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HomeMy WebLinkAbout02-15-06 F&A Committee PacketOTAY WATER DISTRICT FINANCE AND ADMINISTRATION COMMITTEE MEETING and SPECIAL MEETING OF THE BOARD OF DIRECTORS 2554 SWEETWATER SPRINGS BOULEVARD SPRING VALLEY, CALIFORNIA BOARDROOM WEDNESDAY February 15, 2006 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. 4074 REPLACING POLICY 25, DISTRICT FINAN- CIAL POLICIES, OF THE DISTRICT'S CODE OF ORDNANCES, WITH A NEW RESERVE POLICY (BEACHEM) [1 0 minutes] 4. PRESENTATION OF THE BOARD OF DIRECTORS EXPENSES FOR THE 2N° QUARTER OF FISCAL YEAR 2006 (PRENDERGAST) [1 0 minutes] 5. APPROVE THE EXTENSION OF THE EXISTING AGREEMENT WITH DATAPROSE IN THE AMOUNT OF $150,000 FOR THE PROVISION OF CUS- TOMER BILL PROCESSING SERVICES FROM APRIL 1, 2006 THROUGH JUNE 20, 2007 (BEACHEM) [5 minutes] 6. DECLARE VEHICLES AND EQUIPMENT SURPLUS TO DISTRICT'S NEEDS (DOBRAWA) [5 minutes] 7. REJECT DEHESA SCHOOL DISTRICT CLAIM (BURPEAU) [5 minutes] 8. REJECT ST. CYR CLAIM (BURPEAU) [5 minutes] 1 9. APPROVE AMENDMENT NO. 1 TO THE EXISTING AGREEMENT BETWEEN TMO CA/NV, LLC, dba T-MOBILE USA, INC. (SUCCESSOR TO PACIFIC BELL WIRELESS, LLC) AND OTAY WATER DISTRICT FOR AN EXISTING FACILITY AT OTAY'S POND NO. 1 RESERVOIR SITE (POSADA) [5 minutes] 10. APPOVE AMENDMENT NO. 1 TO THE EXISTING TEMPORARY AGREEMENT BETWEEN TMO CA/NV, LLC, dba T-MOBILE USA, INC. (SUCCESSOR TO PACIFIC BELL WIRELESS, LLC) AND OTAY WATER DISTRICT FOR AN EX- ISTING FACILITY AT OTAY'S PATZIG RESERVOIR SITE (POSADA) [5 min- utes] 11. 2ND QUARTER CIP UPDATE REPORT (ARBABIAN) [15 minutes] 12. 2ND QUARTER STRATEGIC PLAN UPDATE REPORT (STEVENS) [15 minutes] 13. ADJOURNMENT All items appearing on this agenda, whether or not expressly listed for action, may be deliberated and may be subject to action by the Board. 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 February 10, 2006 I posted a copy of the foregoing agenda near the regular meeting place of the Board of Directors of Otay Water District, said time be- ing at least 24 hours in advance of the meeting of the Board of Directors (Government Code Section §54954.2). Executed at Spring Valley, California on February 10, 2006. 2 AGENDA ITEM 3 STAFF REPORT TYPE MEETING: SUBMITTED BY: MEETING DATE: Regular Board --~ ~~/7? Joseph R .. /E"ea~hem March 13, 2006 DIV. NO. All W.O./G.F. NO: Chief Financial Officer APPROVED BY: German Al~sistant General Manager APPROVED BY: Mark Watton, General Manager SUBJECT: Adopt Resolution No. 4 07 4 Replacing the "District Financial Policies," Policy #25, in the District's Code of Ordinances with a new Reserve Policy GENERAL MANAGER'S RECOMMENDATION: That the Board adopt Resolution No. 4074 replacing the "District Financial Policies," Policy #25, in the District's Code of Ordinances with a new Reserve Policy COMMITTEE ACTION: See Attachment A. PURPOSE: That the Board adopt Resolution No. 4074 replacing the "District Financial Policies," Policy #25, in the District's Code of Ordinances with a new Reserve Policy. ANALYSIS: The new policy brings the District's policy up to Industry Best Practices, clearly defining the sources and uses of the District's funds and establishing the minimums, maximums, and targets for each of the funds. Not only is this policy in alignment with the District's financial plan but it is an integral part of the annual rate model update and has a direct impact on the rates and fees of the District. The proposed Reserve Policy is a complete rewrite of Policy #25. The need for a revised policy was identified with the development of the first Strategic Plan. Later, the need was highlighted by the State Auditor and by the District's Board of Directors who have asked for more definition of how the District transfers money between funds. With Board approval, this new policy will bring the District in line with recommendations from the State Auditor, the California Special District Association (CSDA), and the Government Finance Officers Association (GFOA) . The following are a list of significant changes to the policy: 0 Changes the name of the policy from the District Financial Policies to Reserve Policy. This is a more descriptive title for the policy. 0 Adds minimums, targets, and maximums to all of the funds. This was a recommendation by the State Auditor. 0 Adds language governing transfers. As the District moves forward with our CIP program, there will be an annual need to transfer money between the various funds. Guidelines governing these transfers are being added at the request of the Board. These transfers have been a part of the District budgeting process for many years and are integrated into the rate model since its development in 2003. 0 Adds clarification of restricted funds and designated funds. The District has sources of revenues which are legally restricted. These revenues need clear separation from those funds that are general purpose but designated by the Board for a particular purpose. 0 Removes outdated improvement district references. In a number of ways, the District has moved to a district-wide perspective of funding and fees. The District's practices have outdated the policy in this respect. 0 Removes the expectation that water rates will fund 30% of all future replacements. The Board moved away from this very expensive strategy shortly after it was developed in 1993 however; the policy was never changed. 0 Removes the required rate stabilization draw-down which was not consistent with its purpose. A defined draw-down of the fund does not allow for the ongoing mitigation of the identified risk and is not consistent with the designed use of this fund. Staff has worked with the District's legal counsel and with Fieldman, Rolapp & Associates, a financial advisor, to bring together a policy that clearly defines the sources and uses of District funds. The proposed Policy meets the current financial planning needs of the District using current best industry standards. Staff believes that the recommended policy places the District at the forefront of water districts by bringing a high degree of transparency to the District's finances. FISCAL IMPACT: None STRATEGIC GOAL: This completes the Strategic Goal Objective 2 2.1.1, "Document the District's Reserve Fund Governance Policy u LEGAL IMPACT: None. G'eneral Manager Attachments: A) Committee Action B) Presentation by Staff C) Presentation by Fieldman, Rolapp & Associates D) Resolution No. 4074 E) Existing Policy 25 F) Proposed New Policy 25 ATTACHMENT A Adopt Resolution No. 4074 Replacing the "District Financial Policies," Policy #25, in the District's Code of Ordinances SUBJECT/PROJECT: with a new Reserve Policy COMMITTEE ACTION: The Finance and Administration Committee recommends that the Board adopt Resolution No. 4074 replacing the "District Financial Policies," Policy #25, in the District's Code of Ordinances with a new Reserve Policy. 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. F:\DianeA\Staff Rpts 2006\CommMtgFinResPol031306.doc ATTACHMENT B Otay Water District Revisions of the Financial Policy Purpose of the Policy Revisions o Satisfy a Strategic Objective of the District o Satisfy the Board request to define fund transfers o Clearly define reserve sources, uses, and target levels o Update the Policy to match current Board approved practices o Address all the State Auditors} suggestions o Present a quality and best practice policy Pol icy History o 1993 -Policy 25 was established o 1998 -Revised to address relocations o 1999 -Revised to add a rate stabilization fund o 2005 -Revised to change the capitalization limit Update Process o Evaluated the existing policy highlighting areas that were outdated. o Performed a complete rewrite of the policy and distributed it for staff input. o Hired Fieldman, Rolapp, and Associates to bring an industry perspective to the policy, and validate that the policy is sound and includes best management practices. 2006 Significant Revisions o Changes the name to Reserve Policy o Adds minimums, targets, and maximums ·J Adds language governing transfers ~ Adds clarification of restricted funds and designated funds 'J Removes outdated improvement district references ..; Removes the expectation that water rates will fund 30°/o of all future replacements o Removes the required rate stabilization draw-down which was not consistent with its purpose o Added designated expansion and designated betterment fund to track expenditures of general funds for these purposes Revenue & Fund Evaluation o Evaluated each of the District's revenue classifications. o Evaluated each of the District's fund classifications. o Verified with District's legal counsel the legal obligations related to the use of certain funds. o Staff reclassified funds to bring the reserves in line with their intended and legal purposes. Fund Evaluation General Fund Designated Funds Expansion Fund Betterment Fund OPEB Replacement fund Rate Stabilization Fund Expansion Fund Betterment Fund Bond Funds Revenue Evaluation Designated o Funded by Transfers DEVELOPERS Designated Funds 1 Designated Funds COUNTY-COLLI:CTE TAX&S A D P&liS Designated Funds Designated Funds 11 Uoans Designated Funds Use of Restricted Funds o Expansion Fund -Expansion Projects o Betterment Fund -All Capital Projects o Debt Fund -Repayment of debt or construction of the specifically identified projects. Use of Designated Funds OPEB -Other Post Employment Benefits (Medical) o Replacement Fund -Replacement projects o Rate Stabilization Fund -Rate spike avoidance o Designated Expansion Fund -Expansion projects o Designated Betterment Fund -All capital projects As a part of the Budgeting/Rate Model annual updates, funding needs are evaluated and fund transfers are recommended. lludget ancd Rate Moctel Upejate und Transfers Designated Funds Fund Levels FUND ACTIONS TO CONSIDER IF BELOW TARGET Capacity fee increase Bond financing Funds transfer Rate increase Bond financing Funds transfer Increase tax collection* Funds transfer Designated Expansion Fund Funds transfer Designated Betterment Fund Funds transfer OPEB Fund Funds transfer Replacement Fund Funds transfer Rate Stabilization Fund Funds transfer Rate increase Funds transfer TARGET Six months of capital expenditures Six months of capital expenditures One semiannual payment Six months of capital MAXIMUM Nexus of Cl P cost to fee 5 yr unfunded needs Two semiannual payments expenditures 5 yr unfunded needs Six months of capital expenditures 5 yr unfunded needs Full funding Full funding 4°/o of infrastructure 6°/o of infrastructure One month of operating budget expenses Two months Three months of operating budget expenses Seven months Review of Fund Types (12-31-05) o Restricted Expansion -Capacity fees Betterment -Availability fees and special rates 0.6M Bond Funds -Tax roll o Designated-General purpose funds s.2M Designated Expansion o.oM Designated Betterment 25.4M Replacement 16.8M OPEB o.oM Rate Stabilization 29.sM o General Fund 91.6M Conclusions o The Policy Brings Clarity to the District Financial Structure. o Meets the direction of the Board to review and update current policies. o Meet Industry Best Practices o Staff will return with recommended fund transfers with the fiscal year 2007 budget. o The Rate Stabilization Fund will be gradually funded, up to its target level, with any annual budget excess revenues. Recommended Board Actions o Approve the new District Reserve Policy. ATTACHMENT C • OTAYWATERDISTRICT Review and Development of Reserve Policy :=i Fieldmar:, Rolapp =.fl. & Assoc1ates INDEPEN~DEN--=T FIN-ANC~IAL----:'AND~INV~EST~MEN~T AD~VIS~ORS I Our Experience with Water Agencies and Policies The Substance Behind Our O pinion • Fieldman, Rolapp has been involved in California's water districts since 1966, originating with Bill Field man • We are one of California's most active financial advisors for water and wastewater financings • We provide professional review of policies for large, complex and growing water districts o San Diego County Water Authority o Metropolitan Water District of SC o Eastern Municipal Water District o Rancho California Water District February 13, 2006 :~ Fieldma:£?-, Rolapp =fl. & Assoclates INDEPENDENT FINANCiAL AND INVESTMENT ADVISORS 1 I Our Role in the Reserve Poli cy • Review substance of policy o How do policies fit within the financial state of District? • Suggest changes to organization and presentation of policy • Assist in communication of details to Board and senior staff • Provide verification and validation with comparisons to other Districts and best industry practice February 13, 2006 =i Fieldmat?-, Rolapp -fl. & Assooates ~DENT RNANCtAl AND INVESTMENT ADVISORS 2 I Evaluation of the Reserve Policy • Thoughtful-Is the Reserve Policy focused on meaningful factors? • Prudent-Does the Reserve Policy match with the District's approach to risk? • Consistent-Is the content and format of the Reserve Policy consistent with both industry standards and with practices of comparable districts? February 13, 2006 ~i Fieldmar:-. Rolapp .=fl. & Assoc1ates INDEPENDENT ANANCIAL AND INVESTMENT ADVISORS 3 Our Overall I mpressions • District has developed thorough and thoughtful policies: o setting levels for reserves, including minimum, maximum and target levels o describing revenues and funds o outline possible actions if minimums not met or maximums exceeded • The Reserve Policy corresponds to the District's approach to managing changes • The levels set in the Reserve Policy are consistent with standards announced by CSDA (in substance) and the State Auditor (in form and process) • As a whole, the Reserve Policy is similar in approach and substance to policies adopted by similar and nearby water districts February 13, 2006 :i Fieldma~, Rolapp =fl. & Associates • iNofPENoENT ANA.'lCIAL AND INVESTMENi ADVtsORS 4 I How Much Should be Held in Reserve? • Article XIII 8, Section 5, California Constitution states that each entity of government can establish contingency, emergency, reserve or similar funds as it deems reasonable and proper • Little Hoover Commission bashed special districts for "hoarding" funds in 2000 • CSDA developed Reserve Guidelines -called for analysis, documentation and transparency • State Auditor-need to justify reserve levels and create and document limits O'n accumulation • Ultimately, how much is left to what you think is reasonable. . . But it is not in a vacuum February 13, 2006 :~ Fieldma~, Rolapp =fl. & Associates 1N"O'fPEN0ENT FINANC1AL AND INVESTMENT ADVtSORS 5 CSDA Reserve Guidelines: F actors to Consider • Economic Uncertainty -performance of the regional economy and the impact of that performance on demand for water • Weather -the amount of rainfall and the impact of weather on the availability and the cost of water • Government Mandates -the impact of federal and state regulation, particularly environmental regulation • Tax Changes -Limitations on the District's taxing and spending powers through the passage of a voter referendum,. the impound of District property taxes or the removal of the District's power to levy property taxes, further increases to ERAF contributions or changes in calculation methodology • Operating Costs -Increases in operating and maintenance costs because of inflation, labor agreement or other modification • Force Majeure -Unanticipated expenditures resulting from natural disasters or intentional acts • Emergency Maintenance -Unanticipated expenditures resulting from unexpected failure of assets (e~g. rupture in the primary transmission system) • Unexpected Variation in Cash Flow -the incidence of additional costs or decreased revenues that requires short term borrowing in the absence of sufficient funds February 13, 2006 :i Fieldmar:, Rolapp =fl. & Assoclates !N"DEPENDENT FINANCIAL AND INVESTM!:NT ADVISORS 6 I State Auditor's Report: A Few Additional Procedural and Process Objectives • Distinguish between restricted and unrestricted reserves • Establish distinct purposes for all reserves • Set target levels, such as minimums and maximums, for the accumulation of reserves • Identify the events or conditions that prompt the use of reserves • Conform with plans to acquire or build capital assets • Receive written board approval • Require periodic review of reserve balances and rationale for maintaining them. February 13, 2006 :i Fieldmar:, Rolapp =fl & A ssoclates !ND'EPENDENT ANANCIAL AND INVESTMENT ADVISO~ 7 I The District's Principles for Reserves • The Reserve Policy sets out a number of policies derived from the CSDA and State Auditor's comments: o Each of the service types is tracked separately so that expenditures and revenues can be monitored and evaluated for each customer type. o Funds are held and used only for the purpose for which they are collected. o Separation of O&M from capital expenditures occurs within each of the service types. o The District will hold its reserve at responsible and prudent levels. The District has set minimum, maximum, and target levels for its various funds. o Debt financing of facilities provides intergenerational equity and maintains rates at reasonable levels. February 13, 2006 _i Fieldmaf?-, Rolapp =fl. & Associates INDEPENDENT FINANCIAL AND INVESTMENT ADV~ORS 8 I Comparison with Other Water Districts • Special Districts have individual fund structures and specialized ways of describing their funds o Structures reflect specific factors unique to each district • The overall set of funds for each is structured to work as a whole o The description and sizing of each fund is interdependent on the other funds • Direct comparisons of individual funds do not provide an accurate picture of how OWD compares to another district's approach to reserves • OWD's Reserve Policy correlates to those of other large, growing districts in consistency with industry standards February 13, 2006 -i Fieldmar:-, Rolapp =fl & Associates INDEPENDENT FINANCIAL AND INVESTMENT ADV~QRS 9 Conclusions • District Reserve Policy is: o transparent-setting clearly defined standards o flexible-allowing for interfund transfers to meet diverse needs o thoughtful-relying on and reflecting factors of change relevant to the District's operations o creditworthy-supporting and enhancing the District's overall financial strength and future ability to issue debt o consistent with industry standards-including provisions recommended by the State Auditor and amplifying the considerations specified by the Reserve Guidelines of CSDA o consistent with practices of California water agencies-containing a structure of funds and reserves that provide an overall system similar in scope to those of other water agencies • We believe that the Reserve Policy is consistent with best management practices for the development and maintenance of financial reserves February 13, 2006 _i Fiel~. Rolapp =fl. & Assoaates INDEPENDENT AN-\NCW. AND INVESTMENT ADIIlSORS 10 ATTACHMENT D RESOLUTION NO. 4074 A RESOLUTION OF THE BOARD OF DIRECTORS OF OTAY WATER DISTRICT ADOPTING A NEW RESERVE POLICY WHICH WILL REPLACE POLICY NO. 25 OF THE DISTRICT'S CODE OF ORDINANCES WHEREAS, the Otay Water District Board of Directors have been presented with a new Reserve Policy which will replace Policy No. 25 (formerly known as the District Financial Policies) of the District's Code of Ordinances for the financial management of Otay Water District; and WHEREAS, the new Reserve Policy has been reviewed and considered by the Board, and it is in the interest of the District to adopt the Reserve Policy; and NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED by the Board of Directors of the Otay Water District that the Reserve Policy for the District, incorporated herein by reference, is hereby adopted as the District's Reserve Policy. PASSED, APPROVED AND ADOPTED by the Board of Directors of Otay Water District at a regular board meeting held this 13th day of March 2006, by the following vote: Ayes: Noes: Abstain: Absent: President ATTEST: District Secretary Page 1 of 1 ATTACHMENT E OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Date Date Number Ado_Qted Revised DISTRICT FINANCIAL POLICIES 25 2/10/93 5/23/05 INTRODUCTION This policy has been prepared to present statements and explanations of several of the proposed key financial policies and practices for the District. They are presented here for two purposes. One of the pur- poses is to allow for their review by the Board of Directors. In addi- tion, explanations of the policies also provide background information on the overall strategy for financing both capital costs and operations and maintenance (O&M) costs. The policy statements were prepared based on explanations by District staff of both firmly established and also less formally documented policies and practices. Some of the policies summarized below represent long-standing approaches by Otay to financing capital and operating costs while others reflect relatively recent practices. CAPITAL COSTS A. Equity Each newly developing area or Improvement District (ID) will pay its fair share of the cost of facilities built on its behalf. B. Master Planned Development Master planned areas are required to provide all new facilities neces- sary to extend service to the area in accordance with district policies. Also, the developer is required to cooperate with the District in obtaining general obligation bonding authority in sufficient amounts to provide a funding source for future upgrades or betterments and replacements. In some cases, where reasonable, the developer may be required by the District to oversize new facilities for future development in order to obtain economies of scale. The developer will be reimbursed for such incremental oversizing costs when the future development occurs. C. Capacity Fees Capacity fees will be established for non-master planned areas to recover all costs associated with providing facilities. The capacity fee should cover, for example, past and future costs including but not limited to planning, design, construction and financing associated with facilities for a given area. When accumulating such costs, considera- tion should be given to general and administrative costs, inspection costs, emergency oversizing, excess or idle capacity which may never be utilized, or any other costs so that any source of funds which loaned money to build such facilities is properly reimbursed for all money out of pocket and the time value of money. D. Improvement Districts Page 1 of 8 OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Date Date Number Adopted Revised DISTRICT FINANCIAL POLICIES 25 2/10/93 5/23/05 IDs and their related bond authorization are required to provide a low cost source of funding for new facilities to extend service to newly developing areas, provide for system upgrades and betterments and future replacements. The maximum tax rate each year for a particular ID will be based upon the factors unique to that area. However, the District goal is that tax rates for each area will not exceed $0.10/$100 of assessed valuation. E. Separation of Capital Costs and Revenues from Operations and Maintenance Costs and Revenues The District finances operations and maintenance (O&M) costs entirely from user charges. Capital facilities, with the exception of replace- ment or betterment items, are financed from separate capital funding sources. User charge revenues, except those designated for replacement of capital facilities, are placed in the general fund. F. Expansion Project Financing Capital facilities that serve less than the entire District are financed on a proportionate basis by those IDs that the facilities are built to serve. Such projects involve local facilities, e.g. water mains, sewer mains, pump stations and water storage. In most cases, such projects are 11 expansion" in nature, i.e., they extend service to a newly developing area. In certain cases, the District may decide to oversize facilities to provide capacity in excess of that currently needed to take advantage of economies of scale. The cost of such oversizing, on an incremental basis, will be funded by the overall District to the ex~ent that funds are available and repaid at its then future value by those IDs utilizing the capacity. G. Use of Capital Reserve Funds Each ID has a capital reserve fund containing revenues from developers or capacity fees from individuals and interest earned on the fund. Capital reserves are used primarily to finance non-bond funded projects and to advance funds for bond funded projects pending receipt of bond proceeds. On a year-by-year basis, to the extent that funds are avail- able, capital reserves may also be used for bond repayment or better- ment. In the case where a policy change requires a betterment project that would have been an expansion project at the time the capacity fee was collected, any reserves may be used for that betterment project. H. Exclusion of Fully Developed Areas from Regional Capital Cost Allocation Developed IDs are considered to have sufficient supply and capacity to meet their current foreseeable requirements. In addition, they are Page 2 of 8 OTAYWATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Date Date Number Adopted Revised DISTRICT FINANCIAL POLICIES 25 2/10/93 5/23/05 considered to have borne capital financial costs that are at least proportionate to the benefits they have received from capital facili- ties. Accordingly, no regional capital financial costs are allocated to these areas so that they will not incur any District costs for newly developing areas. In the case of a capital project that produces District-wide cost sav- ings, however, the District may provide financial support to newer IDs by setting aside a portion of the District-wide operational cost savings to fund some of the capital costs. I. Financing on Betterment Projects in Conjunction with Expansion Projects If developed areas increase existing storage or capacity based upon new standards in conjunction with an expansion project, the costs are allo- cated to new users (Expansion) and existing users (Betterment) so that the new users will not pay for the Betterment portion as follows: Expansion Portion The portion of a conjunctive project that benefits new users is funded by the developing ID through the appropriate system allo- cation method, as described above, as though the Betterment portion were not being constructed. Betterment Portion The portion of the project attributable to existing users is funded by the Betterment Fund on an incremental basis. J. Betterment Reserve The Betterment Reserve covers extraordinary expenditures (in excess of $10,000 for capital purchase items or $20,000 for water or sewer system infrastructure related items) for obtaining and installing capital equipment, accessories, or appurtenances which extend the service life and/or improve the capacity or efficiency of the treatment works as originally designed. These costs are considered capital outlays and are funded through bond proceeds, the collection of availability charges, general levy property tax receipts or any other funds the District deems appropriate. On a year-by-year basis, to the extent that funds are available, the betterment fund may also be used for bond repayment. K. Availability Charges The District levies availability charges each year in developed areas to be used for upgrades or betterments and in undeveloped areas to provide a source of funding for planning, mapping, and preliminary design of facilities to meet future development as determined by those regulatory agencies responsible for land use planning. Page 3 of 8 OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Date Date Number Adopted Revised DISTRICT FINANCIAL POLICIES 25 2/10/93 5/23/05 While current legislation provides that a portion of the availability charge collected in an ID be expended in that ID, it is the District's belief that IDs are formed only to provide the lowest cost funding pos- sible and that they are not intended to separate customers by geo- graphical area. Accordingly, the District could pursue legislation to do away with this restriction so that all District areas may be treated as one or accomplish the same result by annexing all areas of the Otay Water District into one overall ID. OPERATIONS AND MAINTENANCE (O&M) COSTS AND REVENUES A. Uniform User Charge Rates The base user charge rates for water, sewer and reclaimed water are uniform throughout the District. This policy reduces any possible mis- understanding that might occur among customers if rates varied between geographical areas. It also provides for an administratively straight- forward billing process. In addition to the other water user charges provided for in the Dis- trict's Ordinance Section 25.03, customers in the North District and in Improvement District (ID) 9 pay supplemental user charges to provide for payment of system betterment costs. All proceeds from charges collected under Section 25.03.G are set aside by the District in a separate account and are used solely to provide service in the North District for construction, installation and maintenance of water storage reservoirs, pump stations and water lines. Section 25.03.H provides for collection of an additional water charge per HCF and an additional systems charge from customers living in ID 9 for the payment of cost associated with the construction, installation and maintenance of water storage reservoirs, pump stations and water lines. These moneys are also maintained in i separate account. In addition, the District imposes higher user rates for water customers at higher elevations, per Section 25.03.F of the District Ordinances. The energy pumping charge is made per 100 cubic feet above the base elevation of 450 feet. B. User Charge Replacement Element Projects undertaken solely for the purpose of replacing major capital equipment or facilities, i.e., where the cost exceeds approximately $10,000 for capital purchases or $20,000 for water or sewer system infrastructure related items, generally are not considered normal maintenance and are financed annually through the replacement reserve portion of the annual O&M budget. The Replacement Reserve covers expenditures for obtaining and installing equipment, accessories or appurtenances which are necessary during the service life of the water, sewer or general administrative facilities to maintain the capacity and performance for which such facilities were designed, installed and Page 4 of 8 OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Date Date Number Adopted Revised DISTRICT FINANCIAL POLICIES 25 2/10/93 5/23/05 constructed. In calculating the user charge revenues required each year, the District takes into account the need to replace major facilities and equipment due to normal wear or damage. The estimated amount required for replacement is added to the amount required for O&M to determine total user charge revenues that need to be raised. Current contributions to the replacement reserve funds are.based on asset costs which at the end of the useful lives of the facilities would represent approximately 30 percent of full replacement value. Such calculations, take into consideration disrupting and replacing existing infrastructure, the escalation of capital costs due to inflation and the interest earned on amounts set aside to replace the facilities. The portion of user charge revenues attributable to this replacement element are placed in District-wide replacement reserve funds, one each for water, sewer and general administrative fund. C. Financing of a Conjunctive Project and/or Relocation Projects If a major capital facility or piece of equipment is replaced in con- junction with an expansion project, the costs are allocated to new users (expansion) and existing users (replacement) based on the distribution of benefits as described below. This policy protects both the developing and established areas from incurring inappropriate costs. Developing IDs are not required to finance facilities that are due for replacement; conversely, established IDs are not required to replace facilities before they are worn out simply because of new development. New Portion The portion of a project that benefits new users is funded by the developing IDs through the appropriate system allocation method, as described above. Replacement Portion The portion of a project that benefits existing users is funded by the replacement reserve fund. If the project has more than five years of useful life remaining, the funding is incremental; if there is less than five years remaining, funds are contributed from the replacement reserve fund on a pro-rata basis. User Rate Portion The District may construct a project that results in a significant benefit to user rates. In such a case, user rate charges could be used as a funding source for that portion of the project that results in a lowering of overall operation and maintenance costs. The application of user rates to capital construction costs is at the discretion of the Board of Directors. Page 5 of 8 OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Date Date Number Adopted Revised DISTRICT FINANCIAL POLICIES 25 2/10/93 5/23/05 Relocation Portion When a project is relocated, the cost of the funded by the party causing the relocation. contribute the funds that would have accrued this project. GENERAL FINANCIAL POLICIES A. Financial Responsibility new facility shall be The District may for the replacement of Developed areas will not be at risk in any way for a default on debt service for bonds sold to finance construction of facilities for unde- veloped areas. The developer will only be responsible for 'the payment of debt on idle or excess capacity until development occurs. In order to ensure com- pliance, the developer will provide adequate guarantees (i.e., cash, letter of credit, bond insurance, etc.) such that in the event of default (i.e., payment of property taxes) the debt service will be paid through foreclosure proceedings. B. Credit Enhancement The District may choose to utilize the overall District's credit to improve the credit of a particular ID Bond.Issue. When this happens, the developer is still required to provide adequate guarantees to assure debt service will be paid. The ID will pay debt service as though the overall District's credit was not used and the difference between that collected and paid to bondholders will be deposited in the Replacement Reserve Fund. In certain cases, the District may decide to finance capital expendi- tures from a bank borrowing, or loan funds from the Replacement Reserve to an ID. The interest charged for the borrowing will be the current market rate. C. Maximum G.O. Bonds Outstanding The principal amount of General Obligation Bonds to be outstanding at any one time is limited to the Di$trict•s ability to pay debt service. Each ID 1 s ability to pay debt service is determined by such factors as projected future property taxes and capacity fees, and the developer's ability to meet projections and guarantee payment. D. Consolidated Bonds The District may choose to consolidate bond issues for more than one ID so long as no one ID is disadvantaged. E. General Levy Property Tax Receipts Page 6 of8 OTAY WATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Date Date Number Adopted Revised DISTRICT FINANCIAL POLICIES 25 2/10/93 5/23/05 In 1978, Proposition 13 limited general levy property tax rates for all taxing authorities to a total rate of one percent of full cash value. Subsequent legislation, AB 8, established that the receipts from the one percent levy were to be distributed to taxing agencies according to approximately the same proportions that each agency received of total general levy receipts prior to Proposition 13. Funds received are to be used for betterment facilities or debt service on bonds sold to build such facilities. F. Interest Income (Expense) Allocation Interest income (expense) will be allocated each month based upon each fund's prior month-ending balance. G. Regional Water or Sewer Splits The regional split for each system allocates project costs to all IDs and is based upon the ultimate demand of each ID to the total ultimate demand District-wide. Ultimate demands are based upon current land use planning and are subject to change over time. Regional splits should only change when regulatory agencies that determine land use make sig- nificant changes. Such changes in regional splits will be prospective only and not retroactive. Page 7 of 8 OTAYWATER DISTRICT BOARD OF DIRECTORS POLICY Subject Policy Date Date Number Adopted Revised DISTRICT FINANCIAL POLICIES 25 2/10/93 5/23/05 H. Restricted Cash Funds The District maintains restricted cash funds to provide cash for the following purposes: 1. Rate Stabilization The Rate Stabilization Fund may be used to mitigate future rate increases. The contribution to the Rate Stabilization Fund will come from excess revenue at the close of the fiscal year, and the fund balance will accrue interest as a separate fund in pooled investments. The goal of the Board of Directors is to annually approve a rolling five-year projection that will deplete the fund in five years. In the event that the District has collected revenues in excess of anticipated rate increases, the Board shall be presented with options to determine uses for the fund balance. Example: Fiscal Year 2000 Water Rate Increase 3% Rate Stabilization Fund Beginning Balance $2,641 Excess Revenue (Exp) (500) Disburse/Rebates 0 Interest Earnings 137 Ending Balance $2,278 2001 3% $2,278 (551) 0 115 $1,842 2002 3% $1,842 ( 63 0) 0 88 $1,300 2003 3% $1,300 ( 689) 0 54 $ 665 2004 3% $ 665 (682) 0 17 $ -0- Page 8 of 8 olicy Otay Water District Contents Introduction District Funds Fund Types Fund Transfers Glossary Otay Water District INTRODUCTION 1.0 The District The Otay Water District is a publicly-owned water and sewer service agency, more specifically, a California special district, authorized in 1956 by the State Legislature under the provisions of the Municipal Water District Act of 1911. The District is a "revenue neutral" public agency, meaning each end user pays its fair share of the District's costs of water acquisition, construction of infrastructure and the operation and maintenance of the public water facilities. The District operates three distinct business segments: • Potable water • Recycled water • Sewer Each of these business segments has a distinct customer base. In addition, the developer community, large and small, makes up a significant class of customer for each business segment. As a result, the District has four distinct customer service types: • Developers • Potable water users • Recycled water users • Sewer users The District has established practices and developed computer systems that have enabled the District to maintain a clear separation between these service costs. Regardless of customer class, financial principles regarding cost allocation and fund accounting are fundamental to the District’s Reserve Policy. These principles are derived from the statements of the Governmental Accounting Standards Board (GASB), and from oversight and advisory bodies such as the California State Auditor, the Little Hoover Commission, and the Government Finance Officers Association (GFOA). These have significant impacts on how the finances of the District are organized and how financial processes work within the organization. 