HomeMy WebLinkAbout06-18-14 FA&C Committee Packet 1
OTAY WATER DISTRICT
FINANCE, ADMINISTRATION AND COMMUNICATIONS
COMMITTEE MEETING
and SPECIAL MEETING OF THE BOARD OF DIRECTORS
2554 SWEETWATER SPRINGS BOULEVARD
SPRING VALLEY, CALIFORNIA
BOARDROOM
WEDNESDAY
June 18, 2014
11:30 A.M.
This is a District Committee meeting. This meeting is being posted as a special meeting in order to comply with the Brown Act (Government Code Section §54954.2) in the event that a quorum of the Board is present. Items will be deliberated, however, no formal board actions will be taken at this meeting. The committee makes recommendations to the full board for its consideration and formal action. AGENDA
1. ROLL CALL
2. 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 DISCUSSION ITEMS
3. ADOPT RESOLUTION NO. 4236 TO ESTABLISH THE TAX RATE FOR
IMPROVEMENT DISTRICT NO. 27 AT $0.005 FOR FISCAL YEAR 2014-2015 (ZIOMEK) [5 minutes]
4. ADOPT RESOLUTION NO. 4237 TO CONTINUE WATER AND SEWER
AVAILABILITY CHARGES FOR DISTRICT CUSTOMERS FOR FISCAL YEAR
2014-2015 TO BE COLLECTED THROUGH PROPERTY TAX BILLS (MENDEZ-SCHOMER) [5 minutes]
5. ADOPT RESOLUTION NO. 4238 AMENDING SECTION (C) (6) (e) OF THE
DISTRICT’S BOARD OF DIRECTOR’S POLICY 8 TO PROVIDE MORE
EFFICIENT AND STREAMLINED REPORTING AND MORE CLOSELY ALIGN ITS LANGUAGE WITH THE REQUIREMENTS OUTLINED IN GOVERNMENT CODE SECTION 53065.5 (BENHAM) [5 minutes]
6. ADOPT ORDINANCE NO. 544 AMENDING SECTION 23.04, CROSS-
CONNECTIONS AND BACKFLOW DEVICES, OF THE DISTRICT’S CODE OF ORDINANCES (MENDEZ-SCHOMER) [5 minutes]
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7. APPROVE A TEMPORARY MORATORIUM ON THE INSTALLATION OF A
NEW RECYCLED WATER FACILITIES ON OTAY MESA (KENNEDY) [5
minutes]
8. ADJOURNMENT
BOARD MEMBERS ATTENDING:
Mitch Thompson, Chair
Jose Lopez
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 Secre-
tary 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 670-2280 at least 24
hours prior to the meeting.
Certification of Posting
I certify that on June 13, 2014 I posted a copy of the foregoing agenda near the
regular meeting place of the Board of Directors of Otay Water District, said time being at
least 24 hours in advance of the meeting of the Board of Directors (Government Code
Section §54954.2).
Executed at Spring Valley, California on June 13, 2014.
______/s/_ Susan Cruz, District Secretary _____
STAFF REPORT
TYPE MEETING: Regular Board MEETING DATE: July 2, 2014
SUBMITTED BY:
Jeanette Ziomek, Senior Accountant
Rita Bell, 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. 4236 to Establish the Tax Rate for Improvement District No. 27 (ID 27) for Fiscal Year 2014-2015
GENERAL MANAGER’S RECOMMENDATION:
That the Board adopt Resolution No. 4236 to establish the tax rate for Improvement District No. 27 (ID 27) at $0.005 for Fiscal Year
2014-2015.
COMMITTEE ACTION: See Attachment A.
PURPOSE:
Improvement District No. 27 has outstanding general obligation bonds which mature in Fiscal Year 2023 and is the only improvement district
with general obligation debt service.
At the beginning of each fiscal year staff must provide the County of San Diego Property Tax Services with the tax rate to be charged upon all property within ID 27 to ensure the amount of tax collections will support the annual debt service requirement.
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BACKGROUND:
In December 1992, the District sold $11,500,000 of general obligation bonds in ID 27 for the construction of the 30mg reservoir. At the time of the formation of ID 27, the District intended to have a maximum tax rate of $0.10 per $100 of assessed valuation. The tax rate has remained well below the intended maximum rate.
The District refinanced the bonds in fiscal year 1998 and again in fiscal year 2010 which resulted in a reduction in the annual debt schedule. Property valuations continued to increase and reached its peak in fiscal year 2008 at $12.5 billion and have been approximately
$10 billion from 2010 to present. The combination of the reduced debt service requirement and the increased assessed values resulted
in the District’s reserve levels to exceed the target. Since 2009, the tax rate has been $.005. The subsequent drop in
assessed valuations has caused the tax collection to decline below the annual debt service. The District has intentionally covered this
shortfall with ID 27 reserves to bring down the prior build up in that reserve.
For Fiscal Year 2015, staff proposes to maintain the tax rate at $.005 and to continue to cover the tax collection shortfall from the
ID 27 reserves. Staff projects that a $.005 tax rate will maintain reserve levels above the target until it is time to wind down the reserve for the expiration of the debt.
FISCAL IMPACT: Joseph R. Beachem, Chief Financial Officer
The tax proceeds are legally restricted for the sole purpose of the
repayment of this debt. These proceeds will be collected until the debt obligation is fully paid, at which time the fund will have a zero balance. The $0.005 tax rate is projected to generate $626,558 in revenue in fiscal year 2015. The projected revenue, given the recommended tax rate combined with the current fund balance, will
meet the annual ID 27 debt service payment of $754,163. This action lowers the fund balance, bringing it closer to the target level of six months of bond payments while maintaining a positive cash balance for the foreseeable future.
STRATEGIC GOAL:
Through well-established financial policies and wise management of funds, the District will continue to guarantee fiscal responsibility to its ratepayers and the community at large.
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LEGAL IMPACT:
None.
Attachments:
A) Committee Action B) Resolution No. 4236
C) ID 27 Tables
ATTACHMENT A
SUBJECT/PROJECT:
Adopt Resolution No. 4236 to Establish the Tax Rate for Improvement District No. 27 (ID 27) for Fiscal Year 2014-2015
COMMITTEE ACTION:
That the Finance, Administration and Communications Committee recommend that the Board adopt Resolution No. 4236 to establish
the tax rate for Improvement District No. 27 (ID 27) at $0.005 for Fiscal Year 2014-2015.
NOTE:
The “Committee Action” is written in anticipation of the Committee moving the item forward for board approval. This report will be sent
to the Board as a committee approved item, or modified to reflect any discussion or changes as directed from the committee prior to presentation to the full board.
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RESOLUTION NO. 4236
A RESOLUTION OF THE BOARD OF DIRECTORS OF
OTAY WATER DISTRICT FIXING TAX RATES FOR
FISCAL YEAR 2014-2015 FOR PAYMENT OF
PRINCIPAL AND INTEREST ON GENERAL OBLIGATION
BONDS OF IMPROVEMENT DISTRICTS (GF 1600)
WHEREAS, California Water Code Section 72091 authorizes the
Otay Water District, as a municipal water district, to levy an ad
valorem property tax which is equal to the amount required to
make annual payments for principal and interest on general
obligation bonds approved by the voters prior to July 1, 1978.
NOW, THEREFORE, the Board of Directors of the Otay Water
District resolves, determines and orders as follows:
1. Findings. It is necessary that this Board of Directors
cause taxes to be levied in Fiscal Year 2014-2015 for Improvement
District No. 27 of the Otay Water District to pay the amount of
the principal and interest on the bonded debt of such improvement
district.
2. Amounts to be Raised by Taxes. The amount required to
be raised by taxation during Fiscal Year 2014-2015 for the
principal and interest on the bonded debt of Improvement District
No. 27 is as follows:
Improvement District No. 27 $626,558
3. Tax Rates. The tax rates per one hundred dollars ($100)
of the full value of all taxable property within said improvement
district necessary to pay the aforesaid amounts of principal and
interest on the bonded debt of said improvement district for
Fiscal Year 2014-2015 is hereby determined and fixed as follows:
Improvement District No. 27 $0.005
Attachment B
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4. Certification of Tax Rates. Pursuant to Water Code
Section 72094, this Board of Directors hereby certifies to the
Board of Supervisors and the County Auditor of the County of San
Diego the tax rates hereinbefore fixed, and said County Auditor
shall, pursuant to Section 72095 of said Code, compute and enter
in the County assessment roll the respective sums to be paid as
tax on the property in Improvement District No. 27, using the
rate of levy hereinabove fixed for such improvement district and
the full value as found on the assessment roll for the property
therein, and the Secretary of this Board of Directors is hereby
authorized and directed to transmit certified copies of this
resolution, Attachment B, and made a part hereof, to said Board
of Supervisors and said Auditor.
PASSED AND ADOPTED by the Board of Directors of the Otay
Water District at a regular meeting held this 2nd day of July,
2014.
Ayes:
Noes:
Abstain:
Absent:
____________________________
President
ATTEST:
________________________________
Secretary
Attachment C
History
1989 Improvement District 27 was formed with $100,000,000 bonding authorized.
1992 District issued $11,500,000 in General Obligation Bonds primarily for the constructionof a 30 million gallon storage reservoir.
1998 District refinanced outstanding debt of $10,900,000.
2009 District refinanced again outstanding debt of $7,780,000.
TAXES DEBT TAX ASSESSED
COLLECTED SERVICE NET RATE VALUATION INC%
FY03 $725,085 $848,600 ($123,515) $0.01500 $3,837,693,353 37%
FY04 $829,036 $848,700 ($19,664) $0.01400 $5,047,625,296 32%
FY05 $994,501 $840,800 $153,701 $0.01200 $6,454,909,846 28%
FY06 $1,081,991 $840,385 $241,606 $0.01000 $8,579,576,581 33%
FY 07 $862,795 $837,936 $24,859 $0.00700 $10,348,663,242 21%
FY 08 $917,168 $835,017 $82,151 $0.00600 $12,518,643,676 21%
FY 09 $747,175 $830,823 ($83,648) $0.00500 $12,308,043,285 -2%
FY 10 $605,405 $934,674 ($329,269) $0.00500 $10,378,404,507 -16%
FY 11 $606,966 $781,144 ($174,178) $0.00500 $10,131,397,697 -2.4%
FY 12 $597,799 $752,976 ($155,177) $0.00500 $9,941,622,812 -1.9%
FY 13 $650,587 $773,863 ($123,276) $0.00500 $9,869,377,173 -0.7%
FY 14(1)$641,372 $755,438 ($114,066) $0.00500 $10,226,148,004 3.6%
(1) Due to timing of the report, taxes collected is an estimate.
TAXES DEBT TAX ASSESSEDCOLLECTED SERVICE NET RATE VALUATION INC%
Est Fund Balance 6/30/14 $818,955
FY15 $626,558 $754,163 ($127,605) $0.00500 $10,532,932,444 3.0%
Interest $1,905
Est Fund Balance 6/30/15 $693,255
IMPROVEMENT DISTRICT 27
Historical Data
Change in Fund Balance
$0
$2
$4
$6
$8
$10
$12
Bi
l
l
i
o
n
s
ASSESSED VALUATION
10 Year History
STAFF REPORT
TYPE MEETING: Regular Board
MEETING DATE: July 2, 2014
SUBMITTED BY:
Alicia Mendez-Schomer,
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: Adopt Resolution No. 4237 to Continue Water and Sewer Availability Charges for District Customers for Fiscal Year
2014-2015 to be Collected through Property Tax Bills
GENERAL MANAGER’S RECOMMENDATION:
That the Board adopt Resolution No. 4237 to continue water and sewer
availability charges for District customers for Fiscal Year 2014-2015 to be collected through property tax bills.
COMMITTEE ACTION:
See Attachment A.
PURPOSE:
That the Board consider the adoption of Resolution No. 4237 to
continue water and sewer availability charges for District customers for Fiscal Year 2014-2015 to be collected through property tax bills.
ANALYSIS:
State Water Code Section 71630-71637 authorizes the District to access such availability charges. The District levies availability charges each year on property in both developed and undeveloped
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areas. In order to place these charges on the tax roll, the County of San Diego requires the District to provide a resolution
authorizing the charges. Each year, the District provides a resolution along with the listing of charges by parcel. Current legislation provides that any amount up to $10 per parcel (one acre or less) is for general use and any amount over $10 per parcel ($30 per acre for parcels over one acre) is restricted, to be expended in
and for that Improvement District. The District uses amounts over $10 per parcel to develop water and sewer systems within the Improvement Districts where the funds are collected. In accordance with legislation, the District places amounts up to $10 per parcel in the General Fund.
FISCAL IMPACT: Joe Beachem, Chief Financial Officer
The availability charges, as budgeted will generate approximately
$1.2 million in revenue.
STRATEGIC GOAL:
This revenue source will help the District meet its fiscal
responsibility to its ratepayers.
LEGAL IMPACT:
None.
Attachments: Attachment A – Committee Action Form Attachment B – Resolution No. 4237
ATTACHMENT A
SUBJECT/PROJECT:
Adopt Resolution No. 4237 to Continue Water and Sewer Availability Charges for District Customers for Fiscal Year 2014-2015 to be Collected through Property Tax Bills
COMMITTEE ACTION: That the Finance, Administration and Communications Committee
recommend that the Board adopt Resolution No. 4237 to continue water and sewer availability charges for District customers for Fiscal Year
2014-2015 to be collected through property tax bills.
NOTE: The “Committee Action” is written in anticipation of the Committee
moving the item forward for board approval. This report will be sent to the Board as a committee approved item, or modified to reflect any
discussion or changes as directed from the committee prior to presentation to the full board.
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RESOLUTION NO. 4237 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE OTAY WATER DISTRICT CONTINUING PREVIOUSLY ESTABLISHED WATER AND SEWER AVAILABILITY CHARGES FOR FISCAL YEAR 2014-2015; REQUESTING THE COUNTY TO COLLECT SUCH AVAILABILITY CHARGES ON THE 2014-2015 SECURED TAX ROLL AND TAKING OTHER RELATED ACTIONS
WHEREAS, the Otay Water District (herein "District") is a
member of the San Diego County Water Authority and the Metropolitan
Water District of Southern California and, as a member, the
District is entitled to purchase water for distribution within the
District and water so purchased is available to property in the
District that is also within the San Diego County Water Authority
and the Metropolitan Water District of Southern California, without
further need for annexation to any agency; and
WHEREAS, Improvement Districts No. 14 and 18 and Assessment
District No. 4 (Hillsdale) have been formed within the Otay Water
District (herein "District") and sanitary sewers have been
constructed and sewer service is available to land within each of
the said districts; and
WHEREAS, in consideration of the benefit that water
availability confers upon property within the District, and in
further consideration of the need for revenue to pay the cost of
water storage and transmission facilities which directly and
specially benefit property within the District, the District has
previously determined that water availability charges be fixed and
established under applicable provisions of law; and
WHEREAS, in consideration of the benefit which sewer
availability confers upon property within Improvement Districts No.
Attachment B
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14 and 18 and within Assessment District No. 4 (Hillsdale), and in
further consideration of the need to pay the cost of sanitary
sewers which directly and specifically benefit those properties,
the District has previously determined that sewer availability
charges be fixed and established for Improvement Districts No. 14
and 18 and Assessment District No. 4 (Hillsdale), all as provided
under applicable provisions of law; and
WHEREAS, the District desires to continue the collection of
such water and sewer availability charges without increases or
revisions in methodology or application.
NOW, THEREFORE, the Board of Directors of the Otay Water
District resolves, determines and orders as follows:
1. SCHEDULE OF WATER CHARGES
(A) The water availability charges previously fixed and
established are hereby continued for Fiscal Year 2014-2015 at the
existing rates, as follows:
(1) In Improvement Districts No. 5 and La Presa No. 1 the
charge shall be $10.00 per acre of land and $10.00
per parcel of land less than one acre.
(2) In Improvement Districts No. 2, 3, 7, 9, 10, 19, 20,
22, 25 and 27 the charge shall be $30.00 per acre of
land and $10.00 per parcel of land less than one
acre.
(3) For land located outside an improvement district and
within one mile of a District water line, the charge
shall be $10.00 per acre of land and $10.00 for each
parcel less than one acre.
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(4) For land located outside an improvement district and
greater than one mile from District facilities, the
charge shall be $3.00 per acre of land and $3.00 for
each parcel less than one acre.
(B) Modifications The charges provided for in subparagraphs
(1) through (4) in (A) above shall be modified upon petition by the
property owner where the property does not receive water from the
District as follows:
(1) where a parcel of land or a portion thereof is within
an open space easement approved by San Diego County,
the charge for such parcel or portion thereof shall
be fifty percent (50%) of the charge determined
pursuant to paragraph (A), provided the owner files
with the District proof, satisfactory to the
District, that said parcel of land or portion thereof
is within such a designated permanent open space
area;
(2) where a parcel of land or portion thereof is in an
agricultural reserve under a Land Conservation
Contract with the County of San Diego, pursuant to
the Land Conservation Act of 1965 as amended, the
charge for such parcel shall be $3.00 per acre,
provided the owner files with the District proof,
satisfactory to the District, that said parcel of
land or portion thereof is within such an
agricultural preserve;
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(3) where a parcel of land or a portion thereof is within
an area designated as a floodplain by the County of
San Diego, the charge for such a parcel or portion
thereof shall be $3.00 per acre, provided the owner
files with the District proof, satisfactory to the
District, that said parcel of land or portion thereof
is within such designated floodplain; and
(4) where a parcel of land or portion thereof exceeds a
30% slope, and where such is not within a legal
subdivision, lot-split or planned residential
development, the charge for the slope portion shall
be $3.00 per acre, or if such a parcel is less than
one acre and more than one-half of the area exceeds
30% slope, $3.00 for the parcel, provided the owner
files with the District proof, satisfactory to the
District, that said parcel of land or portion thereof
meets or exceeds the slope.
(C) Exceptions The charges provided for in (A) and (B) above
shall not apply, upon petition by the property owner, to the
following:
(1) land located within an area designated as a floodway
by the County of San Diego;
(2) land designated as a vernal pool area by a govern-
mental agency authorized to make such a designation
and which designation prohibits use of such area for
any purpose;
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(3) land owned by non-profit, tax-exempt conservation
organizations specializing in identifying and
protecting the natural habitat of rare species; or
(4) land that is located within the boundaries of the
Otay Water District but not within the boundaries of
the Metropolitan Water District of Southern
California and the San Diego County Water Authority.
2. SCHEDULE OF SEWER CHARGES
(A) Sewer standby assessment or availability charges are
hereby fixed and established for Fiscal Year 2014-2015 as follows:
(1) In Improvement Districts No. 14, 18 and Assessment
District No. 4 (Hillsdale), the charges shall be
$30.00 per acre of land and $10.00 per parcel of land
less than one acre. The preceding charges shall not
apply, upon petition by the property owner, to the
following:
(a) any portion of a parcel which is undeveloped
and maintained in its natural state within an
Open Space Area as a requirement under the San
Diego County General Plan, provided the owner
of such parcel files proof, satisfactory to the
District, of such designed Open Space Area;
(b) any portion of a parcel located within an area
designated by the County of San Diego as a
floodway or floodplain; or
(c) any portion of a parcel of land which exceeds a
slope of 30% and which is not within a legal
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subdivision, lot split or planned lot split or
planned residential development.
3. DEFERRALS
(A) Deferral of Charge, Purpose Situations may arise when an
owner of a parcel of land does not use and has no present intention
of using water and/or sewer provided by the District on a parcel of
land, as defined in Section 4. The purpose of this section is to
permit an evaluation by the District, on a case-by-case basis, of
the circumstances which pertain to such situations to determine
whether a deferral of charges should be approved according to the
terms and conditions herein provided.
Any owner of a parcel of land who believes that the amount of
the water and/or sewer availability charges fixed against such
parcel should be deferred may file an application with the District
for deferral of the charge, as follows:
(a) Application The application shall include a
statement describing the circumstances and factual
elements which support the request for deferral.
(b) The General Manager shall consider the request
within sixty (60) days after the filing of a
completed application. If the application for
deferral meets the established criteria, the General
Manager may decide whether to approve the request
and order the charge deferred accordingly. If the
request is denied, the applicant shall be notified
in writing stating the reasons for the denial.
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(B) Appeal to Board of Directors If the General Manager
denies a request, the owner may file an appeal with the Board of
Directors within sixty (60) days after such denial. No new
application for deferral need be considered by the General Manager
until expiration of twelve (12) months from the date of a denial,
unless differently directed by the Board of Directors.
