming onto the property. Mr. Kifer indicated that rather than shutting the project down, he had authorized a hook-up to the unmetered hydrant. Mr. Prescott added that Aquatica had an accelerated schedule and his firm was working weekends and overtime. He clarified that it does not excuse the fact that they hooked to an unmetered hydrant, albeit it was never their intention to make an illegal connection or to steal water. He stated that F. J. Willert has been operating in the Otay WD service area for well over 15 years. They are located in the City of Chula Vista and if the District reviewed their record, they will find that his firm does not have violations for stealing water or making illegal connections. It has never been their policy to do so and they understand the seriousness of doing so. He asked the committee to understand that it was not intentional, they apologize and respectfully request that the committee reconsider the $5,000 fine. The committee indicated that they were concerned as F. J. Willert is a licensed contractor and if they do grading for construction, then it is likely they fill water trucks quite often. It was indicated that the District’s staff does not visit sites regularly and the fact that staff observed two incidents where in the first the contractor had intended to illegally connect to the District’s system and in the second incident, they had actually connected to the District’s system illegally, could imply that this may be an unwritten policy by the contractor to save money. F. J. Willert is a professional firm and it is their responsibility, as a contractor, to assure that they are in compliance with the law and that they plan properly for their construction project needs. The illegal connection is potentially punishable as a misdemeanor as it is actually stealing water. It was indicated that the District has a responsibility to its ratepayers and, in the committee’s judgment, whatever F. J. Willert’s intent, the imposed fine is appropriate, especially when the incident occurs twice. With regard to the F. J. Willert’s request for documentation regarding the first incident, the committee suggested that they check their work schedule to see which of their staff was scheduled to work at SeaWorld Aquatica on the date of the first incident. The committee commented that if this situation should occur again, the District will go after criminal prosecution as such stealing is a cost to the District’s ratepayers. The District does not have staff to police the use of hydrants throughout the District’s service area, so this is very serious. The committee indicated that this is theft from the public whether intended or not. The committee felt that the District should abide by its policy and uphold staffs’ recommendation. It was noted that there are three other board members and that this is not a decision, but a recommendation from the committee to the full board. The formal action will be taken by the District’s board at their September 4, 2013 board meeting. Upon completion of the discussion, the committee supported staffs’ recommendation and presentation to the full Board as an action item. l? l? l?l?l?l? l? $R $R îîSRP "`"` "`©¨F 33 Otay Valley Rd En t e r t a i n m e n t C i r 034 050 6450201700 6450214700 Location of watertheft from firehydrant STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: September 4, 2013 SUBMITTED BY: Kevin Schmidt Senior Civil Engineer Bob Kennedy Engineering Manager PROJECT: S1502- 001000 DIV. NO. All APPROVED BY: Rod Posada, Chief, Engineering German Alvarez, Assistant General Manager Mark Watton, General Manager SUBJECT: Resolution to Support the Metro Wastewater Joint Powers Authority’s Goal to Develop a Long-Range Regional Water Reuse Plan that Includes Indirect Potable Reuse and Results in a Smaller Secondary Equivalent Point Loma Wastewater Treatment Plant GENERAL MANAGER’S RECOMMENDATION: Approve Resolution No. 4216 (Attachment B) that supports the development of a Long-Range Regional Water Reuse Plan with the goal of realizing a smaller secondary equivalent Point Loma Wastewater Treatment Plant. The Long-Range Regional Water Reuse Plan should include consideration of new local sustainable water supplies that avoid or downsize future imported water projects including indirect potable reuse (IPR). COMMITTEE ACTION: Please see Attachment A. PURPOSE: The purpose of Resolution No. 4216 is to contribute to the development of a regional consensus for production of a long-range AGENDA ITEM 8b planning document that will provide a sustainable potable water supply with a fiscally prudent and environmentally sound plan. ANALYSIS: The Metropolitan Wastewater Joint Powers Authority (JPA) is a coalition of municipalities and special districts in the southern and central portions of San Diego County that share in the use of the City of San Diego's (City) regional wastewater collection and treatment facilities. This coalition represents 35% of the flow and $65 million of the annual budget in relation to the Metro wastewater system. The JPA member agencies include the cities of Chula Vista, Coronado, Del Mar, El Cajon, Imperial Beach, La Mesa, National City, and Poway; the Lemon Grove Sanitation District; the Padre Dam Municipal and Otay Water Districts; and the County of San Diego on behalf of the County Sanitation Districts. Otay Water District contributes approximately 0.5% of the wastewater flow to the Metro wastewater system. Members of the JPA believe that permanent acceptance of a smaller Point Loma Wastewater Treatment Plant as an Advanced Primary Treatment plant can be achieved through development and implementation of a comprehensive, systematic Regional Water Reuse Plan (Plan). This Plan must increase public awareness, further catalyze customer action through individual water conservation and water reuse; consider opportunities for storm water capture, and the use of gray water and rainwater; expand recycled water opportunities; and implement a variety of agency-specific and collaborative large- scale potable water reuse projects. These include IPR, resulting in significant off-loading of the treatment demand on the Point Loma Wastewater Treatment Plant (PLWTP). A copy of this strategy entitled, “The Water Reuse as a Strategy to Secure Secondary Equivalency at Point Loma Wastewater Treatment Plant” is attached (Attachment C). This strategy was written by an Ad-Hoc Committee of the JPA, that includes Mark Watton, the Otay Water District’s General Manager. The City’s Point Loma Wastewater Treatment Plant (PLWTP) is currently permitted to treat 240-million gallons of wastewater per day (MGD). The current permit allows treatment to an Advanced Primary Level and is set to expire on July 31, 2015. The City will begin extensive work to secure a new permit in January, 2014. The City has completed estimates of the cost of upgrading the PLWTP from Advance Primary to Full Secondary Treatment Level. The high cost of the upgrade, combined with the projected high costs for creating a reliable potable water supply, has led the City to the conclusion that it is possible to divert flow from PLWTP and to treat a portion of this diverted flow to a level suitable for IPR. If this goal can be achieved, the lower flow to the PLWTP could preclude the need for upgrading to a Full Secondary Level, and use the diverted flow to offset the region’s future potable water import needs. A more detailed description of this alternative is given in the above mentioned Attachment C. The City has successfully completed a 1 MGD Advanced Water Purification Demonstration Project that treats wastewater and yields product water of similar quality to distilled water. FISCAL IMPACT: Joe Beachem, Chief Financial Officer None. STRATEGIC GOAL: This Resolution supports the District’s Mission statement, “To provide high value water and wastewater services to the customers of the Otay Water District in a professional, effective, and efficient manner” and the General Manager’s Vision, “A District that is innovative in providing water services at affordable rates, with a reputation for outstanding customer service.” LEGAL IMPACT: The District’s Legal Counsel has reviewed and approved Resolution 4216 as to form and legality. KS/BK:mlc P:\WORKING\CIP S1502 - City Of San Diego Metro Water Issues\Staff Reports\BD 09-04-13, Staff Report, Metro JPA, (KS-BK).Docx Attachments: Attachment A – Committee Action Attachment B – Resolution Attachment C – Strategy to Secure Secondary Equivalency Attachment D – Metro JPA Power Point Presentation ATTACHMENT A SUBJECT/PROJECT: S1502-001000 Resolution to Support the Metro Wastewater Joint Powers Authority’s Goal to Develop a Long-Range Regional Water Reuse Plan that Includes Indirect Potable Reuse and Results in a Smaller Secondary Equivalent Point Loma Wastewater Treatment Plant COMMITTEE ACTION: The Finance, Administration, and Communications Committee (Committee) reviewed this item at a meeting held on August 21, 2013 and the following comments were made: Staff is requesting that the board adopt Resolution No. 4216 supporting the Metro JPA’s goal to develop a long-range Water Reuse Plan that includes IPR and results in a smaller Secondary Equivalent Point Loma Wastewater Treatment Plant. It was indicated that the resolution was written by an Ad Hoc Committee of the Metro JPA, which General Manager Watton is a member of. The JPA has approximately 35% of the Metro Wastewater flow of an annual budget of $65 million. Otay contributes approximately 0.5%, which is a very small portion of their total flow (or budget). The resolution’s recommendation is addressed to the City of San Diego proposing to divert flow from the Point Loma Wastewater Treatment Plant to the South Bay and implement IPR. The city of San Diego has, for several years, a successful IPR program which is producing 1 MGD and the intent is to expand this program. The Clean Water Act of 1972 required that all wastewater treatment plants be upgraded to Secondary Treatment. In 1994, Congressman Filner assisted the city of San Diego in obtaining the waiver that allowed Point Loma Waste Water Treatment Plant to operate as an Advanced Primary Treatment Plant, and it has done so for the last 20 years. The present permit provided by the EPA will expire in July 2015. The new five-year permit will start in August 2015, however, to acquire the new permit, it will entail the preparation of reports and studies. The city of San Diego and the members of the JPA have approximately four to five months to commence preparation of the documents which will take approximately 12 months to complete and be submitted to the EPA by no later than January 2015. The JPA members’ intent is to divert approximately 100 MGD of the 243 MGD from the Point Loma Wastewater Treatment Plant. A portion of the diverted flow will go the South Bay Waste Water Treatment Facility for IPR. The wastewater will be treated to a level suitable for IPR and sent to the San Vicente Reservoir where it will be treated again for use as potable water. This will serve two purposes: 1) provide reliability for potable water, and 2) reduces Point Loma’s wastewater treatment to 143 MGD which will preclude the need to upgrade the plant to Secondary Treatment. It was noted that to upgrade the Point Loma Wastewater Treatment Plant to Secondary Treatment it would cost approximately $3.5 billion which would be shared by the members of the Metro JPA. It was indicated that Mr. Scott Tulloch, city of Chula Vista, will be attending the District’s September 4th board meeting to present this item and request the board’s support and adoption of Resolution No. 4216. In response to an inquiry from the committee it was indicated that the city of San Diego has 65% voting rights in the Metro JPA and the remaining members represent the other 35% together. Upon completion of the discussion, the committee supported staffs’ recommendation and presentation to the full Board as an action item. Attachment B RESOLUTION NO. 4216 A JOINT RESOLUTION OF THE OTAY WATER DISTRICT AS A MEMBER OF AND WITH THE METRO WASTEWATER JPA/METRO COMMISSION, SUPPORTING DEVELOPMENT OF A LONG-RANGE REGIONAL WATER REUSE PLAN AND SECONDARY EQUIVALENCY FOR POINT LOMA WASTEWATER TREATMENT PLANT WHEREAS, the Point Loma Wastewater Treatment Plant (PLWTP) is a regional facility in the Metro Wastewater System, operated by the City of San Diego, permitted to treat 240 million gallons of wastewater per day to an Advanced Primary Level, serving a 12 member Joint Powers Authority that comprises approximately 35% of the total flow in the Metro Wastewater System/ PLWTP; and WHEREAS, the Clean Water Act of 1972 requires that wastewater be treated to achieve certain protections before ocean discharge and the permitting of wastewater treatment plants, and wastewater treatment plant permits must be renewed every five years; and WHEREAS, the Ocean Pollution Reduction Act (OPRA) of 1994 allowed the City of San Diego to apply for modified permits allowing PLWTP to continue operating at an Advanced Primary Treatment Level while meeting or exceeding all general and specifically negotiated regulatory obligations including ocean protection requirements; and WHEREAS, the current modified permit for the PLWTP expires on July 31, 2015, and City of San Diego staff must finalize a strategy and begin the extensive work required to secure the next permit in or around January 2014; and WHEREAS, in order to secure “non-opposition” for modified permits from environmental stakeholders, the City of San Diego agreed to and successfully prepared verifiable estimates of the cost to convert the current 240 million gallon per day (MGD) PLWTP to Secondary Treatment Levels, conducted a comprehensive external scientific review of ocean monitoring implementing all recommendations for an enhanced ocean monitoring program, and built 45 MGD of water reclamation capacity in the form of the North City Water Reclamation Plant and the South Bay Water Reclamation Plant; and WHEREAS, the City of San Diego has 20 years of ocean monitoring data demonstrating that the Advanced Primary PLWTP consistently protects the ocean environment; and WHEREAS, the City of San Diego has successfully completed a 1 MGD Advanced Water Purification Demonstration Project producing water that is far superior in quality to raw water currently delivered to local reservoirs, and produces potable water of a quality similar to distilled water; and WHEREAS, the City of San Diego’s survey indicates that percentages of those favoring Advanced Treated recycled water as an addition to the drinking water supply have increased from 36% in 2004 to 73% in 2012; and WHEREAS, the City of San Diego has also achieved significant legislative progress associated with the Advanced Water Purification Demonstration Project to advance both indirect and direct potable water reuse projects; and WHEREAS, the San Diego region forecasts the need for billions of dollars in ratepayer revenue to fund imported water supply projects to address transportation constraints and supply challenges, including a locally owned Colorado River pipeline and plans for at least three ocean desalination plants, all of which will require significant capital, operating and energy expenditures; and WHEREAS, it is possible to develop a long-range regional water reuse plan (Long- Range Regional Water Reuse Plan) to divert at least 100 MGD of flow from PLWTP largely to water reuse projects resulting in new, local water supplies, including potable water, and a smaller secondary equivalent PLWTP with reduced Total Suspended Solids mass emission rates equivalent to those of a 240 MGD secondary treatment PLWTP; and WHEREAS, this proposed Long-Range Regional Water Reuse Plan will avoid billions of dollars in unnecessary capital, financing, energy and operating costs to upgrade a facility that already meets or exceeds all general and specifically negotiated regulatory requirements for ocean protection; and WHEREAS, successful implementation of this proposed Long-Range Regional Water Reuse Plan also creates the potential to avoid or downsize currently planned water transportation and supply projects; and WHEREAS, this proposed Long-Range Regional Water Reuse Plan to maximize local water reuse to create a new, local, sustainable water supply while offloading PLWTP to secure acceptance of a smaller secondary equivalent treatment plant is a fiscally prudent, environmentally sound critical regional priority. NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Otay Water District as follows: Section 1: That the Board of Directors of the Otay Water District supports developing a Long-Range Regional Water Reuse Plan that includes the most cost effective water reuse options, including potable reuse, within the Metro Wastewater System’s service boundary. Section 2: That the Board of Directors of the Otay Water District supports developing a Long-Range Regional Water Reuse Plan with the goal of realizing a smaller secondary equivalent PLWTP to avoid spending