1.1 The District’s Use of Funds All of the District’s expenditures fall into two broad categories: operating costs and capital expenditures. The Operating and Maintenance (O&M) expenditures generally support the purchase and delivery of potable and recycled water, and the transportation and treatment of sewage. The capital expenditures support the construction of infrastructure necessary to deliver service. The District uses various reserves to support the operating and capital efforts. Capital infrastructure is funded using two methods: pay-as-you-go or debt issuance (requiring annual debt service). The Capital Improvement Program (CIP) and the two funding methods support the construction of infrastructure in all three business areas: potable, recycled, and sewer. Both 2 the capital and operating efforts within the District are different for each of the four distinct customer types. The District uses a set of funds to accumulate and account for revenues allocated to different activities. Those funds receive funding up to the levels defined in this policy. Each year, as a part of the annual budget process, the District’s rate model is updated for each fund with the current fund balances and the estimated revenues and expenditures for the next six years. The expenditure or funding requirements are then evaluated to ensure that the existing fund levels and additional revenues are sufficient within the current budget cycle and the next five years. If a deficit is identified, then options for transfers, debt, and/or rate increases are evaluated. 1.2 The District’s Capital Improvement Program The planning, design, and construction costs of all facilities within the three business segments are allocated to three cost areas: Expansion, Betterment, and/or Replacement. The funding allocation for these three cost areas is defined in the District’s Capital Improvement Program (CIP) and is determined by an engineering analysis which identifies which type of customers will benefit from the facility. Expansion is for new customers, betterment is for existing customers where the facility is improved, and replacement is for existing customers where the facility is replaced. If an expansion capital project also results in betterment or replacement, the costs are allocated to new users (Expansion) and existing users (Betterment and Replacement) so that the developers will only pay the expansion portions. This policy protects both the developing and established areas from incurring inappropriate costs. Developing areas are not required to finance facilities that are due for replacement or betterment; conversely, established areas are not required to replace facilities before they are worn out simply because of new development. Each facility has the potential to be classified into all three categories to various degrees. In addition to these standard categories there are occasional CIPs that may be billable to a third party such as relocations. a. Expansion Fund The portion of a project that benefits new users is funded by the developing areas through capacity fees. Future expansion costs are divided by all future connections to calculate the capacity fee. This capacity fee is the primary funding source for expansion projects and is accounted for separately and used solely for the planning, design, and construction of expansion facilities. The majority of the funding sources are restricted in nature with the exception of the general use funds placed into the Designated Expansion Fund. b. Betterment Fund The District may construct a project that results in a significant benefit to existing users. Facilities that improve reliability or meet new or increased standards of service are considered betterment facilities. In such a case, user rate charges and betterment fees could be used as a funding source for that portion of the project that results in a lowering of overall operation and maintenance costs or an improvement to the existing users. Betterment may also be a result of increased standards or regulations on water or sewer systems. If the existing system must be improved in order to meet the new standards this 3 cost is a betterment cost. The majority of the funding sources are restricted in nature of their use and the geographic area of use, with the exception of the general use funds placed in the Designated Betterment Fund. c. Replacement Fund Replacement of facilities is funded primarily by general user rates. The portion of a project that benefits existing users is funded by the Replacement Fund. It is expected that the District will debt finance a significant portion of the future replacement facilities. The District has a Debt Policy (Policy No. 45) that guides the debt issuance process. The replacement reserve will serve as an immediate funding source for replacement projects and will provide the necessary flexibility to begin projects while the appropriate debt financing is being obtained. 1.21 Relocations Occasionally, relocation of facilities is required when the District has easements for the pipe location. When a project is relocated, the cost of the new facility shall be funded by the party without an easement or if no parties have easements then it is funded by the party causing the relocation. When this occurs, a CIP project may be created which is wholly or partially funded by a third party who must reimburse the District for the cost of the relocation. Depending on the nature of the facilities, the funding source for these projects could be from replacement, expansion, betterment or third party funding of projects at the District. Each project is individually negotiated. When determining how much this fund will pay for construction, the following guideline is suggested: If a project has more than five years of useful life remaining then funding is incremental, if there is less than five years remaining funds are contributed from the Replacement Fund on a pro-rata basis. 1.22 Oversizing In some cases, where reasonable, the developer may be required by the District to oversize new facilities for future development in order to obtain economies of scale. The developer will be reimbursed for incremental over-sizing costs as per Policy No. 27. These reimbursements are only for backbone facilities funded by capacity fees - not for the distribution system within a development which is an obligation of the developer separate from the capacity fees. These smaller distribution pipes serving the individual homes within a development are often referred to as “in-tract” pipelines. 1.23 Exclusion of Developed Areas from Expansion Costs Developed areas are considered to have sufficient supply and capacity to meet their current requirements as provided by the developers. In addition, they are considered to have borne capital financial costs that are at least proportionate to the benefits they have received from capital facilities. Accordingly, no regional capital financial costs are allocated to these areas so that they will not incur any costs for newly developing areas. In the case of a capital project that produces District-wide cost savings, however; the District may provide financial support to new facilities. 4 1.24 Improvement Districts (IDs) Improvement Districts are established in order to facilitate the funding of a particular improvement by the specific beneficiaries. The District has a number of Improvement Districts that were established for General Obligation (GO) debt repayment. Many of these GO issuances have been paid off and, as outlined in the Debt Policy, it is unlikely that the District will issue additional GO debt. IDs continues to be used for other funding purposes. First, to distinguish sewer customers from water customers on the county tax roll; second, to place parcels on the county tax roll for the collection of availability fees; third, for the charging of special water rates; and fourth, to track which properties have paid annexation fees. Over the years, the District has taken a district-wide perspective to funding improvements. This philosophy is evident by the district-wide capacity fee and annexation fee. The District also uses district-wide water rates. As time continues, it is expected that IDs will continue to outgrow their purpose. So, while many IDs remain their use will diminish over time. 1.3 The Purpose of the Policy Public entities accumulate and maintain reserves to ensure both financial stability and the continuation of the ability to provide services. Financial stability and the increase in credit quality that result from stability allow the public entity to weather times of uncertainty and the impacts of negative events, both major and minor. Funded reserves allow for the continued maintenance of property and payment of expenses beyond the magnitude of the funds available in a single fiscal period. In the final analysis, the type and level of reserves are driven by the type and magnitude of uncertainty faced by the District. A “reserve” has a number of meanings: • Working capital required to insure timely payment of obligations • A buffer against volatility in revenues • Liquidity required to obtain other goods and services (e.g., bank services) • Designated funds to protect creditors • Funds set aside to replace assets at the end of their useful lives • Funds set aside to repair or replace assets damaged or destroyed at unanticipated times It is important to note that reserve, fund balance, and net assets are not the same. Fund balance and net assets are accounting terms and may not always be in the form of cash or liquid investments. Fund balances and net assets may not always be reserves unless a designation of all or a portion of fund balance is made. It is important to note that the term, fund balance was recently replaced by net assets as codified by the Governmental Accounting Standards Board (GASB). In short, reserves are the liquid assets of the District, accumulated and maintained for application to fund contingent future activities, whether known or unanticipated, operating or capital in nature. The District’s Reserve Policy governs the management and use of these funds. Few policies have a more significant impact on the financial health and stability of the District. This policy explains several key financial concepts used by the District and provides some 5 background information to the overall strategies and practices utilized. The District has a fiduciary obligation to its customers to manage and direct the use of public funds for the purpose of providing water and sewer services in an efficient and financially sound manner. 1.4 Policy Guidelines In 2000, the Little Hoover Commission reviewed the levels of reserve funds for special districts in California and prepared a report reflecting that special districts were accumulating unreasonable levels of funds. As a proactive response, the California Special Districts Association (CSDA) prepared Reserve Guidelines for its members. The Reserve Guidelines were significant in noting that reserve levels need to be in context of the organization’s overall business model and capital improvement plan. There are a number of potential events which the District should consider in the development of reserves: • Economic Uncertainty—performance of the regional economy and the impact of that performance on demand for water • Weather—the amount of rainfall and the impact of weather on the availability and the cost of water • Government Mandates—the impact of federal and state regulation, particularly environmental regulation • Tax Changes—Limitations on the District’s taxing and spending powers through the passage of a voter referendum, the impound of District property taxes or the removal of the District’s power to levy property taxes, further increases to ERAF contributions or changes in calculation methodology • Operating Costs—Increases in operating and maintenance costs because of inflation, labor agreement or other modification • Force Majeure—Unanticipated expenditures resulting from natural disasters or intentional acts • Emergency Maintenance—Unanticipated expenditures resulting from unexpected failure of assets (e.g. rupture in the primary transmission system) • Unexpected Variation in Cash Flow—the incidence of additional costs or decreased revenues that requires short-term borrowing in the absence of sufficient funds The California State Auditor has, in its oversight role, offered a number of quality recommendations for the development of reserve policies as outlined in its report entitled, “California’s Independent Water Districts: Reserve Amounts Are Not Always Sufficiently Justified, and Some Expenses and Contract Decisions Are Questionable,” dated June 2004, 2003-137. Each of these recommendations has been incorporated into this policy in an effort to address key issues surrounding the management and use of District reserves. The detailed objectives as identified by the State Auditor are as follows: • Distinguish between restricted and unrestricted reserves • Establish distinct purposes for all reserves • Set target levels, such as minimums and maximums, for the accumulation of reserves • Identify the events or conditions that prompt the use of reserves • Conform with plans to acquire or build capital assets 6 • Receive Board approval and be in writing • Require periodic review of reserve balances and rationale for maintaining them Yet, the State Auditor’s report acknowledges that the California Constitution (Article XIII B, Section 5) is vague in its provisions governing the accumulation and use of reserve. Specifically, the Constitution states that “each entity of the government can establish contingency, emergency, reserve, or similar funds as it deems reasonable and proper.1” Similarly, the State’s Water Code does not impose any requirements as to specific or recommended reserve fund levels. As a result, the public finance community as a whole has yet to settle on any real objective standards for the level of reserve funds appropriate for governmental enterprises. This lack of consensus as to specific standards is indicative of the wide variance of the financial and operations contexts for different districts and different contingencies justifying reserve of funds. The Government Finance Officers Association (GFOA) in its Recommended Practice on Appropriate Level of Unreserved Fund Balance in the General Fund (2002) states: In establishing a policy governing the level of unreserved fund balance in the general fund, a government should consider a variety of factors, including: • The predictability of its revenues and the volatility of its expenditures (i.e., higher levels of unreserved fund balance may be needed if significant revenue sources are subject to unpredictable fluctuations or if operating expenditures are highly volatile). • The availability of resources in other funds as well as the potential drain upon general fund resources from other funds (i.e., the availability of resources in other funds may reduce the amount of unreserved fund balance needed in the general fund, just as deficits in other funds may require that a higher level of unreserved fund balance be maintained in the general fund). • Liquidity (i.e., a disparity between when financial resources actually become available to make payments and the average maturity of related liabilities may require that a higher level of resources be maintained). • Designations (i.e., governments may wish to maintain higher levels of unreserved fund balance to compensate for any portion of unreserved fund balance already designated for a specific purpose). In the preparation of this policy each of the CSDA guidelines and the GFOA recommendations have been considered. In addition, all seven objectives provided by the State Auditor are specifically addressed for each reserve. The District wholly supports the State Auditor’s efforts to bring a high-level of quality to reserve governance and establishing a standard of performance. The District recognizes that the customer pays for services provided. Quality management requires that periodic valuations be performed so that fees and charges can be set at appropriate 1 California State Auditor, Bureau of State Audits, “California’s Independent Water Districts: Reserve Amounts Are Not Always Sufficiently Justified, and Some Expenses and Contract Decisions Are Questionable,” dated June 2004, 2003-137; p. 8. 7 levels to recover the cost of service. The District’s Reserve Policy has been drafted with consideration of the GFOA, CSDA, and State Auditor general guidelines as provided above. In addition, the District has adopted the following principles in the management of its funds: • Funds are held and used only for the purpose for which they are collected. This is done to maintain equity between customers. • Each of the service types is tracked separately so that expenditures and revenues can be monitored and evaluated for each customer type. This provides the District with the necessary information to appropriately charge for each of the services. • Separation of O&M from capital expenditures occurs within each of the service types. This is done because the funding of these expenditures is often on different timelines or use different funding sources. • The District will hold its reserve at responsible and prudent levels. This policy sets minimum, maximum, and target levels for each of the various funds. This has been done so that the District can maintain funds to meet the purpose for which the funds were established. The levels are set by reference to line items in the District’s financial statements and approved budgets. This allows reserve levels to adjust to the District’s changing financial circumstances. • Debt financing of facilities provides intergenerational equity and maintains rates at reasonable levels. This equity is accomplished with the long-term financing by spreading the cost of facilities over the life of the facilities. The burden to pay for facilities is then paid by those who use them. Optionally, the District could amass significant reserves by pre-collecting funds in a Replacement Reserve Fund allowing the District to cash fund all replacements. In order to obtain those funds, significant rate increases would be required, burdening the current customers and creating reserve levels difficult to defend to the ratepayers or other oversight entities. These concepts are fundamental to the way the District manages its funds and have a direct impact on the way rates and charges are set. The District performs annual budget evaluations and updates its rate study model on at least an annual basis to monitor and adjust the various funds and revenue sources. The separation, tracking, and projecting of the various funds and expenditures create the essential information necessary for the equitable rate structure maintained by the District. The annual review preserves the balance between services provided and the prices charged. This review also insures that funds will be available to continue to serve the District’s customers. 8 SOURCES OF FUNDS 2. 0 Developers a. Meter Installation Charges (General Use) Meter fees are charges collected for new water service connections. Fees vary depending upon meter size and type of service. The costs associated with meter installations are included in the Operating Expenses section of the budget. These charges are funded by developers. b. Annexation Fees (General Use) Annexation Fees are outlined in Section 9 of the Code of Ordinances. This is the buy-in to the District’s potable and recycled water facilities paid by the developer and based on the excess capacity built by existing users. This fee insures that future users fund a portion of the facilities that were sized and built for their future use by prior customers. The annexation fees are general use funds and help to offset current customer costs. The calculation of the fee uses a system-wide evaluation that combines the potable and reclamation systems. This methodology is used because the two water systems work hand-in-hand, the recycled system brings a new supply of water to the District reducing the need for potable systems and the higher cost of obtaining new potable supplies. c. Developer Deposits (General Use) These deposits are for the engineering and operations services provided to developers. They are tracked separately for each developer and any excess amount is returned to the developer. d. Capacity Fees (Restricted) The capacity fee is outlined in Section 28 of the Code of Ordinances. Capacity fees are based on the estimated construction cost of expansion divided by the number of future Equivalent Dwelling Units (EDUs). The capacity fee covers costs including, but not limited to, planning, design, construction, and financing associated with facilities for the District’s expansion needs. Ultimate facility needs are based on projected land use planning. These needs and the projected costs change over time as regulatory agencies determining land use make changes. Significant variations in future land use occur and can alter projected facility requirements. As these changes occur, the District will review the capacity fee calculation. These fees are paid by developers. The District’s construction of infrastructure occurs prior to the addition of EDUs. This serves two purposes: one it ensures that the District can serve the pending construction as it is completed; two, it is more efficient to oversize many facilities at the outset rather than build for the current need and then reconstruct when the future need is realized. As a result of this strategy, the District has financed construction with bond financing as the existing expansion funds are depleted. 9 The capacity fee is calculated based on the expansion costs of the combined recycled and potable water systems needs. This methodology, just like the annexation fee methodology, is used because the two water systems work hand-in-hand. All capacity fees can be used for either potable or recycled but only for expansion needs. So, while capacity fees are not restricted separately, one portion for potable and the other portion for recycled, they are tracked separately. 2.1 Customers/Users a. Uniform Rates and Charges (General Use) Charges to users for water, sewer, and recycled water are uniform throughout the District for similar customer types. This policy reduces possible misunderstanding that might occur among customers if rates varied between geographical areas. It also provides for an administratively straightforward billing process. b. Monthly System Fees (General Use) This is a fixed revenue source that is charged monthly. The amount of the charge is based on the meter size. c. Energy Charges (General Use) The energy pumping fee is $0.032 per unit of water for each 100 feet of lift, or fraction thereof, above the base elevation of 450 feet. This charge is placed on the monthly water bills of all water customers. d. Penalties (General Use) Penalties are added to the monthly water and sewer bills for late charges, locks, etc. DEVELOPERS Annexation Fees Developer DepositsMeter Installation Charges Unrestricted and Undesignated (General Use) Fund Designated Funds Restricted Funds Capacity Fees DIAGRAM 2.0: Flow of Funds – Developer Sources 10 e. Pass-through Fixed Charges (General Use) A fixed monthly charge to the District’s customers intended to collect sufficient funds to pass-through the increased fixed cost from CWA and MWD. f. Special Rates and Charges (Restricted) In addition to the uniform water charges, the District currently has five special water rates and one sewer rate. The five water rates are all for construction, installation, and maintenance of water storage reservoirs, pump stations, and water lines in the respective areas. Each of these is listed as follows: • North District water charge (code section 25.03H) • ID 9 water charge (code section 25.03I) • ID 3 water charge (code section 25.03J) • ID 10 water charge (code section 25.03J) • La Presa water charge (code section 25.03J) • Russell Square sewer charge (code section 53.04C) When these rates were established they were for the specific purpose of constructing, installing, and maintaining the water and sewer systems in the areas that they were collected. Therefore, these are Restricted Funds by geographic area as well as by purpose. These fees however, can be used for maintenance, unlike the availability fees. These six special fees along with availability fees are tracked separately, by geographic area, so they can be evaluated for the target funding levels separately. To meet this need, each special rate and charge is accounted for in a “sub-fund” of the betterment fund. g. Temporary Meter Fees (General Use/Restricted) Water charges, in lieu of capacity fees, are charged on temporary meters. This is done because while temporary meters use system capacity they are not charged a capacity fee. Temporary water use is charged at two times the water rate with the added charge placed in the Restricted Expansion Fund. The primary users of these temporary meters are developers however, general customers also use these for various purposes. 11 2.2 County-Collected Taxes and Fees a. General Levy Property Tax Receipts (1% Property Tax) (General Use) In 1978, Proposition 13 limited general levy property tax rates for all taxing authorities to a total rate of one percent of the assessed value. Subsequent legislation, AB 8, established that the receipts from the one percent levy were to be distributed to taxing agencies proportionate to each agency’s general levy receipts prior to Proposition 13. Funds received are for general use. b. Availability Charges (General Use/Restricted) The District levies availability charges each year in developed and undeveloped areas. Current legislation provides that any amount up to $10 per parcel is general use and any amount over $10 per parcel is restricted to be expended in and for that Improvement District (ID). IDs were formed to provide the lowest cost funding possible for the development of water and sewer systems. Accordingly, the District may use any amount over $10 to develop water and sewer systems which are either, expansion, betterment, or replacement. This portion is geographically restricted and restricted by purpose. The Restricted Funds are accounted for in “sub-funds” of the Betterment Fund (see 2.1 f.). Availability fees can be used for the development of facilities consistent with the purpose of the ID which they are collected in, while special rates and fees can also cover the maintenance of those facilities. As charges are incurred on these projects the respective IDs are charged reducing the betterment fund. In the event that funds are not used, the Restricted Funds must be returned to the property owners that paid them. Therefore, the CUSTOMERS / USERS Energy ChargesMonthly System Fees Uniform Rates and Charges Unrestricted and Undesignated (General Use) Fund Designated Funds Restricted Funds Penalties Pass - through Fixed Charges Temporary Meter Fees Special Rates and Charges DIAGRAM 2.1: Flow of Funds – Customer Sources 12 monies in this fund may only be used to finance the construction, installation, and maintenance of the systems within the geographic area of the specific IDs. The District has historically used these funds for betterment capital facilities however, they are available for any facility construction purpose benefiting the ID whether replacement, betterment, or expansion. Each year the District sends notices to all new customers informing them of the availability fees and their purpose. This notice also informs the customers of the date and time of the public hearing to receive public comment on this fee. The availability fees are split between the Betterment Fund and the General Fund. c. State Loan Assessment (Restricted) The District assesses a $54 charge per unit of sewer service each year on the sewer customers. This is collected via the County Tax Roll and is specifically collected for the repayment of the State Loan. d. General Obligation (GO) Bond Assessments (Restricted) The District occasionally issues GO debt and establishes an Improvement District for the repayment of that debt. When this financing method is used, the County Tax Roll can be used to collect funds and pay debt obligation. COUNTY-COLLECTED TAXES AND FEES State Loan Assessment Availability Charges General Levy Property Tax Receipts Unrestricted and Undesignated (General Use) Fund Designated Funds Restricted Funds General Obligation Bond Assessments DIAGRAM 2.2: Flow of Funds – County Collection Sources 13 2.3 Miscellaneous Income a. Miscellaneous Rents and Leases (General Use) Revenues received from the rental and lease of District property. There is also a one-time fee charged with the set-up of each new lease. The District incurs expenses related to these rents and leases and this fee’s purpose is to recover the cost to set up the lease. b. Sewer Billing Fees (General Use) Fees received from the City of Chula Vista for processing and billing of their sewer customers within our District. c. Interest Income or Expense Allocation (General Use, Designated, and Restricted) Interest income (expense) will be allocated each month based upon each fund's month- ending balance. 