(C) Deferred Charges on Restricted Parcels, Criteria The
levy of the charge may be deferred annually as to any parcel of
land which meets each of the following criteria:
(a) The owner of such parcel makes a timely application
requesting deferral of the charge.
(b) The parcel, which is the subject of the request,
will become subject to enforceable restrictions
which prohibits the connection to the District sewer
system or use of water on the parcel, except by
means of natural precipitation or runoff; provided,
however, if considered appropriate by the General
Manager, local water may be used for limited
domestic stock watering and irrigation uses.
(c) The owner executed a recordable agreement which
includes provisions that:
(1) set forth the enforceable restrictions
pertinent to the subject parcel;
(2) the agreement may be terminated upon written
request by the owner and payment of all
deferred water and/or sewer availability
charges, plus interest thereon, compounded
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annually, and accruing at the legal rate from
the date such charges would have been otherwise
due and payable;
(3) no water and/or sewer service from the District
shall be provided to such parcel for a period
of ten (10) years after the total amount due
for the charges deferred, plus annually
compounded interest, is paid in full to the
District, unless a surcharge penalty as
described below is paid to the District prior
to connection of any water and/or sewer
service;
(4) if the surcharge is not paid, during the ten
(10) year period, while water and/or sewer
service is not available to the subject land,
the owner shall pay all annual water or
availability charges as fixed; and
(5) contains such other provisions considered by
the General Manager to be appropriate.
(D) Surcharge Upon termination of the deferral
agreement, an owner may elect to receive water and/or sewer
service prior to the expiration of the ten (10) year penalty
period upon payment of a surcharge. The surcharge shall be
equal to the amount of the annual water and/or sewer
availability charges fixed for the parcel(s) of land in the
year of election to receive water and/or sewer service
multiplied by the number of years remaining of the ten (10)
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year penalty period. This surcharge shall also apply if a
property owner develops a parcel that is subject to a deferral
agreement without termination of said agreement.
(E) Enforcement Procedures In order to insure that
terms and conditions of the recordable agreement are being
met, the General Manager shall:
(1) Maintain a record of all parcels approved for
deferral of the water assessments or availability
charges.
(2) Report to the Board of Directors any instances where
the terms of the agreement are being violated.
(3) Take such other actions or procedures considered
appropriate.
4. DEFINITION OF PARCEL The term "parcel" as used herein shall
mean a parcel of land as shown on the assessment rolls of the
County Assessor of San Diego County as of March, 2014.
5. NOTICE AND REQUEST TO THE BOARD OF SUPERVISORS AND AUDITOR As
provided in Sections 71634 to 71637, on or before the third Monday
in August, 2013, the Secretary of this District shall furnish, in
writing to the Board of Supervisors of San Diego County and to the
County Auditor, a description of the land within the District upon
which availability charges are to be levied and collected for
Fiscal Year 2014-2015 together with the amount of the assessments
or charges. At the time and in the manner required by law for the
levying of taxes for county purposes, the Board of Supervisors of
San Diego County shall levy, in addition to taxes it levies, water
and/or sewer availability charges in the amounts fixed by this
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Resolution for the respective parcels of land described in Section
1 of this Resolution. All County officers charged with the duty of
collecting taxes shall collect the charges with the regular
property tax payments in the same form and manner as County taxes
are collected. Such availability charges are a lien on the property
with respect to which they are fixed. Collection of the charges
may be enforced by the same means as provided for the enforcement
of liens for state and county taxes.
6. CERTIFICATION TO COUNTY BOARD OF SUPERVISORS The District
certifies that this Resolution complies with the provisions of
Article XIIID of the California Constitution in that the
availability charges are existing charges first set by the Board of
Directors of the District prior to November 6, 1996. At the time
the availability charges were initially established, the District
followed the applicable provisions of law then in effect, and the
District has continued to comply with such provisions, including
any requirements for notices or hearings, as from time to time in
effect. Therefore, pursuant to Section 71632 and Section 71638 of
the California Water Code, as currently in effect, the District may
continue the availability charges in successive years at the same
rate. The District further certifies that the charge is not
increased hereby and the methodology for the rate is the same as in
previous years. The charge is imposed exclusively to finance the
capital costs, maintenance and operating expenses of the water or
sewer system of the District, as applicable.
7. CERTIFIED COPIES The Secretary of this District shall deliver
certified copies of this Resolution to the Board of Supervisors and
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to the Auditor of San Diego County with the list of charges
described in Section 4 above.
8. CORRECTIONS; OTHER ACTIONS The General Manager of the
District is hereby authorized to correct any clerical error made in
any assessment or charge pursuant to this Resolution and to make an
appropriate adjustment in any assessment or charge made in error.
Furthermore, the General Manager and the Secretary of this District
are hereby directed to take any further actions and deliver such
documents and certificates as necessary to carry out the purpose of
this Resolution.
PASSED, APPROVED AND ADOPTED by the Board of Directors of the
Otay Water District at a regular meeting duly held this 2nd day of
July, 2014.
___________________________ President ATTEST: ______________________________ Secretary
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I HEREBY CERTIFY that the foregoing Resolution No. 4237 was duly adopted by the BOARD OF DIRECTORS of the OTAY WATER DISTRICT at a regular meeting thereof held on the 2nd day of July, 2014 by the following vote:
Ayes:
Noes:
Abstain:
Absent:
District Secretary
STAFF REPORT
TYPE MEETING: Regular Board
MEETING DATE: July 2, 2014
SUBMITTED BY:
Wales Benham
Senior Accountant
PROJECT: Various DIV. NO. ALL
APPROVED BY:
Joe Beachem, Chief Financial Officer
German Alvarez, Asst. General Manager
Mark Watton, General Manager
SUBJECT: Update of Section (C)(6)(e) of Otay Water District Board of
Director’s Policy 8
GENERAL MANAGER’S RECOMMENDATION:
Adopt Resolution No.4238 amending Section (C)(6)(e) of Otay Water
District Board of Director’s Policy 8 to provide more efficient and
streamlined reporting and more closely align its language with the
requirements outlined in Government Code Section 53065.5.
COMMITTEE ACTION:
See Attachment A for copy of revised Section (C)(6)(e) of Otay Water
District Board of Director’s Policy 8.
PURPOSE:
The ensure that the District meets the specific disclosure
requirements in Government Code Section 53065.5 and to provide a more
efficient and streamlined format to inform the Board of the
Director’s expenses at quarterly interims.
ANALYSIS:
California Government Code Section 53065.5 requires special districts
to disclose any reimbursement to any member of its governing body of
at least $100 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 a date determined by that district, and
shall be made available for public inspection.
Currently the District meets that requirement by providing detailed
quarterly reports of the director’s expenses. This report includes
such expenses as stipends, mileage, seminar, airline or ground
travel, meals, and telephone use, along with the Director’s name and
date the expenses were incurred.
The new proposed quarterly summary report of Directors’ Expenses will
be included in the General Manager’s report and provide the past
quarter and year-to-date amounts paid for each Director. To meet the
requirements of California Government Code Section 53065.5, a
detailed report, similar to the current quarterly report, will be
provided annually.
Upon review of Policy 8, staff identified language that required
updating. In an effort to minimize the use of paper documents and to
improve communications, the District is now providing computerized
equipment for Director’s use for District business.
FISCAL IMPACT:
This more efficient and streamlined format for the quarterly reports
will provide an incremental savings to the District.
STRATEGIC GOAL:
Prudently manage District funds.
LEGAL IMPACT:
Compliance with California Government Code Section 53065.5.
Attachments: A) Committee Action
B) Resolution No. 4238
Exhibit 1 – Strike-through Policy 8
C) Proposed Quarterly Board of Directors’
Expense Report
D) Proposed Policy 8
1
RESOLUTION NO. 4238
A RESOLUTION OF THE BOARD OF DIRECTORS OF
OTAY WATER DISTRICT AMENDING POLICY 8,
DIRECTORS COMPENSATION, REIMBURSEMENT OF
EXPENSES AND GROUP INSURANCE BENEFITS, WITH
REGARD TO THE REPORTING OF BOARD EXPENSES
WHEREAS, in accordance with the California Government
Code, the Board of Directors of the Otay Water District
wish to amend Policy 8 with regard to reporting of Board
Member expenses; and
WHEREAS, the board wishes to provide more efficient
and streamlined reporting; and
WHEREAS, the board wishes that the language within
Policy 8 be more closely aligned to the language of that of
California Government Code Section 53065.5; and
WHEREAS, the board wishes that the policy be amended
as per attached copy (Exhibit 1).
NOW, THEREFORE, BE IT RESOLVED that this resolution shall
take effect upon adoption by the Board of Directors of the Otay
Water District.
PASSED, APPROVED AND ADOPTED by the Board of Directors of
Otay Water District at a regular meeting held this 2nd day of
July, 2014.
Attachment B
2
Ayes:
Noes:
Abstain:
Absent:
________________________
President
ATTEST:
____________________________
District Secretary
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject Policy
Number
Date
Adopted
Date
Revised
DIRECTORS COMPENSATION, REIMBURSEMENT OF
EXPENSES AND GROUP INSURANCE BENEFITS
08 2/20/91 7/1/097/
2/14
Page 1 of 7
Purpose
To provide guidelines for payment of compensation and reimbursement of
expenses to Directors in connection with their attendance at meetings
or the performance of other authorized business, and for group insurance
benefits for Directors.
Background
Members of the Board of Directors (“Directors”) attend regular, adjourned
or special meetings of the Board of Directors (“Board”). In addition,
Directors attend other District meetings, committee meetings,
association meetings, and educational seminars on behalf of the District.
These meetings and seminars are related to District business, water and
water related issues, and California special districts. State statutes
authorize District payments for meetings, reimbursements of expenses.
State law also authorizes the District to provide health and welfare
benefits for active Directors and, in limited circumstances, retired
Directors if they served 12 years and were first elected prior to January
1, 1995. The District is also authorized to offer health and welfare
benefits for retired Directors who commenced office on or after January
1, 1995, if the recipient participates on a self-pay basis.
Policy
The District will compensate Directors on a per diem basis for attendance
at authorized meetings or functions and will reimburse Directors for
reasonable expenses incurred while traveling on District business to
include, lodging, dining, transportation and related incidentals.
A. Directors Per Diem
As provided in Section 1.01 C. of the District Code of Ordinances,
each Director shall receive a per diem in the amount of $100 for
each day of attendance at meetings of the Board or for each day of
service rendered as a Director by request or authorization of the
Board, not to exceed a total of ten (10) days in any calendar
month. Attendance at any meeting shown on Exhibit A to this Policy
shall be deemed a meeting requested or authorized by the Board.
Attendance of meetings shall be in accordance with Exhibit A. The
President of the Board or the Board may authorize a Director to
attend meetings not listed in Exhibit A when the President or the
Board determine that it is in the interest of the District that a
Director attend, and that such attendance be compensated and
expenses reimbursed. Director’s claims for per diem amounts shall
be made on a “Board of Directors Per Diem and Mileage Claim Form”
(Exhibit B). The President of the Board or the Board may approve
reimbursement of expenses outside the per diem limit for a
Director, if the Director submits receipts for all of the related
District business expenses.
Exhibit 1
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject Policy
Number
Date
Adopted
Date
Revised
DIRECTORS COMPENSATION, REIMBURSEMENT OF
EXPENSES AND GROUP INSURANCE BENEFITS
08 2/20/91 7/1/097/
2/14
Page 2 of 7
Attendance at a meeting that is not authorized by this policy (pre-
approved meetings) or pre-approved by the President may be approved
by the Board for per diem. Director’s seeking per diem amounts
for these meetings shall request that the item be presented to the
Board at its next regularly scheduled meeting for consideration.
The decision of the Board shall be final.
When travel arrangements require a day earlier arrival or a day
later departure, Directors will not be eligible for the $100 per
diem, however, reasonable expenses associated with the extended
stay will be reimbursed as specified below.
B. Pre-payment of Otherwise Reimbursable Expenses
The Director may request pre-payment of registration,
transportation, and lodging, using the “Board of Directors Travel
Request Form” (Exhibit C). Pre-payments shall be limited to the
Director’s expenses only. No advances shall be made on travel
expenses.
C. Reimbursement of Expenses
Each Director shall be reimbursed for travel expenses to and from
the meetings described in Exhibit A or for any other authorized
District business as follows:
1. Authorization
Travel associated with the attendance of meetings or
functions for Directors shall be approved in advance by the
Otay Water District Board President. To request approval of
travel, the Director should complete a “Board of Directors
Travel Request Form” (Exhibit B) in order to be eligible for
compensation and/or reimbursement. Travel requests will be
reviewed and approved by the Board President or the Board.
2. Transportation
a. Air Transportation
The District will endeavor to purchase airline tickets
in advance taking advantage of discounts and low
airfares.
b. Automobile
1. Personal Auto: Directors may use their personal
vehicle. The District will reimburse Directors at
the current rate/mile as established by the IRS,
plus tolls, parking, etc., provided, however, if
air transportation is available, the total amount
of expense paid shall be limited to the cost of
coach air travel between points traveled by
personal vehicle. Gasoline, collision and
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject Policy
Number
Date
Adopted
Date
Revised
DIRECTORS COMPENSATION, REIMBURSEMENT OF
EXPENSES AND GROUP INSURANCE BENEFITS
08 2/20/91 7/1/097/
2/14
Page 3 of 7
liability insurance, and maintenance will be
provided by the Director and is deemed covered in
the rate/mileage reimbursement.
Directors using personal vehicles on District
business must maintain a valid California driver’s
license and the automobile insurance coverage
required by the State of California, or make
arrangements for a driver who meets the above
requirements. The General Manager’s Staff will
verify that Directors have a valid driver’s
license. Directors will also be required to
maintain automobile insurance coverage. Proof of
such insurance will be submitted two times per
year, in January and July, and is required to be
eligible for mileage reimbursement.
2. Rental Cars: The District will provide a rental
car when needed. Such rental car shall be a
compact or mid-size class, unless upgrades are
offered at no additional cost to the District.
c. Miscellaneous Transportation
Whenever practicable, bus, taxi, rail, shuttle, etc.
transportation may be used in lieu of, or in conjunction
with, modes above.
3. Meals and Lodging
a. Meals and Beverages
Whenever travel requires meals, the meals, excluding
gratuity, shall be reimbursable, provided the Director
presents a receipt along with the “Board of Directors
Expense Claim Form” (Exhibit D) for all meals.
Reimbursements for expense items where a receipt has
been lost will not be paid until the President or the
Board has reviewed and approved the expense item. Meals
are reimbursable based on the Meals and Incidental
Expenses (M&IE) as updated by the U.S. General Services
Administration:
1. Full Day Reimbursement
When a Director is traveling for a full day and no
meals are provided for by other sources, such as
pre-paid registration, the Director may be
reimbursed for meal expenses at the rate provided
by the M&IE per day. This amount is exclusive of
any gratuities.
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject Policy
Number
Date
Adopted
Date
Revised
DIRECTORS COMPENSATION, REIMBURSEMENT OF
EXPENSES AND GROUP INSURANCE BENEFITS
08 2/20/91 7/1/097/
2/14
Page 4 of 7
2. Single Meal Reimbursement
When a Director requires reimbursement for a
single meal while traveling, the maximum meal
reimbursement amount shall be at a rate provided
by the M&IEfor Breakfast, lunch, and/or dinner,
or amounts determined by the President or the Board
to be reasonable for the occasion or
circumstances. These amounts and any amount
approved by the President or Board shall exclude
gratuities.
3. Partial Day Reimbursement
When a director will be traveling for a partial day
or where a single meal is provided for by other
sources such as pre-paid registration, the maximum
reimbursement amount shall be at the rate provided
by the M&IE per meal, or such other amounts as may
be determined by the President or the Board to be
reasonable for the occasion or circumstances. In
any event all amounts to be reimbursed shall exclude
any gratuities.
4. Taxes
The maximum meal reimbursement amounts are
inclusive of and assume expenses for taxes. The
maximum meal reimbursements shall exclude any and
all gratuities.
b. Lodging
The District will reimburse Directors or pre-pay
accommodations in single rooms at conference facilities
or in close proximity when applicable. Or, in the
absence of conference accommodations, normal single-
room business, government or commercial class
accommodation may be obtained. Under normal
circumstances, lodging will not be reimbursed for the
night before a conference starts and the night after it
ends. However, in situations where available travel
schedules would require the Director to leave home
before 6:00 AM or return to home after 12:00 AM, lodging
for the night before or the night after will be
reimbursable.
4. Entertainment
The District shall not cover any expenses incurred for
recreation or entertainment.
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject Policy
Number
Date
Adopted
Date
Revised
DIRECTORS COMPENSATION, REIMBURSEMENT OF
EXPENSES AND GROUP INSURANCE BENEFITS
08 2/20/91 7/1/097/
2/14
Page 5 of 7
5. Incidental Expenses
Unavoidable, necessary and reasonable authorized expenses
will be fully reimbursed by the District. Some examples of
allowable expenses are:
a. Telephone Calls (Business): Calls placed by the
Director, to the District office, or for the purpose of
conducting District business. Business related calls
should be itemized on the Director’s “Board of Directors
Expense Claim Form” (Exhibit D).
b. Telephone Calls (Personal): One (1) brief personal call
each day away from home, up to a $10 maximum per day.
c. Telephone Calls (Local): Charges for local calls, for
meal or transportation reservations, or for area
information related to travel.
d. Reasonable transportation to local restaurants and to
optional functions that are a part of conference events.
e. Parking fees.
f. The following expenses are not reimbursable:
1. Alcoholic beverages
2. Parking or traffic violations
3. In-room movies or laundry services
6. Director's Responsibility
a. Directors must submit a detailed “Board of Directors
Expense Claim Form” for reimbursement. Claim forms
should be supported by vouchers and itemized receipts
of expenditures for which reimbursement is being
requested. Receipts must be attached for all expenses.
If a receipt is lost, the lost receipt must be noted on
the “Board of Directors Expense Claim Form” (Exhibit D)
and approved by the President or the Board before any
payment can be made. Claim forms shall be submitted
within 45 calendar days after the expense was incurred.
Expense claims requiring reimbursement to the District,
which are not reconciled within 45 calendar days, shall
be deducted from the next month’s reimbursement.
b. Expenses will not be reimbursed for meetings that have
been pre-paid and not attended. The President or the
Board may excuse an absence for a meeting. The absent
Director shall provide a verbal or written report at
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject Policy
Number
Date
Adopted
Date
Revised
DIRECTORS COMPENSATION, REIMBURSEMENT OF
EXPENSES AND GROUP INSURANCE BENEFITS
08 2/20/91 7/1/097/
2/14
Page 6 of 7
the next regularly scheduled Board meeting stating the
reason for the absence and, if appropriate, request that
it be excused. Directors will be required to reimburse
the district for any pre-paid expenses for any unexcused
absence. This reimbursement will be made by deduction
from future expenditures.
c. When two (2) or more Directors combine an expense on
one receipt, the Director requesting reimbursement
should indicate, on or attached to the Director’s “Board
of Directors Expense Claim Form” the identity of the
other persons sharing expenses. This will facilitate
appropriate allocation of expenses to each participant.
d. Except where the District sponsors a table at an event,
expenses incurred by spouses, family members, or guests
are the responsibility of the Director.
e. The District shall, at least annually, provide a report to
disclose any reimbursement paid by the district within the
immediately preceding fiscal year of at least $100 for each
individual charge for services or product received.
“Individual charge” (as defined in California Government
Code Section 53065.5) includes, but is not limited to, one
meal, lodging for one day, transportation, or a
registration fee.Staff will create a quarterly report
showing in detail all expenses for the Directors The report
will include all expenses, for example, stipend, mileage,
seminar, airline or ground travel, meals, telephone use,
the date incurred, and the Director's name. To the extent
that Directors report meetings for which they did not
receive reimbursement or per diem, those meetings shall be
noted on the report. All payments will be listed whether
the payment was a reimbursement or direct payment made on
behalf of the Director to a vendor. The reports will be
presented to the Board of Directors at public meetings.
D. District Group Insurance Benefits
1. Each Director, while serving as a member of the Board of
Directors, shall be entitled to the health and welfare and
life insurance benefits set forth in the Schedule of Benefits
in the District Group Insurance Plan Booklet, which benefits
are furnished by the District at District cost, with
applicable contributions, for active District employees and
Directors. Each active Director shall also be entitled to a
$65,000 term life and accidental death and dismemberment
insurance policy (subject to policy requirements and any
standard age reduction schedule), a $50,000 travel accidental
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject Policy
Number
Date
Adopted
Date
Revised
DIRECTORS COMPENSATION, REIMBURSEMENT OF
EXPENSES AND GROUP INSURANCE BENEFITS
08 2/20/91 7/1/097/
2/14
Page 7 of 7
death and dismemberment policy. In addition to the foregoing,
the District will pay premiums for additional individual life
insurance coverage in an amount of up to $250,000 for a 20
year term for those active Directors who apply for such
coverage with the District’s provider and meet the provider’s
standard underwriting guidelines and policy requirements. If
coverage at higher amounts or for a longer term is made
available by the provider, each Director may purchase such
additional coverage on a self-pay basis.