billions of dollars in ratepayer monies for an unnecessary upgrade to Secondary Treatment, instead potentially funding the creation of new water supplies, including potable water reuse. Section 3: That the Board of Directors of the Otay Water District supports developing a Long-Range Regional Water Reuse Plan to maximize opportunities to create new, local sustainable water supplies thereby creating opportunities to avoid or downsize billions of dollars in future water supply projects. Section 4: That, in addition, the Board of Directors of the Otay Water District supports pursuing judicial and/or legislative remedies for long-term acceptance of a smaller secondary equivalent PLWTP that continues to protect the ocean environment while avoiding billions of dollars in capital, financing, energy and operating costs for an unnecessary conversion of the PLWTP to Secondary Treatment. PASSED AND ADOPTED at a regular meeting of the Board of Directors of the Otay Water District on the 4th day of September, 2013: AYES: NOES: ABSENT: ABSTAIN: __________________________ President ATTEST: _____________________________ District Secretary METRO 8 WASTEWATER J F)A WATER REUSE AS A STRATEGY TO SECURE SECONDARY EQUIVALENCY AT POINT LOMA WASTEWATER TREATMENT PLANT EXECUTIVE SUMMARY The Point Loma Wastewater Treatment Plant (PLWTP) is operated by the City of San Diego and currently serves the City of San Diego and 12 member agencies throughout the Counly. PLWTP Is permitted to treat up to 240 million gallons of wastewater a day and has operated at levels greater than 180 mgd while meeting or exceeding all general and specifically negotiated regulatory requirements necessary to maintain a permit waiver thereby allowing it to remain as a smaller advanced primary treatment plant. Members of the Metropolitan Wastewater Joint Powers Authority (JPA) believe that permanent acceptance of a smaller PLWTP as an advanced primary treatment plant can be achieved through development and implementation of a comprehensive, systematic Regional Water Reuse Plan. This Plan must Increase public awareness, further catalyze customer action through Individual water conservation and water reuse; consider opportunities for storm water capture, and the use of gray water and rainwater; expand recycled water opportunities; and Implement a variety of agency-specific and collaborative large-scale potable water reuse projects including Indirect Potable Reuse (IPR) resulting In a significant off-loading of the treatment demand on PLWTP. A successful effort would secure state and federal legislation accepting secondary equivalency at a smaller PLWTP making future permit waiver processes unnecessary and avoiding, on behalf of our ratepayers, not only the estimated $3.5 billion dollar capital/financing expense of upgrading PLWTP to secondary treatment (not to mention millions of dollars In annual operating costs), but perhaps also alleviating potable water demands to such a degree as to allow a smaller Sacramento delta option and fewer desalination projects (avoiding additional billions of dollars In capital, operating, and energy costs, as well as carbon generation). THE CASE FOR SECONDARY EQUIVALENCY AT POINT LOMA City of San Diego Water and Wastewater Utilities The current practice of the City of San Diego ("the City") Is to procure raw water, treat It to drinking water standards and distribute it throughout the City. The City also collects and treats wastewater for its residents and businesses and for a number of other agencies and discharges treated wastewater to the ocean. These participating agencies make up about 35% of the flow In the system and are represented by the Metro Wastewater Joint Powers Authority ("JPA") which is comprised of the County of San Diego and the surrounding cities of Chula Vista, Lemon Grove, El Cajon, Coronado, Del Mar, Imperial Beach, La Mesa, National City, and Poway, and the Otay and Padre Dam Water Districts. The City wastewater system also produces reclaimed water for use in 07/01113 3:50 p.m. irrigation and industrial purposes, and distributes through its own separate piping system (purple pipe). The City's wastewater system consists of the following Municipal and Metropolitan wastewater infrastructure: a Municipal wastewater system of pipelines and pump stations which collects and sends wastewater to the Metropolitan (Metro) wastewater system for treatment and discharge to the ocean. The Metro system consists of * several large pipelines and pump stations, , three treatment plants, * a biosolids (sludge) processing plant (the Metro Biosolids Center) and • two ocean outfalls. The Point Loma Wastewater Treatment Plant (PLWTP) is permitted as a 240 million gallons per day (mgd) advanced primary (chemically enhanced) plant which discharges treated wastewater through the Point Loma Ocean Ouffall (PLOO) 4.5 miles out in the ocean in 320 feet of water. The North City Water Reclamation Plant (NCWRP) is a 30 mgd tertiary treatment plant which produces reclaimed water. Since the NCWRP does not have its own outfall, wastewater not needed for reclaimed water customers is treated to a secondary level and pumped to the PLWTP. The South Bay Water Reclamation Plant (SBWRP) is a 15 mgd tertiary treatment plant which produces reclaimed water. Wastewater not needed for rectalmed water customers is treated to a secondary level and discharged through the South Bay OceanOutfall (SBOO). Wastewater Treatment Wastewater treatment is basically the process of removing solids from the wastewater. All treatment plant processes typically begin with screens to remove debris such as pieces of wood, followed by removal of grit (mainly sand). A Pdmarv treatment plant then removes solids which are heavy enough to seltle out of the wastewater by gravity. Advanced Primary treatment plants such as the PLWTP then use chemicals to cause lighter solids to clump together and settle out by gravity. A Secondary treatment plant has a primary level of solids removal followed by a biological treatment which removes lighter biological matter in the wastewater.A Tertia treatment plant like the NCWRP and the SBWRP has both Primary and Secondary treatment followed by filtration such as through anthracite coals beds. The required levels of treatment are typically measured by Total Suspended Solids (TSS) and Biological Oxygen Demand (BOD). The BOD is a measure of how much dissolved oxygen the treated wastewater might remove from the receiving water, such as the ocean. Wastewater Treatment Regulation The federal Clean Water Act passed in 1972 required that all wastewater treatment plants be permitted every five years. The permitting process in California involves the Environmental Protection Agency (EPA), the local Regional Water Quality Control Board 2 07/01/13 3:50 p.m. (RWQCB), the State Water Resources Control Board and the California Coastal Commission (CCC). The Clean Water Act also required wastewater treatment plants to treat wastewater at least at a secondary level. The actual required treatment is based on what is needed to protect the receiving waters, such as lakes, rivers and the ocean. A number of dischargers are required to go to higher levels of treatment than secondary. Several years after the Clean Water Act was enacted, it was amended to allow dischargers to receive a modified permit (waiver of secondary) if dischargers coulddemonstrate they could safely discharge wastewater to the receiving water at a treatment level lower than secondary such as Advanced Primary. In practice, permits were based on what was actually needed to protect the receiving waters--secondary in many cases, above secondary in other cases and below secondary in some cases. Initially, the City of San Diego applied for a modified permit for the PLWTP but later withdrew the application and began planning to convert the PLWTP to secondary. Subsequently the window of time in the Clean Water Act for applying for a modified permit closed, and the EPA and several environmental groups sued the City for not being at secondary at the PLWTP. In 1994, the federal Ocean Pollution Reduction Act (OPRA) was passed. OPRA was sponsored by then-Congressman Filner and provided an opportunity for the City to apply for a modified permit for the PLWTP. In return, the City agreed to construct 45 mgd of reclaimed water capacity. This resulted in the construction of the NCWRP, the SBWRP and the SBOO. The City applied for and was granted a modified permit for the PLWTP in 1994. Point Loma Wastewater Treatment Plant Permits The City must apply for a new permit or modified permit every five years for thePLWTP. In order to gain support from the local environmental community for the modified permit sought every five years, the City has agreed to do a number of studies. Each study was reviewed by environmental groups and their experts. The City conducted a refined estimate of costs to convert the PLWTP to secondary. The PLWTP is hemmed in by the Navy, the Cabrillo National Monument, the ocean and a cliff. This leads to higher costs for the addition of secondary treatment. The initial study indicated a capital cost of $1 billion which has recently been escalated to $1.4 billion in today's dollars, not including financing costs. With financing, current estimates top $3.5 billion. In addition, secondary treatment requires a great deal of electricity. Annual operating and energy costs are estimated to increase by about $44 million annually. The City also conducted a comprehensive review of its Ocean Monitoring Program. In order to apply for a permit, dischargers must demonstrate the effect of their discharge on the receiving water. The City continuously collects data from the ocean near the discharge point of the outfall, measuring impacts on sediments, water quality, and aquatic and plant life. The City hired experts from well-known scientific organizations such as Scripps and Woods Hole to review the Ocean Monitoring Program and provide recommendations to make it mere comprehensive. All the recommendations were implemented. 3 07/01/13 3:50 p.m. The City also agreed to conduct studies and projects to optimize wastewater reuse, although it was already producing reclaimed water at the NCWRP and the SBWRP. The Recycled Water Study looked at the feasibility of expanding recycled water use and producing potable water from wastewater. The Recycled Water Study concluded that since most of the recycled water uses in the area were seasonal irrigation requiring separate pipelines from the existing water system, increasing wastewater reuse would be more productive through pursuing potable reuse. Potable Reuse can be either Indirect or Direct Potable Reuse. • Indirect Potable Reuse (IPR) includes advanced treatment of wastewater followed by discharge to, for example, a drinking water reservoir and then to a water treatment plant. • Direct Potable Reuse (DPR) sends advanced treated wastewater directly to a water treatment plant. The Recycled Water Study outlined a concepl whereby almost 100 mgd of wastewater otherwise planned to be treated at the PLWTP could be diverted upstream of the PLWTP to either Advanced Water Treatment Facilities (IPR) or to South Bay wastewater treatment plants. This would allow the permitted capacity of the PLWTP to be reduced from 240 mgd to 143 mgd. The City then looked at the feasibility of treating wastewater to a potable level. A one mgd demonstration project was conducted at the NCWRP and a study was made of San Vicente Reservoir. The study and demonstration project showed that wastewater could be treated at the NCWRP to a level sufficient for safe discharge to San VJcente Reservoir for subsequent treatment at a water treatment plant. The process would be Indirect Potable Reuse (IPR). Water produced at the demonstration site was almost the same quality as distilled water. The current modified permit for the PLWTP expires on July 31, 2015. The application for a new permil must be submitted no later than January 2015. It takes approximately one year to collect and assemble the data required for the permit application. Thatprocess is expected to start in January 2014. THE CASE FOR POTABLE REUSE AS A STRATEGY Potable Reuse/Secondary Equivalency Program Concept The San Diego region is semi-arid and needs the most cost effective and diverse system of water supply it can achieve. Potable water reuse of wastewater, either Indirect or Direct, appears to be a competitive choice in producing a new water supply. The region also needs a wastewater treatment system that protects the ocean environment, The capital and operating costs of providing additional water for the region will have a significant impact on water ratepayers, in addition, if the City was ever required to convert the PLWTP to secondary, the capital and operating costs would likewise be significant to the wastewater ratepayers. In almost every case, water and wastewater ratepayers are the same people. By considering combined water supply and wastewater treatment needs, there is an opportunity to reduce the impact to ratepayers by billions of dolrars in capitar and financing costs, and tens of millions of dollars in annual operating 07/01/13 3:50 p.m. and energy costs. An additional benefit would be a reduction in environmental impactsbecause much less energy production would be needed. The Recycled Water Study outlines a concept whereby almost 100 mgd of actual and planned wastewater flow is diverted upstream from the PLWTP to either potable reuse or to South Bay wastewater treatment plants. This concept includes 83 mgd of Advanced Water Treatment (IPR) and could reduce the permitted capacity of the PLWTP from 240 mgd to 143 mgd. The environmental impact of a 143 mgd Advanced Primary Plant at Point Loma would be similar to or less than the impact of a 240 mgd Secondary Plant (Secondary Equivalency). Since the historic flows through the PLWTP have exceeded 180 mgd and the comprehensive Ocean Monitoring Program has shown no detrimental impact to the ocean environment, there would be no value in converting the remaining flow at the PLWTP (say 143 mgd) to secondary. Even converting 143 mgd of capacity at the PLWTP would result in hundreds of millions in capital costs, tens of millions in annual operating costs and the environmental impacts of producing the energy to operate thesecondary plant, Rather than planning for one wastewater or water project at a time, the region'sneeds for wastewater treatment and additional water supply should be planned programmatically together over a longer period of time. Conceptually, almost 100 mgd of potable reuse and diversion of wastewater to South Bay could be implemented over a specific timeframe and combined with lowering the permitted capacity of the PLWTP to143 mgd, for example. In return, action would be taken to allow the PLWTP at the lower capacity to remain at Advanced Primary treatment. The PLWTP would still be required to get a new permit every five years and demonstrate through the City's comprehensive monitoring program that it was not harming the ocean environment. CONCLUSION As representatives of our region's ratepayers, we are at a critical juncture. The choices we make as a result of actions we take or, perhaps, opportunities missed due to our Inaction, will have environmental end fiscal ramifications for many generations to come. The Metropolitan Wastewater JPA supports the development of a Regional WaterReuse Plan so that both new, local, diversified water supply including potable reuse is created and maximum offload at Point Loma is achieved to support state and federal legislation accepting a smaller PLWTP as a secondary equivalent. Success ultimately minimizes wastewater treatment costs and lessens the need for new water supply sources due to expanded water reuse thereby mosteffectively applying ratepayer dollars. Metro JPA Goal: Create a regional water reuse plan so that both a new, local,diversified water supply is created AND maximum offload at Point Loma isachieved to support legislation for permanent acceptance of Point Loma as a smaller advanced primary plant. Minimize ultimate Point Loma treatment costs and most effectively spend ratepayer dollars through successful coordination between water and wastewater agencies, 5 07/01/13 3:50 p.m. Regional Water Reuse Plan d SdEil fand Secondary Equivalency for a Smaller Point Loma Wastewater Treatment Plant September 4, 2013 Metro Wastewater Joint Powers Authority •Twelve Member Agencies •35% of Flow & Cost of SD Metro WW System County of San Diego City of Chula Vista City of La Mesa City of National City City of Coronado City of Del Mar City of El Cajon City of Imperial Beach City of Poway Lemon Grove Sanitation District Otay Water District Padre Dam Municipal Water DistrictCity of Imperial Beach Padre Dam Municipal Water District Challenges •Create a New Local Diversified Water SupplyCreate a New, Local, Diversified Water Supply •Avoid Upgrade of Point Loma Wastewater Treatment Plant (PLWTP) to Secondary Saving Billions of Dollars $35Billion$3.5 Billion