2.4 Debt Issuance a. Loans (General/Restricted Use) As the District determines that additional funding is required for a particular purpose the option of borrowing is considered. The determination to borrow is made as a part of the annual rate model update and is evaluated in accordance with the Debt Policy before it is MISCELLANEOUS INCOME Interest Income or Expense Allocation Sewer Billing FeesMiscellaneous Rents and Leases Unrestricted and Undesignated (General Use) Fund Designated Funds Restricted Funds DIAGRAM 2.3: Flow of Funds – Miscellaneous Income Sources 14 DEBT PROCEEDS Certificates of Participation General Obligation BondsLoans Unrestricted and Undesignated (General Use) Fund Designated Funds Restricted Funds recommended to the Board for action. As an option to bond indebtedness, loans are available especially to satisfy short tern financing needs. These loans may or may not be contractually restricted for a particular purpose. b. General Obligation (GO) Bonds (Restricted) As the District becomes more developed it becomes less likely that GO debt will be used as it requires a vote of the public to be approved. Bond proceeds are restricted for the construction of those facilities identified in the GO bond issuance. Occasionally, specific portions of bond proceeds may be allocated for the repayment of the principal and interest, also called debt service, on these bonds. As the District determines that additional funding is required for a particular purpose, the option of debt issuance is considered. The determination to issue debt is made as a part of the annual rate model update and is evaluated in accordance with the Debt Policy before it is recommended to the Board for action. c. Certificates of Participation (Restricted) General revenues of the District are pledged as security for COPs indebtedness. Before issuing COPs, the District will determine that additional funding is required for a particular purpose, the option of debt issuance is considered. The determination to issue debt is made as a part of the annual rate study update and is evaluated in accordance with the Debt Policy before it is recommended to the Board for action. This form of financing has become the industry’s preferred form of financing as it does not require a vote of the general public. DIAGRAM 2.4: Flow of Funds – Debt Issuance Sources 15 2.5 Inter-fund Transfers Each year in the budgeting process future reserve levels are projected over the next six years. Based on these projections, fund transfers are recommended. Monies may be transferred between Unrestricted and General Fund (see 4.0 “Funding Levels” and 4.1 “Fund Transfers”). Funds may not be transferred to or from any of the restricted funds. 16 FUND TYPES 3.0 General Funds a. Purpose The General Fund is neither restricted nor designated. The District maintains only one General Fund for each business segment (water, sewer, and recycled). This fund holds the working capital and emergency operating reserves. This fund can also be used to smooth out rate spikes, similar to the Rate Stabilization Fund (see 3.1 a.v.). While the General Fund has a short-term focus to fund the District’s annual operations, it is supported by the six year rate model. This fund is primarily used to fund the operations of the District however, it can be used for any District purpose. b. Sources Meter installation charges, annexation fees, temporary meter fees, uniform rates and charges, monthly system fees, energy charges, penalties, pass-through fixed charges, general levy property tax receipts, availability charges, miscellaneous rents and leases, sewer billing fees, interest incomes or expense allocation, loans, and a portion of the temporary meter fees.. c. Levels i. Minimum Level – The minimum funding level for the General Fund is three months of operating budget expenses. ii. Maximum Level – The maximum funding level for the General Fund is seven months of operating budget expenses. In the event that this fund exceeds the seven month level, the excess will be evaluated or transferred to one or more of the designated funds. iii. Target Level – The target level of funding is three months of operating budget expenses. In the event that the fund drops below the target level rate increases or fund transfers would be considered. 3.1 Designated Funds a. Purpose Designated cash funds are “general use” funds that have been set apart by Board action for a specific purpose. These funds can only be used for those purposes. However, these funds are at the discretion of the Board and can be used for any other District purpose by an action of the Board. The District maintains designated cash funds as follows: • Other Post Employment Benefits Fund (OPEB) • Designated Expansion Fund 17 • Designated Betterment Fund • Replacement Fund • Rate Stabilization Fund Detailed descriptions of the funds are as follows: i. Other Post Employment Benefits Fund (OPEB) The OPEB fund is used to fund the medical benefits of qualified retirees as outlined in the District’s benefits plan. It is fully funded by user rates. Every two years the fund is evaluated for additional funding requirements. Changes in the actuarial valuation may result from changes in benefit levels, employee population, costs of health insurance, or general market conditions. These funds are currently designated but may be placed into a trust effectively removing the District’s day-to-day access to the funds. This would allow the funds to offset the actuarial liability of the District to fund OPEB. However, these funds are currently designated and therefore, may be used at Board direction for any purpose. ii. Designated Expansion Fund The purpose of this fund is to supplement the financing of expansion projects. In the event the restricted expansion funds are not sufficient to fund the expansion projects these funds may be used. This fund must be evaluated in conjunction with the Restricted Expansion Fund as they work in concert. There is significant interdependency between the District’s potable and recycled water systems. For this reason, the two systems are supported by one combined capacity fee. The same capacity fee is charge on all water connection regardless of whether they are potable or recycled. For this reason the Restricted and Designated Expansion Funds for these two business segments must be considered jointly when using the rate model and setting fees. The District currently has not sewer expansion and therefore has no sewer capacity fees and no active sewer expansion funds. This fund contains general use funds and at the direction of the Board may be used for any District purpose. iii. Designated Betterment Fund The purpose of this fund is to supplement the Restricted Betterment Fund for sewer, water, or recycled. The District maintains three separate designated betterment funds, one for each business segment. In the event a Restricted Betterment Fund is not sufficient to fund betterment projects this fund will be used. This fund must be evaluated in conjunction with the Restricted Betterment Fund as they work in concert. When considering the funding levels for betterment funds there are multiple sub-funds within betterment that must be 18 individually considered (see 2.1 f.). This is a general use fund and at the direction of the Board may be used for any District purpose. iv. Replacement Fund The purpose of this fund is to pay for the replacement of capital infrastructure and capital purchases. This is a Designated Fund and was created to meet a portion of the District’s replacement needs. This fund is not to be used for the replacement of non-capital items. Debt financing of replacement will be the primary source of funds for replacement however; this reserve is established to fund a portion of replacement and ensure that necessary replacements will occur regardless of the immediate availability of the debt markets. With the District’s development of its financial systems and the greater need and ability to separate funds, the Replacement Fund has been separated into three funds: water, recycled, and sewer. Projects undertaken solely for the purpose of replacing major capital equipment or facilities, i.e., where the cost exceeds $10,000 for capital purchases or $20,000 for infrastructure items, generally are not considered normal maintenance. Where the cost is below $10,000 the costs are financed annually as operational maintenance. As charges are incurred on a replacement project the funds are deducted from the Replacement Fund on a monthly basis. This is a Designated Fund and may be redirected for any purpose at Board direction. v. Rate Stabilization Fund The purpose of this fund is to smooth out potential rate spikes. The District maintains a Rate Stabilization Fund for each business segment. These funds are to be used to supplement the District’s rates and charges and be a temporary source of revenue to balance the Operating Budget and avoid spikes in the rates or significant and abrupt increases. This would only occur if there was a temporary need for funds that would smooth out a rate spike or to ramp up what would otherwise be a dramatic rate increase. 19 Rate stabilization is a significant factor in the debt planning of the District. It is an industry practice to have a Rate Stabilization Fund. This fund is viewed by the debt markets as a commitment by the District to ensure financial stability of the rates and charges of the District. The District is anticipated to issue a number of debt issuances over the years and this fund will help the District not only to stabilize rate fluctuations but also access low cost financing for future projects. This is a Designated Fund and may be redirected for any purpose at Board direction. b. Sources The sources of funding for designated funds are limited to interfund transfers from available unrestricted funds (see 3.0 b.) and interest earnings on fund balances within designated funds. Unrestricted funds may come from other designated funds or from the General Fund. The operating budget is another source of designated general revenues. As a part of the normal budget process the general revenues are sufficient to fund a significant portion of the ongoing needs of the designated funds. c. Levels Other Post Employment Benefits Fund A. Minimum Level – Fully funded as identified under the actuarial study of the District’s OPEB liability. B. Maximum Level – Fully funded as identified by an actuarial study. In the event that the fund is over funded, the District will target for the full funding within five (5) years reducing the annual funding levels. C. Target Level – Fully funded to meet the actuarially defined valuation. In the event that the fund is not fully funded, the District will target for full funding within five (5) years by increasing funding levels. This increased funding would be in the form of either annual budget funding or fund transfers. i. Designated Expansion Fund A. Minimum Level – As the District matures the CIP will move to purely replacement projects. As the District moves through its lifecycle the need for expansion funds will decrease and eventually be reduced to zero. When considering the funding of expansion the Restricted Expansion Fund and the Designated Expansion Fund work in concert and must be considered jointly. B. Maximum Level – The maximum level of this fund is limited to five years of unfunded expansion needs as described in the District’s CIP Budget. To determine the unfunded amount the total expansion costs must 20 be reduced by the projected restricted expansion revenues. Bond financing is expected to fund a large portion of expansion. C. Target Level – In order to facilitate debt financing of expansion, it is important that the expansion funds retain a reserve of six months prior to any attempt to obtain bond financing. This reserve allows the District the time necessary to issue additional debt without running out of expansion funds. If the combined expansion funds drop below six months of expenditures this would trigger either a transfer of general use funds or a borrowing of funds with a bond sale. Bond funds would be placed in the Restricted Expansion Fund while transfers would be placed in the Designated Expansion Fund. If the combined expansion funds exceeded target the District should considered the need to reduce capacity fees or transferring designated funds to meet another purpose. ii. Designated Betterment Fund A. Minimum Level – As the District matures the CIP will move to purely replacement projects. As the District moves through its lifecycle the need for betterment funds will decrease and eventually be reduced to zero. When considering the funding of expansion the Restricted Betterment Fund and the Designated Betterment fund work in concert and must be considered jointly. Maximum Level – The maximum level of this fund is limited to five years of unfunded betterment needs as described in the District’s CIP Budget. To determine the unfunded amount the total betterment costs must be reduced by the projected restricted betterment revenues. Bond financing is expected to fund a large portion of betterment. C. Target Level – In order to facilitate debt financing of betterment, it is important that the betterment funds retain a reserve of six months prior to any attempt to obtain bond financing. This reserve allows the District the time necessary to issue additional debt without running out of betterment funds. When considering the funding levels for betterment funds there are multiple sub-funds within betterment that must be individually considered (see 2.1 f.). If the combined betterment funds drop below six months of expenditures this would trigger either a transfer of general use funds or a borrowing of funds with a bond sale. Bond funds would be placed in the Restricted Betterment Fund while transfers would be placed in the Designated Betterment Fund. If this target is exceeded, then the District should evaluate reductions in the special water rates and availability fees and also consider transfers to other funds. iii. Replacement Fund A. Minimum Level – The minimum level of funding is 3% of the historical value of existing assets as identified in the District’s current financial statement. 21 B. Maximum Level – The maximum level of funding is 6% of existing assets. In the event the maximum level is exceeded in any year, then the excess will be transferred as per the general transfer guidelines found in Section IV. C. Target Level – The target level of funding is 4% of existing assets. In the event that the fund falls below the recommended target level, transfers or operating revenues would be shifted to support the Replacement Funds. The District will act based on the annual five (5) year rate study to insure that at the end of that planning horizon the fund exceeds the minimum level and is approaching the target level. iv. Rate Stabilization Fund A. Minimum Level – The minimum level for the Rate Stabilization Fund is one month of operating budget expenses. B. Maximum Level – The maximum funding level for the Rate Stabilization Fund is two months of operating budget expenses. Any excess over the maximum would be transferred based on the general transfer guidelines found in Section IV. C. Target Level – The target level of funding is one month of operating budget expenses. If the balance if this fund is above or below the target level fund transfers or funding in the operating budget will be considered. 3.2 Restricted Funds a. Purpose Restricted cash funds are those that are legally set aside for a particular purpose and cannot be used for any other purpose. The District maintains three Restricted Funds: • Restricted Expansion Fund • Restricted Betterment Fund • Debt Reserve Fund The definition and purpose of each of these funds is described below: i. Restricted Expansion Fund The Restricted Expansion Fund works hand-in-hand with the Designated Expansion Fund. When evaluating the need for additional funding, both the restricted and designated funds must be considered as one fund. The sole purpose of this fund is to construct potable, recycled, and sewer facilities to the extent they serve the expansion needs of the District. Recycled and potable are jointly accounted for as these water systems work in concert. The sewer expansion is accounted for separately but is currently inactive as there is no sewer expansion. 22 This fund is restricted by law and therefore is a Restricted Fund that can be used for no other purpose. Government Code section 66001 requires that these funds be accounted for separately and upon request that an accounting be provided. In addition, five years after the first deposit into the account or fund, the Code requires the District make specific findings regarding any unexpended funds, whether those funds are committed to expenditure or not (Government Code section 66001). The same findings must continue to be made once every five years thereafter. If the findings are not made, the statute requires the District refund the fees to the current owner of the affected property. The manner of the refund is at the District’s discretion. As charges are incurred on a project, and the project has been identified as an expansion project, the costs are deducted from the Expansion Fund. This allocation of funds is done on a monthly basis. In the event that funds are not used for the expansion of District facilities the funds must be returned to the developers who paid them. In the case where a policy change requires a betterment project that would have been an expansion project at the time the capacity fee was collected, reserves may be used for that betterment project. The expansion reserves may also be used for bond repayment, to the extent the debt was incurred to fund expansion. ii. Restricted Betterment Fund The Betterment Reserve covers the cost to construct, install, and in some cases to maintain the potable, recycled, and sewer systems. The District maintains three separate designated betterment funds, one for each business segment. These funds are restricted by law for use within the area in which the fees are collected (Water Code 71631.6). However, the legal restriction of this fund depends upon the particular revenue source. (see Section 2.1 f.) for a review of the special rates and availability fees). iii. Debt Reserve Fund The purpose of the Debt Reserve Fund is to pay periodic principal and interest debt payments on the outstanding debt. As these payments are made the funds are reduced. As additional debt is incurred, new property tax assessments may be authorized funded from assessments on the Property Tax Roll. Annually, the District sets the tax rate at a level necessary to fund that year’s debt payments. These rates are applied to the assessed valuation of the property. Changes in property values in 23 assessment areas result in inverse fluctuations in the tax rate necessary to generate the required debt payments. In other cases, such as assessment districts, the debt service is funded through an assessment being levied on each parcel within the district. In assessment districts, the amount of the levy will vary by parcel and is based on the amount of benefit that parcel received from the improvement. In addition, debt service may be funded through water rates. In the case of funding from water rates, there would not be a restriction on those debt reserve funds. They may remain in the General Fund or be placed in a Designated Fund if the Board were to take specific action to designate rate funds for the purpose of debt payments. These funds are legally restricted for the specific debt issuance for which they are collected. These funds are not available for any other purpose and may not be designated for any other purpose. If these funds are not used for the payment of the specific debt for which they are collected they must be returned to the customers who made the tax roll payments. The District must evaluate the exact need of funds to avoid the costly reimbursement process. b. Sources Temporary meter fees and capacity fees fund expansion while special rates and charges and availability charges fund the betterment fund. The debt reserves are funded by the State Loan Assessment, and GO bond assessments. Each debt fund can also be funded with the proceeds of the debt. Lastly, each fund is allotted its share of the interest income or expense. c. Levels i. Restricted Expansion Fund A. Minimum Level –While there is no minimum balance, an action is required when the balance of the combined Restricted Expansion Fund and the Designated Expansion Fund drops below six months of expenditures. This would trigger either a transfer of funds from a non-Restricted Fund or a borrowing of funds with a bond sale. Bond funds would be placed in the Restricted Expansion Fund while transfers would be placed in the Designated Expansion Fund. B. Maximum Level – The maximum of this fund is limited not by a particular dollar amount but by the limited ability to collect funds for this purpose. This limitation is mandated by Government Code section 66001. Under the Code, the District must identify the purpose of the fee and the use to which it will be put, effectively establishing a nexus between the development project or class of project and the improvement being financed. 24 The District must further establish that the amount of the funds being collected will not exceed that needed to pay for the improvement (Government Code section 66005). Under this mandate, also referred to as AB 1600, the Mitigation Fee Act and Government Code sections 66000 et seq., the District can only collect capacity fees for expansion projects. To insure compliance with this, the District performs periodic rate studies, a part of which is the calculation of the legally defensible capacity fee. Therefore, the District is limited in this fund by the nexus between the need for expansion expenditures and the fee that is approved for its collection. With the lack of a dollar limitation for the maximum, it is incumbent on the District to maintain the planned construction of capital infrastructure. While building ahead of the need makes it unlikely that the capacity fees will accumulate to any great degree, significant delays in construction may result in high levels of the Restricted Expansion Fund. This is one reason why the District reports to the Board on a periodic basis the progress of the CIP spending. Further, the annual update of the rate model brings the Restricted and Designated Expansion Fund balances to the Board’s attention. Also, the District provides annual Developer meetings where the existing and projected reserve levels are reviewed. C. Target Level – In order to facilitate debt financing of expansion, it is important that the expansion funds retain a reserve of six months prior to any attempt to obtain bond financing. This reserve allows the District the time necessary to issue additional debt without running out of expansion funds. ii. Restricted Betterment Fund A. Minimum Level – While there is no minimum, less than six months of available funds in the combined Restricted Betterment and Designated Betterment Funds would trigger either a transfer of funds from a non-Restricted Fund or a borrowing of funds with a bond sale. Bond funds would be placed in the Restricted Betterment Fund while transfers would be placed in the Designated Betterment Fund. B. Maximum Level – The maximum to be retained in this fund is five years of unfunded CIP betterment expenditures as defined in the CIP budget forecast. To determine the unfunded 25 amount the total betterment costs must be reduced by the projected restricted betterment revenues. If this maximum is exceeded, then the District should evaluate reductions in the special water rates and availability fees and also consider transfers to other funds. C. Target Level – In order to facilitate debt financing of betterment, it is important that the betterment funds retain a reserve of six months prior to any attempt to obtain bond financing. This reserve allows the District the time necessary to issue additional debt without running out of betterment funds. When considering the funding levels for betterment funds there are multiple sub- funds within betterment that must be individually considered (see 2.1 f.). iii. Debt Reserve Fund A. Minimum Level – As debt service payments are made the funds may be completely depleted if no other payments are required. B. Maximum Level – Sufficient to pay the periodic annual debt service payments. As levels approach this maximum, the District must evaluate the rate at which funds are being collected so as to not over collect. Reductions in the tax rates have been common as property values have risen. Even if the maximum is exceeded, no refunds would occur if future debt payments are necessary. The action required if funds exceed the maximum is a reduction of the rate of collection which will bring the balance down over time. C. Target Level – The target level of funds for the various debt issuances is six months of debt service. This target level will be reduced as the term of the debt comes to a close. 26 FUND ACTIONS TO CONSIDER IF BELOW TARGET TARGET MAXIMUM Restricted Expansion Fund * Capacity fee increase Bond financing Fund transfers Six months of capital expenditures Nexus of cost to fee Restricted Betterment Funds ** Rate increase Bond financing Fund transfers Six months of capital expenditures 5 yr unfunded needs Debt Reserve Fund Increase tax collection Fund transfers Ones semi-annual payment Two semi-annual payments Designated Expansion Fund * Fund transfers Six months of capital expenditures 5 yr unfunded needs Designated Betterment Fund ** Fund transfers Six months of capital expenditures 5 yr unfunded needs OPEB Fund Fund transfers Full funding Full funding Replacement Fund Fund transfers 4% of infrastructure 6% of infrastructure Rate Stabilization Fund Fund transfers One month of operating budget expenses Two months General Fund Rate increase Fund transfers Three months of operating budget expenses Seven months * Expansion needs must consider the Restricted and Designated Expansion Funds as well as any available bond financing. ** Betterment needs must consider the Restricted and Designated Betterment Funds as well as any available bond financing DIAGRAM 3.0: Fund Targets 27 FUND TRANSFERS 4.0 Funding Levels As described in the preceding sections, the District maintains funds for its operating and capital activities. These funds fall into three accounting categories; 1) unrestricted and undesignated, or general use funds, 2) designated, and 3) restricted. The source of the money for each fund was discussed along with the purpose, source of funds, and levels. Key determinants of these funds are the target levels, minimums, and maximums. The funding levels must be viewed in the context of the economic environment, political environment, and must always be viewed in light of a District’s rate model. The District’s six-year rate model not only shows the current balance but also shows the trend of the fund balances. Often the trend of the fund is a greater indicator of financial stability than is the current balance. The rate model is updated each year with the budget process and evaluates each fund over the next six years. The rate model will take into account the general economic environment, looking at the development rate, supply rate increases, the possibility of raising rates, capital infrastructure spending, and strategic plan initiatives. The fund balances may at times be over the target amount or under the target amount. This is not only acceptable but expected. The rate model provides an empirical estimate of the conformance between the District’s financial activities and the guidelines of this policy. 4.1 Fund Transfers A significant portion of the funding for the District’s designated funds comes from interfund transfers from the Unrestricted or General Funds. It is important to note that the District has the ability to use General Funds for any business purpose. General Funds may be transferred to any other unrestricted fund for any business need. Designated funds are General Funds which have been set aside for a specific purpose by Board action. These funds can only be used for the purpose they were designated, or with Board action, they may be used for any business purpose. General Funds may also be used for any restricted purpose but are not transferred to Restricted Funds due to the sensitivity of the tracking of Restricted Funds. If funds are needed for a restricted purpose they are transferred to a Designated Fund identified with the restricted purpose. Restricted Funds may only be used for the purpose that they were collected therefore no transfers are made to or from these funds. In many situations, fund transfers are expected as some funds will exceed their maximum or drop below their minimums. Only funds that are below the stated target are eligible to receive transferred funds. Funds that exceed their maximums are first to be considered for transfers out followed by funds that exceed their targets. Funds that exceed their minimums are also available for fund transfer out but only when other options are not available. 28 The rationale for prioritizing fund transfers is based on the immediacy of the need and the availability of funds from other funding sources. For example, the General Fund is first to receive funds when it drops below its target or minimum levels. This is because of the immediate and ongoing nature of the expenditures that are served by this fund. The operation of the District is first and foremost of the objectives of the District. On the other end of the spectrum, the Replacement Fund has a long-term perspective and will be used to partially fund replacement assets for many years to come. Debt financing is available to respond to this long term, foreseeable, and planned cash flow. This fund is less likely to have immediate needs and has other funding options. When making the determination of when transfers are necessary, all funds work as independent funds. The exceptions to this rule are the two expansion funds (one restricted and one designated) and the two betterment funds (one restricted and one designated). Each of these two sets of funds work as one but are kept separate due to the significant difference in the fund types, one being restricted and one originating from General Funds. It is unlikely to have high immediacy of need in these funds as they, like the Replacement Fund, are long term in nature and have debt financing as an alternative funding source. As an example, if during the rate model update process it is determined that the expansion funds (designated and restricted) will drop and stay below the minimum during the planning horizon, this will trigger a bond sale or a transfer of unrestricted funds. If in the cash planning process, it is anticipated that the General Fund and the Rate Stabilization Fund were to remain above target during the planning horizon of six (6) years and that the trend did not present a problematic underfunded status, then these funds may be transferred before a bond sale would be utilized. Also, if during this period another Designated Fund is anticipated to exceed its maximum then the excess would be transferred to the Designated Expansion Fund prior to any other transfers. Funds are evaluated to determine which would have the greatest need or availability of funds before any fund transfer recommendation would be presented to the Board. 30 GLOSSARY The Reserve Policy contains terminology that is unique to public finance and budgeting. The following glossary provides assistance in understanding these terms. Annexation Fees: Whenever utility service is requested for land outside the boundaries of an improvement district, the land to be serviced must first be annexed. The annexation fee for water was set on March 3, 1997 at $1,000 per EDU. The fee for sewer annexation was set at $3,819 on December 16, 1998. These base rates are adjusted quarterly according to a cost of living index. Assets: Resources owned or held by Otay Water District that have monetary value. Availability Fees: The District levies charges each year in developed areas to be used for upgrades, betterment, or replacement and in undeveloped areas to provide a source of funding for planning, mapping, and preliminary design of facilities to meet future development. Current legislation provides that any availability charge in excess of $10.00 per acre shall be used only for the purpose of the improvement district for which it was assessed. Betterment Fees: In addition to other applicable water rates and charges, water customers pay a fee based on water service zone or Improvement District. These fees are restricted for use in the area where they are collected and may be used for the construction and maintenance of facilities. Bond: A written promise to pay a sum of money on a specific date at a specified interest rate. The interest payments and the repayment of the principal are authorized in a District bond resolution. The most common types of bonds are General Obligation (GO) bonds and Certificates of Participation (COPs). These are frequently used for construction of large capital projects such as buildings, reservoirs, pipelines and pump stations. Capital Equipment: Fixed assets such as vehicles, marine equipment, computers, furniture, technical instruments, etc. which have a life expectancy of more than two years and a value over $10,000. Capital Improvement Program: A long-range plan of the District for the construction, rehabilitation and modernization of the District-owned and operated infrastructure. CWA: The County Water Authority was organized in 1944 under the State County Water Authority Act for the primary purpose of importing Colorado River water to augment the local water supplies of the Authority's member agencies. The Authority purchases water from the Metropolitan Water District of Southern California (MWD) which imports water from the Colorado River and the State Water Project. 