2. Each former member of the Board of Directors, who served in
office after January 1, 1981, who was elected to a term of
office that began before January 1, 1995, who is at least
60 years of age, and whose total service at the time of
termination is not less than 12 years, shall be entitled to
the health and welfare and life insurance benefits set
forth in the District Group Insurance Plan Booklet, which
benefits are furnished by the District, at District cost,
for retired Directors.
E.Miscellaneous
Cell Phone expenses are not considered a reimbuseable expense
1. The following are not reimbursable expenses:
a. Cell phone expenses
b. Service fees for internet access
2. The District does not provide equipment, such as fax
machines, computers and laptops to board members for
District business use.
Attachments
Exhibit A: Approved Function List
Exhibit B: “Board of Directors Per Diem and Mileage Claim Form”
Exhibit C: “Board of Directors Travel Request Form”
Exhibit D: “Board of Directors Expense Claim Form”
Formatted: Indent: Left: 0", First line: 0"
EXHIBIT A
Approved Functions List
Board Policy for payment of per diems and expenses for Director
attendance at District meetings:
The Board reviews its authorization and policy for payment of per
diems (pre-approved meetings) annually, in January following
reorganization of the Board and election of a new President. Below
is the current Board policy:
1. The following meetings are pre-approved for all Directors
to attend and receive a per diem and expense reimbursement:
Otay Water District Regular and Special Board Meetings
Otay committee meetings for committee members only
Otay business meetings called by the General Manager
and authorized by the President of the Board where
individual Directors are requested to attend
Except as otherwise specifically excluded in this
policy, official District functions that take place
during normal business hours where Directors are
requested to attend by either the Board President or
the Board
Semi-annual conference of the Association of California
Water Agencies
Regular quarterly meetings of the Water Agencies
Association of San Diego County
Regularly monthly meeting of Council of Water Utilities
Business meetings and conferences of the California
Special District Association held in San Diego County
All other meetings not listed here require pre-
approval by the President or Board.
2. The following meetings are pre-approved for designated Otay Director representatives or designated alternate. The
District Secretary will maintain an updated list of designated Director representatives. Any other Director who
wishes to attend these meetings and receive a per diem must
have approval from the President or Board prior to the event or be designated by the President or Board, as an alternate.
The pre-approval shall include the attendance of the
Director at the commission, committee, board or meeting and
any committee, subcommittee or other official or posted
meeting of the agencies, commissions, committees or boards
listed below:
Planning Group and City Commission meetings that fall
within the boundaries of each directors district (when
issues impacting OWD are discussed)
EXHIBIT A
Inter-Agency Committee Meeting
METRO (TAC/AFFORD) Commission
ACWA or CSDA meetings/conferences
Water Conservation Garden
3. The Board President or his designee is pre-authorized to attend District business meetings with cities and other
agencies to represent Otay Water District, and may claim a per diem and expenses. Any other Director desiring to attend
the same meeting of this nature would require approval to attend from the President or the Board in order to receive
a per diem and expense reimbursement.
4. When the President or the Board appoints a director(s) to a committee, the meeting(s) shall be considered pre-approved for per diem and expense reimbursement.
5. The following meetings are not eligible for pre-approved per
diem claims: a) Attending other Districts’ Board meetings
b) Otay employee appreciation breakfast, luncheons or
dinners
c) Retirement receptions
d) Otay picnics or dinner-dances or other purely social
events
e) CWA meeting attendance (by Otay Water District appointed
CWA Board Member(s))
f) Chamber of Commerce events
g) First Friday Breakfasts unless presenting Otay official
business to the assembly
h) Any political campaign event or function
6. In order to submit a per diem/travel reimbursement the
member must attend at least 50% of the meeting (per day) and the reimbursement request must be submitted within 45 days
of the occurrence, otherwise it may be considered attended without per diem. The President of the Board will make the
final determination.
7. All other meetings/conferences/tours/seminars/ workshops/functions not listed in this policy must be pre-
approved by the Board President or the Board.
EXHIBIT B
(Director’s Signature)
GM Receipt: Date:
FOR OFFICE USE: TOTAL MILEAGE REIMBURSEMENT: $
OTAY WATER DISTRICT
BOARD OF DIRECTORS
PER-DIEM AND MILEAGE CLAIM FORM
Pay To: Period Covered:
Employee Number: From: To:
ITEM DATE MEETING PURPOSE / ISSUES
DISCUSSED MILEAGE
HOME to OWD OWD to HOME
MILEAGE
OTHER LOCATIONS
Total Meeting Per Diem:
$
($100 per meeting)
Total Mileage Claimed: miles
EXHIBIT B
INSTRUCTIONS ON REVERSE
EXHIBIT B
INSTRUCTIONS FOR PREPARATION OF
BOARD OF DIRECTORS PER DIEM CLAIM FORM
1. Record the date, and name or purpose/issues discussed of meeting
attended on behalf of the District.
Note: The District will pay Director's per-diem for one meeting/
function per day and the maximum of 10 meetings/functions per month.
If a Director attends more than 10 meetings/functions (10 days), the
District will reimburse for the mileage and any reimbursable out-of-
pocket expenses incurred for these additional meetings.
2. Record number of miles (round trip) driven to attend meeting/ function.
The use of personal vehicles in the conduct of official District business
shall be reimbursed at the current Internal Revenue Service rate. The
Director's expense claim should indicate the nature of the trip. If a trip
begins at home, the District will reimburse the mileage from home to
destination and return mileage. District insurance does not cover personal
vehicles while they are being driven on District business. The reimbursement
rate is inclusive of an allowance for insurance costs. The District will
reimburse Directors for the deductible under their personal insurance policy
should they be involved in an accident while on District business. To be
eligible for reimbursement, each Director shall maintain a current California
driver’s license and at least the minimum vehicle liability insurance
required by State law or shall arrange for a driver who meets said standards.
The District will not reimburse the cost of travel of a personal nature taken
in conjunction with travel on official business.
Claim forms shall be submitted within 45 calendar days after the meeting
date. Expense claims requiring reimbursement to the District which are not
reconciled within 45 calendar days, shall be deducted from the next month’s
reimbursement.
No information on the Per Diem Claim Form may be designated as confidential
in nature. All expenses must be fully disclosed on the form.
EXHIBIT C
OTAY WATER DISTRICT
BOARD OF DIRECTORS
TRAVEL REQUEST FORM
Director: Date of Request:
Name and Location of Function:
Date(s) function to be held: -
Sponsoring Organization:
Request for Prepayment of Fees Related to the Function:
Expense Type Not Needed Pre-Payment
Requested
Registration
Airline
Auto Rental
Mileage N/A
Taxi/Shuttle N/A
Lodging
Meals N/A
Other Expenses – Explain Below
Lodging Preference:
Explanation of Other
Expenses:
Signature of Director Date of Request
For Office Use Only Below This Line
Date of Board
Approval:
Expense Type Description Amount Pre-
Paid
Registration
Airline
Auto Rental
Mileage N/A
Taxi/Shuttle N/A
Lodging
Meals N/A
Other Expenses
District Secretary Date Processed
EXHIBIT D
OTAY WATER DISTRICT
BOARD OF DIRECTORS
EXPENSE CLAIM FORM
Pay To: Period Covered:
Employee Number: From: To:
ITEMIZED REIMBURSEMENT CLAIMED
Date
Type of Reimbursement
Amount
TOTAL Reimbursement Claimed: $
Director Signature: Date:
GM Receipt: Date:
INSTRUCTIONS ON REVERSE
EXHIBIT D
INSTRUCTIONS FOR PREPARATION OF
BOARD OF DIRECTORS EXPENSE CLAIM FORM
The necessary expenses incurred while traveling on District business including
common carrier fares (economy class), automobile rental charges, District business
telephone calls, one personal telephone call home each day ($10 maximum per day),
lodging, baggage handling, parking fees, meals, etc. will be reimbursed when
documented on the Director's Per Diem and Expense Claim Forms. Receipts must be
attached for all meal expenses. If a receipt is lost, the lost receipt should be
noted next to the expense and submitted to the President before any reimbursement
can be made. Receipts are required for the reimbursement of all expenses.
All receipts must have the nature of the expense and the business purpose
noted on the receipt.
The District will not reimburse the cost of travel of a personal nature taken
in conjunction with travel on official business.
Meals shall be reimbursed up to $46 per day, or an amount determined by the
President of the Board of Directors to be reasonable for occasion or
circumstances, exclusive of any gratuities. Partial days shall be reimbursable
at a rate of $8 for breakfast, $13, for lunch and $25 for dinner, or amounts
determined by the President of the Board of Directors to be reasonable for
the occasion or circumstances, excluding any gratuities. The above amounts
may be combined if travel status requires two (2) or more meals. The meal
reimbursement amounts are inclusive of and assume expenses for taxes only.
Gratuities are not reimbursable and are excluded. Where pre-paid registration
includes meals, only meals that are not included in the registration will be
reimbursable.
Any receipts that include costs of personal travel (e.g., hotel receipt for
employee and spouse) should identify what the cost would have been without
personal travel (e.g., single room rate as opposed to double room rate).
Claim forms shall be submitted within 45 calendar days after the expense was
incurred. Expense claims requiring reimbursement to the District which are
not reconciled within 45 calendar days, shall be deducted from the next month’s
reimbursement.
No information on the Expense Claim Form may be designated as confidential in
nature. All expenses must be fully disclosed on the form.
The following expenses are not reimbursable:
a. Alcoholic Beverages d. Laundry service
b. Parking or traffic violations e. Entertainment or recreation
c. In-room movies f. Expenses incurred by spouses,
family members, or guests.
ND: 4840-9653-1715, v. 2
FY 2014 Board of Directors’ Expenses
3rd Quarter
(1/1/14 -3/31/14)
YTD
(7/1/13 -3/31/14)
CROUCHER, GARY $ 400.00 $ 1,000.00
GONZALEZ, DAVID 600.00 5,161.17
LOPEZ, JOSE 1,928.64 5,823.15
ROBAK, MARK 420.16 1,086.58
THOMPSON, MITCHELL 1,469.64 4,231.82
$ 4,818.44 $ 17,302.72
Attachment C
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject Policy
Number
Date
Adopted
Date
Revised
DIRECTORS COMPENSATION, REIMBURSEMENT OF
EXPENSES AND GROUP INSURANCE BENEFITS
08 2/20/91 7/2/14
Page 1 of 7
Purpose
To provide guidelines for payment of compensation and reimbursement of
expenses to Directors in connection with their attendance at meetings
or the performance of other authorized business, and for group insurance
benefits for Directors.
Background
Members of the Board of Directors (“Directors”) attend regular, adjourned
or special meetings of the Board of Directors (“Board”). In addition,
Directors attend other District meetings, committee meetings,
association meetings, and educational seminars on behalf of the District.
These meetings and seminars are related to District business, water and
water related issues, and California special districts. State statutes
authorize District payments for meetings, reimbursements of expenses.
State law also authorizes the District to provide health and welfare
benefits for active Directors and, in limited circumstances, retired
Directors if they served 12 years and were first elected prior to January
1, 1995. The District is also authorized to offer health and welfare
benefits for retired Directors who commenced office on or after January
1, 1995, if the recipient participates on a self-pay basis.
Policy
The District will compensate Directors on a per diem basis for attendance
at authorized meetings or functions and will reimburse Directors for
reasonable expenses incurred while traveling on District business to
include, lodging, dining, transportation and related incidentals.
A. Directors Per Diem
As provided in Section 1.01 C. of the District Code of Ordinances,
each Director shall receive a per diem in the amount of $100 for
each day of attendance at meetings of the Board or for each day of
service rendered as a Director by request or authorization of the
Board, not to exceed a total of ten (10) days in any calendar
month. Attendance at any meeting shown on Exhibit A to this Policy
shall be deemed a meeting requested or authorized by the Board.
Attendance of meetings shall be in accordance with Exhibit A. The
President of the Board or the Board may authorize a Director to
attend meetings not listed in Exhibit A when the President or the
Board determine that it is in the interest of the District that a
Director attend, and that such attendance be compensated and
expenses reimbursed. Director’s claims for per diem amounts shall
be made on a “Board of Directors Per Diem and Mileage Claim Form”
(Exhibit B). The President of the Board or the Board may approve
reimbursement of expenses outside the per diem limit for a
Director, if the Director submits receipts for all of the related
District business expenses.
Attachment D
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject Policy
Number
Date
Adopted
Date
Revised
DIRECTORS COMPENSATION, REIMBURSEMENT OF
EXPENSES AND GROUP INSURANCE BENEFITS
08 2/20/91 7/2/14
Page 2 of 7
Attendance at a meeting that is not authorized by this policy (pre-
approved meetings) or pre-approved by the President may be approved
by the Board for per diem. Director’s seeking per diem amounts
for these meetings shall request that the item be presented to the
Board at its next regularly scheduled meeting for consideration.
The decision of the Board shall be final.
When travel arrangements require a day earlier arrival or a day
later departure, Directors will not be eligible for the $100 per
diem, however, reasonable expenses associated with the extended
stay will be reimbursed as specified below.
B. Pre-payment of Otherwise Reimbursable Expenses
The Director may request pre-payment of registration,
transportation, and lodging, using the “Board of Directors Travel
Request Form” (Exhibit C). Pre-payments shall be limited to the
Director’s expenses only. No advances shall be made on travel
expenses.
C. Reimbursement of Expenses
Each Director shall be reimbursed for travel expenses to and from
the meetings described in Exhibit A or for any other authorized
District business as follows:
1. Authorization
Travel associated with the attendance of meetings or
functions for Directors shall be approved in advance by the
Otay Water District Board President. To request approval of
travel, the Director should complete a “Board of Directors
Travel Request Form” (Exhibit B) in order to be eligible for
compensation and/or reimbursement. Travel requests will be
reviewed and approved by the Board President or the Board.
2. Transportation
a. Air Transportation
The District will endeavor to purchase airline tickets
in advance taking advantage of discounts and low
airfares.
b. Automobile
1. Personal Auto: Directors may use their personal
vehicle. The District will reimburse Directors at
the current rate/mile as established by the IRS,
plus tolls, parking, etc., provided, however, if
air transportation is available, the total amount
of expense paid shall be limited to the cost of
coach air travel between points traveled by
personal vehicle. Gasoline, collision and
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject Policy
Number
Date
Adopted
Date
Revised
DIRECTORS COMPENSATION, REIMBURSEMENT OF
EXPENSES AND GROUP INSURANCE BENEFITS
08 2/20/91 7/2/14
Page 3 of 7
liability insurance, and maintenance will be
provided by the Director and is deemed covered in
the rate/mileage reimbursement.
Directors using personal vehicles on District
business must maintain a valid California driver’s
license and the automobile insurance coverage
required by the State of California, or make
arrangements for a driver who meets the above
requirements. The General Manager’s Staff will
verify that Directors have a valid driver’s
license. Directors will also be required to
maintain automobile insurance coverage. Proof of
such insurance will be submitted two times per
year, in January and July, and is required to be
eligible for mileage reimbursement.
2. Rental Cars: The District will provide a rental
car when needed. Such rental car shall be a
compact or mid-size class, unless upgrades are
offered at no additional cost to the District.
c. Miscellaneous Transportation
Whenever practicable, bus, taxi, rail, shuttle, etc.
transportation may be used in lieu of, or in conjunction
with, modes above.
3. Meals and Lodging
a. Meals and Beverages
Whenever travel requires meals, the meals, excluding
gratuity, shall be reimbursable, provided the Director
presents a receipt along with the “Board of Directors
Expense Claim Form” (Exhibit D) for all meals.
Reimbursements for expense items where a receipt has
been lost will not be paid until the President or the
Board has reviewed and approved the expense item. Meals
are reimbursable based on the Meals and Incidental
Expenses (M&IE) as updated by the U.S. General Services
Administration:
1. Full Day Reimbursement
When a Director is traveling for a full day and no
meals are provided for by other sources, such as
pre-paid registration, the Director may be
reimbursed for meal expenses at the rate provided
by the M&IE per day. This amount is exclusive of
any gratuities.
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject Policy
Number
Date
Adopted
Date
Revised
DIRECTORS COMPENSATION, REIMBURSEMENT OF
EXPENSES AND GROUP INSURANCE BENEFITS
08 2/20/91 7/2/14
Page 4 of 7
2. Single Meal Reimbursement
When a Director requires reimbursement for a
single meal while traveling, the maximum meal
reimbursement amount shall be at a rate provided
by the M&IEfor Breakfast, lunch, and/or dinner,
or amounts determined by the President or the Board
to be reasonable for the occasion or
circumstances. These amounts and any amount
approved by the President or Board shall exclude
gratuities.
3. Partial Day Reimbursement
When a director will be traveling for a partial day
or where a single meal is provided for by other
sources such as pre-paid registration, the maximum
reimbursement amount shall be at the rate provided
by the M&IE per meal, or such other amounts as may
be determined by the President or the Board to be
reasonable for the occasion or circumstances. In
any event all amounts to be reimbursed shall exclude
any gratuities.
4. Taxes
The maximum meal reimbursement amounts are
inclusive of and assume expenses for taxes. The
maximum meal reimbursements shall exclude any and
all gratuities.
b. Lodging
The District will reimburse Directors or pre-pay
accommodations in single rooms at conference facilities
or in close proximity when applicable. Or, in the
absence of conference accommodations, normal single-
room business, government or commercial class
accommodation may be obtained. Under normal
circumstances, lodging will not be reimbursed for the
night before a conference starts and the night after it
ends. However, in situations where available travel
schedules would require the Director to leave home
before 6:00 AM or return to home after 12:00 AM, lodging
for the night before or the night after will be
reimbursable.
4. Entertainment
The District shall not cover any expenses incurred for
recreation or entertainment.
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject Policy
Number
Date
Adopted
Date
Revised
DIRECTORS COMPENSATION, REIMBURSEMENT OF
EXPENSES AND GROUP INSURANCE BENEFITS
08 2/20/91 7/2/14
Page 5 of 7
5. Incidental Expenses
Unavoidable, necessary and reasonable authorized expenses
will be fully reimbursed by the District. Some examples of
allowable expenses are:
a. Telephone Calls (Business): Calls placed by the
Director, to the District office, or for the purpose of
conducting District business. Business related calls
should be itemized on the Director’s “Board of Directors
Expense Claim Form” (Exhibit D).
b. Telephone Calls (Personal): One (1) brief personal call
each day away from home, up to a $10 maximum per day.
c. Telephone Calls (Local): Charges for local calls, for
meal or transportation reservations, or for area
information related to travel.
d. Reasonable transportation to local restaurants and to
optional functions that are a part of conference events.
e. Parking fees.
f. The following expenses are not reimbursable:
1. Alcoholic beverages
2. Parking or traffic violations
3. In-room movies or laundry services
6. Director's Responsibility
a. Directors must submit a detailed “Board of Directors
Expense Claim Form” for reimbursement. Claim forms
should be supported by vouchers and itemized receipts
of expenditures for which reimbursement is being
requested. Receipts must be attached for all expenses.
If a receipt is lost, the lost receipt must be noted on
the “Board of Directors Expense Claim Form” (Exhibit D)
and approved by the President or the Board before any
payment can be made. Claim forms shall be submitted
within 45 calendar days after the expense was incurred.
Expense claims requiring reimbursement to the District,
which are not reconciled within 45 calendar days, shall
be deducted from the next month’s reimbursement.
b. Expenses will not be reimbursed for meetings that have
been pre-paid and not attended. The President or the
Board may excuse an absence for a meeting. The absent
Director shall provide a verbal or written report at
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject Policy
Number
Date
Adopted
Date
Revised
DIRECTORS COMPENSATION, REIMBURSEMENT OF
EXPENSES AND GROUP INSURANCE BENEFITS
08 2/20/91 7/2/14
Page 6 of 7
the next regularly scheduled Board meeting stating the
reason for the absence and, if appropriate, request that
it be excused. Directors will be required to reimburse
the district for any pre-paid expenses for any unexcused
absence. This reimbursement will be made by deduction
from future expenditures.
c. When two (2) or more Directors combine an expense on
one receipt, the Director requesting reimbursement
should indicate, on or attached to the Director’s “Board
of Directors Expense Claim Form” the identity of the
other persons sharing expenses. This will facilitate
appropriate allocation of expenses to each participant.
d. Except where the District sponsors a table at an event,
expenses incurred by spouses, family members, or guests
are the responsibility of the Director.
e. The District shall, at least annually, provide a report to
disclose any reimbursement paid by the district within the
immediately preceding fiscal year of at least $100 for each
individual charge for services or product received.