Solution •Divert Substantial Wastewater Flows fromDivert Substantial Wastewater Flows from PLWTP through Implementation of a Regional Water Reuse Program Focused on PotableWater Reuse Program Focused on Potable Reuse •Permit SMALLER Secondary Equivalent PLWTP that Reduces Wastewater Flows to the Ocean State Regulatory Enhancement State Water Delta Fix Bonds: $50B‐$60B Construction: +? Operating:+? Regional Water Capital: $3.6B Regional Sewer Capital: $90.1M Operating: +? Annual Op: $1.4B Annual Op: $216.3M Future Needs?Future Needs? Desal Cap & Op Carlsbad: $1.0B Capital ? Operating Pendleton: $1.9B Capital ?Oti IPR: $1.0B Capital (not including debt)? Operating Rosarita Beach: $500M Capital ? Operating (not including debt) ? Operating PL Upgrade: $3.5B Capital (includes financing costs) Impact of Local Supply Projects on MWD and SDCWA Rates Local Water CIP & Op Costs (includes financing costs) + $40 m/yr Operating Local Sewer CIP & Op Costs Future Needs?Future Needs?Future Needs?Future Needs? Areas not currently included in rates Cost estimates are currently wide‐ranging and subject to change Comparing the Cost of WaterComparing the Cost of Water Projected cost of purified water (solid line) of a full‐scale reservoir augmentation project at San Vicente Reservoir compared to actual and projected costs of untreated imported water (dashed lines). Regional Water Demand Projections (From San Diego County Water Authority 2010 UWMP )(g y y ) San Diego Metropolitan Wastewater System •PLWTP: 240 MGD •North City Water Reclamation Plant (NCWRP): 30 MGD SthB Wt Rl ti•South Bay Water Reclamation Plant (SBWRP): 15 MGD •Metro Biosolids Center (MBC)•Metro Biosolids Center (MBC) •Point Loma Ocean Outfall (PLOO) •South Bay Ocean Outfall (SBOO) •Metro Wastewater Pump•Metro Wastewater Pump Stations/Pipelines Wastewater Treatment Levels •Primary o 65% Solids Removal •Advanced Primary (PLWTP) o 87/88% Solids Removal •Secondary•Secondary o 90% Solids Removal •Tertiary (NCWRP, SBWRP) o 99% Solids Removal PLWTP Permit Background •Clean Water Act (1972) –Wastewater Treatment Plants Require Permits –Secondary Treatment Required –Act Amended to allow Modified Permits (Waivers) at Less Than Secondary PLWTP Permit Background (cont’d) •Wastewater Treatment Plants MUST get aWastewater Treatment Plants MUST get a Permit or Modified Permit every 5 years •Environmental Protection Agency•Regional Water Quality Control Boardgy•State Water Resources Control Board•California Coastal CommissionCalifornia Coastal Commission PLWTP Permit Background (cont’d) •City of San DiegoCity of San Diego •Submitted Modified Permit Applicationpp•Later withdrew Modified Permit ApplicationApplication•Timeframe for Modified Permits Closed EPA d h Ci•EPA sued the City PLWTP Permit Background (cont’d) •Ocean Pollution Reduction Act (OPRA)Ocean Pollution Reduction Act (OPRA) •Then‐Congressman Filner Sponsoredgp•Allowed San Diego to apply for a Waiver•San Diego agreed to build 45 MGD of•San Diego agreed to build 45 MGD of Water Reclamation Capacity (NCWRP, SBWRP)SBWRP) PLWTP Permit Background (cont’d) •Since then: •San Diego applies for a Modified Permit (Waiver)every 5 years•San Diego applies for a Modified Permit (Waiver) every 5 years •Environmental Community Support for San Diego Waivers Required: Rfi d ti t f t t t 240 MGD t Sd–Refined estimate of cost to convert 240 MGD to Secondary »In 2006, $1Billion capital w/o financing or operating costs Comprehensive external scientific review AND upgrade of Ocean–Comprehensive external scientific review AND upgrade of Ocean Monitoring Program –Recycled Water Study and Water Reuse Demonstration Projectyyj •Current Permit EXPIRES July 31, 2015y PLWTP Permit Background (cont’d) •Current Permit EXPIRES July 31, 2015 Pit li ti d J 2015•Permit application due January 2015 •Work begins January 2014Work begins January 2014 San Diego Recycled Water Study •Outlines Alternatives to Divert Almost 100 MGD from PLWTPfrom PLWTP •Includes 83 MGD of Indirect Potable Reuse F iliti Hb Di NCWRP dFacilities near Harbor Drive, NCWRP and SBWRP•Discharges water to San Vicente and Otay•Discharges water to San Vicente and Otay Water Reservoirs•Reduces planned wastewater flows toReduces planned wastewater flows to PLWTP from 240 MGD to 143 MGD San Diego Water Reuse Demonstration Project •Proved ability to repurify wastewater at operational flow ratesoperational flow rates •Quality of water similar to distilled water—Quality of water similar to distilled water Far Superior to Current Raw Water Sources Historical Metro Sewer System Generated Flow Vs. Point Loma Wastewater Treatment Flow 260 280 278 MGD ‐2050 SYSTEM PROJECTION278 MGD ‐2050 255 MGD ‐CURRENT SYSTEM CAPACITY 220 240 MG D ) System Generated Flow 240 MGD ‐CURRENT PLWTP CAPACITY 180 200 age Da i l y Fl o w (PLWTP Treated Flow 140 160Av e r a 140 MGD ‐OFFLOADED PLWTP 100 120 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201219901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012 Prior to 2001 both SGF and PLM flows include Tijuana emergency flows, after 2001 Tijuana stopped discharing to Metro systemPrior to 2001 both SGF and PLM flows include Tijuana emergency flows, after 2001 Tijuana stopped discharing to Metro system 15000 TSS MASS EMISSION RATE POINT LOMA WASTEWATER TREATMENT PLANT 13000 14000 Current Permit TSS MER Limit (13,598) 11000 12000 t/y r ) 10000 11000 s Em i s s i o n Ra t e (m t TSS MER at 140 MGD / CEPT ( <9,975 ) TSS MER at 240 MGD /secondary (9 942) 8000 9000 TS S Ma s s Actual TSS MER TSS MER at 240 MGD / secondary ( 9,942) 6000 7000 5000 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Projected Cost Comparisons 2016 ‐2035 Notes2016 2035 Notes MET Treated Water Projection $1,522 ‐ $4,000 Does not include adjustment for 1.2 M AF of local water supply development or 650,000 AF in planned and state‐mandated conservation SDCWA Pj i 03/15/2011SDCWAProjection 03/15/2011 2012 Carlsbad Desal $2,257 SDCWA News Release 03/08/13 Gross Cost Less Avoided CIP (‐$600) Less Salinity (‐$100) Less Pt Loma Upgrades (‐$400)($)($)($) IPR $1,700 ‐$1,900 $1,100 ‐$1,300 $1,000 ‐$1,200 $600 ‐$800 City of San Diego Recycled Water Study Presentation 05/03/12 Potential Additional Avoided/Downsized Projects Year 2013 Cost Projection SDCWA: Camp Pendleton Desal 2025+ $15.72 Billion SDCWA: Colorado River Transmission 2035+ $10.07 Billion SDCWA: Local Pipeline Conveyance Constraints 2020+ YTBD State: Bay Delta Conveyance 2025+ $50 – $60 Billion Recommendations •Create Long Range (≈20 year) Regional Water Reuse Program focused on potable water reuse that:Program focused on potable water reuse that:–Provides new, local, sustainable water supply (≈83 mgd) Offloads PLWTP to ≈143 MGD–Offloads PLWTP to ≈143 MGD •Obtain Legislation to permit SMALLER PLWTP (≈143 g p ( MGD) at Advanced Primary that:–Avoids billions of dollars in capital, financing, energy and operating costs–Continues to protect the ocean environment System MapsSystem Maps Current Metro WastewaterWastewater System NCWRP(30 MGD) PLOO PLWTP(240 MGD) SBWRP(15 MGD) SBOO Metro WastewaterWastewater Master Plan NCWRP(30 MGD)Through 2050 MVWTP(15 MGD) (2044) PLOO PLWTP(240 MGD) SBPS (2030)Wet Weather Storage by 2050: SBWRP (15 MGD) SBWTPSBOO(21 MGD [2030] 28 MGD [>2050] 49 MGD ) g y (35 Million Gallons) San Diego RecycledRecycled Water Study NCWRP (30 MGD) San Vicente ReservoirAWPF(15 MGD) (2023)() Alternative () AWPF (52.8 MGD)(2032) PLOO SBPS(2022) Otay Reservoir SBWRP PLWTP(143 MGD) Wet Weather Storage by 2050:(2022) AWPF (15 MGD) (2026) SBWRP (15 MGD) SBOO SBWTP(29 MGD [2022] 18 MGD [>2050] 47 MGD ) g y (28 Million Gallons) STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: September 4, 2013 SUBMITTED BY: Dan Martin Engineering Manager PROJECT: P2514-001103 DIV. NO. 5 APPROVED BY: Rod Posada, Chief, Engineering German Alvarez, Assistant General Manager Mark Watton, General Manager SUBJECT: Approve Change Order No. 2 to the Contract with Sepulveda Construction for the 30-Inch Potable Water Pipeline in Hunte Parkway Project GENERAL MANAGER’S RECOMMENDATION: That the Otay Water District (District) Board of Directors (Board) approve Change Order No. 2 to the existing contract with Sepulveda Construction for a credit in the amount of <$8,972.14> for the 30- Inch Potable Water Pipeline in Hunte Parkway Project (see Exhibit A for Project location). COMMITTEE ACTION: Please see Attachment A. PURPOSE: To obtain Board authorization for the General Manager to approve Change Order No. 2 (see Exhibit B) to the existing contract with Sepulveda Construction for a credit in the amount of <$8,972.14> for the 30-Inch Potable Water Pipeline in Hunte Parkway Project. ANALYSIS: At the March 7, 2012 Board Meeting, the Board awarded a construction contract in an amount of $1,212,257.13 to Sepulveda Construction for the 30-Inch Potable Water Pipeline in Hunte Parkway Project. AGENDA ITEM 9a 2 The Project consists of the installation of approximately 2,240 linear feet of 30-inch polyurethane coated, cement mortar lined, steel cylinder potable water pipeline in Hunte Parkway from Proctor Valley Road to the entrance of the District’s Use Area adjacent to the Salt Creek Golf Course in Chula Vista. This pipeline is needed to eliminate high head losses experienced during the morning peak demand periods in the existing 980 Pressure Zone. The pipeline is being installed parallel to the existing 20- inch 980 Pipeline in Hunte Parkway and will also serve to eliminate the low pressures currently experienced in the 980 Zone. Since the award of the contract, Change Order No. 1 was issued for items related to: multiple utility conflicts that were discovered during construction which required a redesign of the water main; caving soils; an additional 30-inch Class 150 Butterfly valve; and a credit for the use of existing native material determined during construction to be suitable for the purposes of backfilling the trench zone. Change Order No. 2 (Exhibit B) reconciles the contract’s Bid Item 9 “Curb and Gutter Replacement” and Bid Item 10 “Sidewalk Replacement” to reflect the final quantities accounting for unused quantities which results in a credit. In addition, Change Order No. 2 provides credits for unused allowances associated with Bid Item 11 “Unknown or Unidentified Utilities Allowance” and Bid Item 12 “Miscellaneous Paving Allowance.” In total, the credits associated with these items are <$34,052.31>. Change Order No. 2 also provides compensation for items associated with groundwater impacts which could not have been reasonably anticipated. Groundwater was encountered at two locations on the Project including the excavation for the water line tie-in at the intersection of Proctor Valley Road and Hunte Parkway and during the installation of the blow-off appurtenance located in the northwest corner of the same intersection. Lastly, Change Order No. 2 provides for modifications to a contractually required thrust block at the Proctor Valley road connection to accommodate the tie-in. In total, the costs associated with the groundwater and thrust block items are $25,080.17. 3 The following is a table summarizing the credit and cost items in Change Order No. 2. A more detailed description of each item is provided in Exhibit B: Item Description Amount 1 Credits associated with final bid item quantities and unused allowance bid items. <$34,052.31> 2 Groundwater impacts and modifications to contractually required thrust block. $25,080.17 Total <$8,972.14> Change Order No. 2 also addresses contract time as a result of the items included in the Change Order. A detailed assessment of the time associated with each change is provided in Exhibit B. In total, six (6) days will be added to the contract which will result in a revised total contract duration of 340 calendar days as a result of this Change Order. In summary, the net change to the Project for Change Order No. 2 is a decrease totaling <$8,972.14> and the addition of six (6) calendar days. The items included in Change Order No. 2 were discussed in detail with the contractor, Sepulveda Construction, at several meetings that included the District’s Construction Manager and District staff. The discussion at these meetings included a review of the Project documentation to support the compensation amounts. Change Order No. 2 was presented to Sepulveda Construction for signature. Sepulveda Construction signed Change Order No. 2, but is preserving rights as indicated in Sepulveda Construction’s letter dated August 6, 2013 attached to the Change Order (Exhibit B) due to disagreements over the quantities and compensation amounts. District staff is recommending that the Change Order be approved so the District may compensate the contractor for the work in the amounts supported by the staff’s analysis of the Project documentation submitted by Sepulveda Construction. FISCAL IMPACT: Joe Beachem, Chief Financial Officer The total budget for CIP P2514, as approved in the FY 2014 budget, is $1,815,000. Total expenditures, plus outstanding commitments and forecast, are $1,730,582.00. See Attachment B for budget detail. Based on a review of the financial budgets, the Project Manager anticipates that the budget will be sufficient to support the Project. 4 Finance has determined that 100% of the funding is available from the Expansion Fund for CIP P2514. 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. DM:jf P:\WORKING\CIP P2514 PL-30-Inch, 980 Zone, Hunte Pkwy - Proctor Valley\Staff Reports\BD 09-04-13\BD 09-04-2013, Change Order No 2 to Sepulveda Construction, (DM_RP).docx Attachments: Attachment A – Committee Action Attachment B – P2514 Budget Detail Exhibit A – Location Map Exhibit B – Change Order No. 2/Sepulveda Letter 8/6/13 ATTACHMENT A SUBJECT/PROJECT: P2514-001103 Approve Change Order No. 2 to the Contract with Sepulveda Construction for the 30-Inch Potable Water Pipeline in Hunte Parkway Project COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) recessed to Closed Session at a meeting held on August 20, 2013, to discuss this item. The Committee reconvened the meeting and Legal Counsel indicated that no reportable actions were taken in closed session. After the closed session, staff provided a presentation to the Committee and the following comments were made: Staff requested that the Board approve Change Order No. 2 to the existing contract with Sepulveda Construction for a credit in the amount of <$8,972.14> for the 30-Inch Potable Water Pipeline in Hunte Parkway Project. Staff provided a background of the Project and indicated that the Project was needed to eliminate high head losses experienced during the morning peak demand periods in the existing 980 Pressure Zone. It was discussed that since the award of the contract to Sepulveda Construction on March 7, 2012, in the amount of $1,212,257.13, one change order has been issued. Page 2 of the staff report provides additional information of Change Order No. 1. Staff stated that Change Order No. 2 (Exhibit B) reconciles the contract’s bid items for curb and sidewalk and contract allowances to reflect the accounting of unused quantities and unused allowances that resulted in a credit of <$34,052.31>. It also provides compensation, in the amount of $25,080.17, for items associated with groundwater impacts which could not have been reasonably anticipated. Additional information on Change Order No. 2 is provided on page 2 and 3 of the staff report. Staff indicated that Change Order No. 2 includes eight items that are specifically detailed on page 2 of Exhibit B (the change order) and results in a net decrease totaling <$8,972.14> and the addition of six (6) calendar days. Staff noted that Sepulveda Construction signed Change Order No. 2, but is preserving rights as indicated in Sepulveda Construction’s letter dated August 6, 2013 (Attached to Exhibit B) due to disagreements over the quantities and compensation amounts. District staff is recommending that Change Order No. 2 be approved so the District may compensate the contractor for the work in the amounts supported by staff’s analysis of the project documentation submitted by Sepulveda Construction. It was indicated that the project was accepted and a Notice of Completion was filed with the County of San Diego in July 2013. Following the discussion, the Committee supported staffs’ recommendation and presentation to the full board as an action item. ATTACHMENT B – Budget Detail SUBJECT/PROJECT: P2514-001103 Approve Change Order No. 2 to the Contract with Sepulveda Construction for the 30-Inch Potable Water Pipeline in Hunte Parkway Project Date Updated: - 8/6/2013 Budget 1,815,000 Planning Consultant Contracts 4,000 4,000 - 4,000 JAMES NAUGHTON JR, MAI Service Contracts 295 295 - 295 SAN DIEGO UNION-TRIBUNE LLC Settlements 1,080 1,080 - 1,080 ROLLING HILLS RANCH COMM ASSN Standard Salaries 974 974 - 974 Total Planning 6,349 6,349 - 6,349 Design 001102 Consultant Contracts 5,252 5,252 - 5,252 CPM PARTNERS INC 750 750 - 750 PROGRESSIVE MAPPING 5,043 5,043 - 5,043 V & A CONSULTING ENGINEERS Professional Legal Fees 