30 Debt Service: The District's obligation to pay the principal and interest of bonds and other debt instruments according to a predetermined payment schedule. Expenditures/Expenses: These terms refer to the outflow of funds paid or to be paid for an asset, goods, or services obtained regardless of when actually paid for. (Note: An encumbrance is not an expenditure). An encumbrance reserves funds to be expended in a future period. Fund: An account used to track the collection and use of monies for a specifically defined purpose. Fund Balance: The current funds on hand resulting from the historical collection and use of monies. The difference between assets and liabilities reported in the District’s Operating Fund plus residual equities or balances and changes therein, from the results of operations. Interest Income: Earnings from the investment portfolio. Per District Policy Number 25, interest income will be allocated to the various funds each month based upon each fund’s prior month-ending balance. Late Charges/Penalties: Charges and penalties are imposed on customer accounts for late payments, returned checks, and related telephone contacts. Operating Budget: The portion of the budget that pertains to daily operations that provide basic governmental services. The operating budget contains appropriations for such expenditures as personnel, supplies, utilities, materials, travel and fuel, and does not include purchases of major capital plant or equipment which is budgeted for separately in the Capital Budget. The Operating Budget also identifies planned non-operating revenues and expenses. Revenue: Monies that the District receives as income. It includes such items as water sales and sewer fees. Estimated revenues are those expected to be collected during the fiscal year. System Fees: Each water service customer pays a monthly system charge for water system replacement, maintenance, and operation expenses. The charge is based on the size of the meter and class of service. Taxes: California Water Code Section 72091 authorizes the District, as a municipal water district, to levy ad valorem property taxes which are 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. Water Rates: Rates vary among classes of service and are measured in units. The water rates for residential customers are based on an accelerated block structure. As more units are consumed, a higher unit rate is charged. All non-residential customers are charged a flat rate per unit. A unit of water is 100 cubic feet or 748 gallons of water. AGENDA ITEM 4 STAFF REPORT TYPE MEETING: Regular Board Sean Prendergast, MEETING DATE: March 13, 2006 SUBMITIED BY: APPROVED BY: (Chief) APPROVED BY: (Asst. GM): W.O./G.F NO: DIV. NO. All Payroll/AP Supervisor Joseph R. Beach~Financial Officer Germa~ Assistant General Manager SUBJECT: Director's Expenses for the 2nd Quarter of Fiscal Year 2006 GENERAL MANAGER'S RECOMMENDATION: This is an informational item only. COMMITTEE ACTION: Please see Attachment A. PURPOSE: To inform the Board of the Director's expenses for the 2nd quarter of Fiscal Year 2006. ANALYSIS: The Director's expense information is being presented in order to comply with State law. (See Attachment B for Summary and C-H for Details.) FISCAL IMPACT: None . STRATEGIC GOAL: Prudently manage District funds . LEGAL IMPACT: Compliance with State law. Attachments: A) Committee Action Form B) Director's Expenses and per Diems C-H)Director's Expenses Detail ATTACHMENT A SUBJECT/PROJECT: Director's Expenses for the 2nd Quarter of Fiscal Year 2006 COMMITTEE ACTION: This is an informational item only. 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. C:\Outlook Temp\CommMtgDirExp031306.doc ;'1 Attachment B BOARD OF DIRECTORS' EXPENSES AND PER-DIEMS FINANCE AND ADMINISTRATION COMMITEE FEBRUARY 15, 2006 Policy 8 requires that staff present the Expenses and , Per-Diems for the Board of Directors on a Quarterly basis: • Fiscal Year 2006, 2nd Quarter • The expenses are shown in detail by Board member, month and expense type. • This presentation is in alphabetical order. • This information was presented to the Finance and Administration Committee on Feb 15, 2006 ~· ; Board of Directors' Expenses and Per-Diems Fiscal Year 2006 Quarter 2 (Oct 05-Dec 05) • Director Bonilla • Director Breitfelder • Director Croucher • Director Lopez • Director Robak • Total $0.00 $2,296.84 $1,030.07 $1,225.00 $2,624.51 $7,176.42 • • • • • • Director Bonilla Fiscal Year 2006 Quarter 2 Oct 05 Nov05 Dec 05 Mileage Business Mileage Commute Business Meetings Director's Fees Monthly Totals 0.00 0 .00 0.00 • Meetings Attended Director Bonilla does not request • Meetings Paid Per-Diem reimbursements. Qtr2 • Quarterly Total 0.00 • Fiscal Year-to-Date 2006 (Jul05-Dec05) 0.00 Director Brietfelder Fiscal Year 2006 Quarter 2 Oct 05 Nov 05 · Dec 05 • Mileage Business 45.59 64.27 • Mileage Commute 29.10 14.55 • Business Meetings 20.00 82.00 • Seminars & Travel 150.00 585.00 • Director's Fees 400.00 400.00 • Monthly Totals 644.59 1~145.82 • Meetings Attended 23 15 • Meetings Paid 4 4 • Quarterly Total • Fiscal Year-to-Date 2006 (Jul05-Dec05) 71.78 14.55 20.00 400.00 506.33 15 4 Qtr2 2,296.84 5,396.47 ;•f. Director Croucher Fiscal Year 2006 Quarter 2 Oct 05 Nov05 • Mileage Business • Mileage Commute 7.76 • Director's Fees 400.00 300.00 • Business Meeting • Monthly Totals 407.76 300.00 • Meetings Attended 4 3 • Meetings Paid 4 3 • Quarterly Total • Fiscal-Year-to-Date 2006 (Jul05-Dec05) Dec 05 18.43 3.88 300.00 322.31 7 3 .Qtr2 1,030.07 2,195.22 • • • • • Director Lopez Fiscal Year 2006 Quarter 2 Oct 05 Nov05 Dec 05 Mileage Business Mileage Commute Seminars &Travel 150.00 375.00 Director's Fees 400.00 300.00 Business Meeting Qtr2 • Monthly Totals 150.00 775.00 300.00 • Meetings Attended 5 • Meetings Paid 4 • Quarterly Total • Fiscal Year-to-Date 2006 (Jul05-Dec05) 3 3 1,225.00 1,225.00 Director Robak Fiscal Year 2006 Quarter 2 Oct 05 • Mileage Business 92.69 • Mileage Commute 5.82 • Business Meetings • Director's Fees 700.00 • Seminar 150.00 • Monthly Totals 948.51 • Meetings Attended 9 • Meetings Paid 7 • Quarterly Total Nov05 41.23 3.88 600.00 395.00 1040.11 7 6 • Fiscal Year-to-Date 2096 (Jul05-Dec05) Dec 05 33.95 1.94 600.00 00.00 635.89 8 6 Qtr2 2,624.51 4,470.23 Board of Directors' Expenses and Per Diems Fiscal Year 2006 to Date (Jul 05-Dec 05) • Director Bonilla • Director Breitfelder • Director Croucher • Director Lopez • Director Robak • Total $00.00 $5,396.47 $2,195.22 $1,225.00 $4,470.23 $13,286.92 \':' Board of Directors' Expenses and Per Diems Fiscal Year 2006 to Date (Jul 05-Jun 06) Projected · • Director Bonilla • Director Breitfelder • Director Croucher • Director Lopez • Director Robak • Total $00.00 $10,792.00 $4,390.00 $2,450.00 $8,940.00 $26,572.00 ATTACHMENT C SECTIONC OTA Y WATER DISTRICT ADMINISTRATIVE EXPENSES-BOARD July 1, 2005-December 31, 2005 Jul-05 Aug-05 Sep-05 Oct-05 Nov-05 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 Mny-06 Jun-06 TOTAL I 2 3 4 5 6 7 8 9 10 II 12 JAIME BONILLA (DETAILED IN SECTION D): 5211 Mileage-Payroll 5211 Mileage -Accounts Payable 5212 Travel 5214 Business meetings 5114 Director's fees 5241 Telephone 5213 Seminars and conferences ;' i Total LARRY BREITFELDER (DETAILED IN SECTION E): 5211 Mileage -Payroll 36.45 43.65 43.65 29.10 14.55 14.55 181.95 5211 Mileage -Accounts Payable 34.02 16.49 154.23 45.59 64.27 71 78 386.38 5212 Travel 593.14 593 14 5214 Business meetings 66.00 20.00 20.00 82.00 20.00 208.00 5114 Director's fees 400.00 400.00 700.00 400.00 400.00 400.00 2,700.00 5241 Telephone 5213 Seminars and conferences 592.00 150.00 585.00 1,327.00 Total 536.47 460.14 2,103.02 644.69 1,145.82 506.33 5,396.47 GARY D. CROUCHER (DETAILED IN SECTION F): 5211 Mileage -Payroll 4.86 4.86 3.88 7.76 3.88 25.24 5211 Mileage -Accounts Payable 14.55 18.43 32.98 5212' Travel 5214 Business meetings 32.00 32.00 5114 Director's fees 300.00 400.00 200.00 400.00 300.00 300.00 1,900.00 5241 Telephone 5213 Seminars and conferences 205.00 205.00 Total 304.86 656.41 203.88 407.76 300.00 322.31 2,195.22 JOSE LOPEZ (DETAILED IN SECTION H): 5211 Mileage -PayroU 5211 Mileage -Accounts Payable 5212 Travel 5214 Business meetings 5281 Director's fees 400.00 300 00 700.00 5241 Telephone 5213 Seminars and conferences 150.00 375.00 525.00 Total 150.00 775.00 300.00 1,225.00 MARK ROBAK (DETAILED IN SECTION I): 5211 Mileage -Payroll 3.24 3.24 11.64 5.82 3.88 1.94 29.76 5211 Mileage -Accounts Payable 34.44 20.86 22.31 92.69 41.23 33.95 245.46 5212 Tn1vel 5214 Business meetings 5114 Director's fees 700.00 400.00 600.00 700.00 600.00 600.00 3,600.00 5241 Telephone 5213 Seminars and conferences 50.00 150.00 395.00 595.00 Total 737.68 424.10 683.95 948.51 1 040.11 635.89 4,470.23 TOTALS: 5211 Mileage -Payroll 44.55 51.75 59.17 42.68 18.43 20.37 236.95 5211 Mileage-Accounts Payable 68.46 51.90 176.54 138.28 105.50 124.16 664.83 5212 Travel 593.14 593.14 5214 Business meetings 66.00 32.00 20.00 20.00 82.00 20.00 240.00 5114 Director's fees 1,400.00 1,200.00 1,500.00 1,500.00 1,700.00 1,600.00 8,900.00 5241 Telephone 5213 Seminars and conferences 205.00 642.00 450.00 1,355.00 2,652.00 Total 79.01 I 540.65 2 90.85 2 !50.96 32 .93 I 764.53 13 286.92 F:/YTD DEC 05SUMMARY YTD DEC 05 Printed Date2/6/2006 OTAY WATER DISTRICT SUMMARY-BOARD OF DIRECTORS EXPENSES FOR THE PERIOD JULY I, 2005 THROUGH DECEMBER 31, 2005 DIRECTORS NAME llAIME BONilLA Grand Total F:/YTD DEC 05 2 of 11 ATTACHMENT D SECTION D Printed Date:2/3/2006 OTAY WATER DISTRICT SUMMARY -BOARD OF DIRECTORS EXPENSES FOR THE PERIOD JULY 1, 2005 THROUGH DECEMBER 31, 2005 100.00 CSDA CONFERENCE 100.00 CSDA CONFERENCE 100.00 REGULAR BOARD MEETING 100.00 SPECIAL BOARD MEETING 100.00 COUNCIL OF WATER UTILITIES MONTHLY MEETING 100.00 OTAY WATER DISTRICT GROUND BREAKING 100.00 REGULAR BOARD MEETING 100.00 ASSOCIATION OF CA WATER AGENCIES 100.00 REGULAR BOARD MEETING 100.00 FIRST FRIDAY BREAKFAST 100.00 COUNCIL OF WATER UTILITIES MONTHLY MEETING 100.00 CSDA CONFERENCE 100.00 CWA CONSERVATION COMMITTEE 100.00 7/19/2005 MEETING-7/19/2005 34.02 8/8/2005 MEETING -8/8/2005 16.49 MEETING-9/20, 9/26, 9/27 & 9/28/05 154.23 MEETING -10/18 & 10/24/05 45.59 MEETING-11/15, 11/17/05 & 11/30 64.27 MEETING-71.78 7/30/2005 MEETING-7/12,7/21 & 7/25/05 36.45 8/31/2005 MEETING-8/3, 8/11 & 8/23/05 43.65 9/30/2005 MEETING-9/7, 9/12 & 9/19/05 43.65 10/31/2005 MEETING-10/11 & 10/17 29.10 11/7/2005 MEETING -11/7/05 14.55 12/7/2005 •c 4 of 11 F:/YTD DEC 05Larry-Div1 Printed Date:2/3/2006 ,_ !DIRECTORS NAME F:IYTD DEC 05Larry-Div1 OTAY WATER DISTRICT SUMMARY -BOARD OF DIRECTORS EXPENSES FOR THE PERIOD JULY 1, 2005 THROUGH DECEMBER 31, 2005 7/8/2005 ATTACHMENT E SECTION E FIRST FRIDAY BREAKFAST-TO WELCOME BOB FILNER $ 11.00 7/19/2005 COUNCIL OF WATER UTILITIES MONTHLY MEETING 20.00 7/21/2005 WATER AGENCY ASSOCIATION 35.00 9/20/2005 COUNCIL OF WATER UTILITIES MONTHLY MEETING 20.00 10/18/2005 COUNCIL OF WATER UTILITIES MONTHLY MEETING 20.00 11/15/2005 COUNCIL OF WATER UTILITIES MONTHLY MEETING 20.00 11/17/2005 CSDA QUARTERLY MEETING 32.00 12/20/2005 COUNCIL OF WATER UTILITIES MONTHLY MEETING 20.00 11/16/2005 SAN DIEGO COUNTY WATER WORKS GROUP 30.00 9/27/2005 CSDA ANNUAL CONFERENCE (9/27-9/29/05) 592.00 10/14/2005 15th ANNUAL ECONOMIC SUMMIT 150.00 11/29/2005 ACWA FALL CONFERENCE (11/29 -12/02/05) 375.00 ASSOCIATION OF CA WATER AGENCIES 210.00 7/12/2005 REGULAR BOARD MEETING 100.00 7/19/2005 COUNCIL OF WATER UTILITIES MONTHLY MEETING 100.00 7/21/2005 WATER AGENCY ASSOCIATION 100.00 7/25/2005 ACWA SEAWATER DESALINATION PROGRAM 100.00 8/3/2005 REGULAR BOARD MEETING 100.00 8/8/2005 CWA CONSERVATION COMMITTEE 100.00 8/11/2005 SPECIAL BOARD MEETING 100.00 8/23/2005 SPECIAL BOARD MEETING 100.00 9/7/2005 REGULAR BOARD MEETING 100.00 9/12/2005 SPECIAL BOARD MEETING 100.00 9/20/2005 COUNCIL OF WATER UTILITIES MONTHLY MEETING 100.00 9/27/2005 CSDA CONFERENCE 100.00 9/19/2005 ~.; 3 of 11 Printed Date:2/3/2006 OTAY WATER DISTRICT SUMMARY -BOARD OF DIRECTORS EXPENSES FOR THE PERIOD JULY 1, 2005 THROUGH DECEMBER 31, 2005 I DIRECTORS NAME 9/30/2005 CSDA CONFERENCE (9/25, 9/26 &. 9/27/05) HOTEL-CSDA CONFERENCE 9/26 &. 9/27/05 63.30 529.84 1c::t:;.iHr~1':59~¥t~~~ Grand Total < ' • -$ 5,396.47 F:/YTD DEC 05Larry-Div1 5 of 11 Printed Date:2/3/2006 !DIRECTORS NAME OTAY WATER DISTRICT SUMMARY -BOARD OF DIRECTORS EXPENSES FOR THE PERIOD JULY 1, 2005 THROUGH DECEMBER 31, 2005 I GARY CROUCHER! ATTACHMENT F SECTION F -~ ~ ACCOUNTNAME~"~,~ INGURREO~DATE-~~~~"~~~~,"-~~ -~-DESCRIPTION-""~~~~~-~~~"::~ ~-~~~"AMOUNT- 8/18/2005 MEETING 11/29/2005 ACWA 7/12/2005 REGULAR BOARD MEETING 100.00 7/21/2005 ENGINEERING AND OPERATIONS COMMITTEE MEETING 100.00 7/27/2005 WATER RESOURCE AND SECURITY COMMITTEE MEETING 100.00 8/3/2005 REGULAR BOARD MEETING 100.00 8/11/2005 SPECIAL BOARD MEETING 100.00 8/18/2005 CSDA QUARTERLY MEETING 100.00 8/23/2005 SPECIAL BOARD MEETING 100.00 9/20/2005 WATER RESOURCE AND SECURITY COMMITTEE MEETING 100.00 9/27/2005 ENGINEERING AND OPERATIONS COMMITTEE MEETING 100.00 10/17/2005 SPECIAL BOARD MEETING 100.00 10/10/2005 WATER RESOURCE AND SECURITY COMMITTEE MEETING 100.00 10/11/2005 REGULAR BOARD MEETING 100.00 10/25/2005 ENGINEERING AND OPERATIONS COMMITTEE MEETING 100.00 11/7/2005 REGULAR BOARD MEETING 100.00 12/1/2005 ASSOCIATION OF CA WATER AGENCIES 100.00 12/7/2005 REGULAR BOARD MEETING 100.00 12/20/2005 ENGINEERING AND OPERATIONS COMMITTEE MEETING 100.00 11/14/2005 WATER RESOURCE AND SECURITY COMMITTEE MEETING 100.00 11/28/2005 ENGINEERING AND OPERATIONS COMMITTEE MEETING 100.00 8/18/2005 MEETING -8/18/2005 14.55 12/31/2005 F:IYTD DEC 05Gary-Div3 6 of 11 Printed Date:2/3/2006 OTAY WATER DISTRICT SUMMARY -BOARD OF DIRECTORS EXPENSES FOR THE PERIOD JULY 1, 2005 THROUGH DECEMBER 31, 2005 I DIRECTORS NAME I GARY CROUCHER! , ACCOUNT NAME ' INCURRED DATE , ' DESCRIPTION ' , AMOUNT MEETING-7/12, 7/21 & 7/25/05 4.86 8/31/2005 MEETING-8/3, 8/11 & 8/23/05 4.86 9/30/2005 MEETING-9/20 & 9/27/05 3.88 10/31/2005 MEETING-10/10, 10/11, 10/17 & 10/25 7.76 12/31/2005 MEETING -12/7 & 12f20/05 3.88 ., ·;sf~4t~' Grand Total · · ·, · , ' $ 2,195.22 F:IYTD DEC 05Gary-Div3 7 of 11 Printed Date:2/3/2006 I DIRECTORS NAME OTAY WATER DISTRICT SUMMARY-BOARD OF DIRECTORS EXPENSES FOR THE PERIOD JULY 1, 2005 THROUGH DECEMBER 31, 2005 I JOSE LOPEZ I '·~~~~fiJ;RJ;Bt~@,;''fi~~~~~i.~l:fii.~B.~~;:·· 10/14/2005 15th ANNUAL ECONOMIC SUMMIT 11/29/2005 11/2/2005 NOVEMBER AGENDA BRIEFING 11/7/2005 REGULAR BOARD MEETING 11/23/2005 ATTACHMENT G SECTION G $ 150.00 100.00 100.00 FINANCE & ADMINISTRATIVE COMMITTEE MEETING 100.00 11/30/2005 DECEMBER AGENDA BRIEFING 100.00 12/1/2005 FALL CONFERENCE 100.00 12/7/2005 REGULAR BOARD MEETING 100.00 12/16/2005 FINANCE & ADMINISTRATIVE COMMITTEE MEETING 100.00 F:IYTD DEC 05Jose-Div4 .. 8 of 11 Printed Date:2/3/2006 DIRECTORS NAME OTAY WATER DISTRICT SUMMARY -BOARD OF DIRECTORS EXPENSES FOR THE PERibD JULY 1, 2005 THROUGH DECEMBER 31, 2005 MARK ROBAK ATTACHMENT H SECTION H ACCOUNT NAME' INCURRED DATE DESCRIPTION AMOUNT 9/15/2005 REGISTRATION FEE -ACWA DESALINATION PRESENTATION $ 50.00 10/14/2005 15th ANNUAL ECONOMIC SUMMIT 150.00 FALL CONFERENCE 395.00 7/7/2005 METRO COMMISSION 100.00 7/12/2005 REGULAR BOARD MEETING 100.00 7/13/2005 WATER CONSERVATION GARDEN JPA MEETING2 100.00 7/14/2005 AMERICAN ASSEMBLY II WORKSHOP (METRO COMMISSION)2 100.00 7/20/2005 BOARD REPRESENTATIVE ON RECYCLING ISSUES 100.00 7/21/2005 ENGINEERING AND OPERATIONS COMMITTEE MEETING 100.00 7/26/2005 FINANCE l!r. ADMINISTRATION COMMITTEE 100.00 8/3/2005 REGULAR BOARD MEETING 100.00 8/4/2005 METRO COMMISSION 100.00 8/22/2005 WATER CONSERVATiON GARDEN JPA MEETING2 100.00 8/23/2005 SPECIAL BOARD MEETING 100.00 9/1/2005 METRO COMMISSION 100.00 9/7/2005 REGULAR BOARD MEETING 100.00 9/12/2005 SPECIAL BOARD MEETING 100.00 9/15/2005 ACWA SEAWATER DESALINATION PROGRAM 100.00· F:IYTD DEC 05Mark-Div5 9 of 11 Printed Date:2/3/2006 F:IYTD DEC 05Mark-Div5 OTAY WATER DISTRICT SUMMARY-BOARD OF DIRECTORS EXPENSES FOR THE PERIOD JULY 1, 2005 THROUGH DECEMBER 31, 2005 WATER CONSERVATION GARDEN lPA MEETING2 ENGINEERING AND OPERATIONS COMMITTEE MEETING SPECIAL BOARD MEETING SOUTH COUNTY ECONOMIC SUMMIT-CONVENTION CENTER WATER RESOURCE AND SECURITY COMMITTEE MEETING REGULAR BOARD MEETING ENGINEERING AND OPERATIONS COMMITTEE MEETING REGULAR BOARD MEETING ACWA CONFERENCE METRO COMMISSION REGULAR BOARD MEETING ENGINEERING AND OPERATIONS COMMITTEE MEETING WATER RESOURCE AND SECURITY COMMITTEE MEETING ENGINEERING AND OPERATIONS COMMITTEE MEETING WATER CONSERVATION GARDEN JPA MEETING2 ELDORADO IRRIGATION DISTRICT WATER CONSERVATION GARDEN JPA MEETING2 METRO COMMISSION TOUR OF OWD FACILITIES WATER CONSERVATION GARDEN lPA MEETING2 12/14/2005 10 of 11 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Printed Date:2/3/2006 OTAY WATER DISTRICT SUMMARY -BOARD OF DIRECTORS EXPENSES FOR THE PERIOD JULY 1, 2005 THROUGH DECEMBER 31, 2005 -=o-=I,.....R-=E--C.,..T __ O_R_S--:-N-A_M __ E----.---M-A_R_K_R_O_B_A_K--,1 ~ '· ACCOUNTNAME __ , _INCUBREDDA1.E_'_-----· ____ -------~ --DESCRieTION~------'--~-.. ----~~---~~--AMOUNT~ 7/7/2005 8/31/2005 9/30/2005 10/31/2005 11/30/2005 12/31/2005 7/31/2005 8/31/2005 9/30/2005 10/31/2005 11/30/2005 12/31/2005 MEETING-7/7, 7/12, 7/13, 7/21, 7/26/05 MEETING-8/3, 8/4, 8/22, & 8/23/05 MEETING-9/1, 9/7, 9/12, 9/20 & 9/27 MEETING· 10/10, 10/11, 10/12, 10/14, 10/17, 10/20, 10/24 & 10/25 PARKING-10/19 & 10/20/05 MEETING-11/1, 11/3, 11/7, 11/14, 11/28, & 11/30 MEETING -7/12 & 7/26/05 MEETING-8/3 & 8/23/05 MEETING-9/7,9/12,9/15,9/20 & 9/27/05 MEETING-10/11, 10/17 & 10/25 MEETING -11/7 & 11/14 34.44 20.86 22.31 74.69 18.00 41.23 3.24 3.24 11.64 5.82 3.88 Grand Total , ' $ 4,470.23 F:NTD DEC 05Mark-Div5 11 of 11 Printed Date:2/3/2006 AGENDA ITEM 5 STAFF REPORT TYPE MEETING: Regular Board MEETING DATE: March 13, 2006 SUBMITTED BY: Alice Mendez-Schomer, W.O./G.F. NO: APPROVED BY: (Chief) APPROVED BY: (Asst. GM}: Customer Service Bllpervisor =-:z; Joseph &,,__...g-~c~m;/chief Financial Officer German~ssistant General Manager DIV. NO. All SUBJECT: Extend the Existing Contract with Dataprose from April 1, 2006 through June 30, 2007 GENERAL MANAGER'S RECOMMENDATION: Extend the existing contract with Dataprose to print our customer bills from April 1, 2006 through June 30, 2007. COMMITTEE ACTION: Please see Attachment A. PURPOSE: Extend the existing contract with Dataprose to print our customer bills from April 1, 2006 through June 30, 2007. ANALYSIS: After three years of quality customer service from our billing service company with no price increases, staff is recommending a continuation of their contract through June 30, 2007. In December of 2002 a three year contract for billing services was awarded to Dataprose through a competitive bid process. Staff is planning to make a number of significant changes to the format and functionality of the bills for example, consolidated billing for multiple accounts, and clear distinction of the Chula Vista sewer charges. When this project begins staff intends to redraft bill print specifications and obtain a qualified vendor through a competitive bid process. Until the reformatting of the bills is finalized staff is recommending that the current vendor be retained. The General Manager has exercised his authority to amend the annual purchase order to cover the 3rd quarter of FY 2006 keeping the purchase order current through March 31, 2006. At this time staff is asking the Board to continue services with Dataprose and extend the contract from April 1, 2006 through June 30, 2007. The extension of the current contract will keep the same terms with no increase in pricing and will have a 60 day exit clause, which may be exercised upon the completion of the bill reformatting. These terms will continue quality service at fixed pricing, and with the flexibility to exit the contract when the new project begins . FISCAL IMPACT: The cost of the extension for the remaining three months of this fiscal year is estimated not to exceed $30,000 and is covered by the 2006 budget. This will bring the contract cycle in line with the District's budget cycle. The printing services for FY 2007 are estimated to be $120,000 which will be included in the FY 2007 budget. STRATEGIC GOAL: Demonstrate financial health through formalized policies, prudent investing, and efficient operations. LEGAL IMPACT: None. General Manager Attachment: A) Committee Action B) Contract ATTACHMENT A Extend the Existing Contract with Dataprose from April 1, SUBJECT/PROJECT: 2006 through June 30, 2007 COMMITTEE ACTION: The Finance and Administration Committee supports staff's recommendation to extend the existing contract with Dataprose to print our customer bills from April 1, 2006 through June 30, 2007. 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. F:\DianeA\Staff Rpts 2006\CommMtgBillContr031306.doc DATAprose® PRODUCTION AGREEMENT BILLING SOLUTIONS ----------------------------------------------~La-s~tu_p_d'at~e~d-:2~.710~.=20~0=-6 Smarter Statements lei?) Better Results This Production Agreement (Agreement) is made and entered into as of the 1"' day of January 2006 (Effective Date), by and between Data Prose, Inc., a California Corporation (DataProse), and the Otay Water District, organized under the laws of California (Client). In consideration of the mutual promises and benefits contained herein, the parties hereby agree as follows: ARTICLE 1 SCOPE OF PRODUCTION AGREEMENT. DataProse agrees to provide to Client services defined in Schedule 1.0, and Client agrees that Data Prose shall be its exclusive provider of these goods and/or services during the term of this Agreement. During the term of this Agreement, the Client agrees to produce a minimum monthly quantity of 40,000 invoices ("Minimum Commitment") for a period thru July 2007, based upon the rates and terms provided herein. In the event that the Client does not fulfill the Minimum Commitment during any given month, or for the required period, then Client shall pay to Data Prose a Minimum Processing Fee in an amount that shall be calculated based upon the Minimum Commitment and the rates and terms provided herein. ARTICLE 2 COMPENSATION. In full and complete compensation for all goods and/or services provided by DataProse hereunder, Client agrees to pay Data Prose according to the rates set forth in Schedule 1.0. Data Prose will provide an invoice to Client after each production run consisting of the fees, as outlined in Schedule 1.0 and postage used. Invoices are due upon receipt and will be considered past due if not paid within 30 days. A monthly late charge will be assessed on statements not paid within thirty (30) days. The late payment charge will be 1-1/2% per month applied to the invoice amount unpaid (30) thirty days after billing to Client. The prices charged by Data Prose to Client for the services listed in Schedule 1.0 will not be increased for a period of 12 months from the Effective Date of this Agreement ("Pricing Period"). All Data Prose prices are subject to increase following this initial Pricing Period or any subsequent Pricing Period, and upon written notice to Client. The rate of any price increase shall not exceed 10% at the completion of any pricing period. ARTICLE 3 TERM. The initial Effective Date, and shall continue thru July 2007 term of this Agreement shall commence as of the unless terminated earlier in accordance with provisions found elsewhere in this Agreement. This Agreement shall renew itself for successive one (1) year terms unless written notice of cancellation is received by one party from the other if a party exercises its right to terminate the Agreement at the end of the initial term or at the end of any succeeding one (1) year renewal term(s) by sending written notice of non-renewal to the other party no later than thirty (30) days before the expiration of the current term. ARTICLE 4 POSTAGE. Data Prose will require that Client maintain a permanent postage deposit in connection with this agreement. Client shall deposit in advance with DataProse the initial sum specified on Schedule 2.0 as the permanent postage deposit. The amount required to be deposited with DataProse may be changed by DataProse on a periodic basis based upon changes in Client's volume, postage usage, or payment history. Client will be notified in writing and in advance if the deposit is changed. Upon termination of this Agreement, Data Prose shall return the deposit amount to Client after payment for all Services and postage has been paid by the Client. If this Agreement is terminated due to default of Client, Data Prose may apply any of Client's funds it holds against any sum owed by Client to Data Prose upon termination of this Agreement. IF CLIENT FAILS TO MAINTAIN THE DEPOSIT AT THE ADJUSTED LEVELS, OR IF CLIENT FAILS TO MAINTAIN CURRENT STATUS OF ALL INVOICES AS DESCRIBED IN ARTICLE 2, DATAPROSE MAY IMMEDIATELY SUSPEND ITS PERFORMANCE UNDER THIS AGREEMENT AND WILL HOLD CUSTOMER'S MAIL UNTIL THE DEPOSIT IS RECEIVED. ARTICLE 5 TERMINATION. Client or Data Prose may terminate this Agreement for an event of default defined below if such default remains uncured (30) thirty days after written notice of the default has been received from the party declaring the default. (1) Failure of Client to pay for all goods and/or services as provided in this Agreement. In addition to other remedies provided by this Agreement and pursuant to law, Data Prose has the right to withhold production and mailing of any further production cycles until Client's account is brought current. (2) Any other breach by Client or Data Prose of a term or condition of this Agreement. (3) Bankruptcy or insolvency of either party. If Data Prose terminates this Agreement in accordance with Article 5 herein, or the Client terminates this Agreement for any reason other than those specified in Article 5 prior to satisfying its Minimum Commitment, the Client agrees that it shall be liable to Data Prose for liquidated damages ("Liquidated Damages") for its early termination, it being understood and agreed to by the parties that the measure of actual damages noted would be difficult to determine. The Liquidated Damages shall be an amount equal to the product of (a) the Minimum Commitment and (b) the sum of the number of months remaining in the current term of the Agreement and the number of months that any invoices remain un.paid by the Client. ARTICLE 6 FORCE MAJEURE. Neither party shall be responsible for delays or failures in performance resulting from acts or occurrences beyond the reasonable control of such party, including, without limitation: fire, explosion, power failure, flood, earthquake or other act of God; war, revolution, civil commotion, terrorism, or acts of public enemies; any law, order, regulation, ordinance, or requirement of any government or legal body or any representative of any such government or legal body; or labor unrest, including without limitation, strikes, slowdowns, picketing or boycotts. In such event, the party affected shall be excused from such performance (other than any obligation to pay money) on a day-to-day basis to the extent of such interference (and the other party shall likewise be excused from performance of its obligations on a day-to-day basis to the extent such party's obligations relate to the performance so interfered with). ARTICLE 7 CONFIDENTIALITY. Data Prose agrees that any and all data, reports and documentation supplied by Client or its affiliates or third parties on Client's behalf, which are confidential and which are clearly designated as confidential, shall be, subject only to the disclosure required for the performance of Data Prose's obligations hereunder, held in strict confidence and shall not be disclosed or otherwise disseminated by Data Prose without the consent of Client. ARTICLE 8 INDEMNIFICATION. Client agrees to indemnify and hold Data Prose harmless for any and all claims from any person, firm, or entity whatsoever that may arise in connection with Client's supplying to Data Prose the data, reports or other documentation necessary to perform its duties under this Agreement, except that such indemnification shall not extend to any claims that result from action by Data Prose, its officers, employees or agents or anyone acting on behalf of DataProse if such action is in violation of one or more terms of this Agreement. ARTICLE 9 WARRANTIES. Data Prose shall provide all goods and/or services in a good and first class workmanlike manner in accordance with the terms specifically set forth in Schedule 1.0. The parties hereto agree that this Agreement is only for the production of goods and/or services. THIS WARRANTY CONSmUTES THE ONLY WARRANTY WITH RESPECT TO THE GOODS AND SERVICES TO BE PROVIDED TO CLIENT. THE STATED WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES, WRffiEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, THE WARRANTY OF MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR PARTICULAR PURPOSE. ARTICLE 10 LIMITATION OF LIABILITY. The liability of Data Prose with respect to any failure to provide the goods and/or services as required under this Agreement shall in each case be limited to the compensation paid to Data Prose for the defective goods or services. DATAPROSE IS NOT LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFIT OR INCOME, even if Data Prose has been advised of the possibility of such loss or damage. This provision will not be affected by Data Prose's failure to correct any defect or replace any defective work product to Client's satisfaction. Client has accepted this restriction on its right to recover consequential damages as a part of its bargain with Data Prose. Client acknowledges what Data Prose charges for its goods and services would be higher if Data Prose were required to bear responsibility for Client's damages. Page 1 of 3 Client: DataProse: ___ _ PRODUCTION AGREEMENT BILLING SOLUTIONS Last updated: 2.10.2006 Smarter Statements @) Better Results ARTICLE 11 GOVERNING LAW AND JURISDICTION. This Agreement shall be governed and interpreted in accordance with the laws of the state of California, without giving effect to the principles of choice of laws of such state. The parties each consent to the jurisdiction and venue of the Superior Court of Ventura County, Ventura, California, as to any matters initiated in state court, and to the courts of the Central District of California for any matters initiated in federal court. ARTICLE 12 SEVERABILITY. If a court or an arbitrator of competent jurisdiction holds any provision of this agreement to be illegal, unenforceable, or invalid in whole or in part for any reason, the validity and enforceability of the remaining provisions, or portions of them, will not be affected. ARTICLE 13 WAIVER; MODIFICATION OF AGREEMENT. No waiver, amendment or modification of any of the terms of this Agreement shall be valid unless in writing and signed by authorized representatives of both parties hereto. Failure by either party to enforce any rights under this Agreement shall not be construed as a waiver of such rights, nor shall a waiver by either party in one or more instances be construed as constituting a continuing waiver or as a waiver in other instances. ARTICLE 14 NOTICE. All notices must be in writing and if not personally delivered, be sent by facsimile or by first class mail, or by electronic mail. Notices will be effective on the day when delivered, addressed to the other party at the address show in this Agreement. Either party may change the address to which notices are to be sent by giving notice of such a change to the other party. Addresses for purpose of giving notice are as follows: If to Data Prose: DataProse, Inc. 1451 North Rice Avenue, Suite A Oxnard, CA 93030 Attention: Chief Executive Officer If to Client: otay Water District 2554 Sweetwater Springs Blvd. Spring Valley, CA 91978-2096 Attention: Kim Tran ARTICLE 15 ENTIRE AGREEMENT. This Agreement and its exhibits constitute the final, complete, and exclusive statement of the terms of the agreement between the parties pertaining to the production of goods and services for Client by DataProse, and supercedes all prior and contemporaneous understandings or agreements of the parties. No party has been induced to enter into this Agreement by, nor is any party relying on, any representation or warranty outside those expressly set forth in this Agreement. ARTICLE 16 ATTORNEY FEES. In the event of any claim, dispute or controversy arising out of or relating to this Agreement, including an action for declaratory relief, the prevailing party in such action or proceeding shall be entitled to recover its court costs and reasonable out-of-pocket expenses not limited to taxable costs, . including but not limited to phone calls, photocopies, expert witness, travel, etc., and reasonable attorney fees to be fixed by the court. Such recovery shall include court costs, out-of-pocket expenses and attorney fees on appeal, if any. The court shall determine who is the prevailing party, whether or not the dispute or controversy proceeds to final judgment. If either party is reasonably required to incur such out-of-pocket expenses and attorney fees as a result of any claim arising out of or concerning this Agreement or any right or obligation derived hereunder, then the prevailing party shall be entitled to recover such reasonable out-of-pocket expenses and attorney fees whether or not action is filed. ARTICLE 17 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and shall inure to the benefit of the successors and assigns of the parties hereto. The parties hereto execute this Agreement through their duly authorized officers, as of the day and year first written above. DATAPROSE, INC.: CLIENT: By:--:-:----::------:-:-------------Gienn A. Carter, President By: ___________________ _ Date: ___________________ _ Title: _____________ "'Da..,t,e..__: ---,----------' Schedule 1.0 -Fees for Goods & Services Paper Bill (Includes: data processing & simplex, 2-color, laser imaging, 8.5xll at 3.5" from bottom, #10 double window env., #9 single window reply env., folding, inserting, presorting and delivery to USPS) Pricing does not include applicable taxes. Search & ViewBill (Includes: data processing, pdf creation, search & access capabilities & hosting of pdf files for 3 months from creation date) ViewBill (Includes: data processing, pdf creation) Additional Impressions Additional Inserts (supplied) Technical Services (including programming & insert/forms composition) One time set-up charge (bill design and formatting) Freight, Courier & Air Delivery Schedule 2.0 -Permanent Postage Deposit . Permanent Postage Deposit (Based on two (2) months estimated volume) Schedule 3.0 -Performance Guarantee ~0.1355 Per Bill Per Bill Included Per Bill ~0.05 Per Impression ~0.02 Per Insert ~125.00 Per Hour ~soo.oo Cost Per Request ~26,080.00 (2 mos. Volume * .326) DataProse will deliver clients bills within an average of one (1) Business Day after the applicable Determination Date (as Defined herein). Such average time period will be determined by measuring the number of elapsed Business Days between each respective determination date and the date which a majority amount of the Client's bills were mailed for consecutive three (3) month period. The "Determination Date" is the date which data is received-either via electronic transmission (FTP or modem) or hard copy media (tape or disk) if prior to 12 noon, local time. If data is received after 12 noon, local time, the Determination Date is the Business Day immediately following the date data is received. Page 2 of 3 Client: DataProse: ___ _ DATAprose® PRODUCTION AGREEMENT ----------------------------------------------~~-s~t-up-d'at'e'd~:2~.