“Individual charge” (as defined in California Government
Code Section 53065.5) includes, but is not limited to, one
meal, lodging for one day, transportation, or a
registration fee.
D. District Group Insurance Benefits
1. Each Director, while serving as a member of the Board of
Directors, shall be entitled to the health and welfare and
life insurance benefits set forth in the Schedule of Benefits
in the District Group Insurance Plan Booklet, which benefits
are furnished by the District at District cost, with
applicable contributions, for active District employees and
Directors. Each active Director shall also be entitled to a
$65,000 term life and accidental death and dismemberment
insurance policy (subject to policy requirements and any
standard age reduction schedule), a $50,000 travel accidental
death and dismemberment policy. In addition to the foregoing,
the District will pay premiums for additional individual life
insurance coverage in an amount of up to $250,000 for a 20
year term for those active Directors who apply for such
coverage with the District’s provider and meet the provider’s
standard underwriting guidelines and policy requirements. If
coverage at higher amounts or for a longer term is made
available by the provider, each Director may purchase such
additional coverage on a self-pay basis.
OTAY WATER DISTRICT
BOARD OF DIRECTORS POLICY
Subject Policy
Number
Date
Adopted
Date
Revised
DIRECTORS COMPENSATION, REIMBURSEMENT OF
EXPENSES AND GROUP INSURANCE BENEFITS
08 2/20/91 7/2/14
Page 7 of 7
2. Each former member of the Board of Directors, who served in
office after January 1, 1981, who was elected to a term of
office that began before January 1, 1995, who is at least
60 years of age, and whose total service at the time of
termination is not less than 12 years, shall be entitled to
the health and welfare and life insurance benefits set
forth in the District Group Insurance Plan Booklet, which
benefits are furnished by the District, at District cost,
for retired Directors.
E.Miscellaneous
Cell Phone expenses are not considered a reimbuseable expense
Attachments
Exhibit A: Approved Function List
Exhibit B: “Board of Directors Per Diem and Mileage Claim Form”
Exhibit C: “Board of Directors Travel Request Form”
Exhibit D: “Board of Directors Expense Claim Form”
EXHIBIT A
Approved Functions List
Board Policy for payment of per diems and expenses for Director
attendance at District meetings:
The Board reviews its authorization and policy for payment of per
diems (pre-approved meetings) annually, in January following
reorganization of the Board and election of a new President. Below
is the current Board policy:
1. The following meetings are pre-approved for all Directors to attend and receive a per diem and expense reimbursement:
Otay Water District Regular and Special Board Meetings
Otay committee meetings for committee members only
Otay business meetings called by the General Manager
and authorized by the President of the Board where
individual Directors are requested to attend
Except as otherwise specifically excluded in this
policy, official District functions that take place
during normal business hours where Directors are
requested to attend by either the Board President or
the Board
Semi-annual conference of the Association of California
Water Agencies
Regular quarterly meetings of the Water Agencies
Association of San Diego County
Regularly monthly meeting of Council of Water Utilities
Business meetings and conferences of the California
Special District Association held in San Diego County
All other meetings not listed here require pre-
approval by the President or Board.
2. The following meetings are pre-approved for designated Otay
Director representatives or designated alternate. The
District Secretary will maintain an updated list of
designated Director representatives. Any other Director who
wishes to attend these meetings and receive a per diem must
have approval from the President or Board prior to the event
or be designated by the President or Board, as an alternate.
The pre-approval shall include the attendance of the
Director at the commission, committee, board or meeting and
any committee, subcommittee or other official or posted
meeting of the agencies, commissions, committees or boards
listed below:
Planning Group and City Commission meetings that fall
within the boundaries of each directors district (when
issues impacting OWD are discussed)
EXHIBIT A
Inter-Agency Committee Meeting
METRO (TAC/AFFORD) Commission
ACWA or CSDA meetings/conferences
Water Conservation Garden
3. The Board President or his designee is pre-authorized to
attend District business meetings with cities and other
agencies to represent Otay Water District, and may claim a
per diem and expenses. Any other Director desiring to attend
the same meeting of this nature would require approval to
attend from the President or the Board in order to receive
a per diem and expense reimbursement.
4. When the President or the Board appoints a director(s) to a
committee, the meeting(s) shall be considered pre-approved
for per diem and expense reimbursement.
5. The following meetings are not eligible for pre-approved per
diem claims:
a) Attending other Districts’ Board meetings
b) Otay employee appreciation breakfast, luncheons or
dinners
c) Retirement receptions
d) Otay picnics or dinner-dances or other purely social
events
e) CWA meeting attendance (by Otay Water District appointed
CWA Board Member(s))
f) Chamber of Commerce events
g) First Friday Breakfasts unless presenting Otay official
business to the assembly
h) Any political campaign event or function
6. In order to submit a per diem/travel reimbursement the
member must attend at least 50% of the meeting (per day) and
the reimbursement request must be submitted within 45 days
of the occurrence, otherwise it may be considered attended
without per diem. The President of the Board will make the
final determination.
7. All other meetings/conferences/tours/seminars/
workshops/functions not listed in this policy must be pre-
approved by the Board President or the Board.
EXHIBIT B
(Director’s Signature)
GM Receipt: Date:
FOR OFFICE USE: TOTAL MILEAGE REIMBURSEMENT: $
OTAY WATER DISTRICT
BOARD OF DIRECTORS
PER-DIEM AND MILEAGE CLAIM FORM
Pay To: Period Covered:
Employee Number: From: To:
ITEM DATE MEETING PURPOSE / ISSUES
DISCUSSED
MILEAGE
HOME to OWD OWD to HOME
MILEAGE
OTHER LOCATIONS
Total Meeting Per Diem:
$
($100 per meeting)
Total Mileage Claimed: miles
EXHIBIT B
INSTRUCTIONS ON REVERSE
EXHIBIT B
INSTRUCTIONS FOR PREPARATION OF
BOARD OF DIRECTORS PER DIEM CLAIM FORM
1. Record the date, and name or purpose/issues discussed of meeting
attended on behalf of the District.
Note: The District will pay Director's per-diem for one meeting/
function per day and the maximum of 10 meetings/functions per month.
If a Director attends more than 10 meetings/functions (10 days), the
District will reimburse for the mileage and any reimbursable out-of-
pocket expenses incurred for these additional meetings.
2. Record number of miles (round trip) driven to attend meeting/ function.
The use of personal vehicles in the conduct of official District business
shall be reimbursed at the current Internal Revenue Service rate. The
Director's expense claim should indicate the nature of the trip. If a trip
begins at home, the District will reimburse the mileage from home to
destination and return mileage. District insurance does not cover personal
vehicles while they are being driven on District business. The reimbursement
rate is inclusive of an allowance for insurance costs. The District will
reimburse Directors for the deductible under their personal insurance policy
should they be involved in an accident while on District business. To be
eligible for reimbursement, each Director shall maintain a current California
driver’s license and at least the minimum vehicle liability insurance
required by State law or shall arrange for a driver who meets said standards.
The District will not reimburse the cost of travel of a personal nature taken
in conjunction with travel on official business.
Claim forms shall be submitted within 45 calendar days after the meeting
date. Expense claims requiring reimbursement to the District which are not
reconciled within 45 calendar days, shall be deducted from the next month’s
reimbursement.
No information on the Per Diem Claim Form may be designated as confidential
in nature. All expenses must be fully disclosed on the form.
EXHIBIT C
OTAY WATER DISTRICT
BOARD OF DIRECTORS
TRAVEL REQUEST FORM
Director: Date of Request:
Name and Location of Function:
Date(s) function to be held: -
Sponsoring Organization:
Request for Prepayment of Fees Related to the Function:
Expense Type Not Needed Pre-Payment
Requested
Registration
Airline
Auto Rental
Mileage N/A
Taxi/Shuttle N/A
Lodging
Meals N/A
Other Expenses – Explain Below
Lodging Preference:
Explanation of Other
Expenses:
Signature of Director Date of Request
For Office Use Only Below This Line
Date of Board
Approval:
Expense Type Description Amount Pre-
Paid
Registration
Airline
Auto Rental
Mileage N/A
Taxi/Shuttle N/A
Lodging
Meals N/A
Other Expenses
District Secretary Date Processed
EXHIBIT D
OTAY WATER DISTRICT
BOARD OF DIRECTORS
EXPENSE CLAIM FORM
Pay To: Period Covered:
Employee Number: From: To:
ITEMIZED REIMBURSEMENT CLAIMED
Date
Type of Reimbursement
Amount
TOTAL Reimbursement Claimed: $
Director Signature: Date:
GM Receipt: Date:
INSTRUCTIONS ON REVERSE
EXHIBIT D
INSTRUCTIONS FOR PREPARATION OF
BOARD OF DIRECTORS EXPENSE CLAIM FORM
The necessary expenses incurred while traveling on District business including
common carrier fares (economy class), automobile rental charges, District business
telephone calls, one personal telephone call home each day ($10 maximum per day),
lodging, baggage handling, parking fees, meals, etc. will be reimbursed when
documented on the Director's Per Diem and Expense Claim Forms. Receipts must be
attached for all meal expenses. If a receipt is lost, the lost receipt should be
noted next to the expense and submitted to the President before any reimbursement
can be made. Receipts are required for the reimbursement of all expenses.
All receipts must have the nature of the expense and the business purpose
noted on the receipt.
The District will not reimburse the cost of travel of a personal nature taken
in conjunction with travel on official business.
Meals shall be reimbursed up to $46 per day, or an amount determined by the
President of the Board of Directors to be reasonable for occasion or
circumstances, exclusive of any gratuities. Partial days shall be reimbursable
at a rate of $8 for breakfast, $13, for lunch and $25 for dinner, or amounts
determined by the President of the Board of Directors to be reasonable for
the occasion or circumstances, excluding any gratuities. The above amounts
may be combined if travel status requires two (2) or more meals. The meal
reimbursement amounts are inclusive of and assume expenses for taxes only.
Gratuities are not reimbursable and are excluded. Where pre-paid registration
includes meals, only meals that are not included in the registration will be
reimbursable.
Any receipts that include costs of personal travel (e.g., hotel receipt for
employee and spouse) should identify what the cost would have been without
personal travel (e.g., single room rate as opposed to double room rate).
Claim forms shall be submitted within 45 calendar days after the expense was
incurred. Expense claims requiring reimbursement to the District which are
not reconciled within 45 calendar days, shall be deducted from the next month’s
reimbursement.
No information on the Expense Claim Form may be designated as confidential in
nature. All expenses must be fully disclosed on the form.
The following expenses are not reimbursable:
a. Alcoholic Beverages d. Laundry service
b. Parking or traffic violations e. Entertainment or recreation
c. In-room movies f. Expenses incurred by spouses,
family members, or guests.
ND: 4840-9653-1715, v. 2
STAFF REPORT
TYPE MEETING: Regular Board
MEETING DATE: July 2, 2014
SUBMITTED BY:
Alicia Mendez-Schomer,
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: Adopt Ordinance No. 544 Amending Section 23.04, Cross-
Connections and Backflow Devices, of the District’s Code of
Ordinances.
GENERAL MANAGER’S RECOMMENDATION:
That the Board adopt Ordinance No. 544 amending Section 23.04,Cross-
Connections and Backflow Devices, which incorporates key portions of
California Department of Health, Title 17 of the California
Administrative Code (Title 17).
COMMITTEE ACTION:
See Attachment A.
PURPOSE:
To clarify the language in Section 23.04 and incorporate essential
portions from Title 17, which govern the implementation and
provisions of a cross-connection program.
ANALYSIS:
The purpose of Title 17 is to protect the public water supply from
contamination by the implementation of a cross connection control
program.
The proposed amendment to Section 23.04, Cross Connection and
Backflow Devices is taken from Title 17. The amendment includes all
of the following summarized items, A-G:
A. The adoption of operating rules and ordinances to effectively
implement and manage the cross-connection program.
B. The authority to conduct surveys to identify situations where
cross-connections are likely to occur.
C. The provisions of backflow protection types required, based
on degree of hazard, and listing of approved backflow types.
D. The establishment of a procedure or system for testing
backflow preventers.
E. The provision for the inclusion of at least one person
trained in cross connection control to carry out the cross-
connection program.
F. Customer responsibility.
G. The maintenance of records of locations, tests, and repairs
of backflow preventers.
The inclusion of sections from Title 17 will ensure the cross-
connection program is part of the District’s systematic approach to
managing the District and is found in one single document, the
District’s Code of Ordinance.
FISCAL IMPACT: Joe Beachem, Chief Financial Officer
None.
STRATEGIC GOAL:
None.
LEGAL IMPACT:
None.
Attachments:
A) Committee Action Form
B) Ordinance No. 544
Exhibit 1 - Strike-through Section 23.04
C) Proposed Section 23.04
ATTACHMENT A
SUBJECT/PROJECT:
Adopt Ordinance No. 544 Amending Section 23.04, Cross-
Connections and Backflow Devices, of the District’s Code of
Ordinances.
COMMITTEE ACTION:
That the Board adopt Ordinance No. 544 amending Section 23.04,Cross-
Connections and Backflow Devices, which incorporates key portions of
California Department of Health, Title 17 of the California
Administrative Code (Title 17).
1
ORDINANCE NO. 544
AN ORDINANCE OF THE BOARD OF DIRECTORS OF
THE OTAY WATER DISTRICT
AMENDING SECTION 23, 23.04, CROSS-CONNECTIONS AND BACKFLOW
DEVICES OF THE DISTRICT’S CODE OF ORDINANCES
BE IT ORDAINED by the Board of Directors of Otay Water
District that the District’s Code of Ordinances Section 23.04,
Cross-Connections and Backflow Devices, be amended as per
Exhibit 1 (attached).
NOW, THEREFORE, BE IT RESOLVED that the new proposed
Section 23.04, Cross-Connections and Backflow Devices,
(Attachment C) of the Code of Ordinances shall become effective
July 2, 2014.
PASSED, APPROVED AND ADOPTED by the Board of Directors of
the Otay Water District at a regular meeting duly held this 2nd
day of July 2014, by the following roll call vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
________________________________
President
ATTEST:
_____________________________
District Secretary
Attachment B
23-1
SECTION 23 NON-RESPONSIBILITY OF DISTRICT
23.01 INTERRUPTIONS OF WATER SERVICE
District does not guarantee continuous delivery of water
on demand. From time to time it may be necessary for the
District to shut off the flow of water in any of its water systems. Except in emergencies, such stoppages will not be made without prior notice to the customers involved. District shall not assume any responsibility for loss or damages which may occur due to interruption of water service.
23.02 PRIVATELY-OWNED WATER LINES
The District assumes no responsibility for the delivery
of water through privately-owned pipelines or systems, nor
shall it assume any responsibility for damages resulting from the operation of any such system even though water may be received from a district water distribution system. 23.03 WATER PRESSURE REGULATION
A. Customer Responsibility. The District shall
assume no responsibility for water pressure
regulation within a customer's service area. The
customer shall be responsible for providing adequate
safeguard measures for the customer's water system wherever pressure regulation is necessary. B. Requirement for Installation in New Construction. Customers making application for water service for new construction for residential, commercial or
industrial use shall be required to install an
appropriate pressure regulation device for such
service.
23.04 CROSS-CONNECTIONS AND BACKFLOW DEVICES State Regulations for Cross-Connections The California Department of Public Health has issued Regulations Relating to Cross-Connections (Calif. Adm. Code,
Title 17 - Public Health) for the purpose of safeguarding
drinking water supplies by preventing backflow into public
water systems.
It is unlawful for any person, firm, or corporation at
any time to make or maintain or cause to be made or main-
tained, temporarily or permanently, for any period of time
whatsoever, any cross-connection between plumbing pipes or
water fixtures being served with water by the District water
department and any other source of water supply or to maintain
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23-2
any sanitary fixture or other appurtenances or fixtures which
by reason of their construction may cause or allow back-flow
of water or other substances into the water supply system of
the District and/or the service of water pipes or fixtures of
any consumer of the District.
The District has adopted Rules, Regulations, and Fees
Regarding Cross-Connections as uncodified Ordinance No. 386
which is available in the Operations and Engineering
Departments. A. Definitions: For a complete listing see California Administrative Code, Title 17, Public Health. 1. Air-Gap Separation (AG): The term "air-gap separation" means a physical break between a supply
pipe and a receiving vessel. The air-gap shall be
at least double the diameter of the supply pipe
measured vertically above the top rim of the vessel,
in no case less than one inch.
2. Approved Backflow Prevention Device: The term "approved backflow prevention device" shall mean devices which have passed laboratory and field evaluation tests performed by a recognized testing organization which has demonstrated their competency
to perform such test to the California Department of
Health Services and the Otay Water District.
3. AWWA Standard: The term "AWWA Standard" means an
official standard developed and approved by the American Water Works Association (AWWA). 4. Backflow: The term "backflow" shall mean a flow condition, caused by a differential in pressure, that causes the flow of water or other liquids,
gases, mixtures or substances into the distributing
pipes of a potable supply of water from any source
or sources other than an approved water supply
source. Back-siphonage is one cause of backflow.
Back pressure is the other cause. 5. Cross-Connection: The term "cross-connection" as used in this Ordinance means any unprotected actual or potential connection between a potable water
system used to supply water for drinking purposes
and any source or system containing unapproved water
or a substance that is not or cannot be approved as
safe, wholesome, and potable. Bypass arrangements,
jumper connections, removable sections, swivel or
changeover devices, or other devices through which backflow could occur, shall be considered to be cross-connections.
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Formatted: Indent: Left: 0.5"
Formatted: Indent: Left: 0.75", Numbered + Level: 1 +Numbering Style: 1, 2, 3, … + Start at: 1 + Alignment: Left +Aligned at: 1" + Indent at: 1.25"
Formatted: Indent: Left: 0.75"
23-3
6. Double Check Valve Assembly: The term "double check
valve assembly" means an assembly of at least two
independently acting check valves, including tightly
closing shut-off valves, on each side of the check
valve assembly and test cocks available for testing
the water tightness of each check valve.
7. Reduced Pressure Principle Backflow Prevention
Device (RP): The term "reduced pressure principle
backflow prevention device" means a device
incorporating two or more check valves and an
automatically operating differential relief valve
located between the two check valves, a tightly
closing shut-off valve on each side of the check
valve assembly, and equipped with necessary test
cocks for testing.
8. Reduced Pressure Detection Assembly (RPDA): Same as
RP except as approved for fire services.
9. Service Connection: The term "service connection"
refers to the point of connection of a user's piping
to the Otay Water District facilities.
B. General Provisions
1. Unprotected cross-connections with the public
water supply are prohibited.
2. Whenever backflow protection has been found
necessary, the District will require the water
user to install an approved backflow prevention
device by and at his/her expense for continued
services or before a new service will be granted.
3. Wherever backflow protection, has been found
necessary on a water supply line entering a water
user's premises, then any and all water supply
lines from the District's mains entering such
premises, buildings, or structures shall be
protected by an approved backflow prevention
device. The type of device to be installed will
be in accordance with the requirements of this
ordinance.
C. Where Protection is Required
1. Each service connection from the District water
system for supplying water to premises having an
Formatted: Indent: First line: 0"
Formatted: Indent: Left: 0.75", Numbered + Level: 1 +Numbering Style: 1, 2, 3, … + Start at: 1 + Alignment: Left +Aligned at: 1" + Indent at: 1.25"
Formatted: Indent: First line: 0"
Formatted: Indent: Left: 0.75", Numbered + Level: 1 +Numbering Style: 1, 2, 3, … + Start at: 1 + Alignment: Left +Aligned at: 1" + Indent at: 1.25"
Formatted: Indent: Left: 0.75", Numbered + Level: 1 +Numbering Style: 1, 2, 3, … + Start at: 1 + Alignment: Left +Aligned at: 1" + Indent at: 1.25"
Formatted: Indent: Left: 0.75", Numbered + Level: 1 +Numbering Style: 1, 2, 3, … + Start at: 1 + Alignment: Left +Aligned at: 1" + Indent at: 1.25", Tab stops: 1.13", Left
Formatted: Indent: Left: 0", First line: 0"
Formatted: Indent: Left: 0", First line: 0"
23-4
auxiliary water supply shall be protected against
backflow of water from the premises into the
public water system.