2,300 2,300 - 2,300 STUTZ ARTIANO SHINOFF Service Contracts 295 295 - 295 SAN DIEGO UNION-TRIBUNE LLC 70 70 - 70 SAN DIEGO DAILY TRANSCRIPT 4,300 4,300 - 4,300 CITY OF CHULA VISTA 10,600 10,600 - 10,600 UNDERGROUND SOLUTIONS INC Standard Salaries 100,953 100,953 - 100,953 Total Design 129,563 129,563 - 129,563 Construction Construction Contracts 768 768 - 768 CLARKSON LAB & SUPPLY INC 1,321,481 1,290,880 30,600 1,321,481 SEPULVEDA CONSTRUCTION INC (8,972) (8,972) (8,972) CHANGE ORDER NO. 2 Consultant Contracts 3,436 3,436 - 3,436 V & A CONSULTING ENGINEERS 44,700 31,200 13,500 44,700 ALYSON CONSULTING 638 638 - 638 MARSTON+MARSTON INC Postage 127 127 - 127 PETTY CASH CUSTODIAN Professional Legal Fees 370 370 - 370 STUTZ ARTIANO SHINOFF Regulatory Agency Fees 26,005 26,005 - 26,005 CITY OF CHULA VISTA Service Contracts 562 562 - 562 MAIL MANAGEMENT GROUP INC 5,746 5,746 - 5,746 MAYER REPROGRAPHICS INC 68 68 - 68 SAN DIEGO DAILY TRANSCRIPT Standard Salaries 199,743 179,743 20,000 199,743 0 - - - - 0 Total Construction 1,594,670 1,539,542 55,128 1,594,670 Grand Total 1,730,582 1,675,454 55,128 1,730,582 Vendor/Comments Otay Water District P2514-PL-30-Inch, 980 Zone, Hunte Pkwy - Proct Committed Expenditures Outstanding Commitment & Forecast Projected Final Cost MO U N T M I G U E L R D H U N T E P A R K W A Y PROCTO R S R - 1 2 5 COASTAL HILLS D R VALLEY RD PROJECT SITE P: \ W O R K I N G \ C I P P 2 5 1 4 \ G r a p h i c s \ E x h i b i t s - F i g u r e s \ E x h i b i t A . m x d OTAY WATER DISTRICT30-INCH POTABLE WATER PIPELINE IN HUNTE PARKWAYLOCATION MAP EXHIBIT A CIP P2514 §¨¦ ÃÅ ÃÅ ÃÅ ÃÅ ÃÅ ÃÅ ÃÅ ÃÅ ÃÅ ! VICINITY MAP PROJECT SITE NTS DIV. 5 DIV. 2 DIV. 4 DIV. 1 DIV. 3 5 8 805 9454 94 125 905 125 905 125 125 F F 0 2.5 5Miles 5620 Friars Road – San Diego, California 92110 619-851-3331 – alysonconsulting.com August 8, 2013 Mr. Dan Martin, PE Manager, Engineering OTAY WATER DISTRICT 2554 Sweetwater Springs Blvd Spring Valley, CA 91978 Re: Change Order No 02 – Reservation of Rights 30-Inch Potable Water Pipeline in Hunte Parkway (CIP P2514) Dear Mr. Martin: Please find attached the subject change order. Please note that pursuant to previous correspondence and meetings, Sepulveda has reserved rights on the attached change order. Disputed items and amounts will continue through the contractually outlined claim resolution process. Please do not hesitate to contact me if you have any questions or comments. Sincerely, Douglas Cook Construction Manager 233 W. Cerritos Avenue Anaheim, CA 92805 (714) 683-0818 (714) 683-1105 fax www.SepulvedaConst.com August 6, 2013 Mr. Doug Cook Construction Manager Otay Water District 2554 Sweetwater Springs Blvd., Spring Valley, CA 91978-2004 Subject: 30 inch Potable Water Pipeline in Hunte Parkway CO #2 Response Dear Doug, This is to respond to your letter 055 dated August 5, 2013 and Dan’s letter dated on August 6, 2013. The CO #2 was signed and presented under the following conditions: 1. Items No. 7 and No 8 amount represented District’s unilateral approval amount. Sepulveda Construction preserves the right to claim on balance amounts from COR #16 and COR #17 respectively. 2. Items No. 1 and No. 2 amount represented District’s unilateral approval amount. Sepulveda preserves the right to claim on the balance amount as indicated in my email to you on July 15, 2013. This letter of conditions is made part of the CO#2 signed. If you have any questions, please don’t hesitate to contact me at (714) 683-0471 or pliu@SepulvedaConst.com. Sincerely, Peter Liu, P.E. President Sepulveda Construction CIP Title - 30-Inch Potable Water Pipeline in Hunte Parkway Project: P2514Consultant/Contractor: Sepulveda Construction Subproject: 001103 APPROVEDC.O.AMOUNT BY DATE DESCRIPTION TYPE C.O. 1 $109,223.44 Board 3/6/2013 Nine Items: Includes resolution for various utility conflicts, a 30-inch butterfly valve, and compensation for impacts due to caving soils. Also adds 124 days to contract.Owner 2 ($8,972.14) Board Eight Items: Adjusts Bid Items 9, 10, 11, and 12 to reflect final quantities, provides compensation for groundwater impacts, provides compensation for Proctor connection thrust block modifications. Also adds 6 days to contract. Owner 34567891011121314151617181920212223242529303132333435 Total C.O.'s To Date: $100,251.30 8.3%Original Contract Amount:$1,212,257.13Current Contract Amount:$1,312,508.43Month Net C.O.$ Limit Authorization Absolute C.O.$ C.O. %8/13 ($8,972.14) $2,000 Insp 0.0%$5,000 PM/Sr. Engr. 0.0%$10,000 DivM 0.0%$15,000 Chief 0.0%$25,000 AGM 0.0%$50,000 GM 0.0%>$50000 Board ($8,972.14) -0.7% CHANGE ORDER LOG P:\WORKING\CIP P2514 PL-30-Inch, 980 Zone, Hunte Pkwy - Proctor Valley\Construction\Change Orders\P2514_Change Order LOG 1 8/6/2013 STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: September 4, 2013 SUBMITTED BY: Dan Martin Engineering Manager PROJECT: R2091-001103 DIV. NO. 1 APPROVED BY: Rod Posada, Chief, Engineering German Alvarez, Assistant General Manager Mark Watton, General Manager SUBJECT: Approve Change Order Nos. 3 and 4 to the Contract with Sepulveda Construction for the 944-1R Recycled Water Pump Station Upgrades and System Enhancements Project GENERAL MANAGER’S RECOMMENDATION: That the Otay Water District (District) Board of Directors (Board) approve Change Order Nos. 3 and 4 to the existing contract with Sepulveda Construction in the amounts of $52,642.88 and $28,427.49 respectively for the 944-1R Recycled Water Pump Station Upgrades and System Enhancements Project (see Exhibit A for Project location). COMMITTEE ACTION: Please see Attachment A. PURPOSE: To obtain Board authorization for the General Manager to execute Change Order Nos. 3 and 4 in the amounts of $52,642.88 and $28,427.49, respectively, to the contract with Sepulveda Construction for the 944-1R Recycled Water Pump Station Upgrades and System Enhancements Project. ANALYSIS: At the April 6, 2011 Board Meeting, the Board awarded a construction contract in an amount of $1,162,423 to Sepulveda Construction for the AGENDA ITEM 9b 2 944-1R Recycled Water Pump Station Upgrades and System Enhancements Project. The Project constructs Phase 1 upgrades to the 944-1 Pump Station which will serve both the Central and Otay Mesa service areas as included in the November 2010 Water Resources Master Plan. The Phase 1 upgrades include the installation of a third pump and motor system. This added pump system will not only provide the additional capacity to meet the higher demands, but will provide redundancy in the event that a pump requires repairs and must be taken out of service. Phase 2 improvements will upgrade the two (2) existing pumps at a future date. The new pump and motor require a variety of electrical and instrumentation upgrades to the Pump Station. HVAC improvements are also included with this Project to improve the air flow through the facility and thereby lower the temperature while the pumps are operating. Part of the scope of this Project also includes providing a solution to several areas within the 944 pressure zone that experience higher than acceptable pressures. In order to resolve the high pressure, three (3) Pressure Reducing Stations (PRS) were constructed in Olympic Parkway, Eastlake Parkway, and Otay Lakes Road. The PRSs will reduce the pressure in three (3) areas of the 944 system and create new lower pressure zones. This solution is much more cost effective than replacing the existing pipelines in the three (3) areas along with valves that are currently receiving the higher pressure. To date, two (2) contract change orders have been issued on the Project. Change Order No. 1 (CO No. 1) was issued as a time only change and addressed time impacts associated with utility conflicts, delays associated with the City of Chula Vista’s mark-out of facilities, and weather impacts. In total twenty nine (29) days were added as a result of CO No. 1. Change Order No. 2 (CO No. 2) was issued to provide three (3) additional Moore Process Controllers to properly control the two (2) existing pumps, along with the additional new pump, until such time that Phase 2 upgrades at the station are implemented. This report presents Change Order No. 3 (CO No. 3) and Change Order No. 4 (CO No. 4). CO No. 3 (Exhibit B1) includes 16 items related to pump and piping modifications required to construct the new facilities in the existing station, modifications to the variable frequency drive (VFD) pad installation, modifications required to tie in the pressure reducing stations to the existing lines due to existing conditions, and credits associated with modified or deleted items. A detailed breakdown and description of the items included in 3 CO No. 3, along with the associated costs, are shown in Exhibit B1. CO No. 3 also addresses contract time as a result of the items included in the Change Order. A detailed assessment of the time associated with each change is provided in Exhibit B1. In total, 52 days will be added to the contract which will result in a revised total contract duration of 446 calendar days as a result of this CO No. 3. Change Order No. 4 includes four items, as provided in Exhibit B2. The items include furnishing digital outputs to the controllers, modifications to the support saddle of two (2) pipe stanchion supports, modifications associated with the ball check valve control strategy, and a credit for unused allowances provided under Bid Item 13. The detailed cost breakdown and description of the items included in CO No. 4 are shown in Exhibit B2. CO No. 4 also addresses contract time as a result of the items included in the Change Order and the breakdown of time is reflected in Exhibit B2. The work to develop a Phase 1 instrumentation control strategy for the ball check valve/new pump and implement the required piping and electrical features added 178 days to the contract as requested by the contractor. In total, CO No. 4 will add 181 days to the contract which will result in a revised total contract duration of 627 calendar days. In summary, the net increase to the Project for CO No. 3 and CO No. 4 is $81,070.37 and 233 calendar days. FISCAL IMPACT: Joe Beachem, Chief Financial Officer The total budget for CIP R2091, as approved in the FY 2014 budget, is $2,130,000.00. Total expenditures, plus outstanding commitments and forecast, are $2,018,043.00. See Attachment B for budget detail. Based on a review of the financial budgets, the Project Manager anticipates that the Project will be completed within the budget. Finance has determined that 100% of the funding is available from the Expansion Fund for CIP R2091. 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:jf P:\WORKING\CIP R2091 - 927-1 PS Recycled PS Upgrade\Staff Reports\BD 09_04_2013\BD 09-04-2013, Change Order No 3 and 4 to Sepulveda Construction, (DM_RP).docx Attachments: Attachment A – Committee Action Attachment B – R2091 Budget Detail Exhibit A – Location Map Exhibit B1 – Change Order No. 3 Exhibit B2 – Change Order No. 4 ATTACHMENT A SUBJECT/PROJECT: R2091-001103 Approve Change Order Nos. 3 and 4 to the Contract with Sepulveda Construction for the 944-1R Recycled Water Pump Station Upgrades and System Enhancements Project COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) recessed to Closed Session at a meeting held on August 20, 2013, to discuss this item. The Committee reconvened the meeting and Legal Counsel indicated that no reportable actions were taken in closed session. After the closed session, staff provided a presentation to the Committee and the following comments were made: Staff requested that the Board approve Change Order Nos. 3 and 4 to the existing contract with Sepulveda Construction in the amounts of $52,642.88 and $28,427.49 respectively for the 944-1R Recycled Water Pump Station Upgrades and System Enhancements Project. Staff provided a background of the Project and indicated that the Project will serve both the Central and Otay Mesa Service Areas as included in the District’s November 2010 Water Resources Master Plan. See page 2 of the staff report for additional background information. It was discussed that since the award of the contract to Sepulveda Construction on April 6, 2011, in the amount of $1,162,423.00, two change orders were issued. Page 2 of the staff report provides additional information of Change Order Nos. 1 and 2. Staff stated that Change Order No. 3 includes 16 items related to pump and piping modifications plus credits associated with modified or deleted items. It also addresses contract time as a result of the items included in the change order. See Exhibit B1 attached to the staff report for additional information on Change Order No. 3. It was noted that 52 days will be added to the contract, which results in a revised total contract duration of 446 calendar days as a result of Change Order No. 3. Change Order No. 4 includes four items that relates to furnishing digital outputs to the controllers, modifications to the support saddle of two pipe stanchion supports, modifications associated with the ball check valve control strategy, and a credit for unused allowances provided under Bid Item 13. See Exhibit B2 attached to the staff report for additional information on Change Order No. 4. Staff indicated that Change Order No. 4 involved work to develop a Phase 1 instrumentation control strategy for the ball check valve/new pump and implement the required piping and electrical features. This added 178 days to the contract, as requested by the contractor. In total, Change Order No. 4 will add 181 days to the contract which will result in a revised total contract duration of 627 calendar days. It was noted that the net increase to the Project for Change Order Nos. 3 and 4 is $81,070.37 and 233 calendar days. In response to a question by the Committee, staff stated that they believe the change orders that were presented to the Committee are acceptable. Following the discussion, the Committee supported staffs’ recommendation and presentation to the full board as an action item. ATTACHMENT B – Budget Detail SUBJECT/PROJECT: P2091-001103 Approve Change Order Nos. 3 and 4 to the Contract with Sepulveda Construction for the 944-1R Recycled Water Pump Station Upgrades and System Enhancements Project Date Updated: - 8/6/2013 Budget 2,130,000 Planning Consultant Contracts 19,775 19,775 - 19,775 HDR ENGINEERING INC 5,817 5,817 - 5,817 PBS&J Regulatory Agency Fees 50 50 - 50 PETTY CASH CUSTODIAN Service Contracts 1,554 1,554 - 1,554 MAYER REPROGRAPHICS INC 414 414 - 414 SAN DIEGO UNION-TRIBUNE LLC Standard Salaries 19,370 19,370 - 19,370 Total Planning 46,980 46,980 - 46,980 Design 001102 Consultant Contracts 5,451 5,451 - 5,451 FLOW SCIENCE INC 350 350 - 350 MWH CONSTRUCTORS INC 2,276 2,276 - 2,276 PBS&J 9,620 9,620 - 9,620 J C HEDEN AND ASSOCIATES INC 11,213 11,213 - 11,213 JC HEDEN AND ASSOCIATES INC 74,288 74,288 - 74,288 HDR ENGINEERING INC 66,185 66,185 - 66,185 ENGINEERING PARTNERS INC, THE INFRASTRUCTURE EQUIPMENT & MATERIALS 13 13 - 13 US BANK CORPORATE PAYMENT OTHER AGENCY FEES 5,000 5,000 - 5,000 CITY OF CHULA VISTA Standard Salaries 207,591 207,591 - 207,591 Total Design 381,986 381,986 - 381,986 Construction Construction Contracts 2,100 2,100 - 2,100 PERRY ELECTRIC 1,162,423 1,155,561 6,862 1,162,423 SEPULVEDA CONSTRUCTION INC 52,643 52,643 52,643 CHANGE ORDER NO. 3 28,427 28,427 28,427 CHANGE ORDER NO. 4 Consultant Contracts 4,913 4,913 - 4,913 CPM PARTNERS INC 34,050 20,550 13,500 34,050 ALYSON CONSULTING 3,150 3,150 - 3,150 ATKINS 4,230 4,230 - 4,230 ENGINEERING PARTNERS INC, THE 2,450 2,450 - 2,450 HDR ENGINEERING INC INFRASTRUCTURE EQUIPMENT & MATERIALS 425 425 - 425 DENNY'S CONCRETE PUMPING 1,860 1,860 - 1,860 MINARIK CORPORATION 295 295 - 295 PENHALL COMPANY 13,735 13,735 - 13,735 SAGE DESIGNS INC 190 190 - 190 US BANK CORPORATE PAYMENT 2,151 2,151 - 2,151 USA BLUE BOOK 459 459 - 459 T M PEMBERTON OTHER AGENCY FEES 3,000 3,000 - 3,000 CITY OF CHULA VISTA 1,040 1,040 - 1,040 SAN DIEGO COUNTY WATER Professional Legal Fees 1,588 1,588 - 1,588 STUTZ ARTIANO SHINOFF Service Contracts 2,168 2,168 - 2,168 MAYER REPROGRAPHICS INC 84 84 - 84 SAN DIEGO DAILY TRANSCRIPT 10,951 10,951 - 10,951 SAN DIEGO GAS & ELECTRIC 12,507 12,507 - 12,507 TECHKNOWSION INC Standard Salaries 244,237 224,237 20,000 244,237 Total Construction 1,589,078 1,467,646 121,432 1,589,078 Grand Total 2,018,043 1,896,611 121,432 2,018,043 Vendor/Comments Otay Water District R2091-RecPS-927-1 Pump Station Upgrade Committed Expenditures Outstanding Commitment & Forecast Projected Final Cost ^^ ^^^^ ^^ Aä PRS No. 1 PRS No. 2 PRS No. 3 Pk w y 944-1R PumpStation Proctor Valley Rd H u n t e P k w y Olymp i c P k w y Ea s t l a k e Otay Lakes R d L a M e d i a R d La n e A v e Clubhous e D r Palomar St H u n t e P k w y S G r e e n s v i e w D r Olymp i c P k w y VICINITY MAP PROJECT SITE NTS ?ò ?Ë ;&s DIV 5 DIV 1 DIV 2 DIV 4 DIV 3 ?p ?ò Aä ?Ë ;&s ?p !