~10~.2~0~0~6 BILLING SOLUTIONS Smarter Statements (0) Better Results Schedule 4.0 -Glossary of Terms Impression Laser Imaging of one side of one piece of paper. Each physical piece of paper can contain two (2) impressions. USPS United States Postal Service Laser Imaging The process where the application of dry toner (ink) is electro statically applied and bonded to a piece of paper. Simplex Laser Imaging of one (1) side of a piece of paper only. Duplex Laser Imaging of both (2) sides of a piece of paper. OE Outer Envelope -This envelope is used as the carrier mechanism for all information contained in a package to be mailed. RE Reply Envelope -This envelope is usually utilized by a customer to return information/payment requested by on organization. Presorting The act of organizing mail according to the rules and regulations defined by the USPS in order to achieve lower postage rates and increase deliverability of mail. Business Day Any day in which the USPS as well as the U.S. Federal Reserve are open for business. U.S. federal holiday All Holidays as defined by the U.S. Federal Reserve. 24x7 24 hours a day, 7 days a week. Additional Inserts Any item requested to be placed Into the mail container above and beyond (a) the bill and (b) theRE. Container One complete piece of mail packaged into one OE. Bill Data and other information pertaining to one (1) account number and usually in reference to one customer Page 3 of 3 Client: DataProse: ___ _ AGENDA ITEM 6 TYPE MEETING: SUBMITTED BY: APPROVED BY: (Chief) (Asst. GM): STAFF REPORT Regular Board MEETING DATE: Stephen Dobrawa, ~ W.O./G.F. NO: March 13, 2006 DIV. NO. All Purchasing Manager Rom Sarno, J .~ Chief, Administra ~ervices APPROVED BY: Germa;;!/n A~ z, Assi neral Manager, Administration and Finance SUBJECT: DECLARATION OF SURPLUS VEHICLES AND EQUIPMENT GENERAL MANAGER'S RECOMMENDATION: That the Board declare the identified vehicles and equipment as surplus to the District's needs. COMMITTEE ACTION: See Attachment A. PURPOSE: To present a list of vehicles and equipment and obtain Board declaration that the items identified on the list are surplus to the District's needs ANALYSIS: Listed below are various vehicles and equipment that have been determined by the user Department to be of no use, obsolete (spare parts and service not available), beyond useful life and, or, not cost effective to repair or operate and therefore, surplus to the District's needs. Vehicles Identified as Surplus Item Qty Description Reason for Declaration -- 1988 Ford Ranger pickup truck, unit #41, No longer meets District's 1 1 70,000 miles, VIN IFTCR10T8JUA99308, operational equipment #8041 specifications. 1991 Ford Aerostar Van, Unit 47, 86,949 2 1 miles, VIN 1FMDA31X8MZA353228, equipment Same as above. #8047 1992 Ford Ranger pickup truck, unit #71, 3 1 140,264 miles, VIN 1FTCR10X5NUA98111, Same as above. equipment #8071 4 1 1995 Ford Bronco, unit #87, 158,544 miles, Same as above. ~IN 1FMEU15H2SLB84580, equipment #8087 1998 Chevrolet 4x4 pickup truck, unit 104, 5 1 112,414 miles, VIN 1GCGK29J4WE196150, Same as above. equipment #8104 Equipment Identified as Surplus Item Qty Description Reason for Declaration -- Not cost Towable air compressor, 1981 Inger sol Rand effective to 6 1 Model 185, serial #120922081, equipment repair and no #806 longer meets operational specifications. Towable air compressor, 1985 Ingersol Rand 7 1 Model 185, serial # 146243957, equipment Same as above. #1512 Towable air compressor, 1987 Gardner 8 1 Denver Model 0190, serial #R87468, Same as above. equipment #1559 9 1 Cummins Diesel Engine, 1984 model NTA Same as above. 855C-425, serial #56640 Skid mount air compressor, 1989 Ingersol 10 1 Rand Model P-175, serial #179419, equipment #1931 Before the vehicles and equipment can must first declare them as surplus Purchasing Manual, Section 12). be disposed of, (ref: OWD Code the Board 4. 05 and The District's Purchasing Manual disposing of material, equipment, identifies and supplies the process that have for been declared surplus. In general, the General Manager may dispose of the property by one of the following methods: 1) Receiving sealed competitive bids from District employees, 2 ) Utilizing a competitive auction process to the general public, or by 3) Donation to a public agency or non profit organization. FISCAL IMPACT: The salvage value and associated gain or loss on items is not determined until their disposal . Therefore, the fiscal impact of the recommended action is not known at this time. STRATEGIC GOAL: This action supports the District's goal to ensure financial health through efficient operations. LEGAL IMPACT: Non/!d_&l!r Gel?eralManager Attachment A ATTACHMENT A SUBJECT/PROJECT: DECLARATION OF SURPLUS VEHICLES AND EQUIPMENT COMMITTEE ACTION: This item was presented to the Finance/Administration Committee on February 15, 2006 and the committee supported presentation to the full board. 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. H:\Reports\Staff Report\Purchasing\2006\Attachment A -Declaration of Surplus 3-12-06.doc AGENDA ITEM 7 STAFF REPORT TYPE MEETING: MEETING DATE: SUBMITTED BY: David Burpeau, Safety anctD,?;Y W.O./G.F. NO: March 13, 2006 DIV. NO. APPROVED BY: (Chief) Risk Administrator "~,/ Rom Sarno, Chief, Administrative Servi ~~~ APPROVED BY: (Asst. GM): SUBJECT: German AL~~~s~stant General Manager, Finance and Administ~~~vices Rejection of Dehesa School District Claim GENERAL MANAGER'S RECOMMENDATION: That the Board reject this claim in the amount of $3,529.33. COMMITTEE ACTION: See Attachment A. PURPOSE: To reject the claim presented on 01/27/06 by the Dehesa School District, 4612 Dehesa Road, El Cajon, CA 92019. This action is necessary in order to begin the statute of limitations for bringing any legal action in this matter. ANALYSIS: This claim is for costs related to repair of the School District's backflow prevention valve. The claim alleges that following the installation of a water service to the School District, the back flow prevention valves failed an annual back flow test due to pea gravel found in the system. The District's property & liability insurance carrier, Special District's Risk Management Authority (SDRMA), has reviewed the claim and recommended that the District reject this claim in its entirety. This claim is not due to any negligence or liability on the part of the District. The Dehesa School District contracted with Southwest Engineering, Inc., in January 2004, to install a 16-inch water line with services down Dehesa Road to the property line of the school district. The main ends a short distance down the road from the school district property. All inspection reports indicate that the installation went as planned. The lines were flushed from the fire hydrants and blow offs as well as from the end of the services to the school district. Inspection reports indicated that there was no debris or turbidity and bacteriological testing met state health requirements. Since it was the school district's responsibility to install and connect to the services, the debris in question may have been introduced during this connection. Since the records reflect that the lines and testing met state health requirements and were clean when connections were made, it is recommended that this claim be rejected. FISCAL IMPACT: None. STRATEGIC GOAL: Protect the District employees, assets and community by continually improving sound risk management practices and safety programs. LEGAL IMPACT: None. G~neral Manager Attachment: Attachment A Dehesa School District Claim ATTACHMENT A SUBJECT/PROJECT: Rejection of Dehesa School District Claim COMMITTEE ACTION: This item was presented to the Finance/Administration Committee on February 15, 2006 and the committee supported presentation to the full board. 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. H:\Reports\Staff Report\Safety\2006\Rejection of DEHESA School Dist. Claim\Attachment A-Dehesa School -3-1-06.doc Otay Water District 2554 Sweetwater Springs Boulevard. Spring Valley, California 91977 (619) 670-2222 PROCEDURE FOR FILING CLAIM AGAINST THE OTAY WATER DISTRICT Please complete the attached form and send it along with any supporting documenta- tion to: District Secretary Otay Water District 2554 Sweetwater Springs Boulevard Spring Valley, California, 91977-7299 When your completed claim form is received by the District, a determination will be made to either pay your claim or deny your claim. If your claim is to be paid, you will be required to sign a Full Release of Ail Claims before you receive payment. If your claim is to be denied, it will be taken before the Board of Directors at a regularly scheduled Board Meeting. These meetings are typically scheduled on the first Wednesday of each month at 3:30 p.m. The District Secretary will notify you of the date of the Board Meeting and provide you with a copy of the Staff Report. You are invited to attend the Board Meeting to discuss your claim with the Directors. If you wish to speak with the Director who represents your Division prior to the meeting, or if you have any questions regarding your claim or this process, please contact the Dis- trict Secretary at (619) 670-2280. · Thank you for your patience during this process. CLAIM AGAINST OTAY WATER DISTRICT 1. Name of Claimant(s): · pehesa School District A"{JJdress of Claimant(s): 4612 Dehesa Rd.. El Cajon, Ca. 92019 ___ .;__ _______ Phone No. (619) 444:-2161 2. Address to whi~h claimant(s) desire(s) notice to be sent (if other than above): 3. Occurrence or tran$action which gives rise to claim: a) Date: __ 1...,o._-...... o._z -_.o""'s~----Time: 10: OOam b) Place: Dehesa School Dist. c) Specify the particular act or omission you claim caused the injury or damage. Include a statement of why you feel the District or its employees were at fault. · When Floyd & Howerton Plumbing came out to do the annualbackflow test, the backflow valves failed, Valves failed due ·to pea gravel in the system found during inspection. Pictures were taken.artd gravel tuned over to the School District· and lines once again flushed. Repairs made by Floyd & Howerton Plumbing and yalyes passed test. 4. General description of injury, damage or loss (so far as known as of the date of this claim): Damage to the relief valve seat, #1 check seat, #2 check poppet and all rubber askets, 5. Name(s) of any District employee(s) causing injury, damage or loss, if known: Otay Hater Distd ct employee(s) unk.nown IUIUII Ill License: 274886 Floyd and Howerton Plumbing Inc 1269 Greenfield Dr El Cajon CA 92021 619-444-3040 Billed To: DEHESA SCHOOL DIST. 4612 DEHESA RD. EL CAJON CA 92021 Project: Service Invoice Invoice#: 5458 Date: 01/04/2006 4612 DEHESA RD. EL CAJON CA 92021 Scheduled: 11/09/2005 Time: 07:00 AM Employee: 23 Order#: Don Sherman Assembly# Part# Description Quantity 1.0000 . 18.0000 6.0000 Price Ext Price Sales Tax Notes: MATERIALS LABOR LABOR 1,483.330000 95.000000 56.000000 SEEATIACHED PAPERWORK FOR THE EXPLANATION OF PLUMBING CHARGES. TESt RESULTS MAILED TO THI; WATER DISTRICT. COPIES ATIACHED TO THE BILLING FOR YOUR RECORDS. 1,483.33 1,710.00 336.00 A setVice charge of 0.00 %per annum will be charged on all amounts overdue on regular statement dates. Non-Taxable Amount: Taxable Amount: Thank you for your prompt payment! Sales Tax: Amount Due 3,529.33 0.00 0.00 3,529.33 ...... I QTY. PART NO· OR DESCRIPTION SALEAMT Floyd & Howerton n /.j_),~ · · rab 1 r Order#: 5458 -.~ JOB TICKET j ... f!i?",; wll Jou ~ 37"'5:"' ~ #/ ~..X Plumbina lnc.1269 Greenfield Dr .• El Cajon, CA 92021 (619) 444-3040 License #27488 L~EAr DATEORDEREDj oRDEREDBY 1 .. oATEPROMisED 1· TIMEPROMISED 1 MAP#1253A7 J ... }.,i/1 VV//.K~Ncr 97~X'L ~~ ..,.....k 11/01/2005 CRYSTAL .. 11/09/2005 l---"-07~:o~'iri:-c:A!!l!!M~-__._ _____ _ 1-"'---1--''7=-~i!:.,.L~~~wu....._-L-L-~c....o::!..<!:::=-__.A-...s.<!:-Y----+---1 I Technician 23 Don l--f-',ch.......,~"'-,£~_.~...._.-L-~--------------l----+---4 BILL TO: PHONE: JOB NAME: PHONE: / -·5?/? 11V/LK.JA/_~ 37<:" I'~AA~111!:'7'E DEHESA SCHOOL DIST. 619-444-2161, 619-444-2161 lRVL$11£'R K ;'f- ADDRESS: 4612 DEHESA RD. EL CAJON, CA 92021 ADDRESS: 4612 DEHESA RD. EL CAJON CA 92021 REPAIR FAILED BACKFLOWAS PER PROPOSAL DATED 10/30/05 MISC. CHARGES SEWER SERVICE 1---+--------------t----+--f,I/?&Le_r:-.5:CA!r-.RL£2~ .l?YAS" ,aA21;c?b»&-Z??LKei:J rr<? cRvsf& -·-d/6r CJ.K ro ..R~~ c~<:.&: . WARRANTY RUBBER GOODS VALVES & FITTINGS FIXTURES WATER HEATERS DISPOSALS WORKMANSHIP STOPPAGES 30DAYS 9DDAYS 1 YEAR AS APPLIED AS APPLIED 1 YEAR NONE NOTICE TO PAYOR /"RECOMMENDED REPAIRS J, f":_,{ Z JJ "Under the Mechanic's Uen Law (Califomia Code of Civil Procedure. / D L Section 1181 et seg.), any co~raclor, subcontraclor,la~rer, su~plier <£/Z, ,Z:.~-~7::....._-J. '7Q,!:...· ..:!.L~.CPc:A~tCJ.:...'L..~-:&.~Z>~..t..9.~:A/.~IL)~~A!::.....<'Y~C..=. ~::.e:~'£.~~~.$,S:~'LS&-~z..::....r:~==------orolherpersonwhohelpstoomproveyourpropertybulosnotpaodfo,.........-.-::-...L ------------- his worll or supplies, has a right to enforce a Claim against your property. /::l,/',. ~ ./1 . 1"\ . , s? ,_.., Thismeansthat,afteracourtnearing~your propertycouldbesoldby 7/9 t7R'V~ dSS~~'Lv ~~ .. $2idL a court olllcer and the process of the sale used to satisfy the 7 indebtedness. This can happen even if you have paid your own contractor 12)~ -.,... , A r.:" .-L:;, -~:I"\ a~~_-~ in full, if the subcontractor, laborer, orsUppUer remains unpaid." /""&; .4-S.S~L.c./J -z~r~ "'7/~~~ IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT THE TITLE TO ALL PLUMBING FIXTURES FURNISHED OR INSTALLED Fn' SAID PLUMBING CONTRACTOR UNDER OR PURSUANT TO HIS CONTRACT SHALL REMAIN VESTED IN SAID PLUMBING CONTRACTOR AS HIS PERSONAL I?RDPERTY, AND NONE OF SAID FIXTURES SHALL BECOME A PART OF THE REAL TV IRRESPECTIVE OF THEIR BEING INSTALLED 1!11 SAID BUILDING UNTIL ALL MONEY DUE AND OWING TO SAID PLUMBING CONTRACTOR SHALL HAVE BEEN PAID IN FULL PER CONTRACT. DUE UPON RECEIPT: ~;!,j,:""mine material and labor statement before wor1<men Past due invoices will inrur a 1 1/2% per month canying charge. If legal· actions is required to coDed on this account, the prevailing party shall be entitle to actual allomey's fees inamed. WAIVING RIGHT TO CANCEL FOR EMERGENCY WORK OVER $500 PER 1669.18 CIVIL CODE If service is not saUsfactory, please call our office immediately. SIGNED DATE ACCEPTING: VISA, M.C. and American Express DEHESA SCHOOL DISTRICT 4612 DEH~SA RD. SAN DIEGO, CA 92109 · ,,,'l)edlco~llrt to eOI,II'IIullitU $P..\III(!f' 26$4 $WEETWATI!A SPRINGS BOUI.IIVARD, IPAIN$ VA\.1-I!.Y, QAI.IFQANIA 91ft78•208B 111.L~HONE:&7CI-2W, AREA COCii 619 Re: Otay Water District's Cross CQnnectlon Program Dear Customer: A primary responsibility of Otay Water District Is to provide service to the general pubjtc, to maintain the integrity of the water system, and to protect the public from poaetble exposure to contamination. A major source of possible contamination is reverse flow into the water syatem. The California Code of Regulations. TIUe 17 and the Otay Water Qistrict's Baokflow Ordinances, requires the owner or tenant, ~t any location which has backflow ·prevention assembly Installed an: the water service line must maintain the assembly in e continuous utate of good repair and have them tested annually to certify their proper condition. · Our records indicate that the device(s) Installed on your service nne( a) are due for. their annual testing. Plea&e . have this test performed, have the assembly l'flpalred W necessary, and re-tested and submit the r.eal.ilts on test fonns provide by the Otay Water District within 30 days-from the·posted elate located at the bottom of this letter. It is also racommenaed, should you have a fire service with a pressure-regulated relief valve, to teet It as well as part of your maintenance. The maintenance of the fire system is also the respanalblllty of the property owner, as eatabllshed In the Otay Water Dlstrir;fs Code of Ordinance, Section 38 Seivice for Fire Prot&Ctian Systems. · Enclosed Is a list of AWWAIAPBA certified backflow prevention device testers who are authorized to test with the Otay Water District. Please Note a setvlce fee of $10;00 per device will be applied if received more than 3o days from post date. · Should you require additional information regarding this matter please contaot me at 619-670-2263. Sincerely, OTAY WATER DISTRICT Tim Keera-n, Superviaor Cross-Connection Control Coordinator February 14, 2005 ORIGINAL POSi DATE!: Monday, August 15, 20 ORIGINAL COMPLIANCE DATE: Wednesday, September cc: Pedro Po1'1111&, Cl'llef of Water Operations Otay ld: 1078 ·-.·_ ·, DEHESA SCHOOL l"AX NC. lli1'MK171l ~~~ ~l~~ ~.~~-~~ Oat. 31 2tiS5 Be: 371ll'l 1"2 Ployd & :? 4c! -----Hovenoa--_.~------·-------------~~E~----~~- PIOm.blng Inc. 1:u~Q C'~ Oll¥c • 'el ~ ('.A ~J(Q I • (6!9) 4'14·'W4Q • ~: (M\1) 444-016t • lil:. tl746116 . . PROPOSAL Dlillll~!l 'Cajon, Cali foul• Octo\er ll, 1 24~ . · 4~12 Deh••• R~ad 0o11w PM.h"t" SCbgpl D!at;J:J.(]t ~ JU Ca1'0n, Si!l:;l.!cn:eb. 220:n ca-..CDIIINiilllr~ : _ . · 1269 Guellf:laU. lJ~he Oilrw'dQMIUAn...i...bvlrtbp PL»t111ns ln-...U C61an. QaUfg~;a:tl 92021 _ : fllt~---CIIIIItilllll..-lllfiiiiiiiiiii!IIMrWIII_....o....li•..-a ........ IMIII--, ............. lll(llllttlflllilllii.....,...-.,.UPOII ... ~IMIII.d612 D111ltAill Jn•IL-- In .. O!ICifJil.Jia1pn ,,..,Jl,~U ._., Cal;UarDh .................... QliiiiiiiiL lhnllr ..... IM ...... IIflllf ... IM.._J.-!11111•111:1111-Gffli-.. ..... Of,II·MII-MI .... AIIIi.•••f11111Md.•llo---1!111111i .... ...,.,...oahlld:lll .. ..... . . llllllllllltl'lllot~JWnin, IINIIIIIII~-IniiiiM,IOWit BL CAJOH. ClLIPOIItA I'l'RM 11 -BSTIMATB TO CLEAN I i'LUSJI., IBPLA(lJl ALl. lUBUl .t.lfl) R!TEST · Til lU.~Il'L()W 'ASSBHl!LY rHAT F.UI,.IJD !T1S _.tUlti'.\L US'JlJIQ: S".VttliNS BlC(r~ow D!fict M • TOTAL OP H!TIRt&tS ~/rAt~S $ 4l&.Q~ TOTAL OP LllOI ~Of!•SQ TOTAL $ 1,5 • S Mml .. 'l'ii!S·PRO~OSAL l'JICI IS QOOD fOR '1'HtUY (30) DAYS i'IIOK Di'I'E. OP f'ROPOS~t.. ~rue~ IS rox cu\UING or TH~ issmLY AWD . 'I'll IBPLACP.MBRT OF IUlJII P~RTS OMLY. IF UPON FdiTR&i l~SPJCTIOM 0' 'HI .BACXf~OW USIHDT.oY 1 lT IS FOU!tD THAT llUD P.t.lt'fa All lfUD!D • IT VltL ll! IIOIJCllT TO ·Y0011 ATTIN'l'ION AND TH'£ HAltD PARTS· WILL 12 lliPJ,ACE'D ON A TIMR AID H!TMIIA~S !&SIS. . . . ----·--~--~~~--.................. _ ... _ .. _____ ~ ~ ........ -------·--...~· ... -hlllllllc• . ..).-.•-..r. (fJ. I -'"'*"-----... ~.. ·-·--""*'--····--·---·--------(') 111111N ... irMI•~IIII.odllllil-..,...,...aiiMIIWIIII~IIIIIIIIIIdllllldiWI_.......I!id_..,_ . ..--CR-........ . . ................ Qivllll,lltll ........ llf:liiJMIIfti'MI~-...--..,.. .... -IIfllllfl---·· ....... ....,.. ..................... IN!I..._.,Iii~~.IMliiiWtfllllltllllillllllllrll'llltllllll~lll .... IIDIII.NII*'II••-.....-III'Mtlll ...... lttNIIndirihlll .. uAI'II~-~ ...... IIIIl!lo_.llliiMI-.-. ~-. ' TOTAL P.01 Ul~l "'"r=.n.lollillln.!~l 25$4 Swtttwatlf 8prlnga Blvd Sptlno Ve.llay, ~ $18?W088 Past Date: .• MUI'IdaY, .e-..HRU!~oo~ D,_~Jl.9! -·. -· .. " CompiiQnce Date: Wedn!!l~!1t-'-!ptemberJ~~-,·. Telephon• (619} 6704283 10#: 1078 BACKFLOW. CERTIFICATE TE$T · '1. Buslneaa Name: .Q~_H~¥\ SOtt_Q_Q~ r;>IST . . .. .•. _ ·-· _ ......... 00 00 Servlct Addrea&· 4~~~-QEHESA RD. .. .. ----Location: f..L~~~ERVICE ... ~--. . , .. -------·-.-.. -........ . Account Number: . .• • . ... --·· MaterNumbar: 29191609 SIZ.: ,9,:.5_8 __ Manufactu111r. ~:l!i<INS _,.... . . . 112,: .!.............. Madtltlt ~?~.~~---.. ---·-hrlalt#: M.O~~E ........... . REDUCED PFU:UUM PRINCIPLE ASSEMBLY I T n t IJ'.PPilrllm ---· I II t t l a I I T ne 1 a t t I ~~~~~~----~ I I FT 1 • n G ll t I ( ) t . ) (~ Opened At .;!1 6 PSID -~.._...JP$10 ( . __ ___.PSID '----P.SIO Olstl'lbutlon: Whlte..otay Watar DlstrlGt Yellow.Cuitomar Lin~ Prusura: L71 9. · . ' . TMt Kit;~ ~C:-; Strlll t#: ,3 975 Date 'Ritmarks: o o .. .,, u ••--••~•a""''' •.••-•--•- ·----·-;............... .. ... ,· TOTAL P.03 ... ... 2554 lw••twawrlprlnu• Blvd -· Spring V•Uey, CA t187W088 n.-a Wa .. , ~!"!-~!IWIIIJ! ~W:2~.J..'!!.~..!!!'!_. •• Compl!an~ Date: Wectnesd.!lll '~P~~b~r 1_~, . T•lillphont {618) lp'Q.2283 · . 10#: '1078 BACKFLOW CeRTIFICATE TEST ·Business Name: 0EHE~A.S9!::!Q?~ ~~.T .... _ ....... N·-·-· .. ·-... -....... ___ ... : ...... -... ··-··-........ . Service Addl'tt$ -4612 DEHESA RC. Locetlonr FIR.E SERVICE . ··~···· .. , ........ ··-: ' .... -.. _,,______ ----·--.... ·-··-·····" ... . . Acc:ountNumbtr; ___ .. __ , .......... MetarNumbtr: 2.~!~.'1._~9P...... ... .. Size: ~.75 ___ _ Manufacturer. ~!~~~-~ .. , ... -~--.. -··--·-Sl&e: ..Q.:?!.. __ . Mod~l#: ~-?~.~k ..... ··-·-· Serial#: H~!il9,33 ... . . REDUCED PR!SSURE P~NCIPLc ASSEMBLY CHECK V~YE #1 CHECK Vld.Vi. #2 DIFFERENTIAl,. PIUi$SURii Line Prenurt: . /8;G. REUEF VAlVE . TeetKit~-~~ J T Aj:lparisnt '2l ~ Opened~ 3-t. R' " . PSID Leaketl ( ) PSID· S.nal'lll: 1:127:5"" I Ill t t Leaked ( )· Closed Tight <'X'S Old Not Open ( ) bate ·I Cloaed Tight (><) BAWGATE VALV~ #-2 ·. ta,mnated:/h 8~ 8 I Acb.ial 7.·~ PSID Leaked ( .) ~mane.;""':-~ .. ·--···.~ ... Ctoaad Ti;ht (X) ~-. -. '/tj f{VfJJ(/. /.6..:£..-. if.~ I FT Aob.ial. -7h5": P.SID · l • . #~42&.';)(~~~4.1:4 ~ n' ClOsed Tight Cloaecl Tight <>-?' Opened At ±. 3 P$10 a t (~ . I . I . d~S!!.-?.z/1.~ I ~ . ~ .eal'fl L.z..P~ r; DOUBLE CHECK:VAI.VE DOUBLE CHECK VALVE PRESSURE VACUUM- . CHECK VALVE f1 CHECK VALVE #1 · BREAKER ~.I:'M-~1!. ~q,.f.,.O~ t T All' Inlet· .. · a:s.:r.4LJ .0:19$~~ n e Leaked { ) Leaked ( ) Opened At flSIC I s I -t Clcaed Tight ( ) . CIQBBQ Tight ( ·l PldNol(Jpen ( ) I BAI.!JGATE VALVE #2 . EIAI.UGATE VALVE 112 CHECK VALVE --.. ·----~-·-·--· .... _, ... _ ..... , __ , • I .• Held at PSID l.eakitd ( ) Leaked ( l ·-···-----··-·-·--- . Closed TIOht l$aked ( ) ( ) . Cloaed Tlght t l -. ----·-···------~-F T Cloa&d Tight ( . ·) CIC!Sad Tight ( ) Air fnlet Valve ., .. Opened At PSIC _.,. ___ .. ____ , ...... ..:I. .......... 0. n s a t . CheQk v''"-·· 'PSID I - Dlatlibutlonr Wl'llte..ot.ay Water District Vtllow:.Customsr TOTAL P.03 ,, To: From: Date: MEMORANDUM Dave Burpeau Richard D. Shackleyl<V 0 January 27, 2006 wo 30087 P2414-0021 03 Subject: Dehesa Watermain Extension; Chronology of Pipeline Testing • 1/28/04: Notice to proceed • 6/24/04: Source water testing BAC-T s passed • 7/8/04: BAC-T sample phase 1 BAC-Ts passed 0-10 nephelometric turbidity units (NTU) Note: NTU is the measure of solids in the water. 0.50 NTU is the highest allowed for a successful test • 7/13/04: Tie-in Phase 1 to existing pipe • 7/22/04: Performed low chlorine and turbidity tests on Phase 2. All tests 0.50 NTU or below (passed) • 7/23/04: BAC-T sample phase 2 BAC-Ts passed 0.10 NTU (passed) • 7/26/04: Tie-in phase 2 to phase 1 • 8/3/04: Performed low chlorine and turbidity Tests of Phase 3 Turbidity greater than 1.2 NTU (failed) Contractor continued flushing • 8/4/04: Re-test phase 3 All samples 0.45 or under (passed) P:\WORKING\CIP W414\WO 30087\Construction\Chronology of pipe testing-School claim for damages 1-27-06.doc • 8/5/04: BAC-T sample phase 3 BAC-Ts failed 0.25 NTU turbidity (passed) • 8/9/04: Resample low chlorine & turbidity Phase 3 0.49 NTU or below (passed) • 8/10/04: Re-BAC-T sample phase 3 BAC-Ts failed 0.30 NTU turbidity (passed) • 8/18/04: Re-sample low chlorine and turbidity Phase 3 0.48 NTU or below (passed) • 8/19/04: Re-BAC-T sample phase 3 BAC-Ts passed 0.20 NTU (passed) • 8/23/04: Tie-in Phase 3 (last phase) to phase 2 • 9/10/04: Dehesa School Contractor began installation of fire service backflow assembly • 10/17/05: Project accepted It should be noted that no newly installed pipeline is connected to the District's system until all State Health testing and sampling requirements have been met. All connec- tions are observed by District staff to assure pipe connections are clean and free from dirt and debris. All pipe sections used for connections are thoroughly washed with a chlorine soluction as a means of disinfection. P:\WORKING\CIP W414\WO 30087\Construction\Chronology of pipe testing-School claim for damages 1-27-06.doc AGENDA ITEM 8 STAFF REPORT TYPE MEETING: MEETING DATE: March 13, 2006 SUBMITTED BY: David Burpeau, Safety and \)~~· W.OJG.F. NO: DIV. NO. APPROVED BY: (Chief) Risk Administrator ~ Rom Sarno, Chie , Administrative Servi Gl~ APPROVED BY: German {Asst. GM): Administ SUBJECT: Rejection of GENERAL MANAGER'S RECOMMENDATION: Finance and That the Board reject this claim in the amount of $7,500.00. COMMITTEE ACTION: See Attachment A. PURPOSE: To reject this claim presented on 02/01/06 by Mr. Jacques M. St. Cyr, 9879 Ivy Street, Spring Valley, CA. 91977. His claim alleges that the damage occurred on November 17, 2005. This action is necessary in order to begin the statute of limitations for bringing any legal action in this matter. ANALYSIS: This claim has been submitted for the repair of Mr. St. Cyr's driveway following a fire hydrant leak near the side walk. The claim alleges that following a fire hydrant leak, saturated soil caused a large crack extending about four feet from the fire hydrant to about forty feet into the driveway. Following the adjuster's recommendation, the District's proper ty & liability insurance carrier Special District's Risk Management Authority (SDRMA), has recommended that the District reject this claim in its entirety. This claim is not due to any negligence or liability on the part of the District. The District was notified of a leak in the vicinity of the fire hydrant and a crew was dispatched to make the repair. '= ,. The District's claims adjuster met with Mr St. Cyr on January 12, 2006. The adjuster reports that Mr . St. Cyr provided a recorded statement and admitted that the cracks were pre- existing to the fire hydrant leak. Mr. St. Cyr stated that he first noticed the cracks in the first six months of 2005 upon moving into the property. The utility lead responding to the leak reported that he found and repaired a very small leak at the bottom of the 36-inch hydrant spool. He also stated that water was observed in Mr. St. Cyr's neighbor's yard, located well below grade from Mr. St. Cyr's property. However, it should be noted that Mr. St. Cyr reported to the claims adjuster that the neighbor to the south of his property has running water issue on the property on a daily basis. Mr. St. Cyr initially presented a claim to the District on November 29, 2005. However, upon evaluation, it was determined that the claim was deemed "insufficient" per government code as Mr. St. Cyr had not included an amount for stated damages. The claim was returned to Mr. St. Cyr with a letter of explanation. On February 1, 2006, Mr. St. Cyr re-submitted that claim with an amount of $7,500.00. FISCAL IMPACT: -· -~~~;?~;;~~~~~"'::" .. / None. STRATEGIC GOAL: Protect the District employees, assets and community by continually improving sound risk management practices and safety programs. LEGAL IMPACT: None . General Manager Attachments: Attachment A Mr. St. Cyr's Claim Adjuster's Report ATTACHMENT A SUBJECTIPROJECT: Rejection of Mr. Jacques St. Cyr Claim COMMITTEE ACTION: This item was presented to the Finance/Administration Committee on February 15, 2006 and the committee supported presentation to the full board. 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. H:\Reports\Staff Report\Safety\2006\Rejection of Jaques St. Cyr Claim\Attachment A-Jaques St. Cyr Claiml -3-1-06.doc 1. 2. 3. CLAIM AGAINST OTAY WATER DISTRICT Name of Claimant(s): .~-. -, c_ · fl "-. ()Cc~L~ ft1. Jf . \. y ("' u Address of Claimant(s): 9870 Tvy 51rcet" F ...... to 1 20U4D ,_1,;,. .· -. :0 .. ·.~!~:,· 0,~ q iCtrJIJ Oh~~~ '-lr-. r,ta ~~!:_~!_;; .. ~·c1· _11:14 qq 1 q zq~--- 1 ./ I I J - 4. 5. Address to which claimant(s) desire(s) notice to be sent (if other than above): Occurrence or transaction which gives rise to claim: a) b) c) Date: X/ov. i1, Ja;;,:;-Time: ,; : (C ),f)) )S I ----f-/ -------- r'llace• Ct' r J-fD ·j_--v· ·,; c._L -~<?r:,L ; <( Ji·11'~t.~ ;/~· //p. I • • ~-~ . ..J1J ( \_ ... { ....._. ~ •! !o I· ;t[...l_ ~ .- • .. / Specify the particular act or omission you claim caused the injury or damage. Include a statement of why you feel the District or its employees were at fault. /Jn Undera_Jj)_~!rd_-f-trc hvc/ranrjOipt: ieak hcs SaV/mfcL J I . . ./,h; (·.-;: ncie· /'1 tc··l · f'r;u');y_-;, {( larrc C!rad:.. -J 1~1 mv fiOQ(lit?..t_ dnrctJqy /22Ujll/51 Lj ted hem -/he; /)[t/f',-z;f. I -k/;c'i·c' ;/ /0 -///~ //S!)c;)S/bl/;-' . ol· -~ 01/Ly jtbltr )15/ncf ltJ /~@;roil at?/ll/t4e f'tti!Yd ~ /!Je /ra/c , j General description of injury, damage or loss (so far as known as of the date of this claim): 77:t {lf?f'('f, Jigrb {ll;()ut L/ ~~~t fz~~n 1!7e hr-0 bt;t/;t~(J-f trnd t>ile1?d.s obtu/-1C k~f-7J-;J abovf i/f)['/; Clr't?J55 JA .5/71/k,/ /;; f/Je c/;1·~cl;in tr . -//if li;-e /?t/dnv. · Name(s) of any District employee(s) causing injury, damage or loss, if known: Q/; 12cl !yzp't--1 , Ihe (I~'(Zr)t-ti-t/5 catt~d .6jt !NZkr /au-;4 ~7 I!Jc l;ytr4<i;l- 6. ..:.J. 1 j i ;'/ ;) y "~~-__/ Amount claimed if less than $10,000. Be sure to attach invoices or estimates to verify amount of property damage or statement from doctor or hospital for personal injury. If the amount is more than $10,000, indicate whether juris-Jh-8 diction would rest in Municipal or Superior Court . ~ "'15 0 o 1 ~ 1-0 b '1' , 1/ a) Amount claimed.as of date of claim: $ /)ti{J;i[;?i/7/ r"v tpJ b) Estimated amount of any prospective injury, . 1 ; /7•/c damage or loss: $ (ii/,4//cC:ciR f 1 ~rji) $ !I o/c;lttc.J/) 1 ~j' c) Total amount claimed: 8. Name, address and telephone number of witness(es) to the incident: --.. Ji"(!r; ·1 (_.,./ _9~ r, /' -(~ Ia 1/l?et r?l-) tz 9 8 '7 C; Tv y Slrr-d -f;ld?./(_.._ 'f' {}/?c~_rl;"e _ ;?eljljl.»r:s f' 1-& 9 g'·7J~ ? ) ~ vy_ -6fit ... ' /c ·'c.-tc:r ·z);s/r/rf 4~:x7;r Cre;:(.! · __ , 9. Any additional information that might be helpful in considering this claim: I have read the statements made in the above claim and I know the same to be .true of my own knowledge, except as to those matters stated upon information or belief, and as to such matters I believe that same to be true. I certify under penalty of perjury that the foregoing is true and correct. <:f! / Dated: /1 -2 I--1-t)~ ;/ · !}--. {)/} ~ Claimant or Authorize<;!' epresentative 1/Jo jv. :eb 02 06 01 :15p SDRMA (916) 231-4111 p.2 B2/B2/2006 11:34 5524316831 (916) 231-4111 AIMS LOS ALAMITOS PAGE 01/06 DATE: 01/31/06 ACCI.AMATION INSURANCE MANAGEMENT SER V!C:ES FAX TRANSMIIT AL TO: Karen Lafferty COMPANY: SDRMA FAX NO.: 916-231-4111 FROM: Bob Malharn REI: INSURED: Otcy Water District-Jacques St. Cyr CLAIM NO;. GC2563 OUR FILt: 046230 No. of PGS: 6 MESSAGE: Attached is our Second Report on the above referenced claim. The original report with all enclosures to follow via maiL Please contact our office if you have any questions. Thank you very much1 3401 Katella Ave, Suite 206 Los Alamitos, CA 90720 (562) 493~2461 fax (562) 431-6831 CA LIC. 27?2984 Feb 02 06 01 :15p SORMA (916) 231-4111 (91.6) 231-4111 AIMS LOS ALAMITOS 02/02/2BBo 11:34 January 31, 2006 Karen. Lafferty SDRMA 11.12 "I" Street Suit~ 300 5624315831 ' ... ~. r;;.'JJ.t ~j- ACCL.Nv\ATION INSURANCE MANAGEMENT SERVICES FORWARDED JAN 3 1 2006 Sacramento~ CA 95814 A I MS 0 9 In.smed Claimant Claim No. Date ofLoss Type of Loss Loss Location: Our File No. : SECOND REPORT Otay Water Distict Jacques St. Cyr GC2563 ll/27/05 Cracked Driveway 9879 Ivy Streetl Spring Valleyl CA 91977 046230 RECAP p.3 PAGE 02/05 The clahnant is presenting a claim alleging that a leak from the ti:re hydrant caused a large crack in a portion of his driveway. STATEMENT OF CLAIMANT JACQUES ST. CYR 9879 Ivy Street~ Spring Valley, CA 91977 Telephone No.: (619) 461-1689 Work No.: (619) 6967-2739 We secured the recorded statement of Mr.. St. Cyr in person at his home in Spring Valley, CA on January 12~ 2006 at approx-imately 7:50 a.m. Mr. St. Cyr came across as nervous and uncooperative. We believe Mr. St. Cyr would make a less than average witness on his own behalf. Please refer to the attached statement summary for additional details. LIABILITY Based on the information gathered thus far~ including the statement from the cJai.n1ant, this docs not appear to be a case of liability on the part of the insured. The claimant admitted in his ---~---- 3401 l<aLe11<l Avr=. Sllit.e 206 !_o;; A\arr.ito~, CA !10720 562/49)-246 'I Fax 562/431 -6A31 CAL. UC. 27i29iH Feb 02 06 01:15p SDRMA (916) 231-4111 02/02/2006 11:34 5624315831 .... _ ...... SDRMA Insured: Otay Water D.istrict Claim No.: GC2563 Page 2 · (916) 231-4111 AIMS LOS ALAMITOS ... __ .. p.4 PAGE 03/05 recorded statem.etlt that the cracks were preexisti.ng to the fire hydrant leak as the claimant noticed them the first six. months of 2005. Pursuant to your request, we have forwarded a denial Jetter to the claimant and advised the claimant of the Statute of Limitations for filing a lawsuit against Otay Water District. FURTHER ACTIVITIES 1. Monitor for ·a response from the claimant, and 2. Report COMMENTS/DIARY We are placing our file on a 30-day diary pending tbe abo·ve. Respectfully, AIMS/ACCLAMATION INSURANCE MAl\~AGEMENT SERVICES Bob Malham Rft Bob Malham Multi-Line Adjuster BM/al Enclosures: 1. Jannary 25, 20q6 letter. to claimant 2. Statement summary of the claimant 3. Adjuster's photographs Feb 02 06 01 :16p SDRMA (916) 231-4111 02/02/2005 11:34 January 25, 2006 · Jacques St. Cyr 9879 Ivy Street 5524315831 Spring Va11ey, CA 91977 RE: .tnsttred. Claim No. Carrier Date ofLoss Loss Location Our File No. Dear Mr. St. Cyr: (916) 231-4111 AIMS LOS ALAMITOS ACCLAMATION INSURANCE MANAGEMENT SERVICES Otay Water District. GC2563 SDRMA. 11/27/05 Same as above 046230 , : ~ :,. L' I, : ' :~ :. f; JAN 2 5 Z006 ~· . ·, . ·- p.5 PAGE BC\/05 As you maybe aware. we are the field representative assigned to investigate the above-captioned matter on behalf of SDRMA. We have complet~ our investigation into the above-captioned loss. We have been imrttUcted by SDRMA to infonn you that based on the hwestigation co1.1.ductecl includ.ing your recorded statem.ent regarding the facts the loss; they must re~ectfully deny yo\.U' claim in its entirety. We have also been advised to notify you that based on Government code Section 945.6 you have only six (6) months from tbe date this notice was deposited in the mail to fi.Je a court acti.on on this ctaim. Additionally, you roay seek the adv:ice of an Attorney of your choice in connection with this matter. Jf you desire to consult an Artomey, you should do so immediately. Furthennore, if it is determined that a lawsuit arising out of this rejected claim is frivol.ous, the Otay Water District inte11ds to seek Attorney's fees fi:om the Plaintiff and/or the)r Attorney pursuant to state .laws l.ncluding, but not limited to, Code of Civil Procedure Sections 126.5 and 1021.7. Should you have any questions regarding this letter, please contact the undersigned. SiLlcercly, AIMS/ACCLAMATION INSrRANCE MANAGEMENT SERVICES Bob Malham kh Multi-Line Adjuster cc. SDRl\tlA 3401 l<atr.:dla Avl!. Suil.e 206 !.o> Ai.'lmito5, C1~ 90720 5 62/49.3-2461 Fax 562/431-15831 CAl_. I.IC:. 