2. Each service connection from the District water
system for supplying water to any premises on
which any substance is handled in such fashion as
may allow its entry into the water system shall
be protected against backflow of the water from
the premises into the public system. This shall
include commercial accounts, irrigation accounts,
multifamily dwellings, multi-story buildings,
complex piping and locations where the handling
of process waters and waters originating from the
District water system may be subjected to
deterioration in sanitary quality.
D. Type of Protection Required
1. The type of protection that shall be provided to
prevent backflow into the approved water supply
shall be commensurate to the degree of hazard
that exists on the consumer's premises. The type
of protective device that may be required (listed
in an increasing level of protection) includes:
Reduced Pressure Principle Backflow Prevention
Device (RP), and an Air-gap separation (AG). The
water user may choose a higher level of pro-
tection than that required by the District. The
minimum types of backflow protection required to
protect the approved water supply at the user's
water connection to premises with varying degrees
of hazard, are given in Table 1 of the California
Administrative Code, Title 17, Public Health. Situations which are not covered in Table 1 shall
be evaluated on a case by case basis and the
appropriate backflow protection shall be
determined by the District.
E. Approved Backflow Prevention Devices
1. Only backflow prevention devices which have been
approved by the District shall be acceptable for
installation by a water user connected to the
District's potable water system.
2. The District will provide to any affected cus-
tomer, upon their request, a list of approved
backflow prevention devices.
Formatted: Indent: Left: 0", First line: 0"
Formatted: Indent: Left: 0", First line: 0"
23-5
F. Backflow Prevention Device Installation
1. Backflow prevention devices shall be installed in
a manner prescribed in Section 7603, Title 17 of
the California Administrative Code. Location of
the devices should be as close as practical to
the user's connection. The District shall have
the final authority in determining the required
location of a backflow prevention device.
a. Air-gap separation (AG) - The air-gap
separation shall be located on the user's
side of and as close to the service
connection as is practical. All piping
from the service connection to the
receiving tank shall be above grade and be
entirely visible. No water use shall be
provided from any point between the
service connection and the air-gap separa-
tion. The water inlet piping shall
terminate a distance of at least two (2)
pipe diameters of the supply inlet, but in
no case less than one inch above the
overflow rim of the receiving tank.
b. Reduced Pressure principle backflow
prevention device (RP) - The approved
reduced pressure principle backflow
prevention device shall be installed on
the user's side of the service connection
at a distance consistent with the
District's Standard Drawings and
Specifications. The device shall be
installed a minimum of twelve inches (12")
but not more than eighteen inches (18")
above grade measured from the bottom of
the relief valve and with a minimum of
twelve inches (12") side clearance. The
device shall be installed so that it is
readily accessible for maintenance and
testing. Water supplied from any point
between the service connection and the RP
device shall be protected in a manner
approved by the District. Additionally,
materials and installation shall at all
times conform to water agency standards as
outlined in www.sdwas.com.
G. Backflow Prevention Device Testing and Maintenance
23-6
1. The owners of any premises on which, or on
account of which, backflow prevention devices
are installed, shall have the devices tested by
a person who has demonstrated their competency
in testing of these devices to the District and
has been approved by the District. Backflow
prevention devices must be tested at least
annually and immediately after installation,
relocation or repair. The District may require
a more frequent testing schedule -if it is
determined to be necessary. No device shall be
placed back in service unless it is functioning
as required. A report in a form acceptable to
the District shall be filed with the District
each time a device is tested, relocated or
repaired. These devices shall be serviced,
overhauled, or replaced whenever they are found
to be defective and all costs of testing,
repair, and maintenance shall be borne by the
water user.
2. Initial testing after installation and subse-
quent retesting shall at all times conform to
water agency standards as outlined in
www.sdwas.com.
3. The District will supply affected water users
with a list of persons acceptable to the
District to test backflow prevention devices.
The District will notify affected customers by
mail when annual testing of a device is needed
and also supply users with the necessary forms
which must be filled out each time a device is
tested or repaired.
4. Existing double check valves and pressure vacuum
breakers on median strip irrigation areas which
function adequately may remain in place,
however, as the District no longer recognizes
such devices to be commensurate with the degree
of potential hazard, failures of these devices
will necessitate their replacement with a
reduced pressure principal backflow prevention
device (RP).
H. Backflow Prevention Device Removal
1. Written approval must be obtained from the
District before a backflow prevention device is
removed, relocated, repaired or replaced.
23-7
a. Removal: The use of a device may be
discontinued and device removed from
service upon presentation of sufficient
evidence to the District to verify that a
hazard no longer exists or is not likely
to be created in the future;
b. Relocation: A device may be relocated
following confirmation by the District
that the relocation will continue to
provide the required protection and
satisfy installation requirements. A
retest will be required following the
relocation of the device;
c. Repair: A device may be removed for
repair, provided the water use is either
discontinued until repair is completed and
the device is returned to service, or the
service connection is equipped with other
backflow protection approved by the
District. A retest will be required
following the repair of the device; and
d. Replacement: A device may be removed and
replaced provided the water use is
discontinued until the replacement device
is installed and tested. All replacement
devices must be approved by the District
and must be commensurate with the degree
of hazard involved.
I. User Supervisor
1. At each premise where it is necessary, in the
opinion of the District, a user supervisor shall
be designated by and at the expense of the water
user. This user supervisor shall be responsible
for the monitoring of the backflow prevention
devices and for avoidance of cross connections.
In the event of contamination or pollution of
the drinking water system due to a cross-
connection on the premises, the District shall
be promptly notified by the user supervisor so
that appropriate measures may be taken to
overcome the contamination. The water user
shall inform the District of the user
supervisor's identity on, as a minimum, an
annual basis and whenever a change occurs.
Formatted: Indent: First line: 0.5"
23-8
J. Administrative Procedures
Water System Survey
1. The District shall review all requests for new
services to determine if backflow protection is
needed. Plans and specifications must be
submitted to the District upon request for
review of possible cross-connection hazards as a
condition of service for new service
connections. If it is determined that a
backflow prevention device is necessary to
protect the public water system, the required
device must be installed before service will be
activated.
2. The District may require an on-premise
inspection to evaluate cross-connection hazards.
The District will transmit a written notice
requesting an inspection appointment to each
affected water user. Any customer which cannot
or will not allow an on-premise inspection of
their piping system shall be required to install
the backflow prevention device the District
considers necessary.
3. The District may, at it's discretion, require a
reinspection for cross-connection hazards of
any premise to which it serves water. The
District will transmit a written notice
requesting an inspection appointment to each
affected water user. Any customer which cannot
or will not allow an on-premise inspection of
their piping system shall be required to
install the backflow prevention device the
District considers necessary.
K. Customer Notification - Device Installation and/or
Repair (Corrective Action)
1. The District will notify the water user of the
survey findings, listing corrective action to
be taken if required. A period of 30 days will
be given to complete all corrective action
required including installation of backflow
prevention devices.
2. A second notice will be sent to each water user
who does not take the required corrective
Formatted: Indent: First line: 0.5", Tab stops: 0.75", Left+ 0.81", Left
Formatted: Tab stops: 0.88", Left
Formatted: Indent: Left: 0.38", Hanging: 0.38", Numbered
+ Level: 1 + Numbering Style: A, B, C, … + Start at: 11 +Alignment: Left + Aligned at: 0.25" + Indent at: 0.5"
23-9
action prescribed in the first notice within
the 30 day period allowed. The second notice
will give the water user a 14 day period to
take the required corrective action and will
generate the assessment of a fee in accordance
with Schedule A. If no action is taken within
the 14 day period, the District may terminate
water service to the affected water user until
the required corrective actions are taken.
3. A third and final notice will be sent to each
water user who fails to take the requisite
corrective action detailed in the second notice
within the 14 day period allowed. The third
notice will indicate the date of service
termination and will generate the assessment of
a fee in accordance with Schedule A.
4. Only written verification from a certified and
District-approved tester/installer received in
the District office within the allotted time
period will constitute compliance with the
above requirements.
L. Customer Notification - Testing
1. The District will notify each affected water
user when it is time for the backflow preven-
tion device installed on their service
connections to be tested. This written notice
shall give the water user 30 days to have the
device tested and supply the water user with
the necessary form(s) to be completed and
submitted to the District.
2. A second notice shall be sent to each water
user who does not have their backflow preven-
tion device tested as prescribed in the first
notice within the 30 day period allowed. The
second notice will give the water user a 14 day
period to have their backflow prevention device
tested and will generate the assessment of a
fee in accordance with Schedule A of this
Ordinance. If no action is taken within the 14
day period, the District may terminate water
service to the affected water user until the
subject device is tested.
3. A third and final notice will be sent to each
water user who fails to have their backflow
Formatted: Indent: Left: 0", Tab stops: 0.5", Left
23-10
prevention device(s) tested as required in the
second notice within the 14 day period allowed.
The third notice will indicate the date of
service termination and will generate the
assessment of a fee in accordance with Schedule
A of this Ordinance.
4. Submittal of verification of testing by a
District approved tester on the appropriate
form(s) received in the District office within
the allotted time period will constitute
compliance with the above requirements.
M. Water Service Termination
A. General
When the District encounters water uses that rep-
resent a clear and immediate hazard to the potable
water supply that cannot be immediately abated, the
District shall institute the procedure for
discontinuing the District water service. A
reconnection fee will be assessed in accordance with
Schedule A.
B. Basis for Termination
Conditions or water uses that create a basis for
water service termination shall include, but are not
limited to, the following items:
1. Refusal to install a required backflow pre-
vention device;
2. Refusal to test a backflow prevention device;
3. Refusal to repair a faulty backflow prevention
device;
4. Refusal to replace a faulty backflow prevention
device;
5. Direct or indirect connection between the
public water system and a sewer line;
6. Unprotected direct or indirect connection
between the public water system and a system or
equipment containing contaminants;
23-11
7. Unprotected direct or indirect connection
between the public water system and an auxil-
iary water system; and/or
8. Any situation which presents an immediate
health hazard to the public water system.
Additional remedies for failure to comply with Cross
Connection requirements are referenced in Section 72 of The
Code Of Ordinance and may be prosecuted as set forth in
Section 73.01 of this Code.
N. Water Service Termination Procedures
The District has absolute discretion to determine
the corrective action required and referenced in
Sections 72 and 73 of this Code.
1. For conditions 1, 2, 3, or 4, the District will
terminate service to a customer's premise after
2 written notices have been sent specifying the
corrective action needed and the time period in
which it must be done. If no action is taken
within the allowed time period water service
may be terminated.
2. For conditions 4, 5, 6, 7, or 8, the District
will take the following steps:
a. Make reasonable effort to advise the water
user of intent to terminate water service;
b. Terminate water supply and lock service
valve. The water service will remain
inactive until correction of violations
has been approved by the District.
O. Requirements for addition to or renewal on the Otay
Water District list of approved backflow prevention
device testers
A. Each applicant desiring initial addition to or
annual renewal on the District List of Approved
Backflow Prevention Device Testers shall submit
a fee in accordance with Section A. of this
Ordinance. Fees must be made in an acceptable
form of payment to the District. With the fee,
a current address and phone number must be
furnished. Those applicants not meeting all
Formatted: Indent: Left: 0", First line: 0"
Formatted: Indent: Left: 0", First line: 0", Tab stops: 1",Left
Formatted: Indent: Left: 0.5", Hanging: 0.5"
Formatted: Indent: Left: 1"
Formatted: Indent: Left: 0", First line: 0"
23-12
qualifications specified herein will have
current fees returned.
B. Applicants shall hold a valid and current
certification from the American Water Works
Association (AWWA), American Backflow
Prevention Association (ABPA), American Society
of Sanitary Engineering (ASSE), or University
of Southern California Test Procedures (current
edition). California Nevada Section or from a
certification program recognized by the San
Diego County Health Department. Evidence of
said certification shall be furnished the
District at the time of application, at time of
renewal and at any time the District requests
verification. Certification alone does not
constitute District approval.
C. Each applicant shall furnish evidence to show
the availability of the necessary tools and
equipment to properly test and/or repair such
devices. Test kits shall be recalibrated
annually and evidence of this shall also be
provided with both initial application and
subsequent renewals.
D. The tester shall be solely responsible for the
competency and accuracy of all tests and
reports prepared and submitted to the District.
The list of approved testers will be furnished
upon request to any District customer requiring
such service.
The testers listed will remain listed for a
period of one year at which time they are
subject to application for renewal. At the
beginning of each year a grace period not to
exceed ninety (90) days will be allowed for
this process. Failure to renew within the
grace period will constitute removal from the
list. The District reserves the authority to
revoke, suspend, or remove any tester from the
list of authorized testers for improper
conduct, testing, repairs, and/or reporting.
FEES
23-13
A. A second notice for required corrective action
will result in a service fee, per backflow
device as outlined in Schedule A.
B. A third notice (termination of service notice)
will result in a service, per backflow device
followed by the assessment of a reconnection
fee if such action is required as outlined in
Schedule A.
C. A reconnection fee, per service, is required
for service to be resumed as outlined in
Schedule A
D. Applicants for addition to the list of approved
backflow prevention device testers in the Otay
Water District will submit an initial filing
fee and a renewal fee of ten dollars annually
thereafter as outlined in Schedule A.
23.05 WATER SERVICE FOR STEAM BOILERS
Customers using District water to supply steam boilers
are required to provide adequate storage of water for boiler
use for a minimum period of 12 hours.
23.06 ELECTRICAL GROUND CONNECTIONS The connection of electrical ground wire to water pipes is prohibited. The District shall assume no responsibility for any loss or damage resulting from such a connection.
23-1
SECTION 23 NON-RESPONSIBILITY OF DISTRICT
23.01 INTERRUPTIONS OF WATER SERVICE
District does not guarantee continuous delivery of water
on demand. From time to time it may be necessary for the
District to shut off the flow of water in any of its water
systems. Except in emergencies, such stoppages will not be
made without prior notice to the customers involved. District
shall not assume any responsibility for loss or damages which
may occur due to interruption of water service.
23.02 PRIVATELY-OWNED WATER LINES
The District assumes no responsibility for the delivery
of water through privately-owned pipelines or systems, nor
shall it assume any responsibility for damages resulting from
the operation of any such system even though water may be
received from a district water distribution system.
23.03 WATER PRESSURE REGULATION
A. Customer Responsibility. The District shall
assume no responsibility for water pressure
regulation within a customer's service area. The
customer shall be responsible for providing adequate
safeguard measures for the customer's water system
wherever pressure regulation is necessary.
B. Requirement for Installation in New Construction.
Customers making application for water service for
new construction for residential, commercial or
industrial use shall be required to install an
appropriate pressure regulation device for such
service.
23.04 CROSS-CONNECTIONS AND BACKFLOW DEVICES
State Regulations for Cross-Connections
The California Department of Public Health has issued
Regulations Relating to Cross-Connections (Calif. Adm. Code,
Title 17 - Public Health) for the purpose of safeguarding
drinking water supplies by preventing backflow into public
water systems.
It is unlawful for any person, firm, or corporation at
any time to make or maintain or cause to be made or main-
tained, temporarily or permanently, for any period of time
whatsoever, any cross-connection between plumbing pipes or
water fixtures being served with water by the District water
department and any other source of water supply or to maintain
23-2
any sanitary fixture or other appurtenances or fixtures which
by reason of their construction may cause or allow back-flow
of water or other substances into the water supply system of
the District and/or the service of water pipes or fixtures of
any consumer of the District.
A. Definitions: For a complete listing see California
Administrative Code, Title 17, Public Health.
1. Air-Gap Separation (AG): The term "air-gap
separation" means a physical break between a supply
pipe and a receiving vessel. The air-gap shall be
at least double the diameter of the supply pipe
measured vertically above the top rim of the vessel,
in no case less than one inch.
2. Approved Backflow Prevention Device: The term
"approved backflow prevention device" shall mean
devices which have passed laboratory and field
evaluation tests performed by a recognized testing
organization which has demonstrated their competency
to perform such test to the California Department of
Health Services and the Otay Water District.
3. AWWA Standard: The term "AWWA Standard" means an
official standard developed and approved by the
American Water Works Association (AWWA).
4. Backflow: The term "backflow" shall mean a flow
condition, caused by a differential in pressure,
that causes the flow of water or other liquids,
gases, mixtures or substances into the distributing
pipes of a potable supply of water from any source
or sources other than an approved water supply
source. Back-siphonage is one cause of backflow.
Back pressure is the other cause.
5. Cross-Connection: The term "cross-connection" as
used in this Ordinance means any unprotected actual
or potential connection between a potable water
system used to supply water for drinking purposes
and any source or system containing unapproved water
or a substance that is not or cannot be approved as
safe, wholesome, and potable. Bypass arrangements,
jumper connections, removable sections, swivel or
changeover devices, or other devices through which
backflow could occur, shall be considered to be
cross-connections.
6. Double Check Valve Assembly: The term "double check
valve assembly" means an assembly of at least two
independently acting check valves, including tightly
23-3
closing shut-off valves, on each side of the check
valve assembly and test cocks available for testing
the water tightness of each check valve.
7. Reduced Pressure Principle Backflow Prevention
Device (RP): The term "reduced pressure principle
backflow prevention device" means a device
incorporating two or more check valves and an
automatically operating differential relief valve
located between the two check valves, a tightly
closing shut-off valve on each side of the check
valve assembly, and equipped with necessary test
cocks for testing.
8. Reduced Pressure Detection Assembly (RPDA): Same as
RP except as approved for fire services.
9. Service Connection: The term "service connection"
refers to the point of connection of a user's piping
to the Otay Water District facilities.
B. General Provisions
1. Unprotected cross-connections with the public
water supply are prohibited.
2. Whenever backflow protection has been found
necessary, the District will require the water
user to install an approved backflow prevention
device by and at his/her expense for continued
services or before a new service will be granted.
3. Wherever backflow protection, has been found
necessary on a water supply line entering a water
user's premises, then any and all water supply
lines from the District's mains entering such
premises, buildings, or structures shall be
protected by an approved backflow prevention
device. The type of device to be installed will
be in accordance with the requirements of this
ordinance.
C. Where Protection is Required
1. Each service connection from the District water
system for supplying water to premises having an
auxiliary water supply shall be protected against
backflow of water from the premises into the
public water system.
23-4
2. Each service connection from the District water
system for supplying water to any premises on
which any substance is handled in such fashion as
may allow its entry into the water system shall
be protected against backflow of the water from
the premises into the public system. This shall
include commercial accounts, irrigation accounts,
multifamily dwellings, multi-story buildings,
complex piping and locations where the handling
of process waters and waters originating from the
District water system may be subjected to
deterioration in sanitary quality.
D. Type of Protection Required
1. The type of protection that shall be provided to
prevent backflow into the approved water supply
shall be commensurate to the degree of hazard
that exists on the consumer's premises. The type
of protective device that may be required (listed
in an increasing level of protection) includes:
Reduced Pressure Principle Backflow Prevention
Device (RP), and an Air-gap separation (AG). The
water user may choose a higher level of pro-
tection than that required by the District. The
minimum types of backflow protection required to
protect the approved water supply at the user's
water connection to premises with varying degrees
of hazard, are given in Table 1 of the California
Administrative Code, Title 17, Public Health.
Situations which are not covered in Table 1 shall
be evaluated on a case by case basis and the
appropriate backflow protection shall be
determined by the District.
E. Approved Backflow Prevention Devices
1. Only backflow prevention devices which have been
approved by the District shall be acceptable for
installation by a water user connected to the
District's potable water system.
2. The District will provide to any affected cus-
tomer, upon their request, a list of approved
backflow prevention devices.
F. Backflow Prevention Device Installation
1. Backflow prevention devices shall be installed in
a manner prescribed in Section 7603, Title 17 of
23-5
the California Administrative Code. Location of
the devices should be as close as practical to
the user's connection. The District shall have
the final authority in determining the required
location of a backflow prevention device.
a. Air-gap separation (AG) - The air-gap
separation shall be located on the user's
side of and as close to the service
connection as is practical. All piping
from the service connection to the
receiving tank shall be above grade and be
entirely visible. No water use shall be
provided from any point between the
service connection and the air-gap separa-
tion. The water inlet piping shall
terminate a distance of at least two (2)
pipe diameters of the supply inlet, but in
no case less than one inch above the
overflow rim of the receiving tank.
b. Reduced Pressure principle backflow
prevention device (RP) - The approved
reduced pressure principle backflow
prevention device shall be installed on
the user's side of the service connection
at a distance consistent with the
District's Standard Drawings and
Specifications. The device shall be
installed a minimum of twelve inches (12")
but not more than eighteen inches (18")
above grade measured from the bottom of
the relief valve and with a minimum of
twelve inches (12") side clearance. The
device shall be installed so that it is
readily accessible for maintenance and
testing. Water supplied from any point
between the service connection and the RP
device shall be protected in a manner
approved by the District. Additionally,
materials and installation shall at all
times conform to water agency standards as
outlined in www.sdwas.com.