\ P: \ W O R K I N G \ C I P R 2 0 9 1 - 9 2 7 - 1 P S R e c y c l e d P S U p g r a d e \ G r a p h i c s \ E x h i b i t s - F i g u r e s \ E x h i b i t A - L o c a t i o n M a p , A u g 2 0 1 3 w i t h O r t h o . m x d OTAY WATER DISTRICT944-1R RECYCLED WATER PUMP STATION UPGRADEAND SYSTEM ENHANCEMENTS EXHIBIT A CIP R2091F F 0 1,500750 Feet CHANGE ORDER LOGCHANGE ORDER LOGCIP Title: 944-1R Recycled Water Pump Station Upgrades & System EnhancementsCIP Title: 944-1R Recycled Water Pump Station Upgrades & System EnhancementsProject: R2091Project: R2091 Consultant/Contractor:Sepulveda Construction Subproject: 001103Consultant/Contractor:Sepulveda Construction pj APPROVED APPROVEDCOAMOUNTBYDATE DESCRIPTION TYPE C OC.O.AMOUNT BY DATE DESCRIPTION TYPE C.O.1 $0.00 PM 6/21/2012 Change Order for time only to extend contract to 6/29/12 Owner1$0.00 PM 6/21/2012 gy2$9 434 52 Div Mgr 1/3/2013 Additional Controller Mod les O ner2$9,434.52 Div. Mgr 1/3/2013 Additional Controller Modules Owner Change Order includes 16 items including items related toChange Order includes 16 items including items related to d i i difi ti difi ti t th VFDpump and piping modifications, modifications to the VFD 3 $52 642 88 Board installation, modifications required to tie in the pressure Owner3$52,642.88 Board reducing stations to the existing lines, and credits associated Ownereduc g stat o s to t e e st g es, a d c ed ts assoc atedwith modified or deleted items This change order also addswith modified or deleted items. This change order also adds 52 days52 days. Change Order includes 4 items including furnishingChange Order includes 4 items including furnishing additional digital outputs to the controllers modifications toadditional digital outputs to the controllers, modifications to th t ddl f t i t hi t4$28 427 49 Board the support saddle of two pipe stanchion supports, Owner4$28,427.49 Board modifications associated with the ball check valve control Owner strategy, and a credit for unused allowance for Bid Item 13.strategy, and a credit for unused allowance for Bid Item 13. This change order also adds 181 daysThis change order also adds 181 days. 55667788991010111112121313141415151616171718181919202021212222232324242525 Total C.O.'s To Date: $90,504.89 7.8%$90,50 89 8%Oi i lC t tA t $1 162 423 00Original Contract Amount:$1,162,423.00Current Contract Amount:$1 252 927 89Current Contract Amount:$1,252,927.89MonthNet C.O.$Limit Authorization Absolute C.O.$ C.O. %$$8/13 $52 642 88 $2 000 Insp 00%8/13 $52,642.88 $2,000 Insp 0.0%8/13 $28,427.49 $5,000 PM/Sr. Engr.0.0%$,$,g$10 000 DivM 00%$10,000 DivM 0.0%$15,000 Chief 0.0%$15,000 Chief 0.0%$25 000 AGM 00%$25,000 AGM 0.0%$50,000 GM 0.0%$,>$50000 Board $81 070 37 70%>$50000 Board $81,070.37 7.0% P:\WORKING\CIP R2091 927 1 PS Recycled PS Upgrade\Construction\Change Orders\Copy of COLOG18/8/2013P:\WORKING\CIP R2091 - 927-1 PS Recycled PS Upgrade\Construction\Change Orders\Copy of COLOG18/8/2013 STAFF REPORT TYPE MEETING: Regular Board Meeting MEETING DATE: September 4, 2013 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 2013 Calendar of Meetings GENERAL MANAGER’S RECOMMENDATION: At the request of the Board, the attached Board of Director’s meeting calendar for 2013 is being presented for discussion. PURPOSE: This staff report is being presented to provide the Board the opportunity to review the 2013 Board of Director’s meeting calendars 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. Attachments: Calendar of Meetings for 2013 G:\UserData\DistSec\WINWORD\STAFRPTS\Board Meeting Calendar 9-4-13.doc AGENDA ITEM 10a Board of Directors, Workshops and Committee Meetings 2013 Regular Board Meetings: Special Board or Committee Meetings (3rd Wednesday of Each Month or as Noted) January 8, 2013 February 6, 2013 March 6, 2013 April 3, 2013 May 1, 2013 June 5, 2013 July 3, 2013 August 7, 2013 September 4, 2013 October 2, 2013 November 6, 2013 December 4, 2013 January 16, 2013 February 20, 2013 March 20, 2013 April 17, 2013 May 15, 2013 June 19, 2013 July 17, 2013 August 21, 2013 September 18, 2013 October 16, 2013 November 20, 2013 SPECIAL BOARD MEETINGS: BOARD WORKSHOPS: STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: September 4, 2013 SUBMITTED BY: Wales Benham Senior Accountant PROJECT: DIV. NO. All APPROVED BY: Joseph R. Beachem, Chief Financial Officer German Alvarez, Assistant General Manager Mark Watton, General Manager SUBJECT: Director’s Expenses for the 4th Quarter of Fiscal Year 2013 GENERAL MANAGER’S RECOMMENDATION: This is an informational item only. COMMITTEE ACTION: Please see Attachment A. PURPOSE: To inform the Board of the Director’s expenses for the 4th quarter of Fiscal Year 2013. ANALYSIS: The Directors’ expense information is being presented in order to comply with Otay’s Board of Directors Policy 8, requiring staff to create a quarterly report showing expenses for the Directors. In addition, California Government Code Section 53065.5 requires special districts, at least annually, to disclose any reimbursement paid by a district within the immediately preceding fiscal year. The disclosure requirement shall be fulfilled by including the reimbursement information in a document published or printed, at least annually by AGENDA ITEM 11a 2 a date determined by that district, and shall be made available for public inspection. (See Attachment B for Summary and C-H for Details.) FISCAL IMPACT: None. STRATEGIC GOAL: Prudently manage District funds. LEGAL IMPACT: Compliance with state law. Attachments: Attachment A Committee Action Attachment B Director’s Expenses and per Diems Attachment C-H Director’s Expenses Detail ATTACHMENT A SUBJECT/PROJECT: Director’s Expenses for the 4th Quarter of Fiscal Year 2013 COMMITTEE ACTION: This item was presented to the Finance, Administration and Communications Committee at a meeting held on August 21, 2013. The expenses for each director from April 1, 2013 thru June 30, 2013 was presented. It was indicated that directors’ expenses totaled $7,379.43 for the fourth quarter of Fiscal Year 2013 and total directors expenses for Fiscal Year 2013 is $25,790.31. It was noted that the total Directors’ expenses for Fiscal Year 2013 were below the $44,000 15 year average. The increase in Directors’ expenses over the past year is due to increased meetings related to the Rosarito Desalination Project and the retirement of a Director who did not take per diem reimbursements. Following the discussion, the committee recommended presentation of this item to the full board as an informational item. BOARD OF DIRECTORS’ EXPENSES AND PER-DIEMS FINANCE, ADMINISTRATION AND COMMUNICATIONS COMMITEE MEETING August 21, 2013 ATTACHMENT B Policy 8 requires that staff present the Expenses and Per-Diems for the Board of Directors on a Quarterly basis: •Fiscal Year 2013, 4th Quarter. •The expenses are shown in detail by Board member, month and expense type. •This presentation is in alphabetical order. •This information is to be presented to the Finance, Administration, and Communications Committee on August 21, 2013. Board of Directors’ Expenses and Per-Diems Fiscal Year 2013 Quarter 4 (Apr 2013 - Jun 2013) Director Croucher $500.00 Director Gonzalez $1,317.52 Director Lopez $2,423.75 Director Robak $907.49 Director Thompson $2,230.67 Total $7,379.43 Director Croucher Fiscal Year 2013 Quarter 4 Apr 2013 May 2013 Jun 2013 Business Meetings 0.00 0.00 0.00 Director’s Fees 0.00 300.00 200.00 Mileage Business 0.00 0.00 0.00 Conferences and Seminars 0.00 0.00 0.00 Travel 0.00 0.00 0.00 Monthly Totals 0.00 300.00 200.00 Quarterly Total $500.00 Fiscal Year-to-Date 2013 (Jul 2012-Jun 2013) $1,960.00 Meetings Attended 0 4 2 Meetings Paid 0 3 2 Director Gonzalez Fiscal Year 2013 Quarter 4 Apr 2013 May 2013 Jun 2013 Business Meetings 0.00 0.00 0.00 Director’s Fees 300.00 500.00 400.00 Mileage Business 117.52 0.00 0.00 Conferences and Seminars 0.00 0.00 0.00 Travel 0.00 0.00 0.00 Monthly Totals 417.52 500.00 400.00 Quarterly Total $1,317.52 Fiscal Year-to-Date 2013 (Jul 2012-Jul 2013) $4,771.52 Meetings Attended 3 6 5 Meetings Paid 3 5 4 Director Lopez Fiscal Year 2013 Quarter 4 Apr 2013 May 2013 Jun 2013 Business Meetings 0.00 0.00 0.00 Director’s Fees 800.00 900.00 500.00 Mileage Business 38.99 55.94 0.00 Mileage Commuting 47.46 22.60 58.76 Conferences, Seminars, and Travel 0.00 0.00 0.00 Monthly Totals 886.45 978.54 558.76 Quarterly Total $2,423.75 Fiscal Year-to-Date 2013 (Jul 2012-Jun 2013) $8,760.54 Meetings Attended 10 11 7 Meetings Paid 8 9 5 Director Robak Fiscal Year 2013 Quarter 4 Apr 2013 May 2013 Jun 2013 Business Meetings 0.00 0.00 225.00 Director’s Fees 100.00 200.00 300.00 Mileage Business 3.39 6.78 60.45 Mileage Commuting 2.26 4.52 5.09 Conferences, Seminars, and Travel 0.00 0.00 0.00 Monthly Totals 105.65 211.30 590.54 Quarterly Total $907.49 Fiscal Year-to-Date 2013 (Jul 2012-Jun 2013) $3,530.14 Meetings Attended 3 2 4 Meetings Paid 1 2 3 Director Thompson Fiscal Year 2013 Quarter 4 Apr 2013 May 2013 Jun 2013 Business Meetings 0.00 0.00 25.00 Director’s Fees 600.00 800.00 500.00 Mileage Business 77.97 75.71 19.78 Mileage Commuting 29.38 44.07 58.76 Conferences, Seminars, and Travel 0.00 0.00 0.00 Monthly Totals 707.35 919.78 603.54 Quarterly Total $2,230.67 Fiscal Year-to-Date 2013 (Jul 2012-Jun 2013) $6,768.11 Meetings Attended 9 9 6 Meetings Paid 6 8 5 Board of Directors’ Expenses and Per Diems Fiscal Year 2013 to Date (Jul 2012 - Jun 2013) Director Croucher $1,960.00 Director Gonzalez $4,771.52 Director Lopez $8,760.54 Director Robak $3,530.14 Director Thompson $6,768.11 Total $25,790.31 STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: September 4, 2013 SUBMITTED BY: Dan Martin Engineering Manager PROJECT: Various DIV. NO. ALL APPROVED BY: Rod Posada, Chief of Engineering German Alvarez, Assistant General Manager Mark Watton, General Manager SUBJECT: Informational Item – Fourth Quarter Fiscal Year 2013 Capital Improvement Program Report GENERAL MANAGER’S RECOMMENDATION: That the Otay Water District (District) Board of Directors (Board) accept the Fourth Quarter Fiscal Year 2013 Capital Improvement Program (CIP) Report for review and receives a summary via PowerPoint presentation (see Attachment C). COMMITTEE ACTION: Please see Attachment A. PURPOSE: To update the Board about the status of all CIP project expenditures and to highlight significant issues, progress, and milestones on major projects. ANALYSIS: To keep up with growth and to meet our ratepayers' expectations to adequately deliver safe, reliable, cost-effective, and quality water, each year the District staff prepares a Six-Year CIP Plan that identifies the District’s infrastructure needs. The CIP is comprised of four categories consisting of backbone capital facilities, replacement/renewal projects, capital purchases, and developer's reimbursement projects. AGENDA ITEM 11b The Fourth Quarter Fiscal Year 2013 update is intended to provide a detailed analysis of progress in completing these projects within the allotted time and budget of $18 million. Expenditures through the Fourth Quarter totaled approximately $11.5 million. Approximately 64% of the Fiscal Year 2013 expenditure budget was spent (see Attachment B). FISCAL IMPACT: Joe Beachem, Chief Financial Officer No fiscal impact as this is an informational item only. STRATEGIC GOAL: The Capital Improvement Program 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. DM/RP :jf Attachment s: Attachment A – Committee Action Attachment B - Fiscal Year 2013 Fourth Quarter CIP Expenditure Report Attachment C – Presentation ATTACHMENT A SUBJECT/PROJECT: Various Informational Item – Fourth Quarter Fiscal Year 2013 Capital Improvement Program Report COMMITTEE ACTION: The Engineering, Operations, and Water Resources Committee (Committee) reviewed this item at a Committee Meeting held on August 20, 2013, and the following comments were made: Staff provided a PowerPoint presentation to the Committee and indicated that the expenditures through the fourth quarter of FY 2013 totaled approximately $11.5 million, which is about 64% of the District’s fiscal year budget. Staff indicated that the District’s FY 2013 CIP budget consists of 70 projects that total $18 million and is divided into four categories: o Capital Facilities= $7.6 million o Replacement/Renewal= $9.6 million o Capital Purchases= $.8 million o Developer Reimbursement= $0.0 million The PowerPoint presentation included the following: o Total Life-to-Date Expenditures o CIP Budget Forecast vs. Expenditures o Major CIP Projects o CIP Projects in Construction o Construction Contract Status of projects, contract amount with allowances, net change orders, and percent of project completion o Consultant Contract Status of contract amounts, approve payments to date, change orders, dates when contracts were signed and the end date of contracts Staff provided an update of the following: o Calavo Gardens Sewer Rehabilitation Project o Reservoir 624-1 Floating Cover Replacement Project o Hunte Parkway 30-Inch Potable Pipeline Project o Orange Avenue/I-805 12” Potable Water Installation o 803-3 & 832-2 Reservoir Interior/Exterior Coating & Upgrades In response to an inquiry from the Committee, Staff stated that the delivery schedule of several FY 2013 projects was impacted resulting in delayed completion. Many of the project impacts were due to circumstances beyond the District’s control and were brought to the Board’s attention over the course of the fiscal year. Following the discussion, the Committee supported staffs’ recommendation and presentation to the full board as an informational item. Otay Water District Capital Improvement Program Fiscal Year 2013 Fourth Quarter Report (through June 30, 2013) Attachment C 6/3/13 803-3 Reservoir Background The approved CIP Budget for Fiscal Year 2013 consists of 70 projects that total $18 million. These projects are broken down into four categories. 1.Capital Facilities $ 7.6 million 2.Replacement/Renewal $ 9.6 million 3.Capital Purchases $ 0.8 million 4.Developer Reimbursement $ 0.0 million Overall expenditures through the Fourth Quarter Fiscal Year 2013 totaled $11.5 million, which is 64% of the Fiscal Year budget. 2 Fiscal Year 2013 Fourth Quarter Update ($1,000) CIP CAT Description FY 2013 Budget FY 2013 Expenditures % FY 2013 Budget Spent Total Life-to- Date Budget Total Life-to-Date Expenditures % Life-to- Date Budget Spent 1 Capital Facilities $7,588 $4,402 58% $111,138 $43,458 39% 2 Replacement/ Renewal $9,559 $6,627 69% $59,506 $31,938 54% 3 Capital Purchases $794 $459 58% $14,222 $9,020 63% 4 Developer Reimbursement $53 $0 0% $6,513 $1 0% Total: $17,994 $11,488 64% $191,379 $84,417 44% 3 Fiscal Year 2013 Fourth Quarter CIP Budget Forecast vs. Expenditures 4 $17,994,000 $11,471,000 $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun FISCAL YEAR PERIOD IN MONTHS Budget Forecast Total Expenditures District Map of Major CIP Projects 5 CIP Projects in Construction Calavo Gardens Sewer Rehabilitation (S2019, S2020, S2022, S2026) Replacement of 4,500 Linear Feet of Sewer Manhole Rehabilitation/Replacement Capacity Upgrades New Flow Control and Diversion Vault for Calavo Lift Station $3.35M Budget Start: February 2012 Project Completed: June 2013 Above: Installation of grating supports in diversion Vault at Rancho San Diego Shopping Center Left: Final Paving of Private Road along Avocado Boulevard 6 5/17/13 6/6/13 CIP Projects in Construction Reservoir 624-1 Floating Cover Replacement (P2477) Install New Reinforced Polypropylene Geomembrane Floating Reservoir Cover $1.0M Budget Start: November 2012 Project Completed: June 2013 624-1 Reservoir Completed Construction 7 CIP Projects in Construction 8 Hunte Parkway 30-Inch Potable Pipeline (P2514) Installation of 2,250 LF of Polyurethane Coated Steel Pipe $1.69M Budget Start: April 2012 Project Completed: June 2013 Above and Left: Final paving on Hunte Parkway 4/16/13 4/16/13 CIP Projects in Construction Orange Avenue/I-805 12-inch Potable Water Installation (P2513) Installation of New 12-inch Water Line To Replace The Palomar Avenue Line During Palomar Bridge Replacement By Caltrans $1.30M Budget Start: January 2013 Estimated Completion: August 2013 Installation of 10-inch hot tap connection at Melrose 9 6/26/13 CIP Projects in Construction 803-3 & 832-2 Reservoir Interior/Exterior Coating & Upgrades(P2518/P2519) Remove and Replace Deteriorating Reservoir Coatings & Structural Modifications $1.53M Budget Start: March 2013 Estimated Completion: August 2013 Above: 803-3 Reservoir Interior Coating Progress Below: 832-2 Ventilation and Interior Blasting Equipment 10 6/3/13 11 Construction Contract Status CIP NO. PROJECT TITLE CONTRACTOR BASE BID AMOUNT CONTRACT AMOUNT W/ ALLOWANCES NET CHANGE ORDERS LTD* CURRENT CONTRACT AMOUNT TOTAL EARNED TO DATE % CHANGE ORDERS W/ ALLOWANCE CREDIT** % COMPLETE EST. COMP. DATE PROJECT TOTAL % R2091 944-1R RecycledPump Station Upgrade & System Enhancments Sepulveda $1,099,423 $1,162,423 $0 0.0% $1,150,074 $1,117,164 -1.1% 97.1% August 2013 R2096 RWCWRF Upgrades Newest $3,349,000 $3,499,000 $81,922 2.4% $3,526,098 $3,526,098 0.8% 100.0% Complete Apr 2013 P2370 La Presa System Improvements TC Construction $938,995 $978,995 $82,548 