2771934 Feb 02 06 01 :16p SDRMA (916) 231-4111 02/02/2006 11:34 5524316831 (916) 231-4111 AIMS LOS ALAMITOS 046230 STATEMENT SUMMARY Statement of Jacques St. Cyr Home Address 9879lvy Street, Spring Valley, CA 91977 Telephone No. (619) 461-1689 Work Te!ephon.e (619) 696-2739 Occupation Software Project Lead Empl.oyer Sempra Energy Social Security No. Refused to provide Driver's License N6045598 Date of Birth 3/8/1959 COMMENTS: p.6 PAGE 05/05 We secured the reco1'dcd statement ofJ'vh·. St. Cyr in person. at his home in Spring Valley, CA on January 12> 2006 at.approximately 7:50a.m. Mr. St. Cyr came across EJ.s nervous, uncooperative, and evasive in his answers. Mr. St. Cyr avoided looking us in the eye dw:ing the recorded statement. We believe Mr. St. Cyr would make a less titan average witness on his own behalf. SUMMARY: Mr. St. Cyr indicated that he moved into the property approximately four years ago. A professional inspection was don.e and revealed minor issues inside the home which were taken care of befoxe he moved io.. He does not recall getting copies of any permits done for the driveway addition from the seller. He first noticed the crack il:t the driveway addition near the fuc hydrant sometime between Jalluary 1, 2005 and July 4, 2005. Sometime in September of 2005, he noticed standing water in .his neighbor's yard. A few weeks before that, his nei.ghborl s tree had broken of:f and was removed by the neighbor. There was no communication between Ml'. St. Cy.•· and his neighbor regarding what may have ca.used the water to pond in his yard or the tree to fall. Mr. St. Cyr advised that upon moving into the property, he did 11ote cracks alL over the driveway including the driveway addition closest to the neighbor on the north side of its property. Sometime in Novembe1· of 2005, he came home from a trip and .saw the water district trucks i.n. front of his house. One of them was pulling away, and one was left with an employee standing ... ~ =~=;b 02 06 01:16p SDRMA (916) 231-4111 02/8212006 11:34 5624316831 Statement of Jacques S •.... _ .. yr 046230 Page 2 (916) 231-4111 AIMS LOS ALAMITOS p.7 PAGE El6/05 near the fire hydrant. The employee advised that there was a leak in the fire hydrant. Mr. St. Cyr asked the employee if the c:rack in his driveway was caused by the fire hydrant leak~ and the employee told him tbat he couldn't answer the question but that Mr. St. Cyr should file a claim and gave Mr. St. Cyr the information on where the claim should be filed. Mr. St. Cyr did indicate that 1he employee told him that there is no guarantee that if he files a claim anything wi11 be done or anything will be paid. Mr. St Cyr did indicate that there has been a pll;Lmbing leak on his property 1lie date the fire hydrant was bejng repaired by the water district wherein a small water heater above the toilet in the master bathroom bad failed due to wear and tear and deterioration and caused water damage inside his home. The water was preexisting to hirn. moving into the borne just like the driveway add.ition. Mr. St. C}T advised that the home was built in 1980 and that the seller was a property manager and felt that the home was well taken care of. Mr. St. Cyr di.d acknowledge that there have been two trees in the front yard near the driveway, one of which is bigger than the other but denjes seeing 3IlY roots under the driveway .from either of the trees. Mr. St. Cyr also acknowledges the fact that his neighbor's property to the south has rwming water jssues into his property on a daily basis. End of Summary 9 ... 8 ~ 7 f l :1 • 9 ! ! g t l -f j .. l ~~ ~-.· . ~ ·,i . .. ~... ' i. . < Oil ~' AGENDA ITEM 9 STAFF REPORT TYPE MEETING: ~~B7 rL__ Pat:fl ck V~an, SUBMITTED BY: Senior Civil Engineer APPROVED BY: Rod Posada, <fl~~ c~, (Chief) APPROVED BY: (Asst. GM): Chief, Development Services Manny Magana~~ MEETING DATE: W.O./G.F. NO: March 13, 2006 aaOO 0 DIV. NO. 1 1d1000 SUBJECT: Assistant General Manager, Engineering and Operations Request Approval of Amendment No. 1 to Agreement with TMO CA/NV, LLC, d/b/a T-Mobile USA successor to Pacific Bell Wireless, for an existing facility at Otay's Pond No. 1 Reservoir site. GENERAL MANAGER'S RECOMMENDATION: That the Board of Directors (Board) authorize the General Manager to execute Amendment No. 1 with TMO CA/NV, LLC, d/b/a/ T-Mobile USA (T-Mobile), successor to Pacific Bell Wireless as Tenant, for the vacation of the existing utility I equipment easements (Attachment 1), and create new utility I equipment easements to the existing lease agreement for a cellular facility located at Otay's Pond No. 1 Reservoir site (Attachment 2) See attached Exhibit A for project location ~ COMMITTEE ACTION: See Attachment A. PURPOSE: To obtain Board authorization for the General Manager to execute Amendment No. 1 with T-Mobile to its existing lease agreement for Otay's Pond No. 1 Reservoir site executed on September 11, 2003. The description and depiction of the Tenant Facilities as shown in Exhibit B do not accurately reflect the actual location of these Facilities. This amendment will correct that inaccuracy. ANALYSIS: T-Mobile will vacate a portion of their existing utility easement, 6,052 lineal feet which was not required and maintain the remaining 1,255 lineal feet. Approximately 400 lineal feet of the tenant's underground electrical conduit and service wire, found to be outside of the utility easement were relocated at no cost to the District. This relocation facilitated design of the proposed 980 Pressure Zone, 30-inch potable water pipeline while placing the utility in an area that was acceptable to the tenant. T-Mobile will also expand their existing equipment easement of 245 square feet to 1089 square feet, it was discovered that the original easement did not encompass their Monopine (antenna support) or the permanent improvements at the equipment shelter. Staff agrees with the content and purpose of this amendment. Commencement date for this agreement was November 17, 2003, and currently is in the initial five-year term. The tenant has the option to extend the term for four additional five-year periods; lease expiration is November 16, 2028 . FISCAL IMPACT: ----~~ Authorization of this amendment is for administrative purposes only. The District will not receive a non-refundable administrative fee. There will be no impact on the current monthly rent of $2,121.80, subject to an annual inflation adjustment of 3 percent. LEGAL IMPACT: The District's Lease Agreement and proposed Amendment No. 1 have been reviewed by our legal counsel . District Counsel has been an integral part in the negotiations and construction of this amendment. The survey was conducted by the District Surveyor, description and depiction by T-Mobile, and subsequently reviewed by the District Surveyor. STRATEGIC GOAL: This item is in line with the District's Strategic Focus Areas: Community and Governance, and Financial Health. Geteral Manager Attachments 2 ATTACHMENT A .................................................................................................... '""""'"""""""'"''''""""'''''' ... .... ..... .. .............................................................. . ................................. , !Approve Amendment No. 1 to Agreement with TMO CA/NV, LLC, I d/b/a T-Mobile USA, successor to Pacific Bell Wireless, for I an existing facility at Otay's Pond No. 1 Reservoir site. i i COMMITTEE ACTION: The Finance/Admin Committee met on February 15, 2006, and 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. 3 f-"' (L ::E <I ... (lJ ;::::: r' If) D D (lJ ' CD D 2J (]) ;: (:; Q_ 0 ::E c 0 :;:; 0 u 0 ..J / +' <.. 0 0. <ll ~ "-"-0 +' "' ::: (:; c 0 Q. (lJ ~ D CD iJ' / w ;:::! ~ D ::E I f-/ ~ L;: <ll lll 0 <ll ..J <.. 0 } a; u (lJ iJ' a;: D ): / L:J z g ~ D ): / 0.: ., ... <") ., .... c <") "' ... '<: / IMPERIAL BEACH VICINITY MAP HMA (WEST) 78.41 AC. SCALE: OTAY WATER DISTRICT OTAY'S POND NO. 1 RESERVOIR SITE LOCATION MAP ~ I 1 "=1 000' HMA (EAST) 152.09 AC. T -MOBILE AMENDMENT NO. 1 /PROJ AA000-1 01000 EXHIBIT A ATTACHMENT 1 '· ' \ AGREEMENT BETWEEN PACIFIC BELL WIRELESS LLC ' AND OTA Y WATER DISTRICt 1'0 LOCATE A COMMUNICATiONS FACILITY n AT OTAY'S () v "Pond No. 1 RESERVO!-R SITE q'\ ~ / (Use Area, Chula Vtsta) t}:) This Agreement ("Lease") is entered into between the Otay Water District, a municipal \ water district organized and operated pursuant to the Water Code Section 71000, et seq. ("Otay"); and Pacific Bell Wireless, LLC, a Nevada limited liability company doing business as Cingular Wireless ("Tenant"). RECITALS WHEREAS, Otay holds fee title in certain property described in Exhibit A attached hereto and incorporated herein for all purposes; WHEREAS, Otay has constructed water facilities on said property and describes the facilities and property as "Pond No. 1 Reservoir, Use Area"; WHEREAS, Tenant has identified said Property and facilities as desirable for the purpose of locating a communications facility; WHEREAS, Tenant has agreed to make certain improvements to the property, including constructing power transmission utilities, that would benefit Otay in the operation ofthe water facilities; WHEREAS, Tenant and Otay have agreed to enter into this Construction and Lease Agreement to construct power transmission utilities and locate a communications facility and transmitting and receiving antennas at the Reservoir Site. Cell Agreement Version #2 July 14, 2003 SDl 0401vli4469-000I 1 ·~·· ';-.· . . NOW, THEREFORE, in consideration of the mutual covenants herein contained, and for other good and valuable consideration the receipt and adequacy of which is hereby acknowledged, the PARTIES hereto hereby agree and stipulate as follows: AGREEMENT --------- Otay and Tenant agree as follows: 1_. Premises. Otay owns the real property described in Exhibit A. Otay agrees to lease-to Tenant approximately 245 square feet of real property including trenchline, together with space on Otay facilities within Otay property (collectively the "Premises") at Pond No. 1, Use Area more particularly shown on Exhibit B. 2. Use. The Premises may be used by Tenant for any lawful activity in connection with the provision of communications services. Tenant agrees to obtain all necessary land use approvals. Otay agrees, at no expense to Otay, to cooperate with Tenant in making application for and obtaining all licenses, permits and any and all necessary approvals that may be required for Tenant's intended use of the Premises. Tenant shall provide written evidence, satisfactory to Otay of all FCC approvals and other governmental permits and approvals, including but not limited to compliance with FCC Electromagnetic Radiation Guidelines. Said use shall not include the right to sublease to any other person or entity unless otherwise expressly authorized pursuant to this Lease. Tenant shall deliver to Otay a copy of all executed licenses, approvals and permits applicable to Tenant's operation of communication services within the Premises prior to start of construction. Cell Agreement Version #2 July 14, 2003 SD1040l vl/4469-0001 2 In addition, Tenant shall obtain such permits, licenses or easements from the owners of property adjoining the leased premises as may be necessary for Tenant to have access to and from the leased Premises and also for access to utilities as may be necessary. Tenant shall provide copies ofthese documents to Otay prior to start of construction. 3. Access. Otay shall provide access to Tenant, Tenant's employees, agents, contractors and subcontractors to the Premises 24 hours a day, seven days a week, at no charge to Tenal}t. Otay hereby grants to Tenant such rights of ingress and egress over Otay's Property as may be necessary and consistent with the authorized use of the Premises as outlined by Otay Operations. Subject to Otay's reasonable rules, Otay shall permit Tenant's employees, agents, contractors, subcontractors and invitees to park vehicles on Otay's Property as necessary and consistent with the authorized use of the Premises. Otay shall, at its expense, maintain all access roadways or driveways from the nearest public roadway to the Premises in a mllllller reasonably sufficient to allow access. 4. Term. The term of this Lease shall be five (5) years, commencing with the first day of the month in which the local building permit is issued allowing Tenant to construct its communications facilities on the Premises or the first day of the ih month after the execution of this Lease, whichever is earlier ("Commencement Date"). Tenant shall have the right to extend the term of the Lease for four (4) additional terms of five (5) years each by giving Otay written notice of its intention to do so at least 120 days prior to the date that the then current term would otherwise end. 5. Administrative Fee. At the time of initial contact with Otay, Tenant shall provide Otay with a $2,000 non-refundable fee. This fee is to cover Otay's costs to provide assistance to Tenant during early planning phases. Cell Agreement Version #2 July 14, 2003 SD\0401 vl/4469-0001 3 c~ Additionally, Tenant shall ;provide Otay with a $4,500.00 non-refundable fee due and payable upon execution by both parties of this. agreement. This fee will cover Otay's costs incurred or to be incurred in Otay' s supervision or assistance, for the plan, design and construction phases. These administrative fees shall not be considered rent or part of the rental installment. 6. Rent. Beginning upon the Commencement Date, Tenant shall pay Otay as rent the sum_, of $2,000 per month, payable on the first day of each month in advance. Rent shall be increased on each anniversary of the Commencement Date at a flat rate of 3%. However, at the beginning of each five-year renewal period, an adjustment will. be made to the monthly -rent based on average market rates charged for cellular site leases by public utilities in Southern California. This adjustment may be an increase or decrease to keep Otay' s rates comparable to the current market. 7. Construction of Power Transmission Utilities. Tenant has agreed to construct power transmission utilities from an existing power transformer to a termination point shown on Exhibit D. In consideration for an agreed upon credit to be applied towards rent payments from Tenant to Otay, Tenant agrees to install additional power· transmission capacity that would provide Otay with 480 volt, 3-phase, 50 amps power the existing power transformer to the termination point shown on Exhibit D. Tenant agrees that the following NBC specifications for the transmission facilities: • No. 8 A WG, three current-carrying conductors per conduit with ground wire, No. 10. • Conduit Size= 5 number 8 wires in a 1" minimum (Schedule 40 PVC) The amount of the credit shall be determined by Otay being provided with an opportunity to review the final bid for the work related to the construction of the power transmission utilities Cell Agreement Version #2 July 14, 2003 SDI0401 vl/4469-0001 4 and agreeing with Tenant as to the total amount of the credit provided towards rent payments. The credit shall be provided to Tenant at a rate of $2,000 per month, until the amount of the credit is exhausted. The credit shall be applied beginning on the Commencement Date of the Agreement. At such time as the credit is exhausted, rent payment shall resume in accordance with paragraph 6. Tenant agrees to return any and all portions of the premises disturbed by the construGtion or installation of the power transmission utilities or lines to their original condition. " Furthermore, Tenant understands that Otay and certain easement holders require regular access to all portions of the Premises, therefore, Tenant covenants not to block access to any road or right ofway during any such construction or installation. 8. Environmental. Otay represents that to the best of its knowledge the Premises have not been used for the generation, storage, treatment or disposal of hazardous materials other than those materials normally used by Otay for the treatment of water and that there is no · hazardous waste in the Premises. Notwithstanding any other provision of this Lease, Tenant relies upon the representations stated herein as a material inducement for entering into this Lease. Tenant shall not bring any hazardous materials onto the Premises except for those contained in its back-up power facilities (e.g. lead-acid batteries and diesel fuel) and properly stored, reasonable quantities of common materials used in telecommunications operations (e.g. cleaning solvents). Tenant shall handle, store and dispose of all hazardous materials it brings onto the Premises in accordance with all federal, state and local laws and regulations ("Laws"). "Hazardous materials" means any substance, chemical, pollutant or waste that is presently identified as hazardous, toxic or dangerous under any applicable federal, state or local law or regulation and specifically includes but is not limited to asbestos and asbestos containing Cell Agreement Version #2 July 14, 2003 SD1 0401 v 1/4469-0001 5 materials, polychlorinated biphenyl's (PCBs) and petroleum or other fuels (including crude oil or any fraction or derivative thereof). 9. Improvements. Tenant shall have the right to construct, maintain and operate on the Premises communications facilities as described in Exhibit B. Tenant shall not alter or change its facilities in a material manner without the prior approval of Otay, such approval not to be unreasonably withheld. "Material" refers to any physical change that could affect the building or its appearance or any change that could disrupt Otay's workplace or co~unications. All of Tenant's construction and installation work shall be performed at Tenant's sole cost and expense in a good and workmanlike manner. Tenant shall have the right to remove all facilities it installs at its sole expense on or before the expiration or termination of this Lease. Tenant shall have the right to install utilities at Tenant's expense and to improve the present utilities on or near the Premises (including, but not limited to the installation of an emergency back-up power) subject to Otay's approval of the location, which approval shall not be unreasonably withheld. Tenant shall have the right to place utilities on Otay's property in order to service the Premises and Tenant's facilities. Tenant shall fully and promptly pay for all utilities furnished to the Premises for the use, operation and maintenance of Tenant's facilities. However, if the Tenant requests permission from Otay to add improvements to an existing tenant site, requiring construction that could impact Otay's operations of the facility, the ·current Administrative Fee shall be payable to Otay for reimbursement for staff time to process the new request, construction inspection and monitoring during construction. If the requested Tenant improvements include additional lease space, a new lease agreement for the additional Cell Agreement Version #2 July 14, 2003 SD10401 vl/4469-0001 6 h:::. lease space must be executed pnor to start of construction with all standard fees and requirements due to Otay. 10. Installation of Equipment. Tenant's design and installation of all such antennae facilities shall be done according to plans approved by Otay, and such approval shall not be unreasonably withheld. The Tenant shall be responsible for painting its antennas and/or equipment to match Otay's facility. Tenant will be provided specifications regarding paint tYPe, color an,~ application method to accomplish this requirement. Painting/coating submittals shall be provided to Otay by the Tenant prior to receiving permission to begin painting. Otay may specify a camouflage design if appropriate. These camouflage designs may include but are not limited to Palm Trees, Pine Trees and Flag poles. Any damage done to Otay's facility or facility site during installation and/or during operations caused by Tenant shall be repaired or replaced immediately at Tenant's expense and to Otay's reasonable satisfaction. In connection with the installation and operation of the antennae facilities, Tenant shall not locate or attach any antennae or other equipment to Otay's facilities without the prior written approval of Otay. Tenant shall pay all costs and expenses in relation to maintaining the integrity of Otay's facilities in connection with Tenant's installation and operation of the antennae facilities. Within thirty (30) days after completion of the antennae facilities and all improvements, Tenant shall provide Otay with "as built" drawings of the antennae facilities and the improvements installed on the premises. The drawings shall show the actual location of all equipment and improvements. Said drawings shall be accompanied by a complete and detailed inventory of all equipment, personal property and antennae facilities. Cell Agreement Version #2 July 14, 2003 SD I 0401 vl/4469-000 l 7 .~· 11. Maintenance and Repairs. At all times during the tenn of this Lease and any renewals or extensions thereof, Otay may, at its option and upon written notice to Tenant, remove or cause Tenant to remove the antennae or other equipment located or attached to Otay's facility, in order for Otay to paint, repair, or make replacements (the "Maintenance Work"), that may become necessary to the facility. Tenant will reasonably cooperate with Otay's efforts in this regard including removing and re-installing the ~tennae or other equipment. During the course gf such maintenance work to the facility, Tenant may install temporary antennae, at -' Temmt's expense, on the leased Premises subject to Otay's approval of the location. Once the Maintenance Work is completed by Otay, Tenant shall promptly reinstall antennas or other equipment located or attached to Otay's facility. Tenant shall promptly remove the temporary antennae/equipment from: the Premises at Tenant's sole cost and expense in a good and workmanlike manner. Tenant shall repair any damage caused by reason of such removal. If any such temporary antennae is not removed within thirty (30) days upon completion of the maintenance work, Otay will have the right to remove the temporary antennae and charge Tenant for such costs. In the instance of Maintenance Work to paint the facility, the Tenant shall be responsible for repainting its antennas and/or equipment to match Otay's facility. Otay will provide specifications regarding paint type, color and application method to the Tenant to accomplish this requirement. The Tenant will be required to provide painting/coating submittals to Otay prior to receiving permission to begin painting. 12. Co-Location. Tenant agrees that Otay may enter into leases with other wireless communications carriers for use of the "Reservoir Site" as long as said leases do not result in unreasonable interference with ,Tenant's use of the leased property. Tenant will reasonably Cell Agreement Version #2 July 14, 2003 SD10401 vl/4469-0001 8 't~·.- .·~ cooperate with Otay's efforts in this regard including relocation of its facilities at new lessee's expense. 13. Condition of Property at Expiration. Upon the expiration or termination of this Lease, Tenant shall surrender the Premises to Otay in good and broom-clean condition, with all equipment, supplies, buried conduits, and structures removed along with subterranean foundations to a depth of three feet below grade. t4. Interference. Tenant shall not use, nor shall Tenant permit its agents or invitees to use any portion of the Premises in a manner which interferes with Otay's use of the property for it's intended purpose including communications facilities relating to Otay's operation such as · telemetry/radio communications or any other tenant's pre-existing communications facilities. This would not apply to interference with a tenant of Otay whose use did not "pre-exist" this lease. If Tenant's operation in any way interferes with Otay's telemetry/radio facilities, Tenant will have five (5) business days to correct the problem after notice from Otay. Tenant acknowledges that continuing interference will cause irreparable injury to Otay and therefore Otay will have the right to terminate the Lease immediately upon notice to Tenant. 15. Taxes. During the term of this Lease, Tenant shall pay before delinquency all taxes, assessments, license fees, and any other charge of any type whatsoever that are levied, assessed, charged, or imposed on or against Tenant's personal property installed or located in or on the leased premises and that become payable during the term of this Lease. 16. Termination. (a) This Lease may be terminated by Tenant without further liability if: (i) Tenant delivers to Otay 30-day written notice at any time prior to the Commencement Date, for any reason or no reason;. Cell Agreement Version #2 July 14, 2003 SDl 0401 vl/4469-0001 9 (ii) Tenant gives Otay six months notice when Tenant determines at any time after the Commencement Date that any governmental or. non-governmental license, permit, consent, approval, easement or restriction waiver that is necessary to enable Tenant to install or operate Tenant's facility cannot be obtained or renewed at reasonable expense or in reasonable time period. (iii) Tenant determines at any time after the Commencement Date that the Premise~ are not appropriate or suitable for its operations for economic, environmental or techriological reasons, including without limitation, any ruling or directive of the FCC or other governmental or regulatory agency, or problems with signal strength or interference not encompassed by subsection (iv) below; provided that the right to terminate under this subsection (iii) is exercisable only if Tenant pays Otay, as a termination fee, the lesser of twelve monthly installments of annual rent or the balance of the rent due for the remaining term of this Lease; (iv) Otay commits a default under this Lease and fails to cure such default within a 30-day notice period, provided that if the period to diligently cure takes longer than 30 days and Otay commences to cure the default within the 30-day notice period, then Otay shall have such additional time as shall be reasonably necessary to diligently effect a complete cure; (v) The Premises are totally or partially destroyed by fire or other casualty so as to hinder Tenant's normal operations and Otay does not provide to Tenant within ten days after the casualty occurs a suitable temporary relocation site for Tenant's facility pending repair and restoration of the Premises. (b) This Lease may be terminated by Otay without further liability if: (i) Tenant commits a default under this Lease and fails to cure such default as provided under paragraph 16, below. Cell Agreement Version #2 SD I 040 I v i/4469-000 I 10 July 14, 2003 .~. ~ 17. Default (a) Event of Default. The parties covenant .and agree that a default or breach of this Lease (an "Event of Default") shall occur and be deemed to exist if, after notice and opportunity to cure as provided below: {i) Tenant shall default in the payment of rent or other payments hereunder and said default shall continue for ten (1 0) days after Otay provides written notice of the same; or (ii) Either party shall default in the performance or observance of any other covenant or condition of this Lease to be performed or observed if such failure persists for a period of thirty (30) days after the non-defaulting party provides written notice of the default to the defaulting party. (b) Right Upon Default. Upon the occurrence of an Event of Default, in addition to any other rights or remedies available to the non-defaulting party under any law, the non-defaulting party shall have the right to terminate the Lease. (c) Cure Rights. An Event of Default shall not exist unless written notice has been given in accordance with this Lease, and the defaulting party has had the opportunity to cure as provided herein. The defaulting party shall cure the alleged default within the manner provided herein; provided, however, that if the nature of an alleged default is such that it can not reasonably be cured within such thirty (30) day period, the defaulting party shall not be in breach of this Lease if it commences a cure within such period, and thereafter diligently proceeds with · the actions necessary to complete such cure. 18. Destruction of Premises. If the Premises or Tenant's facilities are destroyed or damaged, Tenant may elect to terminate this Lease as ofthe date of the damage or destruction by so notifying Otay no more than 30 days. following the date of damage or d.e~truction. Cell Agreement Version #2 July 14, 2003 SD\0401 vl/4469-0001 11 19. Condemnation. If the condemning authority takes all of Otay's property or a portion which in Tenant's opinion is sufficient to render the Premises unsuitable for Tenant's use, then this Lease shall terminate as of the date when possession is delivered to the condemning authority. In the event of any taking under the power of eminent domain, Tenant shall not be entitled to any portion of the award paid for the taking and Otay shall receive the full amount of such award except as provided herein. Tenant hereby expressly waives any right or claim to any portion .pf a condemnation award, except for relocation benefits and goodwill. All other damages, whether awarded as compensation for diminution in value of the leasehold or to the fee of the Premises, shall belong to Otay. 20. Insurance. Tenant shall maintain the following insurance: A. Commercial general liability with limits of $5,000,000 per occurrence; B. Automobile liability with the combined single limit of $1,000,000 per accident; C. Worker's compensation, as required by law; D. Employer's liability with limits of$1,000,000 per occurrence. Tenant shall name Otay as an additional insured on each of the aforementioned insurance policies and the policies shall state that they are primary and that any policies Otay maintains shall be noncontributory. Tenant shall provide Otay with written certificates of insurance evidencing such coverages. Said policies shall expressly provide that the policies shall not be canceled or altered without at least 30 days prior written notice to Otay. Said policies shall be with insurance companies with an A.M. Best rating of A VII or better. Otay takes no responsibility for the protection of Tenant's property from acts of vandalism by third parties. Cell Agreement Version #2 July 14, 2003 SDl 0401 v 1/4469-0001 12 .. ~ . h:;: 21. Indemnity. Tenant shall hold harmless, indemnify and defend Otay and each of Otay's directors, officers, managers, employees, agents and successors and assigns, from any and all claims, suits or actions of any kind and description brought forth on account of injuries to or death to any person or damage to any property, including damage to the Premises arising out of or related to its use of the Premises, except to the extent that such claims, suits or actions arise out ofthe sole negligence or willful misconduct of Otay. 2,2. Estoppel Certificate. Tenant shall, at any time and from time to time upon not less than thirty (30) days prior request by Otay, deliver to Otay a statement in writing certifying that (a) the Lease is unmodified and in full force (or if there have been modifications, that the Lease is in full force as modified and identifying the modifications; (b) the dates to which rent and other charges have been paid; (c) as far as the person making the certificate knows, Otay is or is not in default under any provisions of the Lease; and (d) such other matters as Otay may reasonably request. 23. Assignment. A tenant shall not assign this Lease except to an affiliated parent entity, subsidiary, purchaser of assets, or holder of its FCC license without Otay's prior written consent. If, during the term of this Lease, Tenant requests the written consent of Otay to any assignment, Otay's consent thereto shall not umeasonably be withheld. A consent to one assignment shall not be deemed to be a consent to any subsequent assignment, and any subsequent assignment without Otay' s consent shall be void and shall, at Otay' s option, terminate this Lease. 24. Attorneys' Fees. In the event that either party commences any legal action or proceeding, including an action for declaratory relief, against the other by reason of the alleged failure of the other to perform or keep any term, covenant, or condition of this Lease, the party Cell Agreement Version #2 Juiy 14, 2003 SOl 040 l v 1/4469-000 I 13 •. "'~--- prevailing in said action or proceeding shall be entitled to recover, in addition to court costs, reasonable attorneys' fees to be fixed by the court, and such recovery shall include court costs and attorneys' fees on appeal. 25. .Entire Agreement. This Lease contains all agreements, promises and understandings between Otay and Tenant and no verbal or oral agreements, promises or understandings shall or will be binding upon either Otay or Tenant and any addition, variation or modification to this Lease shall be in effect unless made in writing and signed by the parties herelo. 26. Notice. Any notice pursuant to this Lease may be made by first class mail to the addresses set forth below: OTAY: TENANT: And to: Otay Water District Attn: General Manager 2554 Sweetwater Springs Boulevard Spring Valley, CA 91978-2096 (619) 670-2210 Cingular Wireless Attn: Network Real Estate Administration 6100 Atlantic Boulevard MailCode GAN02 Norcross, GA 30071 Cingular Wireless Attn: Legal Department 2521 Michelle Drive, 2nd Floor Tustin, CA 92780 27. Memorandum of Lease. If requested by Tenant, Otay agrees to promptly execute and deliver to Tenant a recordable Memorandum of Lease substantially in the form ofExhibit C. 28. Choice of Law and Venue. This Lease shall be interpreted in accordance with the laws of the State of California, and any disputes shall be venued in a court of competent jurisdiction in the.State of California. · Cell Agreement Version #2 July 14, 2003 SDI 040 I v 1/4469-000 I 14 29. Resolution of Disputes. All controversies or claims arising out of or relating to this Lease shall be resolved by submission to final and binding arbitration at the offices of the American Arbitration Association ("AAA") located in San Diego, California. Such arbitration shall be conducted in accordance with the most recent version of the AAA commercial arbitration rules. The prevailing party in any such arbitration shall be entitled to recover all costs and expenses, including reasonable attorneys' fees. IN WITNESS WHEREOF, the parties have executed this Lease as of \ \ \dh day of ;-e._~~' '200 3 . PACIFIC BELL WIRELESS, LLC AN evada limited liability company By: GSM FACILITIES, LLC its sole member, By: CINGULAR WIRELESS, LLC. Its agent OTA Y WATER DISTRICT B~~&Mu Title: G::::ger -'0 :\WORKING\W09192\Agreements\Cingular 980 Pond 1 Lease Agreement.DOC Cell Agreement Version #2 SD10401 vl/4469-0001 15 .'