G. Backflow Prevention Device Testing and Maintenance
1. The owners of any premises on which, or on
account of which, backflow prevention devices
are installed, shall have the devices tested by
a person who has demonstrated their competency
23-6
in testing of these devices to the District and
has been approved by the District. Backflow
prevention devices must be tested at least
annually and immediately after installation,
relocation or repair. The District may require
a more frequent testing schedule -if it is
determined to be necessary. No device shall be
placed back in service unless it is functioning
as required. A report in a form acceptable to
the District shall be filed with the District
each time a device is tested, relocated or
repaired. These devices shall be serviced,
overhauled, or replaced whenever they are found
to be defective and all costs of testing,
repair, and maintenance shall be borne by the
water user.
2. Initial testing after installation and subse-
quent retesting shall at all times conform to
water agency standards as outlined in
www.sdwas.com.
3. The District will supply affected water users
with a list of persons acceptable to the
District to test backflow prevention devices.
The District will notify affected customers by
mail when annual testing of a device is needed
and also supply users with the necessary forms
which must be filled out each time a device is
tested or repaired.
4. Existing double check valves and pressure vacuum
breakers on median strip irrigation areas which
function adequately may remain in place,
however, as the District no longer recognizes
such devices to be commensurate with the degree
of potential hazard, failures of these devices
will necessitate their replacement with a
reduced pressure principal backflow prevention
device (RP).
H. Backflow Prevention Device Removal
1. Written approval must be obtained from the
District before a backflow prevention device is
removed, relocated, repaired or replaced.
a. Removal: The use of a device may be
discontinued and device removed from
service upon presentation of sufficient
23-7
evidence to the District to verify that a
hazard no longer exists or is not likely
to be created in the future;
b. Relocation: A device may be relocated
following confirmation by the District
that the relocation will continue to
provide the required protection and
satisfy installation requirements. A
retest will be required following the
relocation of the device;
c. Repair: A device may be removed for
repair, provided the water use is either
discontinued until repair is completed and
the device is returned to service, or the
service connection is equipped with other
backflow protection approved by the
District. A retest will be required
following the repair of the device; and
d. Replacement: A device may be removed and
replaced provided the water use is
discontinued until the replacement device
is installed and tested. All replacement
devices must be approved by the District
and must be commensurate with the degree
of hazard involved.
I. User Supervisor
1. At each premise where it is necessary, in the
opinion of the District, a user supervisor shall
be designated by and at the expense of the water
user. This user supervisor shall be responsible
for the monitoring of the backflow prevention
devices and for avoidance of cross connections.
In the event of contamination or pollution of
the drinking water system due to a cross-
connection on the premises, the District shall
be promptly notified by the user supervisor so
that appropriate measures may be taken to
overcome the contamination. The water user
shall inform the District of the user
supervisor's identity on, as a minimum, an
annual basis and whenever a change occurs.
J. Administrative Procedures
Water System Survey
23-8
1. The District shall review all requests for new
services to determine if backflow protection is
needed. Plans and specifications must be
submitted to the District upon request for
review of possible cross-connection hazards as a
condition of service for new service
connections. If it is determined that a
backflow prevention device is necessary to
protect the public water system, the required
device must be installed before service will be
activated.
2. The District may require an on-premise
inspection to evaluate cross-connection hazards.
The District will transmit a written notice
requesting an inspection appointment to each
affected water user. Any customer which cannot
or will not allow an on-premise inspection of
their piping system shall be required to install
the backflow prevention device the District
considers necessary.
3. The District may, at it's discretion, require a
reinspection for cross-connection hazards of
any premise to which it serves water. The
District will transmit a written notice
requesting an inspection appointment to each
affected water user. Any customer which cannot
or will not allow an on-premise inspection of
their piping system shall be required to
install the backflow prevention device the
District considers necessary.
K. Customer Notification - Device Installation and/or
Repair (Corrective Action)
1. The District will notify the water user of the
survey findings, listing corrective action to
be taken if required. A period of 30 days will
be given to complete all corrective action
required including installation of backflow
prevention devices.
2. A second notice will be sent to each water user
who does not take the required corrective
action prescribed in the first notice within
the 30 day period allowed. The second notice
will give the water user a 14 day period to
take the required corrective action and will
23-9
generate the assessment of a fee in accordance
with Schedule A. If no action is taken within
the 14 day period, the District may terminate
water service to the affected water user until
the required corrective actions are taken.
3. A third and final notice will be sent to each
water user who fails to take the requisite
corrective action detailed in the second notice
within the 14 day period allowed. The third
notice will indicate the date of service
termination and will generate the assessment of
a fee in accordance with Schedule A.
4. Only written verification from a certified and
District-approved tester/installer received in
the District office within the allotted time
period will constitute compliance with the
above requirements.
L. Customer Notification - Testing
1. The District will notify each affected water
user when it is time for the backflow preven-
tion device installed on their service
connections to be tested. This written notice
shall give the water user 30 days to have the
device tested and supply the water user with
the necessary form(s) to be completed and
submitted to the District.
2. A second notice shall be sent to each water
user who does not have their backflow preven-
tion device tested as prescribed in the first
notice within the 30 day period allowed. The
second notice will give the water user a 14 day
period to have their backflow prevention device
tested and will generate the assessment of a
fee in accordance with Schedule A of this
Ordinance. If no action is taken within the 14
day period, the District may terminate water
service to the affected water user until the
subject device is tested.
3. A third and final notice will be sent to each
water user who fails to have their backflow
prevention device(s) tested as required in the
second notice within the 14 day period allowed.
The third notice will indicate the date of
service termination and will generate the
23-10
assessment of a fee in accordance with Schedule
A of this Ordinance.
4. Submittal of verification of testing by a
District approved tester on the appropriate
form(s) received in the District office within
the allotted time period will constitute
compliance with the above requirements.
M. Water Service Termination
A. General
When the District encounters water uses that rep-
resent a clear and immediate hazard to the potable
water supply that cannot be immediately abated, the
District shall institute the procedure for
discontinuing the District water service. A
reconnection fee will be assessed in accordance with
Schedule A.
B. Basis for Termination
Conditions or water uses that create a basis for
water service termination shall include, but are not
limited to, the following items:
1. Refusal to install a required backflow pre-
vention device;
2. Refusal to test a backflow prevention device;
3. Refusal to repair a faulty backflow prevention
device;
4. Refusal to replace a faulty backflow prevention
device;
5. Direct or indirect connection between the
public water system and a sewer line;
6. Unprotected direct or indirect connection
between the public water system and a system or
equipment containing contaminants;
7. Unprotected direct or indirect connection
between the public water system and an auxil-
iary water system; and/or
23-11
8. Any situation which presents an immediate
health hazard to the public water system.
Additional remedies for failure to comply with Cross
Connection requirements are referenced in Section 72 of The
Code Of Ordinance and may be prosecuted as set forth in
Section 73.01 of this Code.
N. Water Service Termination Procedures
The District has absolute discretion to determine
the corrective action required and referenced in
Sections 72 and 73 of this Code.
1. For conditions 1, 2, 3, or 4, the District will
terminate service to a customer's premise after
2 written notices have been sent specifying the
corrective action needed and the time period in
which it must be done. If no action is taken
within the allowed time period water service
may be terminated.
2. For conditions 4, 5, 6, 7, or 8, the District
will take the following steps:
a. Make reasonable effort to advise the water
user of intent to terminate water service;
b. Terminate water supply and lock service
valve. The water service will remain
inactive until correction of violations
has been approved by the District.
O. Requirements for addition to or renewal on the Otay
Water District list of approved backflow prevention
device testers
A. Each applicant desiring initial addition to or
annual renewal on the District List of Approved
Backflow Prevention Device Testers shall submit
a fee in accordance with Section A. of this
Ordinance. Fees must be made in an acceptable
form of payment to the District. With the fee,
a current address and phone number must be
furnished. Those applicants not meeting all
qualifications specified herein will have
current fees returned.
B. Applicants shall hold a valid and current
certification from the American Water Works
23-12
Association (AWWA), American Backflow
Prevention Association (ABPA), American Society
of Sanitary Engineering (ASSE), or University
of Southern California Test Procedures (current
edition). California Nevada Section or from a
certification program recognized by the San
Diego County Health Department. Evidence of
said certification shall be furnished the
District at the time of application, at time of
renewal and at any time the District requests
verification. Certification alone does not
constitute District approval.
C. Each applicant shall furnish evidence to show
the availability of the necessary tools and
equipment to properly test and/or repair such
devices. Test kits shall be recalibrated
annually and evidence of this shall also be
provided with both initial application and
subsequent renewals.
D. The tester shall be solely responsible for the
competency and accuracy of all tests and
reports prepared and submitted to the District.
The list of approved testers will be furnished
upon request to any District customer requiring
such service.
The testers listed will remain listed for a
period of one year at which time they are
subject to application for renewal. At the
beginning of each year a grace period not to
exceed ninety (90) days will be allowed for
this process. Failure to renew within the
grace period will constitute removal from the
list. The District reserves the authority to
revoke, suspend, or remove any tester from the
list of authorized testers for improper
conduct, testing, repairs, and/or reporting.
FEES
A. A second notice for required corrective action
will result in a service fee, per backflow
device as outlined in Schedule A.
B. A third notice (termination of service notice)
will result in a service, per backflow device
23-13
followed by the assessment of a reconnection
fee if such action is required as outlined in
Schedule A.
C. A reconnection fee, per service, is required
for service to be resumed as outlined in
Schedule A
D. Applicants for addition to the list of approved
backflow prevention device testers in the Otay
Water District will submit an initial filing
fee and a renewal fee of ten dollars annually
thereafter as outlined in Schedule A.
23.05 WATER SERVICE FOR STEAM BOILERS
Customers using District water to supply steam boilers
are required to provide adequate storage of water for boiler
use for a minimum period of 12 hours.
23.06 ELECTRICAL GROUND CONNECTIONS
The connection of electrical ground wire to water pipes
is prohibited. The District shall assume no responsibility
for any loss or damage resulting from such a connection.
STAFF REPORT
TYPE MEETING: Regular Board
MEETING DATE: July 2, 2014
SUBMITTED BY:
Dan Martin
Engineering Manager
Bob Kennedy
Engineering Manager
Kevin Koeppen
Finance Manager
PROJECT: R2087-
001101
DIV. NO. 2
APPROVED BY:
Rod Posada, Chief, Engineering
German Alvarez, Assistant General Manager
Mark Watton, General Manager
SUBJECT: Temporary Moratorium on the Installation of New Recycled Water
Facilities on Otay Mesa
GENERAL MANAGER’S RECOMMENDATION:
That the Otay Water District (District) Board of Directors (Board)
place a temporary moratorium on the installation of new recycled
water facilities on Otay Mesa (see Exhibit A for Project location).
COMMITTEE ACTION:
Please see Attachment A.
PURPOSE:
Given the uncertainty of recycled water availability for Otay Mesa,
the financial feasibility considerations associated with anticipated
recycled water rates from the City of San Diego, the uncertainty of
securing easements to support the Otay Mesa Recycled Water Supply
Link Project, and the delivery horizon of Indirect Potable Reuse
(IPR) and/or Direct Potable Reuse (DPR), staff is recommending a
2
temporary moratorium be placed on the installation of new recycled
water facilities on Otay Mesa.
ANALYSIS:
It is the policy of the District that recycled water shall be used
within the jurisdiction wherever its use is financially and
technically feasible, and consistent with legal requirements,
preservation of public health, safety and welfare, and the
environment. To this end, the District currently operates and
maintains 102 miles of recycled water mains and 43.7 million gallons
of recycled water storage. A significant majority of these
facilities are located in and support recycled water for the Central
area of the District. The District is committed to the use of
recycled water in order to minimize its overall demand for potable
water, and currently has one of the largest recycled water
distribution systems in San Diego County.
The District owns and operates the Ralph W. Chapman Water
Reclamation Facility (RWCWRF) which was originally constructed in
1979 and was upgraded in 1990 to its current rated design capacity
of 1.3 million gallons per day (MGD) or approximately 4.0 Acre-Feet
(AF) per day. In April 2013, the District completed an additional
treatment upgrade to the RWCWRF to meet the current “Total Nitrogen
limits” established by the California Regional Water Quality Control
Board. With the current design capacity, the RWCWRF has recently
produced an average of 3.1 AF per day (1.0 MGD) of recycled water.
On a peak demand day, the RWCWRF has been operated to produce a
supply of 3.7 AF per day (1.2 MGD). In 2011, the RWCWRF provided a
recycled water supply of 1,077 AF to the District. The RWCWRF
supplies a portion of the recycled water needs for the District
which in Fiscal Year 2013 totaled 4,313 AF.
To augment the RWCWRF recycled water supply, the District and the
City of San Diego (City) entered into a Supply Agreement dated
October 20, 2003 (“Agreement” is attached as Exhibit B) that
provides for recycled water supply from the South Bay Water
Reclamation Plant (SBWRP). The term of the Agreement, which began
on January 1, 2007, is for twenty years and includes a Schedule of
Reclaimed Water Delivery that increases on an annual basis up to
5.22 million gallons per day in calendar year 2026. The Agreement
committed the City to supply sufficient recycled water from the
SBWRP to the District at an initial rate of $350 per AF and required
that the District pay a one-time capacity reservation charge of $3.6
Million. The District started taking recycled water from the City
of San Diego’s SBWRP in May 2007. The Agreement was negotiated
approximately four years ahead of implementing the use of the City’s
recycled water supply and in advance of the development of the
3
District’s system in this area. As annual implementation of the
Supply Agreement occurred and use of the recycled water supply was
influenced by the economy and the other factors the contract became
problematic for the District. To date, the City has not shown
interest in discussing the terms of the Agreement.
As the District has pursued expansion of the District’s recycled
water system to the Otay Mesa area, the District has encountered a
number of issues and risks when considered in total, challenge both
the technical and financial feasibility of delivering recycled water
to Otay Mesa. These include the following:
Securing a reliable and cost effective supply of recycled water
for Otay Mesa;
The cost of new recycled water infrastructure when analyzed
with projected demand on Otay Mesa;
Avoided San Diego County Water Authority (SDCWA)capacity fees
on recycled meters; and
Potential new sources of water.
This report provides an overview of these issues as they relate to
the delivery of recycled water on Otay Mesa and are in support of a
staff recommendation to place a temporary moratorium on the
installation of new recycled water facilities on Otay Mesa.
Securing a reliable and cost effective supply of recycled water for
Otay Mesa
The District’s ability to meet the requirements in the Supply
Agreement is based on the City’s ability to provide enough recycled
water in the warmer months when demand peaks. Shortly after the
Agreement commenced in January 2007, the District’s General Manager
met with the City of San Diego’s Utility Director, James Barrett, to
discuss the terms of the Agreement including the topic of pricing.
Director Barrett was unwilling to entertain any changes to the
Agreement. District staff has on several occasions over several
years attempted to negotiate a more equitable recycled water supply
agreement with the City with the goal of securing a financially
feasible and reliable source of recycled water to augment the
District’s supply. As an example, on August 1, 2011, staff met with
the City’s Utility Director, Roger Bailey, and his senior staff on
the amendment and rewrite of the Agreement and a number of other
issues including resolution of the proposed City recycled water
pricing, the contracted volumes, and future availability. The
District’s General Manager also met with the City’s Utility Director
several times on these issues. Each meeting was very friendly and
detailed, however, no movement towards resolution was provided by
4
the City. The new Utility Director, Halla Razak, who started with
the City earlier this year, has met with District staff and
expressed interest in discussing the issues. Staff presented a
proposal to rewrite the Agreement to Director Razak; to date no
meaningful response has been provided. Exhibit C details the City
of San Diego – Otay Water District Discussion Items as of December
2013. Exhibit D includes correspondence related to these issues and
includes the most recent letter sent to the City dated March 5,
2014.
In 2003, when the District entered into the Agreement, the District
expressed concern regarding the City established rate of $350 per AF
indicating that the recycled water rate was not justified and was
excessive for the SBWRP supply. Since that time, the City has
identified that it costs $214 per AF to produce and pump recycled
water from the SBWRP plant. Hence, as the District believed in
2003, the City’s charge for recycled water was approximately $136
per AF in excess of the actual production cost.
Over the last several years, the District has repeatedly requested
and the City has repeatedly promised to provide the District with a
report on future recycled water rates. The District has reviewed
early draft copies of the Raftelis Financial Consultants Recycled
Water Pricing Study (Raftelis Report) which has suggested the
wholesale cost of recycled water could change dramatically for the
District. The City has hired a contractor to move two de-
mineralization systems currently at the City’s North City plant to
the SBWRP to remove chlorides in the recycled water the District
receives. Staff understands that the cost of these systems, which
has been estimated by the City at $5.9 Million, will be passed on to
the District when the cost of service study is released to account
for cost recovery. The District does not agree with this rational
and believes that there are other alternatives. A substantial
increase in the cost of recycled water raises concerns regarding the
financial feasibility of providing recycled water to the District’s
customers.
The issues associated with the recycled water supply Agreement
include occasions that the City has been unable to supply sufficient
recycled water to the District when it is most needed, particularly
in the summer months. Late last year, the South Bay plant did not
consistently deliver requested demands by the District for volume
which resulted in the District’s reservoirs operating at a level
that was lower than optimal. It took several days to bring the
reservoir back to an optimal operating range. The District is
unable to rely on City flows equal to or greater than 6 MGD of
recycled water, let alone the 10 MGD that is included in the recital
of the recycled water supply Agreement with the City. Based on the
5
City's 2012 Annual Report and Summary for the South Bay Wastewater
Reclamation Plant and Ocean Outfall, the City is only diverting
approximately 8.04 MGD of wastewater to the plant making it
impossible for the City to produce 10 MGD as stated in Recital A of
the Agreement. To date, the City has not taken steps towards
expanding the availability of recycled water in the South Bay.
Among the discussion items included in Exhibit C is the use of
District facilities by the City. The City is currently using
reverse flow from the District’s 450-1 reservoir when it is full and
the SBWRP is not pumping to serve a City customer (Caltrans). The
District, under threat from the City to discontinue the supply of
recycled water, allows the City to use the 450-1 reservoir in this
manner. The District disputes the City’s right to use the
District’s facilities in this manner and has sent correspondence to
the City on an annual basis to reserve the District’s rights.
Therefore, the agreement needs to be modified to address the use of
the District’s Reservoir, disinfection, pipeline operations and
maintenance, and Capital recovery costs.
Over the last several years, stakeholders have written letters of
support to the City of San Diego for the District’s recycled water
program and the District’s efforts to expand the supply in an effort
to alleviate the uncertainty out of the cost of the recycled water
(see Exhibit E).
The District has expended approximately $49.0 Million in capital
costs to construct the facilities to link the SBWRP to the
District’s recycled water system to transport the SBWRP recycled
water to the District’s customers located in the South Bay.
Currently, the District is the only significant customer of recycled
water from the SBWRP because the City has not developed a recycled
water system in that area.
Although there are existing recycled water facilities that have been
constructed on Otay Mesa, the District is not currently providing
recycled water to this area. The continued uncertainty on the
availability of recycled water from the SBWRP and future cost of
recycled water has delayed expansion of the District’s Otay Mesa
Recycled Water Supply Link Project. This Project connects to the
existing recycled water infrastructure and customers and enables the
District to expand the use of recycled water. The estimated cost of
this infrastructure is approximately $23.5 Million. It would
connect the existing transmission main from Olympic Parkway via
Wueste Road and connect gaps of the transmission system on Alta
Road, Otay Mesa Road, La Media Street, and Airway Road to be able to
provide recycled water to Otay Mesa.
6
The Otay Mesa Recycled Water Supply Link Project is also dependent
on the acquisition of District easements from the City for the
constructed facilities. As noted in the District’s July 27, 2012
letter to the City (Exhibit D), the District initiated discussions
to obtain easements in 2010. As recent as March 5, 2014, the
District sent correspondence to the City regarding this issue
(Exhibit D). To date, the City has not granted the District
easements for this critical infrastructure providing additional
uncertainty on the availability of recycled water for Otay Mesa.
District staff’s understanding is that the easements were ready to
be granted by the City’s Real Estate Department, however, the City’s
Utilities Department placed a hold on the process.