8.8% $1,041,543 $1,041,543 6.4% 100.0% Complete Aug 2012 S2019/S2020/ S2022/S2026 Calavo Gardens Sewer Rehabilitation Garcia Juarez Construction $2,232,275 $2,316,275 $62,960 2.8% $2,324,735 $2,323,837 0.4% 100.0% Complete Jun 2013 P2491 850-3 Reservoir Coating Advanced Industrial Services $273,300 $293,300 $400 0.1% $293,700 $293,700 0.1% 100.0% Complete Aug 2012 P2514 30-Inch Potable Pipeline in Hunte Parkway Sepulveda $1,172,257 $1,212,257 $109,223 9.3% $1,301,481 $1,290,880 7.4% 99.2% Complete Jun 2013 P2477 Reservoir 624-1 Cover Replacement Layfield $457,050 $497,050 $183,408 40.1% $640,458 $640,458 28.9% 100.0% Complete Jun 2013 P2513 Orange Avenue/I-805 12" Potable Water Installation Basile $767,000 $872,000 $19,290 2.5% $891,290 $801,917 2.2% 90.0% Aug 2013 P2518/P2519 803-3 & 832-2 Reservoir Coating Advanced Industrial Services $876,900 $946,900 $0 0.0% $876,900 $625,575 -7.4% 71.3% Aug 2013 TOTALS: $11,166,200 $11,778,200 $539,750 4.8% $12,046,277 $11,661,172 2.3% *NET CHANGE ORDERS DO NOT INCLUDE ALLOWANCE ITEM CREDITS. IT'S A TRUE CHANGE ORDER PERCENTAGE FOR THE PROJECT **THIS CHANGE ORDER RATE INCLUDES THE CREDIT FOR UNUSED ALLOWANCES Consultant Contract Status 12 Consultant CIP No.Project Title Original Contract Amount Total Change Orders Revised Contract Amount Approved Payment To Date % Change Orders % Project Complete Date of Signed Contract End Date of Contract PLANNING ARCADIS U.S., INC.Varies WASTEWATER MANAGEMENT PLAN FY12-13 $ 349,979.36 $ - $ 349,979.36 $ 344,971.86 0.0%98.6%8/3/2011 12/31/2013 NARASIMHAN CONSULTING Varies HYDRAULIC MODELING SERVICES $ 175,000.00 $ - $ 175,000.00 $ 68,957.00 0.0%39.4%5/2/2011 6/30/2014 TRAN CONSULTING ENGINEERS S1201 SANITARY SEWER CCTV INSPECTION AND CONDITION ASSESSMENT $ 560,025.00 $ - $ 560,025.00 $ 549,013.25 0.0%98.0%1/20/2010 6/30/2013 COMPLETE DESIGN AECOM P2451 OTAY MESA CONVEYANCE AND DISINFECTION SYSTEM (DESIGN ENGINEER) $ 3,910,297.00 $ - $ 3,910,297.00 $ 263,145.71 0.0%6.7%1/3/2011 6/30/2016 AEGIS ENGINEERING MGMT INC VARIES AS-NEEDED DESIGN SERVICES FY13-14 $ 300,000.00 $ - $ 300,000.00 $ 2,890.00 0.0%1.0%11/1/2012 6/30/2014 ARCADIS U.S., INC. P2434, P2511 VALUE ENGINEERING AND CONSTRUCTIBILITY REVIEW $ 153,628.00 $ - $ 153,628.00 $ 65,308.73 0.0%42.5%1/18/2012 6/30/2014 ATKINS Varies AS-NEEDED ENGINEERING DESIGN SERVICES FY12-13 $ 175,000.00 $ - $ 175,000.00 $ 143,581.06 0.0%82.0%10/25/2011 6/30/2015 BSE ENGINEERING INC Varies AS-NEEDED ELECTRICAL SERVICES $ 100,000.00 $ - $ 100,000.00 $ - 0.0%0.0%6/1/2012 6/30/2014 BUSTAMANTE & ASSOCIATES P2451 OTAY MESA CONVEYANCE AND DISINFECTION SYSTEM (BINATIONAL WATER AND RELATED ISSUES) $ 39,500.00 $ - $ 39,500.00 $ 7,000.00 0.0%17.7%1/1/2013 10/31/2013 DARNELL & ASSOCIATES Varies AS-NEEDED TRAFFIC ENGINEERING SERVICES $ 175,000.00 $ 49,330.00 $ 224,330.00 $ 224,117.50 28.2%99.9%1/20/2010 12/31/2012 COMPLETE DARNELL & ASSOCIATES Varies AS-NEEDED TRAFFIC ENGINEERING SERVICES $ 125,000.00 $ - $ 125,000.00 $ - 0.0%0.0%6/12/2012 6/30/2014 ENGINEERING PARTNERS INC, THE Varies AS-NEEDED ELECTRICAL DESIGN SERVICES $ 100,000.00 $ - $ 100,000.00 $ 93,580.00 0.0%93.6%10/7/2009 4/30/2013 COMPLETE HECTOR MARES-COSSIO P2451 OTAY MESA CONVEYANCE AND DISINFECTION SYSTEM (BINATIONAL WATER AND RELATED ISSUES) $ 45,000.00 $ - $ 45,000.00 $ 43,200.00 0.0%96.0%2/9/2011 12/31/2012 COMPLETE HECTOR MARES-COSSIO P2451 OTAY MESA CONVEYANCE AND DISINFECTION SYSTEM (BINATIONAL WATER AND RELATED ISSUES) $ 11,250.00 $ - $ 11,250.00 $ 7,200.00 0.0%64.0%1/1/2013 3/31/2013 COMPLETE HECTOR MARES-COSSIO P2451 OTAY MESA CONVEYANCE AND DISINFECTION SYSTEM (BINATIONAL WATER AND RELATED ISSUES) $ 120,000.00 $ - $ 120,000.00 $ 7,200.00 0.0%6.0%4/1/2013 3/31/2015 LEE & RO INC Varies AS-NEEDED ENGINEERING DESIGN SERVICES $ 175,000.00 $ 23,660.00 $ 198,660.00 $ 198,535.07 13.5%99.9%6/30/2010 6/30/2013 COMPLETE LEE & RO INC P2511 OTAY INTERCONNECT PIPELINE $ 2,769,119.00 $ - $ 2,769,119.00 $ 938,977.08 0.0%33.9%11/4/2010 12/31/2015 MICHAEL D.KEAGY REAL ESTATE VARIES AS-NEEDED APPRAISAL SERVICES FY13-14 $ 45,000.00 $ - $ 45,000.00 $ - 0.0%0.0%9/5/2012 6/30/2014 MTGL INC.Varies AS-NEEDED GEOTECHNICAL CONSULTING SERVICES $ 175,000.00 $ - $ 175,000.00 $ 150,784.80 0.0%86.2%6/23/2010 6/30/2013 COMPLETE MWH AMERICAS INC.R2096 RWCWRF UPGRADE PROJECT (DESIGN ENGINEER) $ 458,813.00 $143,548.00 $ 602,361.00 $ 590,028.65 31.3%98.0%10/14/2009 6/30/2013 COMPLETE REA & PARKER RESEARCH P2451 OTAY MESA CONVEYANCE AND DISINFECTION SYSTEM (BINATIONAL WATER AND RELATED ISSUES) $ 14,500.00 $ - $ 14,500.00 $ 14,500.00 0.0%100.0%1/6/2013 6/28/13 COMPLETE SILVA SILVA CONSULTING P2451 OTAY MESA CONVEYANCE AND DISINFECTION SYSTEM (BINATIONAL WATER AND RELATED ISSUES) $ 104,000.00 $ - $ 104,000.00 $ 56,000.00 0.0%53.8%5/1/2012 6/30/2014 Consultant Contract Status 13 Consultant CIP No.Project Title Original Contract Amount Total Change Orders Revised Contract Amount Approved Payment To Date % Change Orders % Project Complete Date of Signed Contract End Date of Contract SOUTHERN CALIFORNIA SOIL VARIES GEOTECHNICAL SERVICES FY13-15 $ 175,000.00 $ - $ 175,000.00 $ - 0.0%0.0%12/10/2012 6/30/2015 TETRA TECH, INC P2434 RANCHO DEL REY WELL - PHASE 2 $ 724,493.50 $ 23,749.00 $ 748,242.50 $ 404,445.17 3.3%54.1%4/21/2011 12/31/2014 UTILITY SERVICE COMPANY INC Varies AS-NEEDED SURVEYING SERVICES $ 11,700.00 $ - $ 11,700.00 $ 11,700.00 0.0%100.0%4/16/2012 8/31/2012 COMPLETE V & A CONSULTING Varies PROFESSIONAL CORROSION SERVICES FY12-13 $ 392,729.00 $ - $ 392,729.00 $ 234,666.07 0.0%59.8%6/23/2011 9/30/2013 CONSTRUCTION SERVICES ALTA LAND SURVEYING, INC.Varies AS-NEEDED SURVEYING SERVICES $ 175,000.00 $ - $ 175,000.00 $ 141,858.75 0.0%81.1%8/15/2011 6/30/2014 ALYSON CONSULTING VARIES CONSTRUCTION MGMT/INSPECTION FY13-15 $ 350,000.00 $ - $ 350,000.00 $ 88,000.00 0.0%25.1%10/24/2012 6/30/2015 RBF CONSULTING R2058, R2077, R2087 OTAY MESA RECYCLED WATER SUPPLY LINK (CONSTRUCTION MANAGEMENT) $ 708,560.00 $ 708,560.00 $ 13,960.00 0.0%2.0%3/24/2010 12/31/2012 COMPLETE SAIC ENERGY, ENVIRONMENT & INFRASTRUCTURES, LLC R2096 RWCWRF UPGRADE PROJECT (CONSTRUCTION MANAGEMENT) $ 359,013.32 $ 34,551.52 $ 393,564.84 $ 393,564.84 9.6%100.0%8/15/2011 9/30/2012 COMPLETE VALLEY CONSTRUCTION MANAGEMENT Varies AS-NEEDED CONSTRUCTION MANAGEMENT AND INSPECTION SERVICES FY12-13 $ 175,000.00 $ 6,245.00 $ 181,245.00 $ 181,240.00 3.6%100.0%10/25/2011 6/30/2013 COMPLETE ENVIRONMENTAL A.D. HINSHAW Varies CONSULTING SERVICES FOR JWA's CEQA $ 34,625.25 $ - $ 34,625.25 $ 8,500.51 0.0%24.6%3/25/2010 6/30/2014 COMPLETE ICF INTERNATIONAL (aka JONES & STOKES ASSOCIATES)Varies AS-NEEDED ENVIRONMENTAL CONSULTING SERVICES $ 375,000.00 $ - $ 375,000.00 $ 250,515.02 0.0%66.8%9/9/2010 6/30/2014 MERKEL & ASSOCIATES Varies SAN MIGUEL HABITAT MANAGEMENT AREA AND CIP-ASSOCIATED MITIGATION PROJECTS $ 359,079.00 $ - $ 359,079.00 $ 192,938.63 0.0%53.7%12/14/2011 12/31/2014 RECON P2494 PREPARATION OF THE SUBAREA PLAN $ 270,853.00 $ - $ 270,853.00 $ 190,221.86 0.0%70.2%3/28/2008 6/30/2015 TECHNOLOGY ASSOCIATES P2494 CONSULTING SERVICES FOR JWA's NCCP $ 34,625.25 $ 41,825.26 $ 76,450.51 $ 42,422.49 120.8%55.5%4/5/2010 6/30/2013 COMPLETE THE RICK ALEXANDAR COMPANY (TRAC)P2494 CONSULTING SERVICES FOR JWA's NCCP $ 20,201.75 $ - $ 20,201.75 $ 14,450.22 0.0%71.5%3/17/2010 6/30/2013 COMPLETE WATER RESOURCES MICHAEL R. WELCH P2481 ENGINEERING PLANNING SVCS. $ 40,000.00 $ - $ 40,000.00 $ 30,375.00 0.0%75.9%3/25/2009 6/30/2015 PUBLIC SERVICES AEGIS ENGINEERING MANAGEMENT Varies RECYCLED WATER PLAN CHECKING, RETROFIT, AND INSPECTION SERVICES FOR DEVELOPER PROJECTS $ 300,000.00 $ - $ 300,000.00 $ 283,460.97 0.0%94.5%1/20/2010 12/30/2013 AEGIS ENGINEERING MANAGEMENT Varies RECYCLED WATER PLAN CHECKING, RETROFIT, AND INSPECTION SERVICES FOR DEVELOPER PROJECTS $ 300,000.00 $ - $ 300,000.00 $ 280,622.90 0.0%93.5%11/24/2010 12/30/2013 TOTALS: $14,886,991.43 $322,908.78 $15,209,900.21 $6,531,933.14 2.2% QUESTIONS? 14 STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: September 4, 2013 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: Purchasing, Facilities, and Water Conservation: Purchase Orders – There were 66 purchase orders processed in August 2013 for a total of $348,613.90. Landscape Contest Winner Video – The 2013 Landscape Contest winners, John and Geralyn Orcutt, will be featured in a District-produced video. The video will highlight their participation in the District’s turf removal program starting with the front lawn in 2010 and concluding with the back lawn in 2013. The Orcutts are the “poster family” for the water conserving benefits that can accrue from a well-designed project that adds to the family’s outdoor living space. The dramatic water savings is illustrated by a July water usage amount several years ago, that peaked at 52 HCF while irrigating grass. In July 2013, after removing all the grass in the yard, the water usage was 10 HCF, an 81% reduction in water usage for the Orcutts. Education Programs - With the start of the traditional school year, the District continues to sponsor bus/field trips to the Water Conservation Garden for elementary schools. On a first come, first served basis, the Water Conservation Garden’s Ms. Smarty Plants’ led tours are being reserved very quickly. The District also partners with the San Diego County Water Authority to sponsor a mobile Splash lab visit coordinated by the San Diego County Office of Education that provides a hands- on approach to watershed, storm drain and conservation management issues. AGENDA ITEM 12 2 Upcoming Events: o Harbor Fest: Saturday, September 21, 2013, 12 – 9:00 pm o Bonita Fest: Saturday, September 28, 2013, 9 am – 5:00 pm Human Resources: Employee Programs – Effective August 1, 2013, the District implemented a new Employee Recognition Program, which consists of a new “Outstanding Performance” Award. This award will recognize individual employees or Teams of Employees who have performed an outstanding job on a special project or assignment significant to the District, the District’s strategic plan or for commendable safety actions. Recipients of this Award will be recognized at our Employee Recognition Barbeque, which will be held on September 25, 2013. The new recognition program also offers on-going recognition awards such as “Kudos” Award and a “High Five” Award, which allows Managers and Supervisors the opportunity to immediately recognize their employees throughout the year for doing exceedingly well in their positions and/or projects. In addition, the Otay Activities Committee sponsored a “Day at the Del Mar Races” which was held on August 17, 2013. Benefits – Human Resources met with IT and our benefits broker, Alliant, to strategize for Open Enrollment 2014. Our Open Enrollment period will be from October 1, 2013 to October 31, 2013. Packets of information will be sent to all participants in late September. Recruitments – HR is in the process of recruiting for Construction Inspector I/II and Water Systems Operator I/II/III. New Hires – There was one intern hired through the San Diego County Water Authority Internship Program. INFORMATION TECHNOLOGY AND STRATEGIC PLANNING: Strat Plan - The District’s Strategic Plan results are in and they are positive. A detailed presentation on year-end FY13 will be presented to the Board in October. Staff is also revising some of the planning forms used to ensure better tracking of project deliverables. New GPS System - GIS staff, along with Operations, is implementing GPS Insight’s GPS vehicle tracking system. Six bidders were evaluated and the pilot testing was successfully completed. Full implementation is expected by the end of September. 3 Wireless Networks - Upgrades to our wireless networks are in progress. Day Wireless is improving reliability and fixing critical issues in the North District. Once complete, staff will begin implementation of the wireless system in the South District. Billing System Presentation - Otay staff provided a demonstration of Otay’s billing and financial system software to the Helix Water District, assisting them in their evaluation of a new billing system for their District. Customer/Facility Information - Significant progress is being made in improving the District’s accuracy in its customer and facilities information. By comparing the GIS and customer systems, staff can identify potential issues and resolve them prior to experiencing a problem. This is also useful in developing the Special Assessment charges for the County each year. SharePoint - Staff is developing an improved version of the Districts intranet. Design changes and better organization of information will make it easier to find and use District information. The underlying system architecture is also being strengthened to avoid any disruptions to service. FINANCE: Leveraging Master Meter Data – Staff is working to define a process to inform customers of leak alarms that are gathered as part of the reading process. FY2014 Budget Publication and Submittal to GFOA and CSMFO for Awards – Finance staff is working to finalize and review the published FY2014 Budget to be submitted to both GFOA and CSMFO in September for the awards program. Shared Services Equipment Rates – Finance is working with Operations staff to update the shared services billing rates for cross-charging Otay Water District equipment that is used by other water districts in emergency situations. IRS Auditing the 2007 COPS – The District received notice from the IRS that the 2007 COPS issuance has been randomly selected for an audit. They will be auditing the usage of proceeds, arbitrage compliance, and various other aspects of the 2007 COPS. The District has engaged Stradling Yocca Carlson & Rauth as Bond Counsel for the audit. The District has no expectation that there are any compliance issues at this time and may be contacting Engineering and Operations staff as part of the information gathering process. 4 Financial Reporting: o For the month ended July 31, 2013, there are total revenues of $8,330,373 and total expenses of $7,539,126. The revenues exceeded expenses by $791,247. o The market value shown in the Portfolio Summary and in the Investment Portfolio Details as of July 31, 2013 total $81,409,154.38 with an average yield to maturity of 0.360%. The total earnings year-to-date are $25,426.63. ENGINEERING AND WATER OPERATIONS: Engineering: North District – South District Interconnection System: This project consists of installing approximately 5.2 miles of 30- inch diameter pipe from H Street in Chula Vista to Paradise Valley Road in Spring Valley. The Draft Environmental Impact Report (DEIR) was issued for public comment on June 12, 2013. The 45-day public comment period ended July 26, 2013. District staff is working with Sweetwater Authority staff to develop technical concepts to share corridors with future Sweetwater Authority pipelines. District staff is also working with Caltrans regarding pump station parcels identified in the DEIR. (P2511) 30-Inch, 980 Zone, Hunte Parkway – Proctor Valley/Use Area: This project consists of the installation of approximately 2,240 linear-feet of 30-inch steel pipe and appurtenances on Hunte Parkway at Proctor Valley Road, at the entrance to the Salt Creek Golf Course, in the City of Chula Vista. The contract has been accepted and the Notice of Completion was filed with the County of San Diego on July 8, 2013. Sepulveda submitted additional change requests for extended overhead and traffic control delays on the project. Staff has evaluated these requests and has provided an initial determination of “no merit” on these requests based on the information submitted. Staff will be bringing a Change Order to the Board for consideration as part of the closing out of this project. The Project is within budget and construction is completed. (P2514) 944‐1R Recycled Water Pump Station Upgrades and System Enhancement: This project consists of the installation of a new pump, reconfiguration of the suction header piping, upgrades to the instrumentation, SCADA system, and equipment at the 944-1R pump station. The Project also includes the installation of three (3) Pressure Reducing Stations (PRS) on Olympic Parkway, Eastlake Parkway, and Otay Lakes Road. Staff will be bringing Change Orders to the Board for consideration as part of the 5 closing out this project. The Project is within budget and is anticipated to be completed in September 2013. (R2091) 12-Inch Potable Water Pipeline, East Orange Avenue, I-805 Crossing: This project consists of the installation of approximately 1,915 linear-feet of 12-inch steel and PVC pipe along with the associated appurtenances from the intersection of Melrose Avenue and Orange Avenue, east across the I-805 overpass, to the intersection of Olympic Parkway and Oleander Avenue in Chula Vista. This new pipeline is needed to meet fire flow requirements while Caltrans reconstructs the Palomar Bridge overpass, which contains a 10-inch pipeline that will be temporarily out of service. The water line was put into service on July 1, 2013. The Project was completed in August 2013 and has been recommended