~.- July 14, 2003 ' ' 'tl :.. "' .... .. C) "' .., :.. :0.: IMPERIAL BEACH VICINITY MAP HMA (WEST) 78.41 AC. SCALE: ~ ~·-----k- OTAY. WATER DISTRICT CINGULAR · COMMUNICATIONS. SITE AT THE AULD COURSE LOCATION MAP ~ 'I 1 "=1 LEGAL DESCRIPTION EXHIBIT "A" CINGULAR SITE NO. SD-975-02 SH££T 5 OF 6 SH££TS LEGAL DESCRIPTION UTILITY EASEMENT CINGULAR SITE SD-975-02 PROCTOR VALLEY WATER TANK A portion of Sections 23 and 26, township 17 North, Range 1 West, San 1:; Bernadino Base and Meridian, Fn the County of San Diego, State of · California: according to the Unifed States Government survey thereof, described as follows: An easement for Utility purposed being strips of land 10.00 feet in width, lying 5.00 feet on either side of the following described ' cenfer!ines; Beginning at fhe the Northwest comer of the East half of · the Northwest Quarter of said Section 23: Thence Southerly along the Westerly fine of said East hoff, S 00'43'31" W 1562.55 feet; thence ··.leaving said Westerly line N go·oo'oo" E (East), 795.37 feet to the Southeast comer of the> Cingular Telecommunications Lease Boundary and · fhe True Point of Beginning; thence s oo·oo'oo" w a distance of 5.oo' f&et; thence N go·oo'oo" W a distance of 33.oo· feet; thence S 04•00'00" W a distance of 126.00' feet; thence S 77'30'00H W a distance of 288.28· to the beginning of a tangent curve, concave Southeasterly having a radius of 300.00 feet to which a radial line bears North 12•30'00" West; thence Southwesterly along the ore of said curve through a central angle of 66.30'00" an arc length of 348.19" feet: thence tangent to said curve S tt•oo'OO" W a distance of 148.70' feet to the beginning of a fan gent curve, concave · Easterly having a radius of 500.00 feet to which a radial /Tne bears · N79·oo'oO"W; thence Southerly along the arc of said curve through cenfral angle of 18'00'00" an arc length of 157.08' feet; thence tangent to said curve S 07"00'00" E a distance of 181.54' feet to a pofnt hereinafter known as Point "A"; thence continuing S 07'00'00" E 13.33' feet to the beginning of a tangent curve, concave Northwesterly having radius of. 600.00 feet to which a radial line bears N83·oo'oo" E; thence Southerly along the arc of said curve through a central angle of 34.00'00" a arc length of 356.05' feet: thence tangent to said curve S27"00'00" W distance of 553.69' feet; thence S 47"00'00" W a distance of 250.00' feet; thence s 5EJ•oo'oo" w a disfance of 300.00' feet; thence S 20"00'00" W a distance of 540.00' feet; thence S 05·oo'oo" E a distance of 725.00' feet; thence S 11'00'00" W a distance of 250.00' feet; thence S 3o·oo'oo" E a distance of 50.00' feet; thence S 23•37'51" W a distance of 55.00' feet to the beginning of a tangent curve, concave Northwesterly having a radius of 299.00 feet to which a radial line bears S 66.22'09" E; thence Southerly along the arc of said curve through a c&nfral angl& of 18.22'10" an ore length of ·· 95.86' feet; thence tangent fo said curve S 42.00'55" W a distance of · f96.2f.! to the beginning of a tangent curve, concave Southeasterly having a radius of 451.00 feet to whfch a radial lfne bears N 47"59'04" W; thence Southerly along the arc of said curve through a central angle of 1 7" 13'03" an arc length of 135.53' feet. · (continued on page 6) LEGAL DESCRIPTION EXHIBIT "A" CINGULAR SIT£ NO. SD-975-02 SHEET 6 OF 6 SHEETS LEGAL DESCRIPTION UTILITY EASEMENT CINGULAR SITE SD 975-02 PROCTOR VALLEY WATER TANK Thence tangent to said curve; S 24.47'53" a distance of 39.161 feet fo the beginning of a tangent curve, concave Southeasterly having a radius of 2837.50 feet to which a radial line bears N 65.12'07» W thence southerly along the arc of said curve through a central angle of 03'25'26" an arc length of 169.56' feet to the beginning of a compound curve having a radius of 434.00 feet, concave Easterly to whiCh a radial line bears N 68.37'33" W; thence Southerly along the arc of said curve through a central angle of 1 3'07'29" an arc length of 99.42' feel; thence tangent to said curve s os•t4'58" w a distance of 119.17" feet to the beginning of a fagent curve, concave Northeasterly having a radius of 294.00 ff!ef to which a radial line bears N 81.45'02" W; thence Southerly and Easterly along the arc of said curve through a centra{ angle of 84.42'48" an arc length 434.69' feet; thence tangent fo said curve S 76.27'50"' £ a distance of 38.83' feet to the beginning of a tangent curve, concave Northerly, having a radius of 1100.00 to which a radial line bears S 13'32'10" W; thence £asferly along the arc of said curve through a cenfrcr/ angie of 21'41'17" an arc length of 418.301 feet to the beginning of a re·verse curve, concave Southerly having a radius of 989.00 feet to which a radial line bears N os•ts'06" W: thence Easterly along the arc of said curve through a central angle of 18'42'45" an arc length of 323.001 feet to the beginning of a reverse curve, concave Northerly having a radius of 621.00 feet fo which a rodfal line bears S 10•27'38" W; thence Easterly along the arc of said curve through a central anafe of 16.42'44" arc length of 181.13'feef to the beginnina of a revers; curve, concave Southerly having a radius of 908.00 ~feet to which a radial fine bears N 06'07'34" W; thence Easterly along the arc of said curve through a central angle of 14'40'44" an arc length of 232.62' feet to the beginning of a reverse, concave Northerly having a radius of 924.00 feet to which a radial line bears S 08'25'39" W; thence Easterly along the arc of said curve through a central angle of 14'29'47" an arc length of 2:53.78 'feet; thence tangent to a said curve N83'55'52"[ a distance of 67.6t feet, more or less to an existing telephone pedestal and the Point of Terminus. Also begfnnfng at Point "A" described herein; thence N 83 oo·'oO"£, 3t.oo• feet, more or tess to 'an existing transformer and point of termrnus. PROPOSED C£NT£R OF TOW£R LATITtiDC: HOffTH JZ"-10'51.•13• !.ONGITUDC: wrsT I 16'57'20.07• HAD !.J N 1,626,276.75 C 6,344,556.61 CROUHI> Cl.IVAnON: 92Z.5 {NAVD 88} THE HO/tJZONTAL ACCURACY OF THC l.ATITUDC AND LONGI1UO£ AT TH£ CENTeR OF TOWEll LOCA.TIOH fALLS WTIHIH nFT££H (IS} FEET. THC VCRnCAL ACCURACY AT TH£ BAS£ OF THC TOW£R F'AUS WITHIH THR£C (3) F££1. OAT£ OF SURVEY: 11 /07/02 BASIS OF Bf:ARINGS 1HC BASIS Of HORIZONTAL CONTROL f'OR THIS SURVO' IS TH£ NORTH AU£RJCAN OATUJI Of 198J. PU.NC COORDINATCS SHOWN HCRCOH ARE IN TCRAIS OF THC CAUFORHJA STAT£ l"t..ANC COORDIHA T£ SYSTCIJ OF 1 96J, ZON£ I. CXISTIHG POND _j Approximate location of step down transformer with shared electrical panel and telco pedestal for District and collocating wireless carriers 20' ..,. SCAL.E: 1 -20 IF SHEET IS LESS THAN 24" X 36" rr IS A REDUCED PRINT-SCALE REDUCED ACCOROINGLY ..,. £XC£PTION IT£1./S PE:R TITL£ RE:PORT LOC.4TJON TITL£ REPORT ID£NTIFICATION; LANDAI.IfRICA LAWYfRS TITLE ORDfR NO. 01102846-02 OAT£0 ASSfSSORS ID£NTIF/CA TION; Ai'H: 5&5-140-ZI OWNfR: OTAY WATER DISTRICT L£GAL DESCRIPTION Lf:AS£ BOUNDARY: A PORTION OF TH£ NORTHWeST QliARTCR or SECTION 2J. TOWNSHIP 17 SOUTH, RANG£ 1 WEST, S.4H BERNARDINO BAS£ .AND MCR/DIAN. IH THC COUNTY OF SAN DI£GO, STAT£ OF' CALifORNIA, ACCORDING TO TH£ UNITED ST.4TES (;OVCRHIJCHT SURVEY TH£RC:OF', DESCRIBC:D .4$ fOU.OWS: BEGINMHG .AT TU£ NORTHWEST CORHCR Of THC CAST HAlf Of SAID NORTHWEST OUARTCR; TH£NCC SOUTHERLY .ALtJNG THC WESTERLY LIN£ OF SJJD CAST HALF. SOUTH 00"43'31" Mar, 1652.55 ft£1; THEHC£ SOUTH 90'00'00 .. CAST(CAST), 775.24 F££T TO TH£ TRUE /"t)IHT OF BEGIHHJNG; THCHCC COHTJNIJIHC $0UTH JtrOO'OO" CAST, 20.DO FC£1: THCNCC SOUTH orroo•oo• WEST {SOUTH), tO.OO rtCT,· THENCE NORTH !10"00'00" W£ST (WEST). 20.00 FCCT; THENCE @ CXCMPTIDN DCSCRIPT10N R£C. OAT£ RCC. 1NFOR1r1.4TIOH A NOH ASSCSSCD -COVCRHti£NT O'rVHCD 8 SUPPLCJKNTAl. TAXES I SDG.t£ £AS£N£1(T 02/29/19!4 fjp· !4-074400 05/29/1!180 F/P So-17400-1 02/0&/1987 f/P &7-0&6125 ~T PLOf!.ABLC (NP) $HOWN NORTH 00"00'00 .. CAST (NORTH), 10.00 FC:£1 TO THC TRUE POINT OF BCCJNHING. 2 AFFECTS OF ROS 8514 S SOCd:£ CASCJI£111 LACK OF ACCESS TO/FROitl LA.HD AUUJ CDr!' COUR$C l.CAS£ SD<a£ .ACRCCIJCHT' CCRTlFICATC OF COWPJ.EnOH TRUST DUD 9 CAL BANK .t" TRUST ACR££JIENT 10 DE:v. IUPJ.CT FEE AGREEMCHT 0-1/01/,!199 F'/P !19-021n~g 05/lU/2000 F/P 00-02.11258 09/17/J999 F/P 99-0637623 12/10/1999 F/P 99-0BOJI.II 12/21/2001 f/P Ot-0!148127 OB/OJ/2000 f/P 00-0410!/U BOUND.4RY SHOWN SHOWN NP SHOW~>~ WITHIN £AS£ NO. I GOLF COURSE NP NP HP LEAS£ BOUNDARY CONT)JH$ 200 SOU.4R£ F££1 OR 0.0046 ACR£5, IJOR£ OR L£SS. S££ SH££T C-1.1 FOR BOUNDARY D£TA/L L£GAL DfSCRIPT/ON P£R TITL£ Rf:PORT: ALL THAT CERTAIN RCAL PROPCRrf SITUATED 1H THE COiiHT'I OF SAN IJfE.(;'O, STA"T£ OF CAUFORHIA, D£SCRIBCD AS FOLLOWS: ALL OF SCCTIOH 23, TOWNSHIP 17 SOUTH,JWiGC I wtn, $(Jilli£it'RARliiiiO_USC AND IJC:R101.4H, IN THC COUNTY OF SAN 0/CCO, STAT£ 01' CAUFO'RHIA., ACCORDIHC tb THC UHn£D STATC:S COVCRNUCHT SURVEY THCR'COF. C:XCCPTJHC THCRCFROM THC EASTCRLY HALF OF sAID S'l:C'hOH; ,Oil> THE Wtsfti(L-t HAlf OF TH£ NORTHWtST OUARTCR OF SAID S£CTJON; AND THe NdimiWE:ST QUAil'Tftt OF TH£ HORTHWCST OU.4RTCR OF TH£ SOUTHWCST OUAIIT£R 01' SJJ/) SCCTKfH. EXCEPTING THC:REFROIJ ON£ H.4lf OF ALL OIL. GAS .4HD OTHER H'ltiR(J'CA'RB'OfiS LY!f.IG IN AND UNDCR SAID LAND. TOCUHER WJ1H THt RI'GHT TO CNTE'R UPO!i SAID u.'HD .4T ANY TJJIC fOil TU£ PUR~S£ OF £XP1.DIHNC FOR, DRIWNG Fdll, OR ROJOVIHC SUCH OIL. GAS AND OTHER HYDROC.4RHONS Pttovi.Dlb HOWCVf.~ THAT liRANTOit stiU. EXERCISE SUCH RIGHT IH SUCH A II.AHNER HOT TO lliTERFERC WTTH .ANY PRt.sOIT OR FUTURE IJJPROVCIJENTS UI"ON SAID LAND, I . ~ • 0 I ~ • --! • ""< NOT£: FOR SIT£ PLAN, LEAS£ AND TITLE INFORMATION S££ SH££T C-1.0 P.O.B. UTIL EASt. U:GAL tJE:SCHfPTION NW CoRNER Or E t./2 OF ; s 00"4.3'$1. w : , NW 1/4 OF StC. 03i =·=:== =··= =· = = t 662~;. . ·= ·=>·=== : :.. . . APN 585-1'40-21 • • I • • I r-~, ... ,,~.,. ,,._,, . ··-.. ~·"-""· . .,_.,~.l./., ... :; ·. ::;·:,~.:'-,,_,.:.Y~:J . _-). ::-:~-. ' .:·/"············· •.,,.,,,.,., '"""''-'•M• ••,,,,,,,,,,~, BOUNDARY DETAIL SCALE: 1"=200' .. ~~; DIY #•,s• c 5Sts.nr .' .J,. ~; =" 200• .wo" eoa· SCALE: ,::_ 2001 If SHEET IS LESS 1'fWI 2+" X 36" IT IS A REDUCED PRINT-SCIL.E REDUCED ACCORDINGLY --------------------------------------------------------------------------------------~----------------~~~---- ....., . ...., .... CU..t-1'_.; UTILITY EASEMENT EXHIBIT "B" CINGULAR SIT£ NUMBER SD-975-02 GIW'IUC 00.\LC ~ (at:JR:f) , ..... 411tft. kr.1 .~ltr;-' J::;j f ~ \ l--'5-1~ ~.) ; -d ~\ ......•. {....::...lj l ............ .! I 1 l.EGAL DESCRIPTION EXHIBIT • A" CJN{;IJUR $11'£' HO. SD-P1.5-1)2 II<W PGCRt~lfON um tiT f'A$fUfflT e&QW AB snr sp-QZ5-<J2 pfWC!nR' YAfl a HZ ZfB Y.NJ( A poriltlt't or Selotiona 23 and 26. towntlhlp 17 Norlh, RMo<~ 1 Wet~t, San B-emodlno Bose, end "«idlan, h the; CWnty of Scln CIOQO. State of Caltfum~, Oceot"di'1'0J to tha Urdt-.d stot•• ~'Wit a.KWY th•,.of, do5scribecf O:S fdloW;"J: ~e~<f~U~!..~t~=~o~.~ width, S.ning at th• the HorthW"'HHt «mer '(If the EOl!llt holf o'f the North-.t 01Jotter of .akl Sactloff. :Z3; lh<tnc:• SouthtWiy OMg th• W..~ly lin• ot B<lld £est Mlf, S 00"43'::S1 .. W UH52.55 t.et: th.w. J.ec:Mng S<~ld We&t«i)l' lhut N StrOO'OO"' £ (East), 79:1.37 f>Ht to ~o Southec:urt QlmBI" at the ChQ~.dor T.siccemmunleotion:t. l.*O.se B-oundary and th.o TN• Polnt of Begilmln<r, thunc. S OO"'O'co• W a dlutar~c• at 5.00 'f~t: th.nco N 90"00'00" W -c 411'tance of J.l.OO .-..t; ttl.c1ca S 04'00'00 .. W a db.icmett. or T24.00 i'Mt :~· !s~~::t~~t:i~~~· :=.~f~~:.'1t!' ~:!81\t radio! lir1e-be<n N"<rth 12'.}Q'oo-W~ thenOIS' Soutft-ester:fy Glon~ the ore <>f 0<1id Q.II'\Oe thr'C'U._tt <:1 cenl:raf tl!'lljjte of $8"30'oct' 011 aro i4ftll1h of 3~1!J rut.; thtn~ t~I}Ortt to '-Cll~ ~ s lt"'CfOO .. W o dfs:ton¢'5 of 141!1.. 70 &.t. to the ~lnrtlng: of ~ t(l!"'gant curw, canca-... Eoa.t.rty ~~ (I radll3 of $JO.OO f-.t to wt!l<:h o radtoJ line b*'"' tf1'irOO'OO"'W; ttt*'l~ SOI.Itb«<)' .akltl~ the ()(C o( 11oid cww tht'OllQh «miMI o::.n¢1• of umct.oo· on O!"C IMQi;h of 1!7.08 teot \1\.nce ~ont ta IK!Id OJrva S IJT'OO'OO"' £" u df!rtcl't~ ~r 1-81.54 twt to (I poiolt h~lrt<lfu!r kn'l)Wil os Point "A"; ~ cantlrloin-g s 07'00'00'" E 13..-33 fH:t. to th• beginning of a: tcn~ent: eurvt~ c:t:~rteow Korthwa:t.rty heW!; I"Cfdlu.-of 800.00 1M1 to which o rodlol ll•1• b&cN NB.l"'O'ocf £;: thonca-South~y .aion; tl1• -ore or 'old ~ thruJo;,b .a cer~trcl <:lnlJ1e ot 34"00'otl'"' :~at::.S.:1~~6~sp-~ fetrl; lhctt~C41 t<mgilnt to lltlld <:UTW! S:2TOO'OO'" W thenc• S "'1"00'00" VI <1 dbttmce ot 250.00 r"t th.onc. S 58'00'00" W .g dtetonc• of JOO.OO f~t: ih<t11« S 20'00'00"' 'II a dl•1df'lc. of S-4Q.OO ta.t; inltl'l.::e S O!i'OO'oo• E o dl.tonce: -of 72.!.00 fHt; th.~mca s 11'00'oo• w o: 4/&Wte« af :2M,oo IMt; thMCt s 30"00'00"' E (f dts«m~ ot ~.oo r•t: t!'!41t!C~ S 23"37'51" VI a 41BturH~• Qf 6~00 fat to Ui• ~lnriln"Q" of a tan;gerd: -cl.ltVf, a;JlcaYf: Ncrth~:rt«iy ht:r.mo o Ndlw of 29Q.OO klet to which o rodiat line b~ $ &6"22'09" E: tn.l=s South'trty clOI'IQ; tho« «e Of tjgld e~ through o. contN! -angi• of 18'2:2"10"' en are l~oth -of 9~ ~t; =~~1~tt!;.id::::::, ~;!;·su.::~~,t!!:~ ~s~;o of -4-51.00 feet to 1¥tllch o "'dial line b.cn N 47'59'04" W; l:h«1<::rr. Southwly olong ttl• arc: of :~aid CIUW tbtou9h o centn:sl oog1~ of 17'13'0l" Ott ore l.noih of 135.53 feoet. ThiMQI t~t to $0/cJ cutve. S 2~·47'.53'" <1 dJIJtGKO or .:59.16 f•et i.o tl1t~ be~ln~ir\4 of II:! ~t: curw, CW¢0¥1' SoutMoat.rty M>Mg: <J rOOK!s ttf 21U7.50 f!WJt ta lllhld\ Cf r<:~dkl! line bo<n: H M,2"0~ Yl th~ca swtherly oh:ng ihe ere of sold ~rve t11rou-gh o -c.rtrot <lft91• fll OJ:'2S'26"' an «C 1-en;tll of 169-SO fftt to \he b09~ln~ ot 4 -cornp~ ~ hGvin:g o f't'r:fti.IC of 43.(...00 faat, CC~nc.tJ'¥11 ~}' to wttk:h o n:~dfoJ Jlne tHI<n li -ea"'J7':sJ" W: .DI41!1ee South«ty alcng; t.h• or-e ot sold CUt\'$ thrOUgh o C*1ttol on9!e or 13'07'2$1• on arc length <Jt 99.42 *t; th~ ~C!Qt~r::d~"t !:!:!'::! N~e.ri; ::u~ :·:~ ~ 29+.00 f41ot to -.whk::h e1 ra~lal linCI b.ara N 81""45'~· W; th~Wt« Soui:Mrly and Ecl!st«fy along tM <lt'C ot aaJd CllnM through <1 ~trd: oragE4 af 84'f2"-48" an or<: '""9th 4.34..$9: &•t: th4f'l.ca. tongllf"'t to :!tOld curw S: :;:.~!.~ ~=Y~ ~~ <tt.~!t::s ~; =~ ~c:m ~;:~m llnB been S 13"32.'10" ~ th..n<:o "[gn'-fy aiCIIJ.Q \h.-grc:: of .aid «.lN~S throl.lg£1: Q cerltral -ongl. of 21.-'1~tr on (lf"C. liMQtil: t3f 418.30 Mt to-the ~innlflq o1 o -r•VOJ"MM ~ ccr~cov. Southcrl:y hcd't9 o;~ '"'dlua of 980.00 faet tao ...tllch a r<Jdkll tb• b«<rs N 08"1:5'06 .. W. thenc. Eosttllri:t f!,~ ~ 323.~ = t::e ~~tnw,~ :;~ r.= ~4!:0:: t6C NortMrty hehoinQ d. todiu• of 62f.OO fMt to ..-rtlld'l o rad141 line b~ S 10"27'35• W; th.-.ct~> Ead..-y dmg th• ac of ccld tur\111 thtw¢ <t ~~n~ ~~~~·s:r~:~~~8!·~::t0~ ~~~~of _.,.leh o r:adllll line b~r:!: N 06"07.34."' 'It,: thence East-erly d~Q the ar>e at .soid ctii"'V4t 11lrouof't <1 cemb-cii e~nqJ.CI <Jf 14"40'....., .. &I ere len9th Df 2'32.82 f .. t to ttl$ IM§Mil'lg <Jf G rsvvu. CCI!"'CCIW 'N(It'th.-ly hoW!~ji G rctti!u• or 92-4.00 fnt to lllhieh .a rodld Mrl• bQA s 08'2~~ .. W; thMea [Qst:ort)' ofO:ng ttl• ..:~r~ af tuld ~ :thtaugh o cen.trd <m<Jio ot 14-"29.47" on «C l*"gth or 2.Jl.73 f"t: thana t:an~t too said curw 1';8~'52•£ a di~Mee: of 67.& feel:. moro or-le:t• to <It) ~etin.g tWtphone p~ct un-d t.hs Point ot T.rnNrt. ldOD bs;Jnnk1g at Paml .. A. d•aabtd h«lliR: th-~ N 8l OO"'O"E • .::$1.00 f~l m~ Cli' I¢5S to an e::d$t.hg. transformer Gnd point of tel'fninu::t. i I I j I II I I II I- ATTACHMENT 2 AMENDMENT No.1 ENTERED INTO BY OTAY WATER DISTRICT AND TMO CA/NV, LLC, DBA T- MOBILE USA, INC., AS THE SUCCESSOR IN INTEREST TO PACIFIC BELL WIRELESS, LLC TO AMEND THE AGREEMENT BETWEEN PACIFIC BELL WIRELESS, LLC AND OTAY WATER DISTRICT TO LOCATE A COMMUNICATIONS FACILITY AT OTAY'S POND NO. 1 RESERVOIR SITE This Amendment No. 1 (the "Amendment") to the Agreement Between Pacific Bell Wireless, LLC, a Nevada limited liability company and Otay Water District to Locate a Communications Facility at Otay's Pond No. 1 Reservoir Site, dated as of September 11, 2003 (hereinafter, "Lease"), is entered into by and between the Otay Water District (hereinafter, "District") and TMO CA/NV, LLC, d/b/a T-Mobile USA, Inc. (hereinafter, "Tenant"), as the successor in interest to Pacific Bell Wireless, LLC, a Nevada limited liability company, to be effective on the date the last party signs, as reflected on the signature page (the "Effective Date"). This Amendment concerns only those matters, understandings and agreements set forth below. RECITALS WHEREAS, TMO CA/NV, LLC, d/b/a T-Mobile USA, Inc. has represented to District that it is the legal successor in interest to the Lease, as described above_ and has fully and knowingly succeeded to all obligations, rights and responsibilities of the lessee as set forth in the Lease; and WHEREAS, District and Tenant entered into the Lease to provide terms pursuant to which District leased to Tenant certain Premises (as defined in the Lease), and to provide terms and conditions pursuant to which Tenant is allowed to construct and operate certain communication facilities (as further described in the Lease, the "Tenant Facilities") on real property owned by District, and known to the parties as the Pond No. 1 Reservoir Site; and WHEREAS, Tenant has completed the installation of the Tenant Facilities, is currently operating the Tenant Facilities, and has represented to District that, in connection therewith, Tenant is in full compliance with the terms and conditions of the Lease and all applicable laws, rules and regulations; and WHEREAS, it has come to the attention of District and Tenant that the description and depiction of the Tenant Facilities, as attached to the Lease, does not accurately reflect the actual location Tenant Facilities; and WHEREAS, District and Tenant desire to correct the Lease by (i) deleting the Exhibit B attached thereto in its entirety and replacing it with a revised Exhibit B attached hereto, and WHEREAS, for said purposes, the Tenant and District desire to enter into this Amendment to amend certain portions of the Lease, but only to the extent specifically stated herein. SD #483 8-2690-6624 v3 NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, District and Tenant agree as follows: 1. Incorporation of Recitals and Definitions. The recitals set forth above are incorporated herein by this reference and made a part of this Amendment. Capitalized terms used herein in a context where such terms would not normally be capitalized and not defined herein shall have the meaning given to such terms in the Lease. 2. Substitution of Exhibit B. Exhibit B attached to the Lease is hereby deleted in its entirety and replaced with the "First Amendment to Agreement "Premises", Revised Exhibit B" attached hereto. 3. Term. This Amendment shall remain in effect during the entire term of the Lease, including optional extension periods, if any, and shall run concurrently with the Lease. This Amendment may not be terminated without terminating the Lease. 4. Amendment to Address for Notice for Tenant. Paragraph 26 of the Lease is hereby amended to provide the following notice address for Tenant: Tenant: TMO CA/NV, LLC c/o T-Mobile USA, Inc., 10180 Telesis Court, Suite 333, San Diego, CA 92121 attn: Lease Administrator With a copy to: TMO CA/NV, LLC c/o T-Mobile USA, Inc., 12920 SE 38th St., Bellevue, WA 98006 Attn: Lease Administrator With a copy to: Legal Department 5. No Other Change. Except as specifically set forth m this Amendment, all provisions of the Lease remain unchanged and in full force and effect. 6. Controlling Provisions. In case of any inconsistencies between the terms and conditions contained in the Lease and the terms and conditions contained in this Amendment, the terms and conditions of this Amendment shall control. 7. Applicable Law. This Amendment shall be interpreted in accordance with the laws of the State of California, without regard to its conflict of laws provisions. 8. Venue. Proper venue for the resolution of disputes under this Amendment which can not be resolved by negotiation between the parties shall be with the Superior Court ofthe County of San Diego. 9. Amendment. This Amendment cannot be amended, modified or revised unless done in writing and signed by an authorized agent of District and an authorized agent of Tenant. No provision may be waived except in writing signed by both parties. SD #483 8-2690-6624 v3 2 10. Corporate Authority. The person or persons executing this Amendment on behalf of each party hereto warrants and represents that (i) such party is duly organized and existing, (ii) he or she or they is or are duly authorized to execute and deliver this Amendment on behalf of said party, (iii) by so executing and delivering this Amendment, such party is formally bound to the provisions hereof, and (iv) the entering into this Amendment does not violate any provision of any other Agreement to which said party is bound. IN WITNESS WHEREOF, the parties have caused this Amendment to be executed on the dates indicated below. OTAY WATER DISTRICT A municipal water district: By: Name: Mark Watton Title: General Manager Date: SD #4838-2690-6624 v3 TMO CA!NV, LLC, d/b/aT-~ By: . ...--( Name: Title: Date: 3 Bruce Block Interim Director of Engineering (San Diego/Las Vegas) ;/-/0--a~ AMENDMENT NO. 1 TO AGREEMENT BETWEEN AND TMO CA/NV, LLC, DBA T -MOBILE USA, INC., (AS THE SUCCESSOR IN INTEREST TO PACIFIC BELL WIRELESS, LLC) AND OTAY WATER DISTRICT TO LOCATE A COMMUNICATIONS FACILITY AT OTAY'S POND N0.1 RESERVOIR SITE Amendment No.1 the Agreement between TMO CA/NV, LLC, DBA T-Mobile USA, Inc., (as the successor in interest to Pacific Bell Wireless, LLC) and Otay Water District to locate a communications facility at Otay's Pond No. 1 reservoir site is approved as to form on the date indicated below. APPROVED AS TO FORM: Date EXHBIT B-1 REVISED UTILITY EASEMENT AND REVISED LEASE BOUNDARY T-MOBILE SITE NO. SD-975-02 POND NO. 1 RESERVOIR SITE SHEET 1 OF 3 SHEETS LEGAL DESCRIPTION REVISED LEAS£ BOUNDARY A portion of .Section 23, Township 17 North, Range 1 West, San Bernardino Base and Meridian, in the County of San Diego, State of California, according to the United States Government survey thereof, described as follows: Commencing of the the Northwest corner of the East half of the North west Quarter of said Section 23; Thence Southerly along the Westerly line of said East half, S 00"43'31" W 1638.55 feet; thence leaving said Westerly line S 90'00'00" E (East), 765.45 feet to the TRUE POINT OF BEGINNING; thence continuing S 90'00'00" [, 33.0 feet; thence South 0"0'0" West (South), 33.0 feet; thence North 90"00'00" West (West), 33.0 feet; thence North 00"00'00" [ ast (North), 33.0 feet to the TRUE POINT OF BEGINNING. Lease Boundary contains 1089 square feet or 0. 025 acres, more or less. LEGAL DESCRIPTION REVISED UTILITY EASEMENT A portion of Section 23, Township 17 North, Range 1 West, San Bernardino Base and Meridian, in the County of San Diego, State of California, according to the United States Government survey thereof, described as follows: An easement for Utility purposes being a strip of land 10.00 feet in width, lying 5.00 feet on either side of the following described centerline; Commencing at the the Northwest corner of the [ ast half of the Northwest Quarter of said Section 23; Thence Southerly along the Westerly line of said East half, S 00"43'31" W 1638.55 feet; thence leaving said Westerly line S 90'00'00" E (East), 765.45 feet to !he Northwest corner of a T-Mobile Equipment Lease Boundary; thence Southerly along the Westerly line of said Lease Boundary South 00"00'00" West (South), 26.25 feet to the TRUE POINT OF BEGINNING; thence leaving said Westerly line of Lease Boundary North 74'00'00" West, 43.0 feet; thence North 86"00'00" West, 52.0 feet; thence South 51 ·oo'oo" West, 302.50 feet; thence South 62"30'00'' West, 73.0 feet; thence south 57'43'22" West, 80.13 feet to an existing vault; thence South 45'00'00" West, 40.0 feet; thence South 19'00'00" West, 70.0 feet; thence South 11'00'00" West, 40.0 feet; thence ·south 5'0'0" West, 50.0 feet; thence South 13'00'00" West, 149.0 feet; thence South 02'00'00" West, 100.0 feet; thence South 5'00'00" [as!, 60.0 feet; thence South 19"00'00" East, 90.0 feet; thence South 30'00'00" East, 42.0 feet; thence South 03'00'00" East, 63 feet, more or Jess to an existing San Diego Gas and Electric Vault and the point of terminus. The sidelines of said 10.0 foot strip shall be prolonged or shortened so as to begin at the Westerly line of said Lease Boundary and lo end at the said existing vault. 6/6/2005 EXHBIT B-2 REVISED UTILITY EASEMENT AND REVISED LEASE BOUNDARY I-MOBILE SITE NO. SD-975-02 POND NO. 1 RESERVOIR SITE SHEET 2 or 3 SHEUS T.P.O.B. LEAS£ BOUNDARY 26.25 S 90'00'00" [ T.P.O.B. UTILITY £AS£ME ---765._45'_------- EXISTING UTILITY TRENCH/LIN£ s 62'30'0" 73.0' S57'43'22" 80.13' ELEC. VLT 40.0' ---~O;:;S£0 REVISE LEASE BOUNDARY (SEE DUAIL) 5 45'0'0 ' Existing phone/electric conduit surveyed ~ Februmry mnd Mmrch 2004 by Dtmy Vlmter Disrict ~ C) ~-,C) / CENTERLINE PROPOSED :!} /" 10 FOOT WIDE UTILITY EASEMENT &) ' "--.. ___ 1-Mobile/Cingulur emseMent froM 40_ O' August, 2003 plmns --to be quitclmiMed 11'0'0'W 5'0'0" w 50.0' 0 J N I 100' 200' ~-C)' ' o-,·.C) '<1-tv-,, .................. ' SCALE: 1 "= 1 00' ALL BEARINGS AND DISTANCES ~-------------~ SHOWN ARE CENTERLINE or '' V:> .. ; $:, ! C), c:i~' a ;::>r A PROPOSED 10.0 FOOT WID£ UTILITY EASEMENT 60.0' 42.0' S3'0'o"w 63' +l- T.P.O.B. LEASE~ ~~ s 9o·oo·oo" £ 33.o' c,"" 765.45' s 9o·o'o" £ c, ~---'-<l. 10 26.25' ll) C.L U~L~~j:~ ~-f~ ~-:~:r_ PROPOSW REVISE: L~!!'!~::S - REVISED LEASE BOUNDARY DETAIL SCALE: 1 "=40' EX. TRANSFORMER & BOLLAROS EXIST. VAULT 6/6/2005 ;{I 0 SCALE: EXHBIT B-3 REVISED UTILITY EASEMENT AND REVISED LEASE BOUNDAIO' T-J'v!OBILE SITE NO. SD-975-02 POND NO. 1 RESERVOIR SITE SHEET 3 OF 3 SHEETS j .... I 300' 600' ll) ll) tO $: ~ !<)~ "!--~!:'1 "!-"0 lO"'-"-la C) lr) >-I--a::: ~ Q_ 0~ a:::< CL::J 1''= 300' 649.52' N89'05'50" W S89'44'47"W 1301.38' a· z . 0 "· CL s 90'00'00" 765.45' ' ' EXISTING WATER TANKS I i ~ C.L. OF REVISED UTILITY EASEMENT I I ~ " ~ ~ ;:;S ~. EXISTING '?- ·\.....-----TRANSFORMER ······-~······----r==-~=----~ "-----EXISTING VAULT ... __ ,o .. ·--....... __ , ___ _ ~t.-: = '', + /-C. L. EXIST. DIRT ' "-ACCESS ROAD (TYP) 6/6/2005 AGENDA ITEM 10 STAFF REPORT . Senior Civil Engineer APPROVED BY: Rod Posada~~~ (Chief) APPROVED BY: (Asst. GM): Chief, Development Services Manny Magana~~ .. MEETING DATE: W.O./G.F NO: March 13, 2006 aaOOO DIV. NO. 1 1d1000 Assistant General Manager, Engineering and Operations SUBJECT: Request Approval of Amendment No. 1 to Agreement with TMO CA/NV, LLC, d/b/a T-Mobile USA successor to Pacific Bell Wireless, for an existing facility at Otay's Patzig Reservoir site. GENERAL MANAGER'S RECOMMENDATION: That the Board of Directors (Board) authorize the General Manager to execute Amendment No 1 with TMO CA/NV, LLC, d/b/a/ T-Mobile USA (T-Mobile), successor to Pacific Bell Wireless as Tenant, for the 12 month extension of the existing temporary cellular agreement now in place (Attachment 1), the amendment (Attachment 2 ), would be replaced upon execution o f a permanent lease at Otay's Patzig Reservoir site. See attached Exhibit A for project location. COMMITTEE ACTION: See Attachment A. PURPOSE: To obtain Board authorization for the General Manager to execute Amendment No. 1 with T-Mobile to its existing temporary lease agreement for Otay's Patzig Reservoir site executed on March 30, 2004. The amendment will allow T-Mobile's existing temporary cellular communication facility to remain in operation until a permanent lease has been executed. Otay and T-Mobile are currently negotiating a permanent lease for this site: this amendment extends the current temporary lease until March 29, 2 007, or until the permanent lease is in place, the earlier of the two ANALYSIS: T-Mobile will have the ability to provide continuous cellular service from the existing temporary Patzig Reservoir facility until the permanent cellular facility is in place Staff agrees with the content and purpose of this amendment FISCAL IMPACT: ~ _ _,.. ~ ..,.....,.~./ Currently the District receives $2,266.00 per month in rent . Effective upon execution of the amendment, the District will receive a 3 percent increase, to $2,333.98 per month, or $28,007.76 for a period of one year. An initial $2,000.00 payment toward the District's non- refundable administrative fee of $6,500.00 was paid to reimburse the District for staff time to supervise and assist the tenant during the licensing and permitting phases; this fee is separate from rent. The remaining balance of $4,500.00 will be due and payable upon execution of the permanent agreement by both parties to reimburse the District for costs to assist the tenant with planning, design, and construction phases of the project, including legal expenses An additional non-refundable administrative fee of $1,000.00 will be due and payable upon the execution of this agreement to reimburse the District for legal expenses and staff time expended in the processing of this amendment. LEGAL IMPACT: The District's Lease Agreement and proposed Amendment No. 1 have been reviewed by our legal counsel. District Counsel has been an integral part in the negotiations and construction of this amendment. STRATEGIC GOAL: This item is in line with the District's Strategic Focus Areas: Community and Governance, and Financial Health. Attachments P•\WORKING\W09192 Cellular Lease File\T-MOBILE\Patzig\Staff Report\T-Mobile Amendment No. 1, 1-30-06 BO.doc 2 ATTACHMENT A r·sUBJECTJP'i~{OJECT"i i Appro~·~····-~~ndme~t····N·c;·:······l t~ Ag~~~~-~~t ;;ith TMO. CA)N.V ;· LLc;···· . ·: i I d/b/a T-Mobile USA, successor to Pacific Bell Wireless, for ............ 1 .... : .. ~ ....... ~.:~--~-~~--~g fac·~---~--~--~--~ ....... :.~ ......... ~.~ .. : .. ~' s P:.~---~--~--=········~--~--~--~---~--~-~-~-~ si·~--~ ... : ................................................ 1 COMMITTEE ACTION: The Finance/Admin Committee met on February 15, 2006, and 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. 3 (\) "' ~ D :. / "' z ';;! "' D :. IMPERIAL BEACH OTAY WATER DISTRICT OTAY PATZIG RESERVOIR SITE LOCATION MAP T-MOBILE AMENDMENT NO.1/ PROJ AA000-101000 £._ __________________________________________________________________ _. EXHIBIT A ATTACHMENT 1 AGREEMENT BETWEEN CINGULAR WIRELESS AND OTAY WATER DISTRICT TO LOCATE A COMMUNICATIONS FACILITY AT OTAY'S "PATZIG" RESERVOIR SITE This Agreement ("Lease") is entered into between the Otay Water District, a municipal water district organized and operated pursuant to the Water Code Section 71000, et seq. ("Otay"), and Pacific Bell Wireless, LLC, a Nevada limited liability company, d/b/a Cingular Wireless, with its principal office located at Cingular Wireless, Network Real Estate, 6100 Atlantic Blvd.-GAN02, Norcross, GA 30071 ("Tenant") R E C I T A L S 1. Otay owns a site on which it has constructed water facilities known as the "Patzig" reservoir site as shown on Exhibit A attached hereto and incorporated herein by reference. 2. Tenant has requested Otay to allow it to locate a temporary communications facility and transmitting and receiving antennas at the Patzig reservoir site. A G R E E M E N T Otay and Tenant agree as follows: 1. Premises. Otay owns the real property described in Exhibit B (the "Property"). Otay agrees to lease to Tenant approximately 360 square feet of real property within the 1 Property, as more particularly shown on Exhibit c (the "Premises") 2. Grant of Trench Easement ( s) . No trenching shall be permitted by tenant under the provisions of this lease. 3. Use. The Premises may be used by Tenant for any lawful activity in connection with the provision of communications services. Tenant agrees to obtain all necessary approvals. Otay agrees, at no expense to Otay, to cooperate with Tenant in making application for and obtaining all licenses, permits and any and all necessary approvals that may be required for Tenant's intended use of the Premises. Tenant shall provide written evidence, satisfactory to Otay of all FCC approvals and other governmental permits and approvals, including but not limited to compliance with FCC Electromagnetic Radiation Guidelines. Said use shall not include the right to sublease~·· to any other person or entity unless otherwise expressly authoriied pursuant to this Lease. Tenant shall deliver to Otay copies of all executed licenses, approvals and permits applicable to Tenant's operation of communication services within the Premises. In addition, Tenant shall obtain such permits, licenses or easements from other tenants of Otay and from the owners of property adjoining the leased premises as may be necessary for Tenant to have access to and from the leased Premises and also 2 for access to utilities as may be necessary. Tenant shall provide copies of these documents to Otay prior to commencing operations at the Premises. 4. Access. Otay shall provide access to Tenant, Tenant's employees, agents, contractors and subcontractors to the Premises 2 4 hours a day, seven days a week, at no charge to Tenant. Otay hereby grants to Tenant such rights of ingress and egress over Otay' s Property as may be necessary and consistent with the authorized use of the Premises as outlined by Otay Operations. Subject to Otay's reasonable rules, Otay shall permit Tenant's employees, agents, contractors, subcontractors and in vi tees to park vehicles on Otay' s Property as necessary and consistent with the authorized use of the Premises. Otay shall, at its expense, maintain all access roadways or driveways from the nearest public roadway to the Premises in a manner reasonably sufficient to allow access. 