As part of the development of the recycled water system on Otay
Mesa, Developers have been required to install dual main pipelines
for potable and recycled water and separate onsite recycled water
irrigation systems in anticipation of a future recycled water
supply. The current demand for irrigation water on Otay Mesa is 330
AF/year (approximately 0.30 MGD) and is expected to grow to 1,200
AF/year (approximately 1.1 MGD) by 2035.
The cost of new recycled water infrastructure when analyzed with
projected demand on Otay Mesa
The District’s Finance Department has prepared a recycled water
financial analysis for Otay Mesa based on a range of anticipated
costs of water from the City’s SBWRP. That analysis shows how
financially unfeasible it is to structure recycled water CIP
expenditures in Otay Mesa without a reliable and cost effective
water supply. The recycled water supply Agreement with the City
expires at the end of 2026 and the District’s expansion project will
begin delivering recycled water to Otay Mesa in 2020. With only six
years remaining on the contract from the time recycled water is able
to be delivered to Otay Mesa, staff is concerned with further
expansion of the District’s recycled water supply system to Otay
Mesa given the uncertainty of the supply and the cost of recycled
water from the City.
The budgeted CIP expenditure for the expansion of the recycled water
system to Otay Mesa is approximately $23.5 Million through 2025.
The District anticipates it could recoup up to 25% of Otay Mesa
recycled water project expenditures through grant reimbursements,
resulting in a net CIP cost of $17.6 Million. However, there is
some risk as grant reimbursements are not guaranteed. Staff
performed its financial analysis based on obtaining grant
reimbursements of 0% and 25% for the associated CIP expenditures.
On October 1, 2013, the United States Department of the Interior
Bureau of Reclamation notified the District that Fiscal Year 2014
7
appropriations did not include funding for the District’s
Cooperative Agreement.
In addition to the City of San Diego’s recycled water supply and
pricing issues mentioned above, there are risks that, when combined,
currently render this a costly source of water. These risks
include: the projected volume associated with the level of CIP
expenditures, potable versus recycled water costs, ongoing
incremental recycled operating costs and the expiration of
Metropolitan Water District of Southern California (MWD) and San
Diego County Water Authority (SDCWA) credits in 2025 and 2026,
respectively.
The financial analysis indicates that the most recent pricing
proposal received from the City reflects a recycled rate of $566/AF,
which is a 59% increase from Fiscal Year 2015’s budgeted rate of
$357/AF and a 23% increase from District staff’s estimated cost of
service, including demineralization, rate of $462/AF. Staff
performed the financial analysis based on the $462/AF estimated cost
of service and $566/AF proposed pricing from the City of San Diego.
The Otay Mesa recycled expansion will deliver 672 acre-feet of
recycled water beginning in 2020 and grow to 1,200 acre-feet per
year by 2035. If the District was able to fund 25% of the CIP
through grants the CIP cost per annual acre-feet of supply would be
$14,667. Comparably, the District invested approximately $25.6
Million, net of grants, or $8,533 per annual acre-feet of supply to
obtain the current 3,000 AF/year through the City of San Diego
connection to the SBWRP. On an annual acre-feet of supply basis,
the cost of CIP expansion to Otay Mesa is 172% greater than the cost
of the City of San Diego connection to the SBWRP.
The Fiscal Year 2015 effective rates for potable and recycled water
are $1,476/AF and $551/AF, respectively. The District anticipates
that the current savings between the cost of potable and recycled
water will decrease in the future as the City increases its recycled
pricing to the District and other uses for this water are developed.
The ongoing incremental operating costs include regulatory cross-
connection testing of recycled water lines to the end user and
maintaining dual infrastructures (i.e., potable and recycled
infrastructure). Staff anticipates that while the volume of water
being delivered to Otay Mesa will reach a capacity of 1,200 AF/year,
the ongoing incremental costs associated with maintaining the
recycled system will continue to increase due to inflation.
Currently, the District receives $385/AF credit from SDCWA and MWD
for recycled water sales to assist in the recovery of investments in
8
the recycled system. These credits will expire in 2025 and 2026 and
currently represent approximately $1.5 Million in revenue to the
District. The loss of these credits extend the payback period of
any investment not recovered prior to their expiration. When
considering all the risks and volumes associated with expanding
recycled water to Otay Mesa, the financial analysis indicates it is
probable that the payback period for these facilities would be in
excess of 70 years. A payback period of more than 70 years would be
beyond the estimated useful life of the infrastructure and as a
result would be considered to be financially unfeasible.
Avoided San Diego County Water Authority (SDCWA) capacity fees on
recycled meters
Currently, the District has not collected SDCWA capacity fees on
meters set for future recycled water in anticipation that recycled
water will be available on Otay Mesa. To date, the value of the
avoided SDCWA capacity fees is $1,265,300. These fees represent a
risk to the District. This risk could grow very quickly upon the
sale of meters to the Pio Pico Power Plant (Pio Pico) which
anticipates needing a 6-inch recycled water meter and to Corrections
Corporation of America (CCA) which anticipates needing a 4-inch
recycled water meter. In total, these two projects will expose the
District to an additional $222,728 in avoided SDCWA capacity fees,
if not collected. A temporary moratorium would allow the District
to collect capacity fees from developers and avoid this risk. It
also allows developers to avoid the installation cost of a dual
pipeline with separate purple pipe recycled water systems.
Potential new sources of water
Lastly, the City is pursuing Indirect Potable Reuse (IPR) and/or
Direct Potable Reuse (DPR) as a water source. At this time it is
unclear how this will specifically impact the City’s production and
supply of recycled water to the District. The delivery for IPR or
DPR may have a delivery horizon similar to the estimated development
horizon for the Otay Mesa area.
FISCAL IMPACT: Joe Beachem, Chief Financial Officer
The issues, risks, and financial analysis presented in the report
indicate that a temporary moratorium on the installation of new
recycled water facilities on Otay Mesa would assist in mitigating
financial impacts to the District should the Board decide that a
9
future permanent moratorium of recycled water facilities on Otay
Mesa is required.
There are financial risks associated with a future permanent
moratorium. Those risks include reimbursement of $950,000 in grant
funds that were received from the United States Bureau of
Reclamation (USBR) and SDCWA capacity fees.
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 District’s Vision, “A District that is innovative in
providing water services at affordable rates, with a reputation for
outstanding customer service.”
LEGAL IMPACT:
None.
BK/DM/KK/RP:jf
P:\WORKING\CIP R2087\Staff Reports\BD 07-02-14\BD 07-02-14 Staff Report City of San Diego Recycled
Water Contract and District Expansion to Otay Mesa (BK-DM-RP)_140610.docx
Attachments: Attachment A – Committee Action
Exhibit A – Project Location Map
Exhibit B – Supply Agreement
Exhibit C – Otay Water District Discussion Items
Exhibit D – Letters to City of San Diego
Exhibit E – Letters of Support
Exhibit F - Presentation
ATTACHMENT A
SUBJECT/PROJECT:
N/A
Temporary Moratorium on the Installation of New Recycled
Water Facilities on Otay Mesa
COMMITTEE ACTION:
Finance, Admin, and Communications Committee (Committee) reviewed this
item at a meeting held on June 18, 2014. The Committee supported
Staff’s recommendation.
NOTE:
The “Committee Action” is written in anticipation of the Committee
moving the item forward for Board approval. This report will be sent to
the Board as a Committee approved item, or modified to reflect any
discussion or changes as directed from the Committee prior to
presentation to the full Board.
Exhibit C
Otay Water District Discussion with City of San Diego
Updated 12/06/2013
Scott Chadwick is the Chief Operating Officer of the City of San Diego effective
October 31, 2013. Scott Chadwick serves the Mayor. The Assistant Chief Operating
Officer is Stacey LoMedico. Together they manage the 6 Deputy Chief Operating
Officers at the City. The Deputy Chief Operating Officer for Infrastructure/Public Works
is Tony Heinrichs. Halla Razak, Public Utilities Director, is one of six departments that
report to Tony.
Recycled Water Discussion Items:
On August 1, 2011, the City of San Diego and Otay Water District staff met to discuss
the amendment/rewrite of the recycled water agreement. The District stated the areas in
which the agreement could be changed to the benefit of both partners. On a follow-up
meeting on September 20, 2013, District staff met with Lee Ann Jones-Santos, to go
over many of the same items and a possible amendment to the recycled water
agreement was discussed. With Halla Razak as the new Utilities Director, the District
would like to revisit these issues again with the City.
Proposition 218 Setting of Recycled Water Rates: After trying to rush a
recycled water rate increase through the City over the summer of 2013, City staff
was directed to have Black & Veatch prepare a cost of service study and
recommend a new rate structure. Their contract was scheduled to go to the City
council in October so it is time to get an update.
City Customers Served by SBWRP: Latest disclosure lists five City of San
Diego recycled water meters serving City customers along with the single meter
to the District. Little information is available for the City meters. IBWC use
fluctuates a lot now and as of Jan-May 2012 were using approx. 97,000 GPD or
about 35 MG per year. This is almost a 50% decrease from previous years and is
probably the result of their producing a sufficient quantity of secondary effluent of
a quality suitable for use onsite. On January 16, 2013, Edgar Perez of the City of
San Diego acknowledges the City relies on District facilities to serve their South
Bay recycled water customers.
Inability to Meet Otay WD’s Demands: The District’s demands have dropped
so no potable water has been needed to supplement the recycled water supply
2
since the summer of 2011. The Metro Commission/JPA letter to the City’s Deputy
Director of Water Resources and Planning dated June 7, 2012 on the
acceptance of the City’s Recycled Water Study stated that, with the JPA’s
acceptance, the JPA request the City begin the Point Loma offloads starting with
the Salt Creek Diversion to the South Bay Plant to be addressed within 12
months of this letter. Ann Sasaki said the City must complete a “benefit analysis”
to justify adding this project to the CIP list.
Consent Decree: In prior IROC Annual Reports (FY2008, FY2009, FY2010, and
FY 2011), IROC has stressed the importance of planning for the potential waiver
denial by the EPA to continue operating Point Loma as advanced primary plant.
The Public Utilities Department relies on the belief that the Advance Primary
Treatment Process at the Point Loma Wastewater Treatment Plant meets all of
the requirements of the Clean Water Act, with the exception of the 30 mg/L TSS
and BOD requirements (30/30 rule). No scientific evidence has been presented
that demonstrates a significant negative impact to the biodiversity at the outfall
has occurred as a result of the outfall not meeting the 30/30 rule. However, IROC
as well as the Otay Water District understands that this may be less of a science
issue and more of a political issue when the application for the next waiver is
required.
An additional waiver may not be issued when the current permit expires July 31,
2015. Hence, the District/P.A.’s would like to see a 5, 10, and 15 year detailed
plan on how the City of San Diego will meet this future challenge. FY 2012
should have been the time that a technical subcommittee was formed within the
Department, along with citizen involvement, to start outlaying the long-term plan.
If the next waiver is denied, the City of San Diego would likely have another 5-15
yrs to implement a strategy solution to upgrade its wastewater treatment
capability. Significant planning is required now to assess how future rate cases
may be affected by the lack of the waiver. Too much is at stake not to be
engaged now, instead of waiting until 2015. (IROC’s Annual Report Fiscal Year
2011 issued February 22, 2012 also points out this fact)
To start the Point Loma waiver, a Metro JPA Ad-Hoc Committee was formed to
pursue action on a Long-Range Regional Water Reuse Plan and also to gain
Secondary Equivalency for the Point Loma Wastewater Treatment Plant. With
the exception of Imperial Beach and the County of San Diego, all Metro JPA
agencies have adopted resolutions supporting these goals.
3
Compliance with Agreement; Under Section 7 of the agreement, the
responsibility for the quality of the recycled water is defined and at the point of
connection between the District and City facilities, the recycled water must meet
all applicable federal, state, and local health and water quality requirements, and
that the recycled water total dissolved solids concentration not exceed 1,000
milligrams per liter. The most recent three years were researched and the
violations show an increasing pattern over the last three years, climbing from
three (3) in 2010 to thirty-three (33) in 2012. Violations occurred for chloride,
coliform, manganese, and percent sodium. The City recently announced they are
moving the demineralization facility from North City to South Bay. When the
District questioned this move, the City provided documentation that they have not
been in compliance with the Regional Board Requirements.
Use of Otay Water District’s Facilities; The City is using the District’s 450-1
reservoir to serve City customers. This reverse flow from the reservoir can be
considerable and has been measured as high as 0.9 MGD (March 9, 2011). To
prevent air from getting into the District’s pipeline and to protect the 680-1R
11,500 GPM pump station, the District has established the reservoir water level
set point for shutdown of the 680-1R pump station at 8.5 feet. The pumps can’t
begin pumping again until the reservoir level is back at 9 feet. As a result of these
operational limitations, only 8.7 MG of useable volume is now available to the
District. This is affecting the efficiency of the pumps by requiring more frequent
shutdowns and start up. The City needs to build infrastructure to serve their
customers and the agreement needs to be modified to address the District’s
Reservoir, disinfection, and pipeline O&M and Capital recovery costs. We
understand that the City is in the process of installing the jockey pump that
supposedly will correct this operational limitation.
Rate Uncertainty: The District has repeatedly requested to be involved in the
setting of a wholesale rate that is fair and equitable to both the District and the
City. The District buys 99.6% of the recycled water sold at SBWRP by the City.
The District owns and operates the largest recycled water distribution system in
the region with over 700 retail customers and 99 miles of distribution mains. The
District maintains that the recycled water rate should be based on a true cost of
service study that gives both price and volumetric assurances that will allow the
District to continue to expand the distribution of this regionally valuable
commodity. Otay Water District’s existing and future demands; without
assurance on price and availability, the District has delayed construction of the
Otay Mesa Recycled Water Supply Link project that will expand recycled water to
Otay Mesa. This is a $30 Million project that is on hold. It is expected that if this
4
project is implemented, 325 AFY of recycled water would be used. The ultimate
demand for recycled water for Otay Mesa is projected to be 1,200 AFY.
Take or Pay Agreement; The take or pay requirement should be revisited.
When the original contract was signed in 2003, the volumes on the take
requirement were unrealistic and did not anticipate the poor economic conditions
in recent years that greatly reduced the demand for recycled water. The
contractual take requirement grew at an average rate of 6% until 2011, and then
it jumped an incredible 21% in one year. This schedule should be revised to
reflect a realistic take requirement and growth rate that assures both beneficial
reuse in the region and financial stability for the City and the District. The City
had to build the SBWRP to tertiary level of 15 MGD per terms of the Consent
Decree wholly independent of the District recycled water system and supply
requirements and the City along with the PA’s 100% paid for the SBWRP. If take
requirements are to remain then they need to be reasonable and adjust as a
function of actual growth rates and impacts to sales such as water conservation
or drought condition declarations and the like. A take or pay agreement is often
used to give financial protection to the party investing in infrastructure, but it
should not be used to take advantage of the other party.
Caltrans water service at Del Sol/I-805; Caltrans is asking to install a City of
San Diego recycled water meter off of the District’s transmission pipeline; The
City needs to install the infrastructure needed to serve this project independent of
the District’s existing reservoir and disinfection facility.
Otay Mesa Recycled Water Supply Link Easement to Otay WD: The City
needs to grant the recycled water pipeline easements to the District for the Otay
Mesa Recycled Water Supply Link Project.
$3.6 M Capacity Reservation Fee: The City (Metro) invested $4.5 Million in
tertiary capital cost at SBWRP. They received $1.4 Million in grant funds,
therefore, the net tertiary capital cost at SBWRP was $3.1 Million. The District’s
capacity costs can be estimated by dividing the District’s portion of the capacity
by the overall pipeline capacity multiplied by the cost of the tertiary capital cost
(6 MGD/15 MGD x $3.1 Million of net capital cost = $1.24 Million). The balance of
the $3.6 Million capacity fee the District overpaid the City for this capacity should
be refunded to the District or applied to future capital expenditures. In this case,
the District’s Capacity Reservation Charge paid for 100% of the tertiary treatment
infrastructure at SWBRP. See the American Water Works Association (AWWA),
Principles of Water Rates, Fees and Charges, M1 Manual which explains the
proper utilization of a take or pay contractual agreement.
5
An unresolved issue with the Participating Agencies (PAs) of Metro is the City’s
(Metro) transferred the 4,145 feet of pipeline that connects to the District pipeline
to the Water department. This was followed by a transfer of funds between
departments of $1.2 Million, the original cost of the pipeline. Metro should
reimburse the PAs for their share of this transfer.
Potable Water Discussion Items:
Metropolitan Airpark development on Brown Field: City is asking for new
interconnection agreements for future emergency interconnections for this
development. City staff wants to terminate existing interconnection agreements
and terminate the service agreement to the INS facility currently served by the
District. Street improvements on La Media will require developer to relocate
existing potable pipeline and install a recycled water pipeline along their project
frontage. Will City require developer to use recycled water?
Nakano Development: Will City require developer to use recycled water? Status
of project?
Otay Water District Base Load Treated Water from Lower Otay Water
Treatment Plant: The City has fixed costs at the Lower Otay water treatment
plant and could benefit by increasing production, thereby, lowering the unit cost
of the water produced at the plant. The purchase price has to be lower than the
total of CWA treated water cost plus the District’s pumping costs. CWA delivery
pressure vs. City of San Diego’s delivery pressure will affect the transportation
cost for the District.
LOPS Agreement: The City and the District entered into an agreement to sell
Otay treated water from the District WTP in 1999. City records indicate an
outstanding balance of $706,991.44 for treated water received 2006-2008. The
City’s letter dated October 15, 2012 states that a failure to resolve this issue with
the City may result in the following adverse actions:
o Forward all unpaid invoices to the City Attorney Office for appropriate
action.
o Assess and accrue interest charges on outstanding balance at a rate of
return equal to the City’s pool investment return per agreement.
o Temporarily suspend the District’s ability to purchase treated water from
City’s Otay WTP.
o Terminate agreement for failure to abide by the terms and conditions of
the agreement.
6
P:\WORKING\CIP R2087\Staff Reports\BD 07-02-14\Draft Final Report\Exhibit C - Otay Water District Discussion Items
with City of San Diego_djm.docx
At the last meeting District staff had with City of San Diego staff, resolution of
this item was identified as a critical item for the City. Resolution of this item
may need to be considered as key to getting the City to renegotiate the
recycled water agreement.
CWA’s Fixed Cost/Desal Pricing: Member agencies (MAs) of CWA have high
fixed water cost that are passed onto them from MWD and CWA. Currently,
CWA has 30% of their water sales revenue as fixed revenue, including the MWD
pass-through. CWA’s preferred method to price Carlsbad Desalinated water for
the member agencies is to increase both the Infrastructure Access Charge, as
well as create a new fixed Standby charge for member agencies. This would
make 32% of what MAs pay to CWA and MWD fixed charges. These high fixed
costs may increase revenue stability to CWA, mitigating its own risk, but they
force the member agencies to pass more fixed costs onto their customers (MA’s
are limited to a 30% fixed per Best Management Practices 1.4). This also
discourages the MAs from developing their own sources of water such as IPR or
recycled water if their fixed costs to CWA are too high, deteriorating the water
independence of MAs. CWA projects that its sales will exceed the combined
required take of water from IID and Carlsbad. This projection shows that CWA
has limited financial risk that would result from sales revenue reductions. CWA
also has the ability to modify its rates in a declining sales environment and adjust
its declining revenues.
Potential Areas the Otay Water District Could Help the City
Expand Recycled Water Use in the South Bay: The City has an opportunity to
expand recycled water use in the South Bay if the District and the City can
amend the current agreement. The District has much of the infrastructure needed
to transport recycled water to the Nakano Development, Caltrans, Brown Field,
IBWC, and the westerly area of Otay Mesa.
DPR/IPR Pipeline Alternative: A concept the City and the District could discuss
is IPR (or DPR) at Lower Otay reservoir and treatment plant. The District has
plans to install a recycled water pipeline near the Otay WTP. An RO facility co-
located at the Otay WTP would reduce staff requirements, eliminate the need for
a costly pipeline from South Bay WRP, and could take advantage of the head
and storage volume available from the large 927/944 recycled water reservoirs.
The brine disposal is just an engineering problem that needs to be solved.