for contract acceptance. The Project is within budget. (P2513) 803-3 & 832-2 Reservoirs Interior/Exterior Coatings and Upgrades: This project consists of removing and replacing the interior and exterior coatings of the 803-3 Reservoir 2.0 MG and the 832-2 Reservoir 2.0 MG, along with providing structural upgrades to ensure the tanks comply with both State and Federal OSHA standards as well as American Water Works Association and County Health Department standards. The Contractor, Advanced Industrial Services (AIS), has completed all work required to fill the 803-3 and 832-2 Reservoirs. The remaining work consists of testing and both of the Reservoirs are scheduled to be placed into service in early September 2013. The Project is within budget. (P2518 & P2519) 624-2 Reservoir Interior/Exterior Coatings & 458-2 Reservoir Interior Coating and Upgrades: This project consists of removing and replacing the interior and exterior coatings of the 624-2 8.0 MG Reservoir and removing and replacing the interior coating of the 458-2 1.75 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 Project was advertised for construction on July 31, 2013 and bids are due August 29, 2013. The Project is anticipated to be completed in early July 2014. (P2493 & P2535) East Palomar Street Utility Relocation: This project is in coordination with Caltrans’ I-805 south improvements. Caltrans will demolish the East Palomar Street overpass on the I-805, and construct a new bridge with a Direct Access Ramp (DAR) for carpool vehicles. The existing 10-inch pipeline in the bridge will be removed and replaced with a new 12-inch pipeline. Other work includes relocation of a fire hydrant and lowering 50-feet of the 12-inch pipeline near Ocala Ct. The Orange Avenue 12- inch pipeline will serve as a replacement during the 6 construction and local residents will not see any interruption of service. Caltrans scheduled the bridge demolition on the night of August 18, 2013 from 3:00 pm to 5:00 pm. Caltrans expects the bridge construction to be completed in the summer of 2015. This project is within budget, and three (3) agreements for cost sharing were approved at the June 2013 Board meeting. (P2507) For the month of July 2013, the District sold 22 meters (25 EDUs) generating $229,227 in revenue. Projection for this period was 17.5 meters (29.5 EDUs) with a budgeted revenue of $266,447. Total revenue for Fiscal Year 2014 through July 2013 is $229,227 against the annual budget of $266,447. The following table summarizes Engineering's project purchases issued during the period of July 16, 2013 through August 10, 2013 that were within staff signatory authority: Date Action Amount Contractor/ Consultant Project 7/31/13 Check Request $37,521.29 Aspire Encore at Rancho del Rey Homeowners Association Potable irrigation Meters to Recycled Water Meters (R2094) Water Operations: Total number of potable water meters is 49,096. The July potable water purchases were 3,347.0 acre-feet which is 0.2% above the budget of 3,341.0 acre-feet. The cumulative purchases through July is 3,347.0 acre-feet which is 0.2% above the cumulative budget of 3,341.0 acre-feet. 7 The July recycled water purchases and production was 600.7 acre-feet which is 5.5% above the budget of 569.5 acre-feet. The cumulative production and purchases through July is 600.7 acre-feet which is 5.5% above the cumulative budget of 569.5 acre-feet. Recycled water consumption for the month of July is as follows: Total consumption was 531.9 acre-feet or 173,265,224 gallons and the average daily consumption was 5,589,201 gallons per day. Total recycled water consumption as of July for FY 2014 is 531.9 acre-feet. Total number of recycled water meters is 710. Wastewater flows for the month of July were as follows: Total basin flow, gallons per day: 1,702,293. Spring Valley Sanitation District Flow to Metro, gallons per day: 563,981. Total Otay flow, gallons per day: 1,138,254. Flow Processed at the Ralph W. Chapman Water Recycling Facility, gallons per day: 1,195,548, from which 57,352 gallons per day were processed from Spring Valley Sanitation District. Flow to Metro from Otay Water District, gallons per day: 0. By the end of July there were 6,083 wastewater EDUs. Check# Vendor Check Total 5,191.77 595.87 473.00 CHECK REGISTER Otay Water District Date Range: 7/25/2013 - 8/21/2013 Date Vendor Name Invoice Inv. Date Description Amount 2037814 08/07/13 10720 1060 TECHNOLOGY INC 3638 07/12/13 CISCO SWITCH 1,182.60 1,182.60 2037815 08/07/13 08488 ABLEFORCE INC 3860 07/09/13 PROGRAMMING SERVICES (6/27/13-7/3/13)875.00 875.00 2037924 08/21/13 08488 ABLEFORCE INC 3892 07/29/13 PROGRAMMING SERVICES (7/12/13-7/18/13)687.50 687.50 2037816 08/07/13 03317 ADVANCED CALL PROCESSING INC 20132959 07/15/13 TELEPHONE SOFTWARE MAINTENANCE 40,281.12 40,281.12 2037925 08/21/13 13901 ADVANCED INDUSTRIAL SVCS INC 4A 07/30/13 COATINGS/UPGRADES-803-3/832-2 (ENDING 7/26/13)187,791.25 187,791.25 2037817 08/07/13 12174 AECOM TECHNICAL SERVICES INC 8 07/19/13 DISINFECTION SYSTEM (ENDING 6/28/13)41,323.91 41,323.91 2037818 08/07/13 11462 AEGIS ENGINEERING MGMT INC 1203 07/08/13 AS NEEDED DESIGN SVCS FY13 & FY14 (6/1/13-6/30/13)35,080.00 35,080.00 2037926 08/21/13 07732 AIRGAS SPECIALTY PRODUCTS INC 131297650 07/22/13 AQUA AMMONIA 3,711.74 131297649 07/22/13 AQUA AMMONIA 1,480.03 2037927 08/21/13 13753 AIRGAS USA LLC 9018381740 08/01/13 BREATHING AIR 207.07 207.07 2037819 08/07/13 14811 ALARMS UNLIMITED INC 152594 07/19/13 SAFETY UPGRADES 3,239.85 3,239.85 2037870 08/14/13 15041 ALEX JOHNSON Ref002429760 08/12/13 UB Refund Cst #0000198643 75.00 75.00 2037871 08/14/13 15038 ALICE STACY Ref002429757 08/12/13 UB Refund Cst #0000193419 19.59 19.59 2037820 08/07/13 02362 ALLIED WASTE SERVICES # 509 0509005277262 07/25/13 TRASH SERVICES (AUG 2013)530.33 0509005278927 07/25/13 TRASH SERVICES (AUG 2013)65.54 2037872 08/14/13 15030 ALMA ALVAREZ Ref002429748 08/12/13 UB Refund Cst #0000140003 95.09 95.09 2037928 08/21/13 01369 AMERICAN BACKFLOW INV26910 07/29/13 BACKFLOW REPAIR KITS 3,455.08 3,455.08 2037929 08/21/13 06166 AMERICAN MESSAGING L1109570NH 08/01/13 PAGER SERVICES (JULY 2013)259.11 259.11 2037821 08/07/13 02730 AMERICAN PAYROLL ASSOCIATION 080113 08/01/13 MEMBERSHIP DUES (ANNUAL)254.00 1922130713 07/31/13 MEMBERSHIP RENEWAL (ANNUAL)219.00 2037822 08/07/13 00002 ANSWER INC 8649 07/22/13 ANSWERING SERVICES (JULY 2013)1,100.00 1,100.00 2037759 07/31/13 08967 ANTHEM BLUE CROSS EAP 41154 07/22/13 EMPLOYEE ASSISTANCE PROGRAM (AUG 2013)316.66 316.66 2037873 08/14/13 02829 APPLIED TECHNOLOGY GROUP INC INV0000002054 08/06/13 INET 900 ETHERNET RADIOS 3,008.50 3,008.50 2037930 08/21/13 01509 ARC ERGONOMICS 38678 08/02/13 IT ERGONOMICS 316.44 316.44 2037823 08/07/13 13171 ARCADIS US INC 0531704 07/17/13 WASTEWATER MANAGEMENT (ENDING 7/3/13)5,000.00 5,000.00 2037760 07/31/13 15020 ASLAN RESIDENTIAL LLC Ref002429563 07/30/13 UB Refund Cst #0000197787 91.40 91.40 Page 1 of 12 Check# Vendor Check Total CHECK REGISTER Otay Water District Date Range: 7/25/2013 - 8/21/2013 Date Vendor Name Invoice Inv. Date Description Amount 2,299.18 98.88 5,673.53 16,079.53 2037761 07/31/13 15023 ASPIRE ENCORE AT RANCHO 071213 07/12/13 REIMBURSEMENT AGREEMENT 37,521.29 37,521.29 2037931 08/21/13 05758 AT&T 0821645728072513 07/25/13 ACCESS TRANSPORT SVCS (7/25/13-8/24/13)2,267.47 33784130450813 08/07/13 ACCESS TRANSPORT SVCS (8/7/13-9/6/13)31.71 2037874 08/14/13 05758 AT&T 61967053070713 07/15/13 LONG DISTANCE (MONTHLY)37.00 37.00 2037875 08/14/13 05758 AT&T 61969851400713 07/24/13 LONG DISTANCE (MONTHLY)37.00 37.00 2037824 08/07/13 05758 AT&T 61942256050713 07/20/13 LONG DISTANCE (7/20/13-8/19/13)67.17 3378413045070713 07/07/13 LONG DISTANCE (7/7/13-8/6/13)31.71 2037932 08/21/13 07785 AT&T 000004574936 08/02/13 CALNET 2 PHONE SVCS (7/2/13-8/1/13)5,657.90 000004577153 08/02/13 CALNET 2 PHONE SVCS (7/2/13-8/1/13)15.63 2037762 07/31/13 07446 BANK OF NEW YORK MELLON, THE 2521716336 07/01/13 ADM FEES 1996 COPS (7/1/13-6/30/14)2,782.50 2,782.50 2037933 08/21/13 14577 BASILE CONSTRUCTION INC 7 08/02/13 ORANGE AVENUE 12-INCH PIPELINE (ENDING 7/31/13)84,903.79 84,903.79 2037876 08/14/13 10823 BONITAFEST 080913 08/09/13 SPACE RENTAL 125.00 125.00 2037934 08/21/13 10970 BRENNTAG PACIFIC INC BPI329432 07/29/13 SODIUM HYPOCHLORITE 2,418.68 BPI331437 08/02/13 SODIUM HYPOCHLORITE 2,340.22 BPI326907 07/22/13 SODIUM HYPOCHLORITE 2,243.20 BPI328870 07/26/13 SODIUM HYPOCHLORITE 1,859.52 BPI327874 07/24/13 SODIUM HYPOCHLORITE 1,537.97 BPI331286 08/01/13 SODIUM HYPOCHLORITE 1,258.94 BPI328387 07/25/13 SODIUM HYPOCHLORITE 1,170.65 BPI326908 07/22/13 SODIUM HYPOCHLORITE 1,011.51 BPI327188 07/23/13 SODIUM HYPOCHLORITE 851.28 BPI329431 07/29/13 SODIUM HYPOCHLORITE 695.42 BPI329433 07/29/13 SODIUM HYPOCHLORITE 692.14 2037825 08/07/13 10970 BRENNTAG PACIFIC INC BPI324292 07/12/13 SODIUM HYPOCHLORITE 3,315.75 BPI325164 07/15/13 SODIUM HYPOCHLORITE 2,179.98 BPI322137 07/08/13 SODIUM HYPOCHLORITE 1,576.27 BPI324717 07/15/13 SODIUM HYPOCHLORITE 1,430.07 BPI326568 07/19/13 SODIUM HYPOCHLORITE 1,202.26 BPI324716 07/15/13 SODIUM HYPOCHLORITE 906.88 BPI324077 07/11/13 SODIUM HYPOCHLORITE 904.70 BPI326110 07/18/13 SODIUM HYPOCHLORITE 870.91 Page 2 of 12 Check# Vendor Check Total CHECK REGISTER Otay Water District Date Range: 7/25/2013 - 8/21/2013 Date Vendor Name Invoice Inv. Date Description Amount 14,160.38 1,059.00 13,560.00 1,200.00 2,414.00 BPI322138 07/08/13 SODIUM HYPOCHLORITE 767.43 BPI321914 07/08/13 SODIUM HYPOCHLORITE 686.76 BPI324076 07/09/13 SODIUM HYPOCHLORITE 319.37 2037877 08/14/13 08156 BROWNSTEIN HYATT FARBER 539606 07/24/13 LEGISLATIVE ADVOCACY (THRU 6/30/13)3,500.00 3,500.00 2037935 08/21/13 03450 BUELNA, ARMANDO 16040813 08/19/13 SPONSORSHIP 150.80 150.80 2037826 08/07/13 02920 CALIFORNIA COMMERCIAL 129734 07/12/13 ASPHALT 750.82 750.82 2037763 07/31/13 15014 CARLOS ARGUELLO Ref002429557 07/30/13 UB Refund Cst #0000182648 5.46 5.46 2037827 08/07/13 02758 CARMEL BUSINESS SYSTEMS INC 7687 07/09/13 DESTRUCTION SERVICES (7/5/13)162.48 162.48 2037878 08/14/13 15033 CARMELITA GRIFFIN Ref002429752 08/12/13 UB Refund Cst #0000183449 100.00 100.00 2037764 07/31/13 01788 CHAVARELA, GERARDO 072513 07/25/13 CERTIFICATION RENEWAL 230.00 230.00 2037765 07/31/13 15009 CHELSEA SMITH Ref002429551 07/30/13 UB Refund Cst #0000162539 29.52 29.52 2037879 08/14/13 15045 CHENG I AND MERRY P LIN TRUST Ref002429764 08/12/13 UB Refund Cst #0000199269 56.71 56.71 2037880 08/14/13 12631 CITY OF CHULA VISTA DE24160813 08/02/13 PLAN CHECK DEP # DE-2416 3,125.00 3,125.00 2037766 07/31/13 03811 CITY OF EL CAJON 072213 07/22/13 CONSORTIUM FEES 1,700.00 1,700.00 2037936 08/21/13 04119 CLARKSON LAB & SUPPLY INC 68626 08/06/13 BACTERIOLOGICAL TESTING SVCS 580.00 68624 07/31/13 BACTERIOLOGICAL TESTING SVCS 176.00 68625 07/31/13 BACTERIOLOGICAL TESTING SVCS 162.00 68623 07/31/13 BACTERIOLOGICAL TESTING SVCS 141.00 2037881 08/14/13 15039 COLFIN AI-CA 4 LLC Ref002429758 08/12/13 UB Refund Cst #0000195275 184.37 184.37 2037828 08/07/13 08160 COMPLETE OFFICE 15164530 07/17/13 COPY PAPER 1,071.01 1,071.01 2037937 08/21/13 15049 CORELOGIC SOLUTIONS LLC 50010217 08/02/13 DATA SERVICES (8/1-13-7/31/14)7,260.00 50010219 08/02/13 DATA SERVICES (8/1/13-7/31/14)6,300.00 2037938 08/21/13 12334 CORODATA MEDIA STORAGE INC DS1258906 07/31/13 TAPE STORAGE (JULY 2013)424.22 424.22 2037939 08/21/13 00184 COUNTY OF SAN DIEGO DEH2004HUPFP20358406/17/13 UPFP PERMIT RENEWAL (8/31/13-8/31/14)713.00 DEH2002HUPFP13213706/17/13 UPFP PERMIT RENEWAL (8/31/13-8/31/14)487.00 2037829 08/07/13 00184 COUNTY OF SAN DIEGO DEH130471D11 07/24/13 SHUT DOWN TEST (6/27/13)852.00 DEH130476D11 07/24/13 SHUT DOWN TEST (6/26/13)852.00 DEH130468D11 07/24/13 SHUT DOWN TEST (6/20/13)710.00 Page 3 of 12 Check# Vendor Check Total CHECK REGISTER Otay Water District Date Range: 7/25/2013 - 8/21/2013 Date Vendor Name Invoice Inv. Date Description Amount 3,000.00 24.00 1,365.00 1,620.00 15.75 9,485.23 2037767 07/31/13 00184 COUNTY OF SAN DIEGO DEH2002HUPFP10490804/16/13 UPFP PERMIT RENEWAL (6/30/13-6/30/14)2,378.00 2,378.00 2037830 08/07/13 02756 COX COMMUNICATIONS SAN DIEGO 28810713 07/30/13 INTERNET SERVICES (7/29/13-8/29/13)1,500.00 27170713 07/30/13 INTERNET SERVICES (7/29/13-8/28/13)1,500.00 2037882 08/14/13 15040 CT DREAM REALTY LLC Ref002429759 08/12/13 UB Refund Cst #0000198017 107.45 107.45 2037883 08/14/13 15042 DAN SCOTT Ref002429761 08/12/13 UB Refund Cst #0000198845 75.00 75.00 2037768 07/31/13 15008 DARLA GONZALEZ Ref002429550 07/30/13 UB Refund Cst #0000143341 109.94 109.94 2037769 07/31/13 15010 DAVID SANCHEZ Ref002429552 07/30/13 UB Refund Cst #0000168465 9.10 9.10 2037884 08/14/13 15027 DENNIS HOGGE Ref002429745 08/12/13 UB Refund Cst #0000092585 16.13 16.13 2037885 08/14/13 03744 DEPARTMENT OF JUSTICE 985232 08/15/13 FINGERPRINTING SERVICES (JULY 2013)98.00 98.00 2037770 07/31/13 03417 DIRECTV 20840945345 07/05/13 SATELLITE TV (7/4/13-8/3/13)18.00 20943987728 07/19/13 SATELLITE TV (7/18/13-8/17/13)6.00 2037886 08/14/13 03417 DIRECTV 21061500985 08/05/13 SATELLITE TV (8/4/13-9/3/13)18.90 18.90 2037887 08/14/13 15029 DOROTA JUCHUM Ref002429747 08/12/13 UB Refund Cst #0000127332 31.53 31.53 2037831 08/07/13 02447 EDCO DISPOSAL CORPORATION 1554580713 07/31/13 RECYCLING SERVICES (JULY 2013)95.00 95.00 2037832 08/07/13 03227 ENVIROMATRIX ANALYTICAL INC 3070518 07/09/13 RECYCLED WATER ANALYSIS (6/20/13-6/27/13)780.00 3070615 07/11/13 RECYCLED WATER ANALYSIS (6/19/13-6/30/13)295.00 3070659 07/15/13 RECYCLED WATER ANALYSIS (7/1/13-7/3/13)290.00 2037940 08/21/13 03227 ENVIROMATRIX ANALYTICAL INC 3071028 07/30/13 RECYCLED WATER ANALYSIS (7/13/13-7/22/13)865.00 3070836 07/22/13 RECYCLED WATER ANALYSIS (7/4/13-7/12/13)755.00 2037888 08/14/13 15026 ESTHER RHEIM Ref002429744 08/12/13 UB Refund Cst #0000054029 21.75 21.75 2037833 08/07/13 00645 FEDEX 234928203 07/26/13 MAIL SERVICES (7/18/13)9.51 233434116 07/12/13 MAIL SERVICES (7/5/13)6.24 2037941 08/21/13 03546 FERGUSON WATERWORKS # 1083 0443560 07/24/13 INVENTORY 4,313.52 0443558 07/29/13 INVENTORY 2,365.96 04435581 07/31/13 INVENTORY 1,717.20 0444386 07/29/13 INVENTORY 1,056.24 04443861 07/31/13 INVENTORY 32.31 2037942 08/21/13 13958 FIRETIDE INC 12455 07/30/13 RADIO REPAIR 500.00 500.00 Page 4 of 12 Check# Vendor Check Total CHECK REGISTER Otay Water District Date Range: 7/25/2013 - 8/21/2013 Date Vendor Name Invoice Inv. Date Description Amount 665.29 1,075.00 2037943 08/21/13 12187 FIRST AMERICAN DATA TREE LLC 9003400713 07/31/13 ONLINE DOCUMENTS (JULY 2013)99.00 99.00 2037834 08/07/13 04066 FIRST CHOICE SERVICES - SD 003454 07/12/13 COFFEE SUPPLIES 149.45 149.45 2037944 08/21/13 04066 FIRST CHOICE SERVICES - SD 004040 07/26/13 COFFEE SUPPLIES 515.62 515.62 2037835 08/07/13 02591 FITNESS TECH 8597 07/16/13 EQUIPMENT MAINTENANCE 263.04 263.04 2037945 08/21/13 02591 FITNESS TECH 8625 08/01/13 EQUIPMENT MAINTENANCE 135.00 135.00 2037889 08/14/13 11962 FLEETWASH INC x151181 07/19/13 FLEET VEHICLE WASHING 78.84 78.84 2037836 08/07/13 11962 FLEETWASH INC x148382 07/12/13 VEHICLE WASHING 203.67 203.67 2037771 07/31/13 11962 FLEETWASH INC x146164 07/05/13 VEHICLE WASHING 32.85 32.85 2037890 08/14/13 01612 FRANCHISE TAX BOARD Ben2429794 08/15/13 BI-WEEKLY PAYROLL DEDUCTION 1,032.65 1,032.65 2037772 07/31/13 01612 FRANCHISE TAX BOARD Ben2429591 08/01/13 BI-WEEKLY PAYROLL DEDUCTION 1,032.65 1,032.65 2037773 07/31/13 02344 FRANCHISE TAX BOARD Ben2429597 08/01/13 BI-WEEKLY PAYROLL DEDUCTION 81.00 81.00 2037891 08/14/13 02344 FRANCHISE TAX BOARD Ben2429800 08/15/13 BI-WEEKLY PAYROLL DEDUCTION 81.00 81.00 2037837 08/07/13 07224 FRAZEE INDUSTRIES INC 9530271461740 07/09/13 PAINT 125.02 125.02 2037774 07/31/13 02254 FRY'S ELECTRONICS INC 073013 07/30/13 COMPUTER LOAN 1,877.80 1,877.80 2037775 07/31/13 15015 GABRIEL LARIOS Ref002429558 07/30/13 UB Refund Cst #0000187272 13.10 13.10 2037892 08/14/13 15044 GLYDAS SANTOYO Ref002429763 08/12/13 UB Refund Cst #0000199065 44.10 44.10 2037838 08/07/13 14948 GPS INSIGHT LLC 76203 07/09/13 GPS MODEMS 27,747.42 27,747.42 2037946 08/21/13 00101 GRAINGER INC 9203687992 07/29/13 WAREHOUSE SUPPLIES 648.24 9203688008 07/29/13 WAREHOUSE SUPPLIES 17.05 2037947 08/21/13 12907 GREENRIDGE LANDSCAPE INC 11104 07/29/13 LANDSCAPING SERVICES (JULY 2013)8,650.00 8,650.00 2037839 08/07/13 00174 HACH COMPANY 8397031 07/19/13 LABORATORY SUPPLIES 3,366.24 3,366.24 2037948 08/21/13 00174 HACH COMPANY 8409116 07/26/13 APA MODULE REPAIR 1,216.39 1,216.39 2037776 07/31/13 15003 HILDA EDEEN Ref002429545 07/30/13 UB Refund Cst #0000047134 45.55 45.55 2037840 08/07/13 09710 HOMESTEAD TREE SERVICE INC 1639 07/19/13 TREE REMOVAL 550.00 1645 08/01/13 TREE REMOVAL 525.00 2037841 08/07/13 12335 HP ENTERPRISE SERVICES LLC U3089655 07/12/13 CREDIT CARD PYMT SVC (JUNE 2013)1,767.95 1,767.95 Page 5 of 12 Check# Vendor Check Total CHECK REGISTER Otay Water District Date Range: 7/25/2013 - 8/21/2013 Date Vendor Name Invoice Inv. Date Description Amount 739.76 1,123.10 1,123.10 11,150.50 2,710.40 2037841 08/07/13 12335 HP ENTERPRISE SERVICES LLC U3089655 07/12/13 CREDIT CARD PYMT SVC (JUNE 2013)1,767.95 1,767.95 2037893 08/14/13 