5. Term. The term of this Lease shall be one ( 1) year, commencing with the day of the month in which the Lease is executed ("Commencement Date") . Tenant shall have the right to extend the term of the Lease for one (1) additional term of one (1) year by giving Otay written notice of its intention to do so at least 90 days prior to the date that the then current term would otherwise end. ~It is agreed however, that the parties are in the process of negotiating another lease for the Premises and 3 that this Lease will terminate on the earlier of ( 1) the expiration of this Lease or ( 2) the date on which Otay and Tenant enter into another lease concerning the Premises. ' 6. Administrative Fee. Tenant shall provide Otay with a $2,000 non-refundable fee due and payable upon execution by both parties of this agreement. This fee is to cover Otay's costs to provide assistance to Tenant during early planning phases and to cover Otay's costs incurred or to be incurred in Otay's supervision and processing of this Lease. This fee is to be separate from rent and any other fees associated with other lease agreements. 7 . Rent. Beginning upon the Commencement Date, Tenant shall pay Otay as rent the sum of $2,200 per month payable on the first day of each month in advance. If the Commencement Date is other than the first day of the calendar month, Tenant shall pay on the first day of the term the prorated rent for the remainder of the calendar month in which the term commences. If Tenant chooses to exercise their option to extend the current agreement as per paragraph five ( 5) "Term" of this agreement, the rent shall be increased by a rate of 3% for the following term. 8. Environmental. o-tay represents that to the best of its knowledge the Premises have not been used for the generation, storage, treatment or disposal of hazardous 4 materials other than those materials normally used by Otay for the treatment of water and that there is no hazardous waste in the Premises. Notwithstanding any other provision of this Lease, Tenant relies upon the representations stated herein as a material inducement for entering into this Lease. Tenant shall not bring any hazardous materials onto the Premises except for those contained in its temporary power facilities (e.g. lead- acid batteries and diesel fuel) and properly stored, reasonable quantities of common materials used in telecommunications operations (e.g. cleaning solvents). Tenant sh~ll handle, store and dispose of all hazardous materials it brings onto the Premises in accordance with all federal, state and local laws and regulations ("Laws"). "Hazardous materials" means any substance, chemical, pollutant or waste that is presently identified as hazardous, toxic or dangerous under any applicable federal, state or local law or regulation and specifically includes but is not limited to asbestos and asbestos containing materials, polychlorinated biphenyl's (PCBs) and petroleum or other fuels (including crude oil or any fraction or derivative thereof) 9. Installation of Equipment. Tenant's design and installation of all such temporary antennae facilities shall be done according to plans approved by Otay, and such approval shall not be unreasonably withheld. 5 Any damage done to Otay's facility or facility site during installation and/or during operations caused by Tenant shall be repaired or replaced immediately at Tenant's expense and to Otay's reasonable satisfaction. In connection with the installation and operation of the temporary antennae facilities, Tenant shall not locate or attach any antennae or other equipment to Otay' s facilities without the prior written approval of Otay. Tenant shall pay all costs and expenses in relation to maintaining the integrity of Otay' s facilities in connection with Tenant's installation and operation of the temporary antennae facilities. Tenant shall provide Otay with drawings of the temporary antennae facilities and the improvements installed on the Premises. The drawings shall show the actual location of all equipment and improvements. Said drawings shall be accompanied by a complete and detailed inventory of all equipment, personal property and antennae equipment. 10. Maintenance and Repairs. At all times during the term of this Lease and any renewals or extensions thereof, Otay may, at its option and upon written notice to Tenant, request the tenant to relocate the temporary antennae or other equipment located within the Premises in order for Otay to repair, add or make replacements (the "Maintenance Work"), that may become necessary to the facility. Tenant will reasonably cooperate 6 with Otay's efforts in this regard including removing the antennae and/or other equipment. 11. Condition of Property at Expiration. Upon the expira- tion or termination of this Lease, Tenant shall surrender the Premises to Otay in good and broom-clean condition, with all temporary equipment, supplies, and structures removed. 12. Interference. Tenant shall not use, nor shall Tenant permit its agents or invitees to use any portion of the Premises in a manner which interferes with Otay' s or any other tenant's use of the Property for it's intended purpose including communications facilities relating to Otay' s operation such as telemetry/radio communications. If Tenant's operation in any way interferes with Otay's telemetry/radio facilities, Tenant will have five ( 5) business days to correct the problem after notice from Otay. Tenant acknowledges that continuing interference will cause irreparable injury to Otay and therefore Otay will have the right to terminate the Lease immediately upon notice to Tenant. 13. Taxes. During the term of this Lease, Tenant shall pay before delinquency all taxes, assessments, license fees, and any other charge of any type whatsoever that are levied, assessed, charged, or imposed on or against Tenant's personal property installed or located in or on the leased premises and that become payable during the term of this Lease. 7 14. Termination. (a) This Lease may be terminated by Tenant without further liability if: (i) Tenant delivers to Otay 30-day written notice at any time prior to the Commencement Date, for any reason or no reasof1; (ii) Tenant gives Otay three months notice when Tenant determines at any time after the Commencement Date that any governmental or non-governmental license, permit, consent, approval, easement or restriction waiver that is necessary to enable Tenant to install or operate Tenant's temporary facility cannot be obtained or renewed at reasonable expense or in reasonable time period. (iii) Tenant determines at any time after the Commencement Date that the Premises are not appropriate or suitable for its operati.ons for economic, environmental or technological reasons, including without limitation, any ruling or directive of the FCC or other governmental or regulatory agency, or problems with signal strength or interference not encompassed by subsection (iv) below; provided that the right to terminate under this subsection (iii) is exercisable only if Tenant pays Otay, as a termination fee, the balance of the rent due for the remaining term of this Lease; 8 (iv) Otay commits a default under this Lease and fails to cure such default within a 30-day notice period, provided that if the period to diligently cure takes longer than 30 days and Otay commences to cure the default within the 30-day notice period, then Otay shall have such additional time as shall be reasonably necessary to diligently effect a complete cure; (v) The Premises are totally or partially destroyed by fire or other casualty so as to hinder Tenant's normal operations and Otay does not provide to Tenant within ten days after the casualty occurs a sui table temporary relocation site for Tenant's facility pending repair and restoration of the Premises. (b) This Lease may be terminated by Otay without further liability if: (i) Tenant commits a default under this Lease and fails to cure such default as provided under paragraph 15, below. 15. Default (a) Event of Default. The parties covenant and agree that a default or breach of this Lease (an "Event of Default") shall occur and be deemed to exist if, after notice and opportunity to cure as provided below: 9 •-.-_ (i) Tenant shall default in the payment of rent or other payments hereunder and said default shall continue for ten (10) days after Otay provides written notice of the same; or (ii) Either party shall default in the performance or observance of any other covenant or condition of this Lease to be performed or observed if such failure persists for a period of thirty (30) · days after the non-defaulting party provides written notice of the default to the defaulting party. (b) Right Upon Default. Upon the occurrence of an Event of Default, in addition to any other rights or remedies available to the non-defaulting party under any law, the non-defaulting party shall have the right to terminate the Lease. (c) Cure Rights. An Event of Default shall not exist unless written notice has been given in accordance with this Lease, and the defaulting party has had the opportunity to cure as provided herein. The defaulting party shall cure the alleged default within the manner provided herein; provided, however, that if the nature of an alleged default is such that it can not reasonably be cured within such thirty ( 30) day period, the defaulting party shall not be in breach of this Lease if it commences a cure within such period, and thereafter diligently proceeds with the actions necessary to complete such cure. 16. Destruction of Premises. If the Premises or Tenant's facilities are destroyed or damaged, Tenant may elect to termi- 10 ~-. - nate this Lease as of the date of the damage or destruction by so notifying Otay no more than 30 days following the date of damage or destruction. 17. Condemnation. If the condemning authority takes all of Otay' s property or a portion which in Tenant's opinion is sufficient to render the Premises unsuitable for Tenant's use, then this Lease shall terminate as of the date when possession is delivered to the condemning authority. In the event of any taking under the power of eminent domain, Tenant shall not be entitled to any portion of the award paid for the taking and Otay shall receive the full amount of such award except as provided herein. Tenant hereby expressly waives any r:Lght or claim to any portion of a condemnation award, except for relocation benefits and goodwill. All other damages, whether awarded as compensation for diminution in value of the leasehold or to the fee of the Premises, shall belong to Otay. ance: 18. Insurance. Tenant shall maintain the following insur- A. Commercial general liability with limits of $5,000,000 per occurrence; B. Automobile liability with the combined single limit of $1,000,000 per accident; C. Worker's compensation, as required by law; 11 D. Employer's liability with limits of $1,000,000 per occurrence. Tenant shall name Otay as an additional insured on each of the aforementioned insurance policies and the policies shall state that they are primary and that any policies Otay maintains shall be noncontributory. Tenant shall provide Ot~y with written certificates of insurance evidencing such coverage. Said policies shall expressly provide that the policies shall not be canceled or altered without at least 30 days prior written notice to Otay. Said policies shall be with insurance companies with an A.M. Best rating of AVII or better. Otay takes no responsibility for the protection of Tenant's property from acts of vandalism by third parties. 19. Indemnity. Tenant shall hold harmless, indemnify and defend Otay and each of Otay' s directors, officers, managers, employees, agents and successors and assigns, from any and all claims, suits or actions of any kind and description brought forth on account of injuries to or death to any person or damage to any property, including damage to the Premises arising out of or related to its use of the Premises, except to the extent that such claims, suits or actions arise out of the sole negligence or willful misconduct of Otay. 20. Estoppels Certificate. Tenant shall, at any time and from time to time upon not less than thirty ( 30) days prior 12 •n '~ • • request by Otay, deliver to Otay a statement in writing certifying that (a) the Lease is unmodified and in full force (or if there have been modifications, that th~ Lease is in full force as modified and identifying the modifications; (b) the dates to which rent and other charges have been paid; (c) as far as the person making the certificate knqws, Otay is or is not in default under any provisions of the Lease; and (d) such other matters as Otay may reasonably request. 21. Assignment. A tenant shall not assign this Lease except to an affiliated parent entity, subsidiary, purchaser of assets, or hol,der of its FCC license without Otay' s prior written consent. If, during the term of this Lease, Tenant requests the written consent of Otay to any assignment, Otay' s consent thereto shall not unreasonably be withheld. A consent to one assignment shall not be deemed to be a consent to any subsequent assignment, and any subsequent assignment without Otay's consent shall be void and shall, at Otay's option, terminate this Lease. 22. Attorneys' Fees. In the event that either party commences any legal action or proceeding, including an action for declaratory relief, against the other by reason of the alleged failure of the other to perform or keep any term, covenant, or condition of this Lease, the party prevailing in said action or proceeding shall be entitled to recover, in 13 ••• • 0 in addition to court costs, reasonable attorneys' fees to be fixed by the court, and such recovery shall include court costs and attorneys' fees on appeal. 23. Entire Agreement. This Lease contains all agreements, promises and understandings between Otay and Tenant and no verbal or oral agreements, promises or understandings shall or will be binding upon either Otay or Tenant and any addition, variation or modification to this Lease shall be in effect unless made in writing and signed by the parties hereto. 24 .. Notice. Any notice pursuant to this Lease may be made by first class mail to the addresses set forth below: OTAY: TENANT: Otay Water District Attn: General Manager 2554 Sweetwater Springs Boulevard Spring Valley, CA 91978-2096 (619) 670-2210 c/o Cingular Wireless Network Real Estate 6100 Atlantic Boulevard Mail Code GAN02 Norcross, GA 30071 (877) 231-5447 copy to: Cingular Wireless Attn: Lease Administrator 6160 Cornerstone Court, Suite 150 San Diego, CA 92121 2 5. Memorandum of I,ease. If requested by Tenant, Otay agrees to promptly execute and deliver to Tenant a recordable Memorandum of Lease substantially in the form of Exhibit D. 14 26. Choice of Law and Venue. This Lease shall be interpreted in accordance with the laws of the State of California, and any disputes shall be heard in a court of competent jurisdiction in the State of California. 27. Resolution of Disputes. All controversies or claims arising out of or relating to this Lease shall be resolved by submission to final and binding arbitration. at the offices of the American Arbitration Association '(''AAA") located in San Diego, California. Such arbitration shall be .conducted in accordance with the most recent version of the AAA commercial arbitration rules. The prevailing party in any such arbitration shall be entitled to recover all costs and expenses, including reasonable attorney~' fees. r 15 ·,":·- IN WITNESS WHEREOF, the parties have executed this Lease as of , 200_!j_. Pacific Bell Wireless, LLC a Nevada limited liability company d/b/a Cingular Wireless By: GSM Facilities, LLC its sole member, By: Cingular Wireless, LLC, Its agent By: Mark A. Appel Director of Network f3o~ b± OTAY WATER DISTRICT 2554 Sweetwater Springs Blvd. Spring Valley, CA 91979 BY: ~'b=;; Name: Robert Griego Title: General Manager •t:_· __ 16 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT [ ~· i' State of California } County of _s____,_··Rv\--'--'-_,___·lA-"-"-,_,e""'~'+"-'0,______ ss. On W\~"' '3 0 2-t>O'j Dale I Na e and nue of OHicer (e.g., "Jane Doe, Notary Public") personally appeared ---"L>L.>J-"~-V-~-JZ:;:=--1--'-----'---------,,----:-:-:-:::\--'I. c-:---='----------- 0 personally known to me ~proved to me on the basis of satisfactory evidence to be the person~ whose name~ @Are- subscribed to the wit~ instrument and acknowledged to m~t~~ executed the same in his h9fAAe+f.~thorized capacity(i~), an hat by his ~ signature(li on the instrument the rson{,i), or the entity upon behalf of which the person¢ acted, executed the instrument. OPTIONAL----------- Though the information below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent removal and reattachment of this form to another document. Description of Attached Document Title or Type of Document: __ l_e..='--'f\S:..=..e..-=----'fu!J~+VL~e=-R....-~V'-'-V\..RN\_,· """""'-'--t--'-------- Document Date:--------------------Number of Pages: ____ _ Signer(s) Other Than Named Above:---~------------------ Capacity(ies} Claimed by Signer Signer's Name:------------------------- 0 Individual 0 Corporate Officer-Title(s): ------------------ 0 Partner-0 Limited 0 General 0 Attorney-in-Fact 0 Trustee 0 Guardian or Conservator 0 Other:------------------------ Signer Is Representing: ____________________ ~ Top of thumb here © 1999 Nallonal Notary Association • 9350 De SotoAve .. P.O. Box 2402 • Chatsworth, CA 91313·2402 • www.nationalnolary.org Prod. No. 5907 Reorder: Call Toii·Free 1-600·876·6827 IMPERIAL BEACH VICINITY MAP OTAY WATER DISTRICT CINGULAR WIRELESS · AT "PATZIG RESERVOIR SITE" W.O. 9192 LOCATION MAP t--•• .EXHIBIT A . >-<( ~ ~ 0:::: <( CL CIP# N/ A EXHIBIT C ~' ......................... ..... '-, ...._ ...._ ...._ '......; ...._ ...._ ...._ -....... ., '-...._ ...._ ...._ ..__ . ..__ .. . ,__ ..__ ..__ ...._ ..__ 1t tii{/)D IL-~JC-'1 LM~~ . M.:f.A .. -· '··--.. , __ ·.-::•.·.• \.. __ ENLARGED SITE PLAN ··· .... ~6'Jo · .. •.. ~'\ ......... :, .... _: ······· ····· --~- raN 1 .O,rdll1 _ _.,.~ ... ...-.... 11i0 U...,wt C.lll•~ !Irk .. sutr. 360 W.wp011......,.,e.liiDmlaHJ50 :::;-:!:::~ i!g:~ft PROPRIETARY INFORWATION (f1i'OCo<IOer•l~>n•CD"!'IE~Sir.1150 Son ~~~·~ Cal~oml~ 92121 EASTLAKE OTAY DISTRICT PRDJECTNUL.WER SD-972-11-P5-B3 IQJ!g-A O'I!J,.Y L.U:ES RDioD ~UL.o.VI!ni..C.O.SI1!1T$ 04/01/Cil 5/23/D.l 05/11/0::1 12/17/0l 1/"/0& 1/27/04 2/n(o-4 DJU.IIIINGOA."Zt$ PliiEUWZDREVI£W(P1) ZD RE:VIEW (P2J ZDR£YIEW(P.3) ZDitE;VIEW(P4) ZOREVIEW{P5) PlfELILI.CORE.'ii£W(P!>-9.2) !If' SUIJWIITAL (P5-B3) ENLARGED SITE PLAN A-1 . _j . • RECORDING REQUESTED BY: WHEN RECORDED, MAIL THIS VlEMORANDUM OF AGREEMENT TO: APN: 643-020-13-00 MEMORANDUM OF AGREEMENT BETWEEN . AND OTAY WATER DISTRICT THIS ade and entered into by written ta Water District to locate a " ite") effective as of , 200 _, ,...,~-"'ater district organized and operated q., with an office at 2554 Sweetwater ________ (Lessee") with an The Site agreement v es n pa t 0 er leases to , a certain site ("Site") located on a pare of a ope e ounty of San Diego, State of California, and more particularly described as · "t "B" a ac e to this memorandum. The site Agreement provides , . · "t ccess and electric/telephone facilities rights. The site memorandum, and ONE (1 a~ti na rm extension. Should any party ir . y information concerning the Site Agreement, they should contact either . r Owner. · IN WITNESS WHEREOF, t parties enter in this Memorandum of Site Agreement as of the effective date above. OWNER: OTA Y WATER DISTRICT (VENDOR) By: By: --------,------- Name: Name: ------------------ Title: General Manager Title: __________ _ D~e: D~e: --------------- EXHIBIT "D" . ~:;_ .. -- j: .\ "·\,_ :! \,,_ ' i ! I '-. \ I EXIBIT B [ ; ·, '· I ( ! I ·\ \, I i i '"--.. \\. I I i ''\ . t' i I \\ ''.. · i I \.,_ ','\ll" I I ', ,,, ··, 'II \,,1'\\/ LEGAL DESCRIPTION: I I '\\"'(\,, SCALE: 1"=100' II \ \ NORTH 21'35'20" EAST, 10 FE~T~ THENCE NORTH 56'02'29" EAST, 153.48 FEET.'. THEJiJCE SOUTH 55'45'03" EAST, 77.84 FEET; ~ NCE SOUTH 17'50'20" WEST 189.54 FEET; THEN~ N'GRTH 79'09'40" WEST. 368.48 FEET; THENCE Nb TH 21'35'20" EAST, 180.34 FEET TO THE TRUE PO~O~ BEGINNING. PARCEL 3: ALL THAT PORTION I C)IF SECTION 3, TOWNSHIP 18 SOUTH, RANGE 1 WEST, AN 'f;!ERNARDINO MERIDIAN, IN THE COUNTY OF t~AN DIEGO, STATE OF CALIFORNIA. MORE PARTICULARLY S FQLLOWS: BEGINNING AT THE NORTHEAS~ I ORNER OF THE NORTHWEST QUARTER OF SAID SECTION ~A'S_ SHOWN ON RECORD OF SURVEY MAP · . 12371, FILED IN THE OFFICE OF THE COUNTY RECORDER F S.(IN DIEGO COUNTY, OCTOBER 12, 1 9; THENCE ALONG THE EASTERLY LINE OF THE NORTHWES. QUA~ER OF SAID SECTION, SOUTH 00' ' 02' WEST, 131.72 FEET TO A POINT ON THE SOUTHWESTERL L1 OF AN 80.00 FOOT WIDE EASE NT GRANTED TO THE SAN DIEGO COUNTY WATER AUTHORITY P~~ A FILE/PAGE NO. 83-353519,rEC RDED OCTOBER 3, 1983, SAID POINT ALSO BEING THE TRUE POihi,T \ OF BEGINNING; THENCE CON INU NG SOUTH 61'31 '02" WEST, 585.63 FEET TO THE MOST NORTHERLY \ CORNER OF LAND DESCRIB IN DEED TO THE OTAY MUNICIPAL WATER DISTRICT, RECORDED SEPTEMBER 15, 1965 AS ILE/P GE NO 167296 OF OFFICIAL RECORDS; THENCE ALONG THE EASTERLY BOUNDARY OF SAID DIST, ICTS L NO AS FOLLOWS: SOUTH 42'03'00" EAST, 518.011 FEET; THENCE 18'15'15" WEST, 199.89 FEET TO THE BEGINNING OF A 480.00 "OOT RADIUS TANGENT CURVE, CONCAVE NORTHWESTE L Y ALON~G THE ARC OF SAID CURVE, THROUGH A CENTRAL ANGLE OF 05'00'00", A DISTANC OF 41.8 ' AND TANGENT TO SAID CURVE SOUTH 23'15'15", 179.27 FEET TO A POINT ON THE NORTH ASTERLY LINE OF LAND DESCRIBED IN DEED TO OTAY MUNICIPAL WATER DISTRICT, RECORDED EPTEMBER 30, 1965 AS FILE/PAGE NO. 177739 OF OFFICIAL RECORDS; THENCE ALONG THE BOUNDA Y OF SAID LAST MENTIONED DISTRICT'S LAND; SOUTH 55'44'43" EAST, 98.30 FEET, AI~D SOUTH 1 '50'42" WE T, 189.54 FEET TO THE MOST SOUTHERLY CORNER OF SAID LAND; THENCE ALONG THE SOUTHEAST RL Y PROLONGATION OF THE SOUTHWESTERLY LINE OF SAID WATER DISTRICT'S LAND S UTH 79'09'1 " EAST, 246.48 FEET; THENCE NORTH 04%~%0 29'21" EAST, 33.31 FEET, THENCE NOR H 11'11'28" AST, 150.88 FEET; THENCE NORTH 07'15'08" EAST, 7590 FEET; THENCE NORTH 0 25'58" EAST, 188.84 FEET; THENCE NORTH 12' 44'10" EAST, 200.96 FEET; THENCE NORTH 28'44'50" AST, 116.10 EET TO A POINT ON THE WESTERLY LINE OF THE EASTERLY 10.00 FEET OF SAID NO THWEST QUA TER OF SECTION 3, THENCE ALONG SAID WESTERLY LINE, NORTH 00'36'28" EAST 4 2.35 FEET T A POINT ON SAID SOUTHWESTERLY LINE OF SAID SAN DIEGO COUNTY WATER AUTHORIT EASEMENT, B lNG A POINT IN THE ARC OF AA 1970.00 FOOT RADIUS NON-TANGENT C RVE, CONCAV SOUTHWESTERLY, A RADIAL LINE TO SAID POINT BEARS NORTH 48'57'30" EAST; HENCE NORTHWESTERLY ALONG SAID SOUTHWESTERLY LINE. BEING ALONG THE ARC OF SAID CURVE, HROUGH A C NTRAL ANGLE OF 00'45'21" A DISTANCE OF 25.99 FEET; THENCE TANGENT TO SAl CURVE NORT 41'47'51" WEST, 130.05 FEET TO THE TRUE POINT OF BEGINNING. ATTACHMENT 2 CELL AMENDMENT T-MOBILE AT PATZIG RESERVOIR This staff Report is being routed for approval without the signed amendment from T -Mobile, District Legal Counsel has made corrections on the proposed amendment and the District has not received the signed amendment back from T -Mobile. The current temporary lease is due to expire March 29, 2006 and this amendment must be approved at the March 13, 2006 Board meeting to authorize T -Mobiles continued use of their temporary facility, in lieu or a new permanent lease agreement. Market: San Diego, CA Site Number: SD06-972 Site Name: Patzig Reservoir ATTACHMENT2 FIRST AMENDMENT TO AGREEMENT BETWEEN CINGULAR WIRELESS AND OTAY WATER DISTRICT TO LOCATE A COMMUNICATIONS FACILITY AT OTAY'S "PATZIG" RESERVOIR SITE This First Amendment (the "Amendment") to Agreement between Cingular Wireless and Otay Water District to locate a Communications Facility at Otay's "Patzig" Reservoir Site, is made and entered into on March 13, 2006, to be effective as of March 29, 2006 (the "Effective Date") by and between the Otay Water District (hereinafter "District") and TMO CAINV, LLC, a Nevada limited liability company (hereinafter "Tenant"), as the successor in interest to Pacific Bell Wireless, LLC, a Nevada limited liability company d/b/a Cingular Wireless ("Cingular"). This Amendment concerns only those matters, understandings and agreements set forth below. All other provisions of the Agreement (as defined below) remain in full force and effect for the duration of this Amendment. RECITALS WHEREAS, District and Cingular entered into that certain Agreement between Cingular Wireless and Otay Water District to locate a Communications Facility at Otay's "Patzig" Reservoir Site, dated March 30, 2004 (the "Agreement"); and, WHEREAS, District and Cingular entered into the Agreement to provide terms pursuant to which District leased to Cingular certain Premises (as defined in the Agreement), and to provide terms and conditions pursuant to which Cingular was allowed to construct and operate certain communication facilities on real property owned by District, and known to the parties as the Patzig Reservoir Site, and defined in the Agreement as the Property; and WHEREAS, Tenant has represented to District that it is the legal successor in interest to Cingular under the Agreement, and has fully and knowingly succeeded to all obligations, rights and responsibilities of the Tenant as set forth in the Agreement; and, WHEREAS, Tenant and District desire to enter" into this Amendment to amend certain portions of the Agreement, but only to the extent specifically stated herein. NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Landlord and Tenant hereby agree to amend the Agreement as follows: 1. Incorporation of Recitals and Definitions. The recitals and definitions set forth above are incorporated herein by this reference and made a part of this Amendment. Capitalized terms used herein in a context where such terms would not normally be capitalized and not defined herein shall have the meaning given to such terms in the Agreement. 2. Tenant. The Tenant, TMO CA!NV, LLC shall hereby replace all references to Tenant in the Agreement. Tenant has represented to the District that it is the successor in interest to Pacific Bell Wireless, LLC, a Nevada limited liability company, d/b/a Cingular Wireless, and that it assumes all terms, conditions, covenants and obligations formerly attributed to Pacific Bell Wireless, LLC under the Agreement. 3. Notice. Paragraph 24, Notice of the Agreement shall be amended to reflect the new Tenant and shall be as follows: TENANT: TMO CA!NV. LLC c/o T -Mobile USA, Inc. 10180 Telesis Court, Suite 333 San Diego, California 92121 Attn: Lease Administrator 4. Term. The term of the Lease is hereby extended for one (1) year, commencing on March 30, 2006, and expiring on March 29, 2007. It is agreed that the parties are in the process of negotiating a permanent lease for the Premises and that the term of the Agreement as extended by this Amendment will terminate on the earlier of (1) the expiration of the Agreement as extended by this Amendment, or (2) the date on which District and Tenant enter into a permanent agreement for the location of a communication facility at the Premises. 5. Administrative Fee. Tenant shall pay to the District a non-refundable administrative fee in the amount of ONE THOUSAND DOLLARS AND NO CENTS ($1,000.00). These administrative fees shall not be considered rent or part of the rental installment. 6. Rent. Commencing on March 30, 2006, the Tenant shall pay District as rent the sum of Two Thousand Three Hundred Thirty Three Dollars and 98/1001h ($2,333.98) per month payable on the first day of each month in advance. If the commencement of the extended term occurs on a date other than the first day of the calendar month, Tenant shall pay on the first day of the term the prorated rent for the remainder ofthe calendar month in which the term commences. 7. No Other Change. Except as expressly modified herein, the ternis and provisions of the Lease shall remain in full force and effect. 8. Controlling Provisions. In case of any inconsistencies between the terms and conditions contained in the Agreement and the terms and conditions contained in this Amendment, the terms and conditions of this Amendment shall control. 9. Amendment. This Amendment cannot be amended, modified or revised unless done in writing and signed by an authorized agent of the District and an authorized agent of the Tenant. No provision may be waived except in writing signed by both parties. 2 10. Corporate Authority. The person or persons executing this Amendment on behalf of each party hereto warrants and represents that (i) such party is duly organized and existing, (ii) he or she or they is or are duly authorized to execute and deliver this Amendment on behalf of said party, (iii) by so executing and delivering this Amendment, such party is formally bound to the provisions hereof, and (iv) the entering into this Amendment does not violate any provision of any other agreement to which said party is bound. IN WITNESS WHEREOF, the parties have executed this Amendment as of the 13th day of March, 2006. LANDLORD: OTAY WATER DISTRICT, a municipal water district By: --------------------------- Mark Watton, General Manager Date: TENANT: TMO CAINV, LLC, a Nevada limited liability company By: Tim Fincham, Director-Engineering Date: This First Amendment to Agreement Between Cingular Wireless and Otay Water District to Locate a Communications Facility at Otay's "Patzig" Reservoir Site is approved as to form on the date indicated below. APPROVED AS TO FORM: Yuri Calderon, General Counsel Date 3 AGENDA ITEM 11 STAFF REPORT TYPE MEETING: Regular Board SUBMITTED BY: Mehdi Arbabian APPROVED BY: Mehdi Arbabian . /JI. /zilrl, / (Chief) / ''"" tf APPROVED BY: (Asst. GM): Manny Magana~~ ~ - MEETING DATE: PROJECT: March 13, 2006 P22 10 DIV. NO. ALL SUBJECT: Informational Item -FY 2006 2nd Qtr CIP Report GENERAL MANAGER'S RECOMMENDATION: That the Board accept the FY 2006 Second Quarter CIP Report for review and receive a summary via PowerPoint presentation. COMMITTEE ACTION: Please see Attachment A. PURPOSE: To update the Board about the status of all CIP project expenditure highlights, significant issues, progress, and milestones on major projects. ANALYSIS: To keep up with growth and to meet our ratepayers' expectations to adequately deliver safe, reliable, cost-effective, and quality water, each year Otay WD staff prepares a six-year rolling CIP that identifies the Otay WD infrastructure needs. The CIP is comprised of four (4) categories consisting of backbone capital facilities, maintenance projects, developer's reimbursement projects, and capital purchases. The quarterly update is intended to provide a detailed analysis of progress in completing these projects within the allotted time and budget. Staff continues to strive to achieve the targeted goal of 70 to 80% of the total fiscal year budget amount. Overall expenditures in the 2ndQtr totaled $11.4 Million, which is 63% of our forecast expenditure, with CIP (backbone) Capital Facilities at 80%. FISCAL IMPACT: None. STRATEGIC GOAL: The CIP supports the mission of providing the best quality of water and wastewater service to the customers of the Otay Water District in a professional, effective, efficient, and sensitive manner, in all aspects of operation, so that public health, environment, and quality of life are enhanced. LEGAL IMPACT: None. Ge~ral:Manager MA P:\ENGRSEC\REPORTS\CIP Qtrly Report\2006\2Q Update\BD 12-7-05, FY 2006 2nd Qtr CIP Report.doc 2 ATTACHMENT A ' Informational Item -FY ···2006····2na Qtr .. ci:i? "f<.eport ........................................................................................ 1 (Project P2210) ......... -................................................................................................................................................................................................................................................................................ ..! COMMITTEE ACTION: The Committees (Finance and Operations) met to consider February 22, respectively. information and recommended NOTE: Administration; Engineering and this item on February 15 and The Committees received the to be heard by the Full Board. 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. AGENDA ITEM 12 STAFF REPORT TYPE MEETING: Regular Boar SUBMITTED BY: Geoffrey Ste y and MEETING DATE: W.O./G.F. NO: March 13, 2006 DIV.NO. APPROVED BY: (Chief) APPROVED BY: (Asst. GM): German Alvar~ant General Manager, Administration and Finance SUBJECT: Semi Annual FY 2006 Strategic Plan and Performance Measures Results GENERAL MANAGER'S RECOMMENDATION: No recommendation. This is an informational item only. COMMITTEE ACTION: See Attachment A. PURPOSE: Provide an informational update to the Board on the District's semi- annual progress concerning FY 2006: • Strategic Plan Objectives • Performance Measures In addition, the Board will be provided an update on progress concerning the improvement and updating of FY 2006 Performance Measures. ANALYSIS: The District has revised its Strategic Plan for FY 2006 to FY 2008. The Board approved this revised plan along with the District Budget after a series of workshops in June 2005. Staff has continued to review the existing strategic plan and performance measures and make minor additions and changes that make the overall measurement plan more relevant and accurate. In addition, we conducted a series of workshops to make significant improvements in the District's performance measures. We engaged Doug Spiers of Westin Engineering to facilitate this process. One particularly important task was to ensure that our revised performance measures reflected "industry best practice" and, where possible, incorporated the AWWA Benchmarking program (QUALSERVE) so that our performance measures collection also provided the data to participate in the industry benchmarking program. This goal has been achieved. FISCAL IMPACT: None at this time. STRATEGIC GOAL: Strategic Plan and Performance Measure reporting is a critical element in providing performance reporting to the Board and staff. LEGAL IMPACT: None GeneraiMall.ager Strategic Plan Objectives Report Performance Measures Report. ATTACHMENT A Semi Annual Update on Strategic Plan and Performance SUBJECT/PROJECT: Measures COMMITTEE ACTION: This item was presented to the Finance/Administration Committee on February 15, 2006 and the Engineering/Operations committee on February 22, 2006 and both committees supported presentation to the full board. 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.