... COedicoted to Comnw"Lty .QetuJtce
2554 SWEETWATER SPRINGS BOULEVARD, SPRING VALLEY, CALIFORNIA 91978-2004
TELEPHONE: 670-2222, AREA CODE 619
March 5, 2014
Halla Razak
Water Department Director
City of San Diego
MOC II Building
9192 Topaz Way, 2nd Floor
San Diego, CA 92123
RE: City of San Diego Invoice No. 1000095859
Dear Ms. Razak:
www.otaywater.gov
Please consider this correspondence as accompanying the Otay Water District's ("Otay")
payment remitted by check no. 2039533 on the above invoice for reclaimed water, pursuant to the
October 23, 2003 Agreement Between the Otay Water District and the City of San Diego for Purchase of
Reclaimed Water from the South Bay Water Reclamation Plant ("Agreement"). Please take notice that,
as with the prior payments under the Agreement, said payment is made under protest and Otay reserves
any and all rights to dispute or challenge the invoice and/or any related issues. Listed below are several
such related issues regarding the volume requirements, pricing of recycled water, water quality issues and
the unauthorized use of Otay facilities, although these issues may not be the only outstanding issues.
Pursuant to the Agreement, Otay is obligated to pay for certain quantities of reclaimed water at
rates set by the City of San Diego ("City") regardless of whether or not Otay takes the water (the "take-
or-pay provision").' Pursuant to the Agreement, the take-or-pay quantity increases each year.2 Since the
Agreement was signed in 2003, the region has experienced a recession and a drought, which increased
conservation efforts and diminished recycled water demands as much as 30%, thus creating a hardship for
Otay.
Moreover, on more than one occasion the City has been unable to satisfy Otay's recycled water
demands when it was most needed in the summer months. The contract, in section 4.2, states that recycled
water will be produced and pumped to Otay in amounts equal to or greater than 6 mgd. Recital A of the
Agreement represents that the City has 10 million gallons per day of recycled water available for sale.
Over the years Otay has on many occasions needed to supplement its reservoirs with potable water.
Within the last few weeks, for instance, the South Bay plant did not consistently deliver requested
demands by Otay for volume and Otay's storage tank nearly ran empty. The District is rarely able to rely
on the contracted 6 mgd of volume let alone the 10 mgd the recital states. Based on the City's 2012
Annual Report and Summary for the South Bay Wastewater Reclamation Plant and Ocean Outfall, the
City is only diverting 8.04 mgd of wastewater to the plant making it impossible for the City to produce 10
mgd and it is highly questionable if they can produce 6 mgd as agreed.
1 Agreement Between the Otay Water District and the City of San Diego for Purchase of Reclaimed Water from the
South Bay Water Reclamation Plant, dated October 23, 2003 ("Agreement"), sec. 3.2.
2 Agreement, sec. 3.1 and Exhibit B.
Page 2
In addition to such supply difficulties from the City and the recession and drought issues touched
on above, increasing recycled sales is made even more difficult because the City is withholding an
easement to Otay which would allow the expansion of Otay's recycled water system to Otay Mesa,
placing unrelated, unreasonable, and unnecessary conditions on the granting of the easement that the
District has sought for years. Similarly, the City is also preventing developers from using recycled water
for projects upstream from the Upper and Lower Otay Reservoir, even after approving water quality
measures which address the City's water quality concerns on storm runoff. Limiting the use of recycled
water prevents Otay from expanding recycled water use to meet the targets of the take-or-pay provision.
Unfortunately, the above actions are not the only actions the City has taken that have stymied the
District's efforts to increase recycled water usage. The City commissioned a recycled water rate study by
Raftelis Financial Consultants ("Raftelis") and a draft report dated January 2009 was issued (the
"Report"). The City Director of Public Utilities at the time indicated the Report was going to be the basis
for intended changes of rates and charges for recycled water. Based on the content of the Report, this put
into focus the viability of the recycled water supply to Otay on an intermediate and long-term basis.
Consequently, Otay suspended plans to invest as much as $30 million in its CIP to expand the recycled
water system. This has had a negative impact on the potential recycled water sales and, as a result,
recycled water purchases from the City, hence Otay's inability to purchase the quantities of recycled
water required in the Agreement.
On June 24, 2013, Otay staff spoke at the City's Independent Rates Oversight Committee
("IROC") meeting after learning about the latest recommendations from Raftelis' study. Otay disputed
the equity of the uniform single rate the City was proposing for all customers, regardless of whether the
customer was a wholesale customer who built its own distribution system (such as Otay) or a retail
customer with a single meter delivering water directly to the customer's property. To resolve this issue,
on July 2nd City staff brought forward a zone rate proposal separating the North City rate from the South
Bay rate. While this proposal was much more equitable, new capital costs were added, raising the South
Bay rate over a four-year period. The addition of such capital costs is troubling when, as part of the
Agreement, Otay was required to pay a $3.2 million Capacity Reservation Charge, thereby prepaying all
capital costs for the length of the Agreement. Accordingly, capital costs should not again be added to the
zone rate at South Bay.
In the past, Otay staff has met with City's staff to discuss these matters but, regrettably, such
discussions and correspondence have not resulted in any progress. Otay has repeatedly expressed
concerns to the City regarding the ongoing viability of the Agreement and the City's rate-setting
calculation for reclaimed water. For instance, on November 24, 2009 and again on or about May 2, 2011,
Otay sent correspondence to the City expressing such concerns. Moreover, Otay's General Manager,
Mark Watton, met with City officials on more than one occasion in an attempt to discuss and work
through issues related to the Agreement and the City's rate structure. Additionally, in both 2012 and
2013, Otay sent protest letters with its take-or-pay payments outlining a number of outstanding issues.
In addition to the above, Otay wants to address and again put the City on notice of outstanding
issues relating to the City's use of storage capacity in Otay's 450-1 Reservoir despite having no
contractual entitlement thereto, as such storage capacity is not contemplated in the Agreement. (The
City's historical share of cost to date is $549,976.) Otay has previously notified the City regarding the
City's unauthorized use (including correspondence going back as early as 2007, again in January of2010,
and yet again in May 2011 and March 2013) but, out of respect for the relationship between Otay and the
City, Otay has delayed taking any action on such issues pending an agreement between the parties. As
Page 3
correspondence on this issue has been ongoing for several years now, discussions on a resolution to the
storage. issues are long overdue.
Similar to the storage capacity issue, the City has not paid for its use of a disinfection facility at
the 450-1 Reservoir. Since the completion of the 450 Reservoir Disinfection System project in July of
2009, the return flow of over 600 acre-feet of disinfected recycled water has served City customers, yet
the City has not paid for past or future use of the disinfection system. (The City's historical share of cost
to date is $39,764.) Additionally, the Agreement also states the City is responsible for metering the
recycled water delivered to Otay. From May 2007 until August 2013, the City's meter did not work
properly, yet the City continued to bill Otay for a malfunctioning meter for 60 of the 76 months, resulting
in an over billing of $88,911. Because the City's meter did not function properly, Otay's water meter at
the 450-1 Reservoir was being used as the meter to read both inflows and outflows of the inlet piping.
Unfortunately, such meter issues were not the City's only failure to comply with the terms of the
Agreement. Otay recently became aware that the City has not been in compliance with state regulations
regarding chlorides since 2010, yet Otay was not notified of the noncompliance in a timely manner.
Section 7.1 of the Agreement clearly states that "City shall meet all applicable federal, state, and local
health and water quality requirements for Reclaimed Water produced at SBWRP and delivered to Otay at
the Point of Delivery." Failure to meet such requirements could be considered a breach of Agreement.
The importance of resolving such issues is highlighted by the City's issuance of a permit to
Caltrans to tap a recycled water irrigation service to Otay's pipeline from the South Bay Water
Reclamation Plant. Otay has notified Caltrans that, pending resolution of the City's use of Otay's storage
and disinfection facilities, and the City paying their fair share of the cost to operate and maintain Otay's
pipeline, Otay may be in a position to issue a permit for this connection. (The City's share of historical
cost to date is $74,936.)
Because of such concerns, I want to take this opportunity to again notify you of the issues which
loom large if the Agreement continues as currently structured. We look forward to reinitiating dialogue
between our respective entities to reach an amicable solution which will allow for a sustainable and long-
term way to move forward.
cc: Richard E. Romero, Stutz Artiano Shinoff & Holtz, Otay WD Attorney
Lee Ann Jones-Santos, Deputy Director, Public Utilities Dept. (check hand delivered to
Ms. Jones-Santos)
Tom Zeleny, San Diego City Attorney's Office, Public Works Unit
cc: Mayor Jerry Sanders Councilmember David Alvarez, Council District 8
Mr. Mark Walton, General Manager, Otay Water District
STATE OF CALIFORNIA – NATURAL RESOURCES AGENCY EDMUND G. BROWN JR., Governor
July 25, 2011
Mr. Roger Bailey, Utilities Director City of San Diego
9192 Topaz Way, MS 904A
San Diego, CA 92123
Subject: Otay Water District’s Procurement of Reclaimed Water
Dear Mr. Bailey,
On behalf of the California Energy Commission staff, I’d like to express our support for
the Otay Water District’s (OWD) effort to procure additional reclaimed water from the City of San Diego under your October 20, 2003 Agreement to supply reclaimed water
from the South Bay Water Reclamation Plant.
As part of the Natural Resources Agency, the Energy Commission works diligently to
uphold state water policies that require the use of reclaimed water in industrial applications, such as thermal power plants which are under our exclusive permitting
authority. We are currently conducting an environmental review of the proposed Pio
Pico Energy Center (PPEC) which is a 300-megawatt (MW) power plant that proposes
to use reclaimed water supplied through existing infrastructure owned and operated by
the OWD. Understanding whether or not there is a reliable supply of reclaimed water for PPEC’s operation is a significant consideration in our environmental review.
Additionally, the Energy Commission previously permitted the Otay Mesa Generating
Station (OMGS) which is a 400MW, natural gas-fired power plant adjacent to the PPEC
site. The OMGS was approved to use potable water under a Condition of Certification that requires the water supply to be switched to reclaimed water when reclaimed water
becomes available. As such, we again support any efforts by the City of San Diego to
supply more reclaimed water to the OWD under your October 20, 2003 agreement.
Please feel free to call me at 916-654-3933 with any questions. Thank you.
Sincerely,
TERRENCE O’BRIEN, Deputy Director
Siting, Transmission, and
Environmental Protection Division
CALIFORNIA ENERGY COMMISSION
1516 NINTH STREET SACRAMENTO, CA 95814-5512 www.energy.ca.gov
OMPOA
Otay Mesa Property Owners Association
August 6, 2012
Mr. Roger Bailey
Utilities Director
The City of San Diego
9192 Topaz Way, MS 904A
San Diego, CA 92123
Mr. Bailey:
As you are aware from our previous letter dated September 23, 2011, the Otay Mesa Property
Owners Association ("OMPOA") is very concerned about the progress that the City 9f San Diego
("City") and the Otay Water District ("OWD") have made towards establishing recydled water
service in Otay Mesa. Therefore, this topic was raised at the OMPOA's joint meeting with its
counterpart in the County, the East Otay Mesa Property Owners Association ("EOM:POA") on
July 12, 2012, whereby the members of both associations unanimously voted for th:e OMPOA
and EOMPOA to take a more active involvement in this effort and identify the main issues that
are delaying this critical alternate water source for our region.
During these efforts, we have learned that the City has not committed to delivering the amount
of water that is necessary to meet customers' needs. This shortage of water suppl~ is a concern
to the OMPOA and EOMPOA, since a dependable recycled water source is essential as our
traditional water sources continue to be depleted. As such, we would like to see a focus on
operating and improving the efficiencies of the South Bay Reclamation Plan to resolve the
water supply deficiencies.
Additionally, it has come to our attention that the City may be attempting to add conditions on
OWD's request for an easement to build the missing link of recycled pipeline from Wueste Road
to Alta Road. It appears that these conditions are unrelated to the easement requ~st and
should be dealt with separately, as they seem to be the only delay to OWD obtaining the
easement. This easement will allow OWD to finalize the design for this crucial segment of
I
pipeline which will connect the 16.5 miles of recycled pipeline infrastructure, that developers
were conditioned to build as part of their projects, to the larger system. Currently, these
segments of purple pipe are sitting in the ground, unable to connect or be utilized. All of the
previous hard work and investment in this infrastructure is for naught, unless the qty and OWD
are able to do their part and connect the system.
Lastly, we understand that the City and OWD have not reached consensus on recycJed water
rates. As perspective ratepayers, this issue is of utmost importance and should be ~esolved
3111 Camino del Rio North, Ste. 100
San Diego, CA 92108
\
OMPOA
Otay Mesa Property Owners Association
immediately to ensure that a fair and equitable price is established, while the other
aforementioned issues are being resolved.
The continuing uncertainties and lack of progress since our previous letter from almost a year
ago, causes us concern. It is imperative to the future development of Otay Mesa and to the tax
base and job opportunities in our region that these two governmental agencies work together
in a productive and efficient manner to resolve these issues immediately.
Since the OMPOA has now designated this task as a "priority item", we request a re;sponse from
the City on the status of its negotiations with OWD in this regard.
We thank you in advance for your attention to this important issue. If you have questions,
please don't hesitate to contact me at (619) 696-8350 or Rob.Hixso, @cbre.com.
Sincerely,
Rob Hixson
Chairman, Otay Mesa Property Owners Association
Cc: Councilmember David Alvarez
Mayor Jerry Sanders
Congressman Bob Filner
Councilmember Carl DeMaio
Supervisor Greg Cox
Ann Sasaki, City of San Diego
Mark Watton, OWD
3111 Camino del Rio North, Ste. 100
San Diego, CA 92108
, ..
EOMPOA
East Otay Mesa Property Owners Association
March 6, 2014 ~ 17J' 7 :To~ &
Mayor Kevin Faulconer
City of San Diego
202 C Street, lOth Floor
San Diego, CA 92101
RE: City of San Diego Water Utilities Department Recycled Water Rate Recommendation
Dear Mayor Faulconer:
,Y4 I ~p~t{
(?~IV A.
The East Otay Mesa Property Owners Association (EOMPOA) has reviewed both the City of San Diego
Water Utilities Department recycled water rate report and the City's Independent Rate Oversight
Committee annual report which discusses the city's recycled water rate. This will be coming to the City
Council for a hearing soon. The report touches upon several areas of concern to our members including
the following:
The City retained Raftelis Financial Consultants to do a pricing study of the recycled water program. This
program was established to promote the development of recycled water within the service area as a
way to diversify the regional water supply and reduce San Diego's dependence on imported water.
The study found that the Public Utilities Department (PUD) was charging a subsidized recycled water
rate of $0.80 per hundred cubic feet (HCF) which was 20% of the June 2013 irrigation rate of $4.014 per
HCF. The true all-in non-subsidized cost to produce and distribute recycled water is $14.12/HCF and
continuation of the current rate structure would result in San Diego ratepayers paying approximately
$57M-$60M/year to continue subsidizing recycled water.
The PUD proposed to reduce but not eliminate the subsidy by increasing the recycled commodity rate
from 20% to 56% of the portable irrigation rate or from $0.80/HCF to $2.241/HCF (an 180% rate
increase) beginning January 1, 2014 for the next four years. Complicating the proposal was the need to
reduce the subsidy while maintaining customer demand in face of the 180% rate shock; and protests by
the Otay Water District (OWD) who had made $200M of infrastructure investments in their recycled
water system which the rate increased jeopardized.
Independent Rate Oversight Committee (I ROC) held a hearing on the proposed rate increase, reviewed
the proposal, and heard from Otay Water District. I ROC found that San Diego rate payers were likely to
continue to pay the $57-60M annual costs to maintain the subsidy over the next four years, and I ROC
therefore concurred with the PUD proposal to reduce the subsidy. IROC though suggested PUD do this
over a five year phase in period in consultation with their wholesale customers such as OWD, so they
could adjust their business models to accommodate the rate increase. Otay and the City are working
together to resolve the concern about escalating rates so Otay can continue to invest in future
infrastructure and ensure its customers that recycled water supplies will be available in future years.
Page 2
Recycled Water Rate Recommendation
This I ROC recycled water rate recommendation came before the City had the most recent information
regarding potential cut backs in state water transfers to Southern California due to the current severe
drought in California which may continue for several more years.
With the recent announcement by California Governor Jerry Brown that the state is suffering from the
severest drought in decades, now is not the time to cut back on water conservation such as the recycled
water program by increasing water rates significantly over a short time horizon to agencies that are
doing their part to conserve potable water. This increases demand for imported portable water and, at
the same time, supplies may be severely cut back including the imposition of rationing.
The Otay Water District has invested over $200 million in their recycled water distribution system and
private property owners in Otay have invested additional millions in infrastructure to transport recycled
water to their current and proposed developments. Otay and four other agencies that have invested in
recycled water infrastructure need more time than just one to five years to recover the costs of their
infrastructure investment and need some assurance that they will be able to provide recycled water
supplies to customers that have invested in recycled water infrastructure.
Due to the drought, the San Diego Water Utilities Department shouldn't penalize agencies that want to
conserve water by using recycled water. The East Otay Mesa Property Owners Association recommends
the City consider phasing in the proposed water rate increase over 20 to 30 years so Otay and other
agencies can continue to provide recycled water to customers, which will allow both the agencies and
customers to recover the cost of their infrastructure investments and maintain a reliable customer base
for the San Diego PUD to sell its recycled water.
The City of San Diego shouldn't jeopardize our water supply security by destroying the demand for
recycled water by sharply increasing the cost of the recycled water in a short timeframe. This would
only hamper the agencies' ability to market and sell recycled water to users who cannot absorb the
recommended cost increase which amounts to almost 200% over a five year period.
Thank you for your efforts to incorporate our proposed changes into the final recycled water city council
recommendations to help property owners depend upon the availability and future costs of recycled
water to serve future projects in Otay Mesa, East Otay Mesa and throughout San Diego County.
David Wick, Chairman
East Otay Mesa Property Owners Association
cc: San Diego City Council
Supervisor Greg Cox
Andrea Tevlin, Independent Budget Analyst
Mark Watton, General Manager, Otay Mesa Water District
Kevin Smith, Staff Consultant, City Council Environment Committee
County District 1 Staff Representative, Michael de Ia Rosa
1050 Rosecrans Street, Ste. B
San Diego, CA 92106
619.222.8155 • 619.222.8154
July 2, 2014
Otay Water District
Temporary Moratorium on
Otay Mesa Recycled Water
System
Overview District System/Otay Mesa
Securing a Reliable and Cost Effective Supply of
Recycled Water for Otay Mesa
Otay Mesa -Cost of Infrastructure, Demand,
Cost of Supply
Avoided Fees
Potential New Sources of Water
Recommendation 2
Existing Infrastructure\Demand
◦102 miles of mains
◦4 Reservoirs -43.7 MG
◦3 Pump Stations
◦RWCWRF –1.0 MGD
◦FY 2013 Total Demand
4,313 AF (3.9 MGD)
◦City of SD Supply
Agreement –Supplies
75% of District’s needs
3
4
5
RWCWRF
6
944-1
927-1
7
SBWRP
8
450-1
9
680-1
Infrastructure\Demand
◦Approx. 16 miles of
Developer installed mains
◦No current supply
◦Current Demand
330 AF/Year (0.3 MGD)
◦Future Demand -2035
1,200 AF/Year (1.1 MGD)
◦Otay Mesa Recycled Water
Supply Link Project -$23.5 M
10
Otay Mesa
Recycled
Water
Supply Link
City of San Diego Supply Agreement
◦Cost of recycled water in excess of actual production
costs
◦District’s efforts to discuss the terms of Agreement
2007 to Present
◦Draft Recycled Water Pricing Study –Cost of
De-mineralization systems
◦Recent Price Proposal from City -$566/AF
◦Agreement expires in 2026
11
Otay Mesa Recycled Water Supply Link
Easement from the City of San Diego
Use of the 450-1 Reservoir by City
Supply –No Plans to expand SBWRP
Recycled Water Incentives
◦MWD -Expire in 2025
◦SDCWA -Expire in 2026
12
Financial Analysis: Payback period more than 70
years (beyond estimated useful life)
Infrastructure Cost: $23.5 Million
Demand projections: 672 AFY (0.6 MGD) by 2020
1,200 AFY (1.1 MGD) by 2035
Cost of Supply: $566/AF City of San Diego
Expiration of Recycled Water Incentives
13
SDCWA $1.27 Million of capacity fees associated
with recycled water meter purchases
o Pio Pico Plant and Corrections Corporation of America
($0.22 Million of exposure)
USBR Grants -$0.95 Million
These fees represent financial risks associated with a
permanent moratorium.
14
Indirect Potable Reuse (IPR)
Direct Potable Reuse (DPR)
Conservation -Revised landscape plant palates
from City of San Diego, and County of San Diego
use less water
15
Temporary Moratorium
That the Otay Water District (District)Board
of Directors (Board)place a temporary
moratorium on the installation of new
recycled water facilities on Otay Mesa.
16