15043 HUD Ref002429762 08/12/13 UB Refund Cst #0000198932 74.42 74.42 2037894 08/14/13 03743 HYDROTEX 160650 06/21/13 OIL 4,740.84 4,740.84 2037842 08/07/13 01649 IDEXX DISTRIBUTION INC 269916574 07/08/13 LABORATORY SUPPLIES 577.39 269916575 07/08/13 LABORATORY SUPPLIES 162.37 2037843 08/07/13 02372 INTERIOR PLANT SERVICE INC 6007 07/15/13 PLANT SERVICES (JULY 2013)205.00 205.00 2037895 08/14/13 13899 INTERMEDIA.NET INC 2013080118 08/01/13 EMAIL SERVICES (7/2/13-8/1/13)3,477.57 3,477.57 2037777 07/31/13 15006 JANELLE KEEPPER Ref002429548 07/30/13 UB Refund Cst #0000122679 58.58 58.58 2037949 08/21/13 03077 JANI-KING OF CALIFORNIA INC SDO07130163 07/01/13 JANITORIAL SERVICES (JULY 2013)1,135.50 1,135.50 2037844 08/07/13 10563 JCI JONES CHEMICALS INC 588033 CREDIT MEMO -2,000.00 587968 07/11/13 CHLORINE 3,123.10 2037950 08/21/13 10563 JCI JONES CHEMICALS INC 589341 CREDIT MEMO -2,000.00 589327 07/24/13 CHLORINE 3,123.10 2037896 08/14/13 15034 JOANNE ESPARZA Ref002429753 08/12/13 UB Refund Cst #0000185411 6.43 6.43 2037778 07/31/13 15016 JOSELYN SIVILA Ref002429559 07/30/13 UB Refund Cst #0000187701 20.71 20.71 2037897 08/14/13 15037 JUSTIN SOLBERG Ref002429756 08/12/13 UB Refund Cst #0000193066 20.79 20.79 2037779 07/31/13 15007 KAMAL NONA Ref002429549 07/30/13 UB Refund Cst #0000124844 40.08 40.08 2037898 08/14/13 10089 KENNEDY, ROBERT 1713080713 08/07/13 TRAVEL EXPENSES (7/16/13-7/17/13)164.33 164.33 2037845 08/07/13 05840 KIRK PAVING INC 5394 07/09/13 AS NEEDED PAVING SERVICES FY14 4,307.40 5395 07/09/13 AS NEEDED PAVING SERVICES FY14 3,748.10 5396 07/09/13 AS NEEDED PAVING SERVICES FY14 3,095.00 2037951 08/21/13 04996 KNOX ATTORNEY SERVICE INC 4009052 07/31/13 DELIVERY SERVICES (7/19/13)96.75 96.75 2037899 08/14/13 14808 KOEPPEN, KEVIN 1819073113 07/31/13 AICPA MEMBERSHIP DUES 225.00 225.00 2037952 08/21/13 12276 KONECRANES INC SDG00818627 08/09/13 CRANE INSPECTIONS 400.00 400.00 2037953 08/21/13 14036 KRATOS / HBE 18060113 07/23/13 DOOR REPAIR 2,560.40 SM42959 07/17/13 ALARM MONITORING (JULY 2013)55.00 SM42960 07/17/13 ALARM MONITORING (JULY 2013)55.00 SM42958 07/17/13 ALARM MONITORING (JULY 2013)40.00 Page 6 of 12 Check# Vendor Check Total CHECK REGISTER Otay Water District Date Range: 7/25/2013 - 8/21/2013 Date Vendor Name Invoice Inv. Date Description Amount 702.21 278.01 2037780 07/31/13 02063 LA MESA - SPRING VALLEY 3539 04/26/13 GARDEN TOURS (3/20/13-3/22/13)911.00 911.00 2037954 08/21/13 06497 LAKESIDE LAND COMPANY 272302 07/23/13 LANDFILL 66.95 66.95 2037846 08/07/13 06497 LAKESIDE LAND COMPANY 272194 07/18/13 LANDFILL 30.40 30.40 2037955 08/21/13 03607 LEE & RO INC LR15838 07/15/13 INTERCONNECTION (ENDING 6/30/13)30,581.38 30,581.38 2037900 08/14/13 14127 MANOLO REALTY Ref002429750 08/12/13 UB Refund Cst #0000176922 6.96 6.96 2037901 08/14/13 15025 MARC ROLLSTON Ref002429743 08/12/13 UB Refund Cst #0000003699 100.00 100.00 2037902 08/14/13 15047 MARK JOHNSON 2503964130813 08/05/13 CUSTOMER REFUND 104.74 104.74 2037781 07/31/13 15004 MARSHALL TREAT Ref002429546 07/30/13 UB Refund Cst #0000060457 48.85 48.85 2037847 08/07/13 02902 MARSTON & MARSTON INC 201381 08/01/13 COMMUNITY OUTREACH (JULY 2013)5,000.00 5,000.00 2037956 08/21/13 12004 MASTER METER SYSTEMS INC 0063139IN 08/02/13 PHONE SUPPORT (AUG 2013-AUG 2014)1,500.00 1,500.00 2037957 08/21/13 01183 MCMASTER-CARR SUPPLY CO 56059087 07/24/13 A-TANK SPRAYHEAD UNISTRUT 244.11 244.11 2037848 08/07/13 01824 MERKEL & ASSOCIATES INC 13071001 07/10/13 ENVIRONMENTAL SERVICES (5/1/13-6/30/13)14,941.03 14,941.03 2037782 07/31/13 15013 MOTOKI IIDOI Ref002429556 07/30/13 UB Refund Cst #0000182414 64.01 64.01 2037783 07/31/13 03523 NATIONAL DEFERRED COMPENSATION Ben2429589 08/01/13 BI-WEEKLY DEFERRED COMP PLAN 7,707.61 7,707.61 2037903 08/14/13 03523 NATIONAL DEFERRED COMPENSATION Ben2429792 08/15/13 BI-WEEKLY DEFERRED COMP PLAN 7,192.61 7,192.61 2037849 08/07/13 13690 NEAL ELECTRIC CORP 59133 07/17/13 CONDUIT INSTALLATION 1,805.00 1,805.00 2037784 07/31/13 14968 NERYS USA INC Ref002429555 07/30/13 UB Refund Cst #0000177661 17.90 17.90 2037958 08/21/13 02848 NEWMAN, PATRICK 292420813 08/20/13 CERTIFICATE RENEWAL 120.00 120.00 2037850 08/07/13 14856 NEXUS IS INC JC631859 07/17/13 SOFTWARE RENEWAL 8,978.50 8,978.50 2037959 08/21/13 14856 NEXUS IS INC JC632345 07/31/13 HARDWARE 2,851.86 2,851.86 2037904 08/14/13 15028 NICOLE LIU Ref002429746 08/12/13 UB Refund Cst #0000123963 274.23 274.23 2037960 08/21/13 00510 OFFICE DEPOT INC 669187688001 07/30/13 OFFICE SUPPLIES 566.09 665526224001 07/29/13 OFFICE SUPPLIES 136.12 2037851 08/07/13 00510 OFFICE DEPOT INC 664355256001 07/09/13 OFFICE SUPPLIES 153.26 667041282001 07/17/13 OFFICE SUPPLIES 124.75 2037852 08/07/13 03149 ON SITE LASER LLC 47775 07/13/13 PRINTER SERVICES (7/12/13)79.00 79.00 Page 7 of 12 Check# Vendor Check Total CHECK REGISTER Otay Water District Date Range: 7/25/2013 - 8/21/2013 Date Vendor Name Invoice Inv. Date Description Amount 846.80 1,982.10 774.88 296.62 2037852 08/07/13 03149 ON SITE LASER LLC 47775 07/13/13 PRINTER SERVICES (7/12/13)79.00 79.00 2037961 08/21/13 03149 ON SITE LASER LLC 47791 07/24/13 PRINTER SERVICES 430.00 47813 08/10/13 PRINTER SERVICES (8/9/13)416.80 2037962 08/21/13 01002 PACIFIC PIPELINE SUPPLY 161133 07/24/13 INVENTORY 8,331.13 8,331.13 2037785 07/31/13 14954 PACIFIC TRANS ENVIRONMENTAL 41727 06/30/13 HAZARDOUS WASTE DISPOSAL 1,193.25 1,193.25 2037786 07/31/13 15022 PARK WEST LANDSCAPE MAINT Ref002429565 07/30/13 UB Refund Cst #0000199425 1,799.40 1,799.40 2037787 07/31/13 15002 PETER FELLER Ref002429544 07/30/13 UB Refund Cst #0000041041 18.70 18.70 2037788 07/31/13 00137 PETTY CASH CUSTODIAN 072913 07/29/13 PETTY CASH 897.71 897.71 2037853 08/07/13 01715 PORRAS, PEDRO 080513 08/05/13 TRAVEL EXPENSE ADVANCEMENT (9/30/13-10/3/13)1,283.80 1,283.80 2037905 08/14/13 01733 PRICE TRONCONE &12682 05/31/13 ANTENNA SUBLEASE (JULY-SEPT 2013)4,128.00 4,128.00 2037963 08/21/13 13059 PRIORITY BUILDING SERVICES 35754 07/01/13 JANITORIAL SERVICES (JULY 2013)3,504.00 3,504.00 2037854 08/07/13 06641 PRUDENTIAL OVERALL SUPPLY 30352924 07/11/13 UNIFORMS, TOWELS & MATS 377.26 30354431 07/18/13 UNIFORMS, TOWELS & MATS 371.26 30354430 07/18/13 UNIFORMS, TOWELS & MATS 213.12 30352923 07/11/13 UNIFORMS, TOWELS & MATS 213.12 30354432 07/18/13 UNIFORMS, TOWELS & MATS 182.50 30352925 07/11/13 UNIFORMS, TOWELS & MATS 182.50 30353814 07/16/13 UNIFORMS, TOWELS & MATS 114.12 30352297 07/09/13 UNIFORMS, TOWELS & MATS 114.12 30352926 07/11/13 UNIFORMS, TOWELS & MATS 60.92 30354433 07/18/13 UNIFORMS, TOWELS & MATS 60.92 30352296 07/09/13 UNIFORMS, TOWELS & MATS 46.13 30353813 07/16/13 UNIFORMS, TOWELS & MATS 46.13 2037789 07/31/13 06641 PRUDENTIAL OVERALL SUPPLY 30351363 07/04/13 UNIFORMS, TOWELS & MATS 371.26 30351364 07/04/13 UNIFORMS, TOWELS & MATS 182.50 30350689 07/02/13 UNIFORMS, TOWELS & MATS 114.12 30351365 07/04/13 UNIFORMS, TOWELS & MATS 60.92 30350688 07/02/13 UNIFORMS, TOWELS & MATS 46.08 2037964 08/21/13 06641 PRUDENTIAL OVERALL SUPPLY 30355937 07/25/13 UNIFORMS, TOWELS & MATS 182.50 30355314 07/23/13 UNIFORMS, TOWELS & MATS 114.12 2037855 08/07/13 00078 PUBLIC EMPLOYEES RET SYSTEM Ben2429581 08/01/13 BI-WEEKLY PERS CONTRIBUTION 155,665.25 155,665.25 Page 8 of 12 Check# Vendor Check Total CHECK REGISTER Otay Water District Date Range: 7/25/2013 - 8/21/2013 Date Vendor Name Invoice Inv. Date Description Amount 4,590.00 3,803.76 4,497.23 188,224.29 28,007.16 2037855 08/07/13 00078 PUBLIC EMPLOYEES RET SYSTEM Ben2429581 08/01/13 BI-WEEKLY PERS CONTRIBUTION 155,665.25 155,665.25 2037965 08/21/13 00078 PUBLIC EMPLOYEES RET SYSTEM Ben2429784 08/15/13 BI-WEEKLY PERS CONTRIBUTION 157,710.96 157,710.96 2037856 08/07/13 10415 QUICKSTART INTELLIGENCE INPO236521 04/09/13 TRAINING 2,795.00 INPO23653 04/09/13 TRAINING 1,795.00 2037966 08/21/13 01342 R J SAFETY SUPPLY CO INC 31566500 07/31/13 SAFETY SUPPLIES 1,057.53 1,057.53 2037906 08/14/13 15031 RAMON SALAZAR Ref002429749 08/12/13 UB Refund Cst #0000175779 172.32 172.32 2037790 07/31/13 15012 RAY BAKER Ref002429554 07/30/13 UB Refund Cst #0000174255 56.97 56.97 2037791 07/31/13 15018 ROBERT SHIRD Ref002429561 07/30/13 UB Refund Cst #0000196973 75.00 75.00 2037907 08/14/13 15035 ROC LUGG Ref002429754 08/12/13 UB Refund Cst #0000188318 47.85 47.85 2037908 08/14/13 15032 ROSANA MORA Ref002429751 08/12/13 UB Refund Cst #0000182733 94.60 94.60 2037967 08/21/13 09148 S & J SUPPLY COMPANY INC S100027183001 07/31/13 INVENTORY 2,948.40 S100027066001 07/25/13 INVENTORY 855.36 2037857 08/07/13 14286 SAFEGUARD PROPERTIES 004410 07/15/13 CUSTOMER REFUND 128.02 128.02 2037858 08/07/13 11596 SAN DIEGO CONSTRUCTION WELDING 8962 07/10/13 WELDING SERVICES 4,130.00 4,130.00 2037859 08/07/13 02586 SAN DIEGO COUNTY ASSESSOR 2013024 07/09/13 ASSESSOR DATA 125.00 125.00 2037860 08/07/13 00003 SAN DIEGO COUNTY WATER AUTH 0000000811 07/15/13 SOCAL WATERSMART (MAY-JUNE 2013)3,747.23 0000000800 07/15/13 HOME WATER USE EVALUATION 750.00 2037861 08/07/13 00003 SAN DIEGO COUNTY WATER AUTH 0000000791 07/10/13 SOCAL WATERSMART (MAY 2013)3,199.96 3,199.96 2037968 08/21/13 00247 SAN DIEGO DAILY TRANSCRIPT 383974 07/25/13 NOTICE OF INTENT 663.60 663.60 2037969 08/21/13 00121 SAN DIEGO GAS & ELECTRIC 080613 08/06/13 UTILITY EXPENSES (MONTHLY)89,656.29 89,656.29 2037862 08/07/13 00121 SAN DIEGO GAS & ELECTRIC 072913 07/29/13 UTILITY EXPENSES (MONTHLY)68,892.56 072613 07/26/13 UTILITY EXPENSES (MONTHLY)51,677.68 072213 07/22/13 UTILITY EXPENSES (MONTHLY)41,378.51 073013 07/30/13 UTILITY EXPENSES (MONTHLY)25,232.56 072513 07/25/13 UTILITY EXPENSES (MONTHLY)1,042.98 2037792 07/31/13 15019 SAN DIEGO REAL ESTATE OWNED Ref002429562 07/30/13 UB Refund Cst #0000197178 122.38 122.38 2037863 08/07/13 14708 SC FUELS 4948699 07/10/13 UNLEADED FUEL 18,610.22 494869A 07/10/13 DIESEL FUEL 9,396.94 Page 9 of 12 Check# Vendor Check Total CHECK REGISTER Otay Water District Date Range: 7/25/2013 - 8/21/2013 Date Vendor Name Invoice Inv. Date Description Amount 1,273.00 239.94 418.09 2037970 08/21/13 12333 SCHINDLER ELEVATOR CORPORATION 8103494773 07/01/13 ELEVATOR MAINTENANCE (JULY 2013)416.00 416.00 2037971 08/21/13 04544 SIGN CRAFTERS 130493 07/23/13 SAFETY SIGNS 184.14 184.14 2037972 08/21/13 13327 SILVA-SILVA INTERNATIONAL 1308 08/10/13 PROJECT CONSULTANT (JULY 2013)4,000.00 4,000.00 2037973 08/21/13 12281 SIR SPEEDY PRINTING 4958 07/31/13 BUSINESS CARDS 38.72 38.72 2037864 08/07/13 03592 SOFTCHOICE CORPORATION 3425919 07/19/13 MICROSOFT ENTERPRISE AGREEMENT 83,546.14 83,546.14 2037974 08/21/13 11618 SOUTH COAST COPY SYSTEMS AR132899 07/29/13 COPIER MAINTENANCE (AUG 2013)1,682.59 1,682.59 2037975 08/21/13 03103 SOUTHCOAST HEATING &291623 07/24/13 A/C COMPRESSOR REPLACEMENT (7/22/13)2,490.57 2,490.57 2037865 08/07/13 03103 SOUTHCOAST HEATING &C51570 07/19/13 AC MAINTENANCE (JULY 2013)1,068.00 C51571 07/19/13 AC MAINTENANCE (JULY 2013)205.00 2037909 08/14/13 03760 SPANKY'S PORTABLE SERVICES INC 957072 07/19/13 PORTABLE TOILET RENTAL (7/18/13-8/14/13)98.17 98.17 2037976 08/21/13 03760 SPANKY'S PORTABLE SERVICES INC 957352 07/26/13 PORTABLE TOILET RENTAL (7/26/13-8/22/13)79.98 957353 07/26/13 PORTABLE TOILET RENTAL (7/26/13-8/22/13)79.98 957974 07/31/13 PORTABLE TOILET RENTAL (7/27/13-8/23/13)79.98 2037793 07/31/13 03760 SPANKY'S PORTABLE SERVICES INC 953597 06/21/13 PORTABLE TOILET RENTAL (6/20/13-7/17/13)98.17 954497 06/28/13 PORTABLE TOILET RENTAL (6/28/13-7/25/13)79.98 954498 06/28/13 PORTABLE TOILET RENTAL (6/29/13-7/26/13)79.98 954499 06/28/13 PORTABLE TOILET RENTAL (6/28/13-7/25/13)79.98 954960 07/01/13 PORTABLE TOILET RENTAL (6/29/13-7/26/13)79.98 2037866 08/07/13 03760 SPANKY'S PORTABLE SERVICES INC 956017 07/10/13 PORTABLE TOILET RENTAL (7/10/13-8/6/13)79.98 79.98 2037794 07/31/13 03516 SPECIAL DISTRICT RISK PD12130054790003 07/19/13 PROPERTY LIABILITY DEDUCTIBLE 500.00 500.00 2037795 07/31/13 10670 STANDARD & POOR'S FINANCIAL 10325393 07/10/13 ANALYTICAL SERVICES (7/1/13-6/30/14)3,500.00 3,500.00 2037977 08/21/13 02354 STANDARD ELECTRONICS 18706 07/03/13 MONTHLY MONITORING (JULY 2013)1,352.50 1,352.50 2037910 08/14/13 06281 STATE DISBURSEMENT UNIT Ben2429798 08/15/13 BI-WEEKLY PAYROLL DEDUCTION 919.03 919.03 2037796 07/31/13 06281 STATE DISBURSEMENT UNIT Ben2429595 08/01/13 BI-WEEKLY PAYROLL DEDUCTION 919.03 919.03 2037797 07/31/13 06299 STATE DISBURSEMENT UNIT Ben2429587 08/01/13 BI-WEEKLY PAYROLL DEDUCTION 237.69 237.69 2037911 08/14/13 06299 STATE DISBURSEMENT UNIT Ben2429790 08/15/13 BI-WEEKLY PAYROLL DEDUCTION 237.69 237.69 2037912 08/14/13 06303 STATE DISBURSEMENT UNIT Ben2429796 08/15/13 BI-WEEKLY PAYROLL DEDUCTION 831.23 831.23 2037798 07/31/13 06303 STATE DISBURSEMENT UNIT Ben2429593 08/01/13 BI-WEEKLY PAYROLL DEDUCTION 831.23 831.23Page 10 of 12 Check# Vendor Check Total CHECK REGISTER Otay Water District Date Range: 7/25/2013 - 8/21/2013 Date Vendor Name Invoice Inv. Date Description Amount 200.00 61.59 7,297.44 516.24 319.68 2037798 07/31/13 06303 STATE DISBURSEMENT UNIT Ben2429593 08/01/13 BI-WEEKLY PAYROLL DEDUCTION 831.23 831.23 2037913 08/14/13 08533 STATE DISBURSEMENT UNIT Ben2429802 08/15/13 BI-WEEKLY PAYROLL DEDUCTION 258.00 258.00 2037799 07/31/13 08533 STATE DISBURSEMENT UNIT Ben2429599 08/01/13 BI-WEEKLY PAYROLL DEDUCTION 258.00 258.00 2037978 08/21/13 00274 STATE OF CALIFORNIA 469740813 08/20/13 LICENSE RENEWAL 172.50 172.50 2037800 07/31/13 15005 STEPHEN ANSUINI Ref002429547 07/30/13 UB Refund Cst #0000061869 23.82 23.82 2037914 08/14/13 14999 STONE POINT - SWEETWATER HOA 23115 06/28/13 LANDSCAPE PROGRAM 11,685.00 11,685.00 2037801 07/31/13 12809 STUTZ ARTIANO SHINOFF 92572 07/23/13 LEGAL SERVICES (JUNE 2013)28,481.17 28,481.17 2037802 07/31/13 03608 TELLIARD CONSTRUCTION 111Otay2013 06/30/13 1200 PS STEEL COVER 17,000.00 17,000.00 2037803 07/31/13 13564 THE STAR-NEWS PUBLISHING CO 300021480 06/14/13 ONLINE BILL PAY ADVERTISING 100.00 300021656 06/21/13 ONLINE BILL PAY ADVERTISING 100.00 2037804 07/31/13 15001 THEODORE FELBER Ref002429543 07/30/13 UB Refund Cst #0000009340 129.35 129.35 2037915 08/14/13 14177 THOMPSON, MITCHELL 18070713 08/08/13 MILEAGE REIMBURSEMENT (JULY 2013)41.81 18070613 08/08/13 MILEAGE REIMBURSEMENT (JUNE 2013)19.78 2037805 07/31/13 15021 THREE FROGS INC Ref002429564 07/30/13 UB Refund Cst #0000198314 171.63 171.63 2037806 07/31/13 15011 TIM KIM Ref002429553 07/30/13 UB Refund Cst #0000169107 45.45 45.45 2037807 07/31/13 07936 TRACER ENVIRONMENTAL SCIENCES 0213908 06/30/13 RISK MGMT CONSULTING SVCS (JUNE 2013)3,540.00 3,540.00 2037808 07/31/13 15017 TYREE NEWTON Ref002429560 07/30/13 UB Refund Cst #0000188407 89.04 89.04 2037979 08/21/13 00427 UNDERGROUND SERVICE ALERT OF 720130474 08/01/13 UNDERGROUND ALERTS (JULY 2013)405.00 405.00 2037809 07/31/13 13047 UNION BANK NA 11182 07/17/13 ADM FEES 2010 BOND (7/1/13-6/30/14)2,988.44 11179 07/17/13 ADM FEES FOR 93 COPS (7/1/13-6/30/14)1,872.00 11180 07/17/13 ADM FEES COPS 2007 (7/1/13-6/30/14)1,837.00 11181 07/17/13 ADM FEES FOR ID 27 (7/1/13-6/30/14)600.00 2037980 08/21/13 14181 UNITED RENTALS (NORTH AMERICA)112741229001 07/22/13 CONCRETE 178.20 112781427001 07/23/13 CONCRETE 178.20 112848202001 07/25/13 CONCRETE 159.84 2037867 08/07/13 14181 UNITED RENTALS (NORTH AMERICA)112419735001 07/09/13 CONCRETE 159.84 112643795001 07/17/13 CONCRETE 159.84 2037916 08/14/13 00350 UNITED STATES POSTAL SERVICE 104339510813 08/13/13 PREPAID POSTAGE MACHINE 6,000.00 6,000.00 Page 11 of 12 Check# Vendor Check Total CHECK REGISTER Otay Water District Date Range: 7/25/2013 - 8/21/2013 Date Vendor Name Invoice Inv. Date Description Amount 1,452.59 2037868 08/07/13 07674 US BANK E000039 07/22/13 CAL CARD EXPENSES (MONTHLY)198.60 198.60 2037981 08/21/13 07674 US BANK 081913 07/22/13 CAL CARD EXPENSES (MONTHLY)870.58 004456 07/22/13 CAL CARD EXPENSES (MONTHLY)582.01 2037917 08/14/13 07674 US BANK A000046 08/12/13 CAL CARD EXPENSES (MONTHLY)9,664.16 9,664.16 2037918 08/14/13 01095 VANTAGEPOINT TRANSFER AGENTS Ben2429782 08/15/13 BI-WEEKLY DEFERRED COMP PLAN 12,492.89 12,492.89 2037810 07/31/13 01095 VANTAGEPOINT TRANSFER AGENTS Ben2429579 08/01/13 BI-WEEKLY DEFERRED COMP PLAN 12,508.42 12,508.42 2037811 07/31/13 06414 VANTAGEPOINT TRANSFER AGENTS Ben2429585 08/01/13 BI-WEEKLY 401A PLAN 2,003.28 2,003.28 2037919 08/14/13 06414 VANTAGEPOINT TRANSFER AGENTS Ben2429788 08/15/13 BI-WEEKLY 401A PLAN 1,903.28 1,903.28 2037869 08/07/13 03329 VERIZON WIRELESS 9708595238 07/21/13 VERIZON SERVICES (6/22/13-7/21/13)5,754.89 5,754.89 2037920 08/14/13 03781 WATTON, MARK 1791080713 08/07/13 TRAVEL EXPENSES (JULY 2013)339.06 339.06 2037921 08/14/13 15046 WHEELER PAVING INC Ref002429765 08/12/13 UB Refund Cst #0000203733 1,848.00 1,848.00 2037922 08/14/13 13483 WHITE NELSON DIEHL EVANS LLP 136468 07/31/13 AUDIT SERVICES FOR FY2013 (THRU 7/31/13)1,750.00 1,750.00 2037812 07/31/13 13483 WHITE NELSON DIEHL EVANS LLP 136295 07/11/13 AUDIT SERVICES FOR FY2013 5,000.00 5,000.00 2037923 08/14/13 15036 YOLANDA SOLORZANO Ref002429755 08/12/13 UB Refund Cst #0000193014 27.57 27.57 2037813 07/31/13 03151 ZHAO, MING 072613 07/26/13 TRAVEL EXPENSES (7/16/13-7/17/13)314.35 314.35 Amount Pd Total:1,607,287.21 Check Grand Total:1,607,287.21223 Page 12 of 12